FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 [FEE REQUIRED]

     For the fiscal year ended    December 31, 1999                   OR
                                  -----------------

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from    Not Applicable   to
                                  ---------------     ----------------

Commission file number                0-17840
                                  ---------------

                          NEW HORIZONS WORLDWIDE, INC.
             (Exact name of Registrant as specified in its charter)

          Delaware                                       22-2941704
-------------------------------             ------------------------------------
(State of other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

1231 East Dyer Road
Santa Ana, California                                        92705
-------------------------------             ------------------------------------
(Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code:  (714) 432-7600
                                                     --------------

Securities registered pursuant to Section 12(b) of the Act:

     Title of each Class               Name of each exchange on which registered

        Not Applicable                               Not Applicable
     -------------------               -----------------------------------------


           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 Par Value
                          ----------------------------
                                 Title of Class


<PAGE>

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [x] No  [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  ___

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
Registrant as of March 24, 2000 was  approximately  $104,120,592 computed on the
basis of the last reported  sales price per share  ($16.00) of such stock on The
Nasdaq Stock Market.

The number of shares of the  Registrant's  Common Stock  outstanding as of March
24, 2000 was 9,692,438.

              DOCUMENTS OR PARTS THEREOF INCORPORATED BY REFERENCE

Part of Form 10-K                        Documents Incorporated
-----------------                        by Reference
Part III (Items 10, 11, 12 and 13)       ---------------------------------------
                                         Portions of the Registrant's definitive
                                         Proxiy Statement to be used in
                                         connection with its Annual Meeting of
                                         Stockholders to be held on May 2, 2000


<PAGE>

                          NEW HORIZONS WORLDWIDE, INC.
                             INDEX TO ANNUAL REPORT
                                   ON FORM 10K

                                     PART I
Item 1.  Business..............................................................1
         General...............................................................1
         Information Technology Education and Training Market..................2
         New Horizons Business Model...........................................3
              Company-owned Training Centers...................................3
              Franchising......................................................4
         Customers.............................................................7
         Sales and Marketing...................................................7
         Training Authorizations...............................................7
         Competition...........................................................8
         Information about Forward Looking Statements..........................9
         Regulations...........................................................9
         Insurance.............................................................9
         Trademarks............................................................9
         Employees............................................................10

Item 2.  Properties...........................................................10

Item 3.  Legal Proceedings....................................................10

Item 4.  Submission of Matters to a Vote of Security Holders..................10

                                  PART II

Item 5.  Market for Registrant's Common Equity
           and Related Shareholder Matters....................................11

Item 6.  Selected Consolidated Financial Data.................................12

Item 7.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations.......................3

Item 7A. Quantitative and Qualitative Disclosures About Market Risk ..........17

Item 8.  Financial Statements and Supplementary Data..........................17

Item 9.  Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure.............................17

                                    PART III

Item 10. Directors and Executive Officers of the Registrant...................18

Item 11. Executive Compensation...............................................19

Item 12. Security Ownership of Certain Beneficial Owners and Management.......19

Item 13. Certain Relationships and Related Transactions.......................19

                                     PART IV

Item 14. Exhibits and Reports on Form 8-K ....................................20

         SIGNATURES...........................................................21

<PAGE>

                                     PART I
ITEM 1.  BUSINESS

This  Annual  Report  on Form 10-K  contains  forward-looking  statements  which
involve  risks and  uncertainties.  The  Company's  actual  results  may  differ
significantly  from the results  discussed  in the  forward-looking  statements.
Factors that may cause such a difference include,  but are not limited to, those
discussed  throughout  this  document and under the caption  "Information  About
Forward Looking Statements."

New Horizons Worldwide,  Inc., (the "Company" or "New Horizons") formerly Handex
Corporation,  through various  subsidiaries,  both owns and franchises  computer
training centers.  System-wide  revenues include revenues for all centers,  both
owned and franchised.  The Company sold its  environmental  business segment and
changed  its name to New  Horizons  in late 1996,  in order to  concentrate  its
resources on the technology  training market.  The Company's common stock trades
on The Nasdaq Stock Market under the symbol "NEWH".

GENERAL

New Horizons' 1999  system-wide  revenues of $435.1 million makes it the largest
independent  provider in the fragmented PC software  applications  and technical
certification training industry. Through various subsidiaries,  the Company both
owns and franchises  computer training  centers.  Through these training centers
the  Company   offers  a  variety  of  flexible   training   choices   including
instructor-led training (ILT), Web-based training (WBT), Computer-based training
(CBT) via CD-ROM,  computer labs,  certification  exam  preparation  tools,  and
24-hour, seven-day-a-week free help desk support. The goal of the training is to
deliver to the student information and skills which have immediate and practical
value in the workplace.

The New Horizons  worldwide network  delivered over 2.4 million  student-days of
technology (IT) training in 1999, generating system-wide revenues, which include
both the results of company-owned and franchised operations,  of $435.1 million,
up 21.7% from $357.5  million in 1998.  The  network has over 1,200  classrooms,
1,400 instructors and 1,300 account executives.

New Horizons  specializes  in  instructor-led  training  which is the industry's
dominant delivery method for information  technology (IT) training.  The Company
has become a leader in the industry by developing  the processes for  delivering
quality  training  for the largest  technology  training  segments:  PC software
applications  and  technical  certification  training.  The  network's  training
centers  offer a broad  range of  courses  for  several  of the  major  software
vendors,  including  Microsoft,  Novell,  Lotus,  Adobe,  Aldus, Apple Computer,
Corel,  Symantec,  Sun  Microsystems,  and Unix.  New  Horizons  has the largest
network of Microsoft Certified Technical Education Centers and Novell Authorized
Education  Centers  in  the  world.  Additionally,  with  certification  testing
becoming increasingly  important,  New Horizons also has established the largest
number of Authorized Prometric Testing Centers in the world. Classes can be held
at New Horizons locations or on-site at the client's facility. Curriculum can be
tailored to the client's  specific needs.  The Company can also provide training
and courseware  for customers'  proprietary  software.  Additionally,  using its
courseware as the source  material,  the Company has entered into an arrangement
with a company  to develop  its own line of  computer-based  products,  entitled
Masterware,  which became available to franchisees for sale in the third quarter
of 1997.  The Company also has a reseller  agreement  with a company that has an
extensive  offering  of  computer-based   training  courses  that  will  prepare
customers for certification exams.

New Horizons owns and operates 26 computer training  facilities located in Santa
Ana, Burbank, Los Angeles, Irvine, Long Beach, Sacramento, Stockton, Modesto and
Redding,  California;  Albuquerque,  New Mexico; Charlotte,  North Carolina; San
Antonio,  Texas;  and  Denver,  Englewood,   Broomfield  and  Colorado  Springs,
Colorado; two in Chicago,  Illinois;  Cleveland and Akron, Ohio; two in New York
City,  New York;  Memphis,  Jackson  and  Nashville,  Tennessee;  and  Hartford,
Connecticut.

As of December 31, 1999, the Company's franchisees operated 121 locations in the
United  States and  Canada and 83  locations  in 38 other  countries  around the
world.  An  additional  38  franchises  had  been  sold as of that  date and are
scheduled for future openings.

                                       1
<PAGE>

The Company was incorporated in Delaware on December 15, 1988, and its principal
executive  offices  are  located  1231 East Dyer  Road,  Suite  140,  Santa Ana,
California 92705. The Company maintains a website at http://www.newhorizons.com.

THE INFORMATION TECHNOLOGY EDUCATION AND TRAINING MARKET

The rapidly growing role of information technology in business organizations and
the emergence of the Internet are creating significant and increasing demand for
information  technology  training. A 1999 International Data Corporation ("IDC")
study  estimated that in 1998 the worldwide  market for  information  technology
education and training was about $16.5 billion and is expected to grow at a pace
of 11% per year to over $28 billion in the year 2003.  The study  indicated that
nearly  one-fifth  of the top U.S.  IT  executives  rated  the  lack of  skilled
personnel as the most serious  constraint  to the growth of their  businesses in
1998.  A survey  published  in 1997 by  Information  Technology  Association  of
America (ITAA) stated that the number of unfilled  positions for IT employees at
large and midsized U.S. companies is approximately 190,000.

The  growing  need for  technology  training  is driven by several  developments
including:  (i) increased use of computers in the workplace  requiring employees
to acquire  and apply  information  technology  skills;  (ii) rapid and  complex
technological  changes in  operating  systems,  new  software  development,  and
technical  training;  (iii)  continuing  emphasis by  industry on  productivity,
increasing the number of functions  being  automated  throughout  organizations;
(iv)  greater  focus  by  organizations  on core  competencies  with a  shifting
emphasis  to  outsourcing  of  non-core  activities;  (v)  corporate  downsizing
requiring  remaining  personnel to develop a greater variety of skills; and (vi)
development  of the Internet.  In its survey,  the ITAA announced that education
will be a key facet of any solution to the skills problem.

Although a significant  portion of  technology  training is provided by in-house
training  departments,  IDC, in its study,  identified a decided  shift  towards
outsourcing to external training professionals. This outsourcing is motivated by
several factors, including: (i) the lack of internal trainers experienced in the
latest software; (ii) the cost of maintaining an in-house staff of trainers; and
(iii) the cost of developing and maintaining internal courseware.

Organizations  are  searching  out and  selecting  outside  technology  training
services that can provide the  following:  (i) cost  effective  delivery of high
quality  instruction;  (ii) qualified,  technically  expert  instructors;  (iii)
flexibility to deliver a consistent training product at geographically dispersed
facilities;  (iv) ability to tailor the training products to specific customers'
needs; (v) definitive,  current  courseware;  (vi) testing and  certification of
technical competency;  (vii) effective training methods delivering knowledge and
skills  with  immediate  practical  value in the  workplace;  (viii) a depth and
breadth of curriculum; and (ix) flexible and convenient scheduling of classes.

Instructor-led classroom training is the dominant delivery method for technology
training in the U.S. with 75% of the  information  technology  education  market
according to the 1999 IDC report. IDC projects that instructor-led training will
continue to maintain a significant  share of the market  because  trainees value
the personalized attention,  interfacing and problem-solving with classmates and
instructors,  and the  insulation  classroom  training  provides from  workplace
interruptions.  While IDC projects  instructor-led  training will continue to be
the  leading   delivery   method  in  the  market  through  2003,  the  role  of
technology-based  training,  consisting of  computer-based  training,  Web-based
training,  and CD-ROM  multimedia is gaining greater  acceptance.  IDC estimates
that  technology-based  training  will  have 46% of the  information  technology
education market by 2003 while instructor-led classroom training will have 51%.

THE NEW HORIZONS BUSINESS MODEL

New  Horizons'   company-owned   and  franchised   operations  both  provide  an
instructor-led  training  delivery  system  to  customers  that is  executed  by
certified  employee  instructors  primarily in fully equipped  classrooms in New
Horizons  facilities.  Approximately  10% of  classes  are given  on-site at the
customer's location. New Horizons often supplies the computer hardware for these
on-site  classes.  The Company sells its services  primarily to  businesses  and
government agencies as opposed to individuals.

Curriculum  is  centered  on  software  applications  (approximately  52% of the
courses) and technical  certification programs  (approximately 48%). Classes are
concise,  generally  ranging  from  one to five  days,  and are  designed  to be
intensive  skill-building  experiences.  The  Company  offers  a broad  array of
information  technology courses covering the most popular software  applications
and  technical  certification  programs.  The Company also  provides  customized
training for customers' proprietary software applications.  The Company believes
it offers more classes more often than any other company in the industry.

<PAGE>
                                       2

In addition to  certified  instructors  and broad  curriculum,  the New Horizons
business model is designed to provide its customers  significant  training value
by featuring:  (i)  guaranteed  training  through the Company's  free  six-month
repeat  privileges;  (ii)  skills  assessment  on  subjects  and skills for both
standard or proprietary  software;  (iii) professional  certification  training;
(iv) the largest network of authorized training centers in the industry ensuring
quality and consistency; (v) free 24 hours-a-day, 7 day-a-week help desk service
for a full  sixty-day  period  after a class has been  completed;  (vi)  on-site
training at customer's facilities; (vii) customized courseware from a library of
over 1,200 titles in 14 languages; (viii) club memberships providing a series of
classes for one platform at one low price;  (ix) flexible  scheduling  including
evening and weekend classes; (x) a Corporate Education Solutions program, (CES),
formerly  Major Accounts  Program,  which  coordinates a  national/international
referral  system and delivery  network of training for major  clients which have
training  requirements  in  multiple  locations;  and (xi) its  Choice  Learning
program  which  allows  customers  to blend  the  delivery  methodology  between
instructor-led training and technology-based training.

New Horizons believes that while Web-based  training will become more prevalent,
the  instructor  will  continue  to play a critical  role in the  delivery of IT
education.   The  instructor   naturally   facilitates  a  structured   learning
environment where students are focused on achieving course  objectives,  thereby
giving employers greater confidence that their training investment is maximized.
The Company believes these functions will continue to be critical in the future,
even as technology becomes a more pervasive part of the training curriculum.

New  Horizons'  existing   Web-based  training  provides  a  rich,   interactive
environment  that teaches,  prompts,  and uses on-line  tutors to guide students
through  specific  learning  objectives.  Created  specifically  for  the Web by
recognized  experts in the field,  these in-depth courses give the user valuable
real-world skills and cover the most cutting edge technology  topics.  Since the
courses reside in a hosted server,  there is no need for specialized software or
hardware.

New  Horizons  is  developing  a plan to create a new, fully Web-based  training
curriculum.  Through this strategy,  the Company plans to achieve content parity
across its ILT,  CBT and WBT  product  lines.  This will add  simplicity  to the
account   executive's   sales  process,   which  is  presently   biased  towards
ILT-products, and will facilitate the selection of optimal training packages for
prospective customers.

The Company has historically  grown through the sale of franchises,  the opening
of new company-owned facilities,  the buy back of franchises in certain markets,
and revenue  growth from the existing  training  centers.  Revenues at locations
open more  than  twelve  months  grew  approximately  15% in 1999.  The  Company
believes a mix of franchised and company-owned centers will enable it to combine
the  accelerated   expansion   opportunities   provided  by  franchising   while
maintaining  ownership of a significant number of training centers.  The Company
plans to continue to grow through the (i) improvement of revenues and profits at
both current company-owned and franchised operating locations;  (ii) the sale of
additional franchises; (iii) the selective buyback of existing franchises in the
United  States  which have  demonstrated  the ability to achieve  above  average
profitability while increasing market share, and (iv) the potential  acquisition
of companies in similar or complementary businesses.

Company-owned Training Centers
------------------------------

At the end of 1999 the  Company  owned and  operated 26  training  centers  that
generated $86.5 million in revenue.  The locations open at the beginning of 1999
were as follows:

California     Connecticut    Illinois     New York       Ohio         Tennessee
----------     -----------    --------     --------       ----         ---------
Santa Ana      Hartford       Chicago      New York (2)   Cleveland    Memphis
Irvine                                                                 Nashville
Burbank                                                                Jackson
Los Angeles

                                       3
<PAGE>

The franchise locations acquired in 1999 were as follows:

  Albuquerque, New Mexico                             Acquired March 1, 1999
  Charlotte, North Carolina                           Acquired April 1, 1999
  Sacramento, Stockton and Redding, California        Acquired April 1, 1999
  San Antonio, Texas                                  Acquired May 1, 1999
  Denver, Englewood, Broomfield and                   Acquired September 1, 1999
   Colorado Springs, Colorado

Additionally,   the  Company  opened   locations  in  Long  Beach  and  Modesto,
California, Akron, Ohio, and Rosemont, Illinois in 1999.

The  acquisitions  are a  result  of the  Company's  strategy  to  acquire  well
performing franchises in select United States markets. The selling shareholders,
other than the former  owner of the  Sacramento  and Stockton  franchises,  have
continued to manage the acquired training centers,  and will receive  additional
consideration if certain  performance  criteria are met. The  acquisitions  have
been recorded using the purchase method of accounting and the operating  results
have  been  included  in the  Company's  financial  statements  from the date of
acquisition.

Franchising
-----------

At the end of 1999 the  Company  supported a  worldwide  network of  independent
franchises which provide information  technology training at 204 locations in 40
countries.  There were an additional 38 franchised locations which had been sold
and which are scheduled to open at various times during 2000.  The franchisee is
given a  non-exclusive  license  and  franchise  to  participate  in and use the
business  model and sales  system  developed  and  refined by the  Company.  The
Company  initially  offered  franchises  for sale in 1991  and  sold  its  first
franchise in 1992. The Company had 175 franchised locations operating at the end
of 1997;  194 at the end of 1998;  and 204 at the end of 1999, of which 121 were
in the United States and Canada and 83 were abroad.

The offer and sale of franchises  are subject to regulation by the United States
Federal  Trade  Commission  and  certain  foreign  countries.  There  also exist
numerous  state laws that regulate the offer and sale of franchises and business
opportunities,  as well as the  ongoing  relationship  between  franchisors  and
franchisees,  including  the  termination,  transfer,  and renewal of  franchise
rights.  The  failure  to comply  with these  laws  could  adversely  affect the
Company's operations.

New Horizons  estimates the initial  investment  required to acquire and start a
franchise   operation,   including  the  initial   franchise  fee,  ranges  from
approximately $250,000 to $450,000.

United States and Canada
------------------------

Franchise Fees

A franchisee in the United States and Canada is charged an initial franchise fee
and ongoing monthly royalties, which become effective a specified period of time
after the center  begins  operation.  The initial  franchise fee is based on the
size of the  territory  granted as defined in the  Franchise  Agreement.  In the
United  States and Canada,  the size of a territory is measured by the number of
personal  computers  ("PC's") in the territory.  The initial franchise fee for a
start-up center for a Type 1 territory (150,000 or more PC's) is $75,000;  for a
Type 2 territory  (75,000 to 149,999  PC's) is  $50,000;  and a Type 3 territory
(50,000  to  75,000  PC's) is  $25,000.  Entrepreneurs  converting  an  existing
training  center to a New Horizons center receive a 20% reduction in the initial
fee as a conversion allowance.  Based on information furnished by IDC concerning
the number of PC's in various  geographic  areas,  as of December 31, 1999,  the
Company has identified 31 Type 1 territories, 25 Type 2 territories, and 18 Type
3  territories  as the  remaining  territories  currently  available for sale as
franchises in the United States and Canada.

                                       4
<PAGE>

The initial  franchise fee is payable upon execution of the Franchise  Agreement
and is not  refundable  under any  circumstances.  The  territory  is a "limited
exclusive"  territory  in that New Horizons  agrees not to own or franchise  any
other New Horizons Computer Learning Center provided the franchisee  operates in
compliance with the terms of its franchise agreement.  The geographic boundaries
of a territory  are typically  determined  by United  States Postal  Service zip
codes.  Unless  the  Franchise  Agreement  terminates  or is  amended  by mutual
agreement,  a territory  will not be altered.  Franchises are expected to market
their  business to customers  located  within the defined  territory  and not to
customers  within  territories  of other New Horizons  franchises or affiliates.
Franchisees  generally  have six months  from the date of the  execution  of the
Franchise Agreement to open a center.

Royalties

In addition to the initial franchise fee,  franchisees pay the following fees to
New Horizons: (i) a monthly continuing royalty fee, consisting of the greater of
3% to 6% of monthly gross  revenues or a minimum flat fee of $1,500 for a Type 1
territory or $1,000 for a Type 2 and Type 3 territory;  (ii) a monthly marketing
and advertising fee of 1% of gross  revenues;  and (iii) a course  materials and
proprietary  computer-based  training  products  surcharge  of 9% of  the  gross
revenues from course materials and proprietary  computer-based training products
sold to third parties. Each franchisee also pays a $50 per month maintenance fee
for customized software developed and maintained by New Horizons. The 6% royalty
fee rate was effective for franchises sold during September 1996 or later.

Franchise Agreement

The Franchise  Agreement  runs for an initial term of ten years and is renewable
for additional  five-year  terms. The franchise is exclusive within the specific
defined  territory  and is subject to a number of  limitations  and  conditions.
These limitations and conditions  include,  but are not limited to: (i) staffing
requirements,  including  a General  Manager  plus a minimum  number of  account
executives  based on the  territory  type;  (ii) a minimum  number of classrooms
depending on the territory type; (iii) full-time and continuous operations; (iv)
a pre-defined  minimum required  curriculum;  (v) computer  equipment and system
requirements;  (vi) signage and display  material  requirements;  (vii)  minimum
insurance  requirements;  and (viii) record keeping requirements.  The agreement
also contains  non-competition  restrictions  which bar: (i) competing  with New
Horizons  during  the term of the  Franchise  Agreement  and for one year  after
termination  of the  franchise,  within  a 25 mile  radius  of any New  Horizons
center;  (ii)  diverting or attempting to divert any customer or business of the
franchise business to any competitor; (iii) performing any act that is injurious
or prejudicial to the goodwill associated with the New Horizons service marks or
operating system; and (iv) soliciting any person who is at that time employed by
the  franchisor  or any of  its  affiliated  corporations  to  leave  his or her
employment.  In addition,  there are certain  restrictions  on the  franchisees'
rights to transfer the franchise  license.  New Horizons also maintains a "right
of first refusal" if a transfer effects a change of control.  The agreement also
contains default and termination remedies.

International
-------------

Franchise Fees

Initial  franchisee  fees  and  territories  for  international  franchises  are
market/country  specific.  While the  Company  does  have  some unit  franchises
internationally,  the Company has  predominantly  entered into Master  Franchise
Agreements providing franchisees with the right to award sub-franchises to other
parties within a particular region. The Master Franchisee pays an initial master
franchise  fee that is based upon the expected  number of  sub-franchises  to be
sold.  The master  franchise fee is then earned  ratably over the opening of the
sub-franchises.  Under  the  terms of these  Master  Franchise  Agreements,  the
franchisee commits to open or cause to be opened a specified number of locations
within a specified  time frame.  The Master  Franchisee is  responsible  for the
pre-opening and ongoing support of the  sub-franchises.  The Company shares with
the  Master  Franchisee  in the  proceeds  of  subsequent  sales  of  individual
franchises  and also  receives a  percentage  of the  royalties  received by the
Master Franchisee.  In 1999 the Company entered into Master Franchise Agreements
for the development of Bolivia,  Columbia,  France, Greece,  Lebanon,  Pakistan,
Peru and Venezuela.  Approximately 17.6% of the Company's  system-wide  revenues
were generated by international  locations in 1999. In addition to those markets
currently  served  by its  franchisees,  the  Company  has  identified  over 200
additional international markets that may support a training center.

                                       5
<PAGE>

The initial  franchise fee is payable upon execution of the Franchise  Agreement
and is not  refundable  under any  circumstances.  The  territory  is a "limited
exclusive"  territory  in that New Horizons  agrees not to own or franchise  any
other New Horizons Computer Learning Center provided the franchisee  operates in
compliance  with the terms of its  Franchise  Agreement.  Unless  the  Franchise
Agreement terminates or is amended by mutual agreement,  a territory will not be
altered.  Franchises are expected to market their business to customers  located
within the defined  territory and not to customers  within  territories of other
New Horizons  franchises or  affiliates.  Franchisees  generally have six months
from the date of the execution of the Franchise Agreement to open a center.

Royalties

In addition to the initial franchise fee,  franchisees pay the following fees to
New Horizons:  (i) Unit Franchisees:  a monthly  continuing royalty fee, ranging
from 3% to 6% of monthly gross revenues with minimum royalties ranging from $350
to $3,000,  depending on the marketplace;  (ii) Master  Franchisees:  40% of the
royalties received from their Subfanchisees with those royalties ranging from 3%
to 6% with  the  aforementioned  minimums;  and  (iii) a  course  materials  and
proprietary  computer-based  training  products  surcharge  of 9% of  the  gross
revenues from course materials and proprietary  computer-based training products
sold to third parties. Each franchisee also pays a $50 per month maintenance fee
for customized software developed and maintained by New Horizons. The 6% royalty
fee rate was effective for franchises sold during September 1996 or later.

Master Franchise Agreement

A Master Franchisee  receives a "Protected Area" which is typically a country or
a region encompassing  multiple countries.  Under the Master Franchise Agreement
the  Master   Franchisee  shall:  (i)  license  and  service  third  party  Unit
Subfranchises  operated by persons other than the Master Franchisee and (ii) own
and operate at least one New Horizons  location  under a separate Unit Franchise
Agreement.  The Master Franchise Agreement runs for an initial term of ten years
and is  renewable  for  additional  ten-year  terms.  The Master  Franchisee  is
expected to: (i) grant unit franchises in a form of Unit Franchise  Agreement as
prescribed  by  New  Horizons;  (ii)  perform  and  enforce  against  each  Unit
Subfranchise the terms of any Unit Subfranchise  Agreement it enters into; (iii)
provide  the  initial   training  in  the  New  Horizons  system  to  each  Unit
Subfranchise;  and (iv) provide  ongoing  support,  consulting and assistance to
each Unit  Subfranchise  after the initial  training.  For these obligations the
Master  Franchisee  retains  60% of the initial  franchise  fees and the ongoing
royalties received from the Unit Subfranchises.

Unit Franchise Agreement

The Franchise  Agreement  runs for an initial term of ten years and is renewable
for additional  five-year  terms. The franchise is exclusive within the specific
defined  territory,  typically a city, and is subject to a number of limitations
and conditions.  These limitations and conditions  include,  but are not limited
to: (i) staffing requirements, including a General Manager plus a minimum number
of  account  executives  based  on the  territory;  (ii)  a  minimum  number  of
classrooms   depending  on  the  territory;   (iii)   full-time  and  continuous
operations;  (iv)  a  pre-defined  minimum  required  curriculum;  (v)  computer
equipment   and  system   requirements;   (vi)  signage  and  display   material
requirements;  (vii) minimum insurance  requirements;  and (viii) record keeping
requirements.  The agreement also contains  non-competition  restrictions  which
bar: (i) competing with New Horizons during the term of the Franchise Agreement;
(ii) diverting or attempting to divert any customer or business of the franchise
business  to any  competitor;  (iii)  performing  any act that is  injurious  or
prejudicial to the goodwill  associated  with the New Horizons  service marks or
operating system; and (iv) soliciting any person who is at that time employed by
the  franchisor  or any of  its  affiliated  corporations  to  leave  his or her
employment.  In addition,  there are certain  restrictions  on the  franchisees'
rights to transfer the franchise  license.  New Horizons also maintains a "right
of first refusal" if a transfer effects a change of control.  The agreement also
contains default and termination remedies.

                                       6
<PAGE>

Franchise Support
-----------------

In return for the initial  franchise fee and the other monthly fees, the Company
provides  franchisees  with the following  services,  products,  and  managerial
support:  (i) two weeks of initial franchise training at the Company's operating
headquarters  in Santa Ana,  California,  and one week of field  training at the
franchisee's location;  (ii) franchise and sales system information contained in
the Company's  Confidential  Operations Manual and other training manuals; (iii)
ongoing  operating  support via on-site visits from Regional  Franchise  Support
Managers,  access to  troubleshooting  and business  planning  assistance;  (iv)
current  applications  courseware  at printing  cost only (over 1,200  titles in
fourteen  languages);  (v) access to the Corporate  Education  Solutions program
which coordinates a national/international  referral system and delivery network
of training  for major  clients  which have  training  requirements  in multiple
locations;   (vi)  site  selection  assistance;   (vii)  periodic  regional  and
international meetings and conferences; and (viii) advisory councils and monthly
communications.

CUSTOMERS

Customers for the training provided at New Horizons company-owned and franchised
training centers are  predominantly  employer-sponsored  individuals from a wide
range of public and  private  corporations,  service  organizations,  government
agencies  and  municipalities.  Little,  if any, of the  Company's  revenues are
generated from Title IV entitlement programs.

No single customer accounted for more than 10% of New Horizons revenues in 1999.

The New Horizons  system  delivered over 2.4 million  student-days of technology
training in 1999.

SALES AND MARKETING

New Horizons  markets its services  primarily  through  account  executives  who
utilize  telesales to target and contact potential  customers.  The New Horizons
sales system is organized and  disciplined.  After  undergoing a formal  initial
training program, account executives are expected to generate their own database
of customers  through  telephone sales,  make a minimum number of calls per day,
and invoice and collect a minimum  amount of revenue each month.  These minimums
escalate  over the first eight  months an account  executive  is selling and are
designed  to  move  the  account   executive  from  being   compensated  with  a
non-recoverable  draw  against  commission  to a  full  commission  compensation
program.  Account  executives' target sales areas are local and regional.  Sales
opportunities  that  involve  national  and  international  accounts and involve
delivery  of training at  multiple  locations  are turned over to the  Company's
Corporate Education Solutions program.

In 1995 the Company  established  it's major accounts program designed to market
computer  training  services to large  organizations  which have  facilities and
training  needs  throughout  the world.  This  program  provides  New  Horizons'
national  and  international  customers  with a single  point of  contact to the
entire New Horizons  network of training and support  services.  During 1999 New
Horizons competed for and won national and international  contracts with Boeing,
GE Capital ITS,  Honeywell  International,  Microsoft OEM  Division,  and Pitney
Bowes among others.

The Company  maintains a web site for  marketing  its products over the Internet
(http://www.newhorizons.com). The Company believes that the Internet will become
an increasingly important tool in its marketing program.

TRAINING AUTHORIZATIONS

New  Horizons  is  authorized  to  provide  certified  training  by more than 30
software publishers,  including Microsoft,  Novell, Apple, and Sun Microsystems.
Many of the industry's major software vendors do not offer training, but support
their  products  through  independent  training  companies  using  a  system  of
standards and performance criteria. In support of these vendors, the Company has
136 Microsoft (CTEC),  100 Novell (NAEC), and 28 Lotus (LAEC) authorized centers
worldwide.  The authorization  agreements are typically annual in length and are
renewable at the option of the publishers.  While New Horizons believes that its
relationships  with software  publishers  are good, the loss of any one of these
agreements could have a material  adverse impact on its business.  Additionally,
with certification  testing becoming  increasingly  important,  New Horizons has
grown its number of Authorized Prometric Testing Centers to 137.

                                       7
<PAGE>


COMPETITION

The  information  technology  training  market  is  highly  competitive,  highly
fragmented,  has low  barriers  to  entry,  and has no single  competitor  which
accounts  for a dominant  share of the market.  The  Company's  competitors  are
primarily in-house training  departments and independent  education and training
organizations.  Computer retailers,  computer resellers, and others also compete
with the Company. Periodically,  some of these competitors offer instruction and
course  titles  similar to those  offered by New  Horizons at lower  prices.  In
addition,  some of these  competitors  may have greater  financial  strength and
resources than New Horizons.

New Horizons believes that competition in the industry is based on a combination
of pricing,  breadth of  offering,  quality of  training,  and  flexibility  and
convenience of service.

The Company recognizes that the emergence of computer-based training, as well as
distance learning and online training on the Internet, are important and growing
competitive developments in the industry.

In-house Training Departments
-----------------------------

In-house  training  departments  provide  companies  with the highest  degree of
control  over the  delivery  and  content of  information  technology  training,
allowing  for  customized  instruction  tailored  to  specific  needs.  However,
according to IDC, the demand for outsourced training is expected to grow as more
companies switch to outside training  organizations.  By outsourcing,  companies
can choose to spend based on  real-time  training  needs while  alleviating  the
overhead costs for in-house instructors' salaries and benefits.

Independent Education and Training Organizations
------------------------------------------------

Although the majority of independent training organizations are relatively small
and focus on local or  regional  markets,  the  Company  competes  directly on a
national  level with several firms  providing  similar  curriculum.  Executrain,
Productivity Point, Global Knowledge Network, Learning Tree, and Catapult target
the same  customer base and operate in some of the same markets as New Horizons.
The Company believes that the combination of its market presence,  the depth and
breadth of its course offerings,  its flexible  customer service  approach,  its
centralized control of delivery to national customers, its status as the world's
largest network of Microsoft  Certified  Technical  Education Centers and Novell
Authorized  Education  Centers,  and its organized and disciplined  sales system
distinguishes it from these competitors.

The Company also  competes in certain  locations  with computer  resellers  like
Inacom and IKON, as well as computer retailers such as CompUSA.

Computer-based Training, Distance Learning, and Web-based Training
------------------------------------------------------------------

Instructor-led  training has historically  been the dominant delivery method for
information  technology training.  Multimedia,  CBT, distance learning,  and WBT
have been small but growing delivery  methods.  According to IDC, these training
delivery  methods  are  expected  to grow at a faster  rate than  instructor-led
training  through the year 2003. The Company  recognizes that its future success
depends  on,  among  other  factors,   the  market's  continued   acceptance  of
instructor-led   training  as  a  delivery  method  for  information  technology
training, the Company's ability to continue to market competitive instructor-led
course offerings,  and the Company's  ability to successfully  capitalize on the
potential of multimedia, CBT, distance learning, and WBT delivery methods. Using
its  courseware  as the  source  material,  the  Company  has  entered  into  an
arrangement with a company to develop its own line of  computer-based  products,
entitled Masterware, which became available to franchisees for sale in the third
quarter of 1997.  As of  December  31,  1999,  there were 50  Masterware  titles
available for sale.  IDC's 1998  research  found that IT  professionals  use 2.8
methods of study and preparation  when preparing for  certification  exams.  The
Company has a reseller  agreement with a company that has an extensive  offering
of CBT courses that will prepare customers for certification exams.

WBT  represents  an emerging  trend in the  computer  training  industry and IDC
estimates  that the online  learning  market will  increase from $440 million in
1998, to $5.3 billion by 2003.  The Company has entered into an agreement with a
company  that will allow New  Horizons  customers  worldwide  to have  access to
tutor-supported WBT computer courses seven days a week, 24 hours a day.

                                       8
<PAGE>
Information  technology  training can be broken into three  segments:  Segment 1
includes the most sophisticated  levels of training for programmers and software
developers; Segment 2 includes certification for engineers (Microsoft,  Novell);
and Segment 3 includes the end users of standard application software. While the
Company does very little  training of programmers  and software  developers,  it
does compete in Segments 2 and 3, with an estimated 48% of revenues from Segment
2 and 52% from Segment 3.

The Company competes with Catapult,  Executrain, IKON, and Productivity Point in
Segments 2 and 3. The Company competes  marginally with Learning Tree and Global
Knowledge Network in Segment 2.

INFORMATION ABOUT FORWARD LOOKING STATEMENTS

The  statements  made in this Annual Report on Form 10-K that are not historical
facts are  forward  looking  statements.  Such  statements  are based on current
expectations but involve risks, uncertainties, and other factors which may cause
actual  results to differ  materially  from those  contemplated  by such forward
looking  statements.  Important  factors  which may  result in  variations  from
results  contemplated by such forward looking statements include,  but are by no
means limited to: (i) the Company's ability to respond  effectively to potential
changes in the manner in which  computer  training is  delivered,  including the
increasing  acceptance  of  technology-based  training,  including  through  the
Internet,  which could have more favorable  economics with respect to timing and
delivery costs and the emergence of just-in-time  interactive training; (ii) the
Company's  ability to attract and retain  qualified  instructors  and management
employees;  (iii) the rate at which new software  applications are introduced by
manufacturers  and the Company's  ability to keep up with new  applications  and
enhancements to existing applications; (iv) the level of expenditures devoted to
upgrading  information  systems  and  computer  software by  customers;  (v) the
Company's  ability to compete  effectively with low cost training  providers who
may not be authorized by software manufacturers;  and (vi) the Company's ability
to manage the growth of its business.

The  Company's  strategy  focuses on  enhancing  revenues and profits at current
locations,   and  also  includes  the  possible  opening  of  new  company-owned
locations,  the sale of  additional  franchises,  the selective  acquisition  of
existing  franchises in the United States which have demonstrated the ability to
achieve above  average  profitability  while  increasing  market share,  and the
acquisition of companies in similar or complementary  businesses.  The Company's
growth strategy is premised on a number of assumptions  concerning trends in the
information  technology  training  industry.  These include the  continuation of
growth in the market for  information  technology  training and the trend toward
outsourcing. To the extent that the Company's assumptions with respect to any of
these matters are inaccurate,  its results of operations and financial condition
could be adversely effected.

REGULATIONS

The offer and sale of  franchises  and  business  opportunities  are  subject to
regulation by the United States Federal Trade Commission, as well as many states
and foreign  jurisdictions.  There also exist  numerous  laws that  regulate the
ongoing  relationship   between  franchisors  and  franchisees,   including  the
termination,  transfer  and renewal of franchise  rights.  The failure to comply
with any such laws could have an adverse effect on the Company.

INSURANCE

The Company maintains  liability insurance in amounts it believes to be adequate
based on the nature of its business. While the Company believes that it operates
its business  safely and prudently,  there can be no assurance that  liabilities
incurred with respect to a particular  claim will be covered by insurance or, if
covered,  that the dollar amount of such  liabilities  will not exceed  coverage
limits.

TRADEMARKS

The  Company  has  issued   trademark   registrations   and  pending   trademark
applications  for  the  word  mark  "NEW  HORIZONS"  and  for  other  trademarks
incorporating  the words  "NEW  HORIZONS."  The  Company  believes  that the New
Horizons name and  trademarks  are  important to its  business.  The Company has
obtained  the  European  Community  trademark  which  protects its name and mark
throughout the European Union. The Company is not aware of

                                       9
<PAGE>
any pending or threatened  claims of infringement or challenges to the Company's
right to use the New Horizons name and trademarks in its business.  However, the
Company has been advised that it cannot register the word mark "NEW HORIZONS" in
certain  foreign  countries  and that it cannot  register  or use any of the New
Horizons trademarks in Australia.  The Company has an application filed with the
Australian  trademark  office  to  protect  Skill  Master  as its  trademark  in
Australia,  and its  franchises  there are using  that name and  trademark.  The
Company  believes  that neither the pending  claim nor the inability to register
certain of its  trademarks  in certain  foreign  countries  will have a material
adverse effect on its financial condition or results of operations.

EMPLOYEES

As of February 29, 2000,  the Company  employed a total of 1,109  individuals in
its corporate operations and company-owned  facilities.  Of these employees, 374
are instructors,  263 are account  executives,  and 472 are  administrative  and
executive personnel. New Horizons also utilizes the services of outside contract
instructors to teach some of its curriculum,  primarily technical  certification
programs which require  instructors who are certified by Microsoft,  Novell, and
Lotus.

None of New Horizons'  employees is  represented  by a labor  organization.  New
Horizons considers relations with its employees to be good.

ITEM 2.    PROPERTIES

The  Company's  corporate  headquarters  and its  flagship  training  center are
located in Santa Ana,  California,  pursuant to a lease,  which expires in 2002.
The Company has signed a lease to relocate its  corporate  headquarters  and the
Santa Ana training  facility to Anaheim,  California in 2001. The lease provides
for reimbursement of its Santa Ana lease costs through its expiration.

On October 2, 1998, the Company purchased 8.3 acres of undeveloped land in Santa
Ana,  California  for  approximately  $5.1  million.  Until it signed  the lease
discussed  above the Company had intended to construct a building on the land to
serve as the world headquarters.  With the signing of the lease the Company will
now market the land for sale.

As of December 31,  1999,  New Horizons  operated  training  centers at 25 other
leased facilities in California,  Illinois, Ohio, Connecticut, New Mexico, North
Carolina,  Texas,  Tennessee  and New York with  leases that expire from 2000 to
2009.

The Company believes that its facilities are well maintained and are adequate to
meet current  requirements and that suitable additional or substitute space will
be available  as needed to  accommodate  any  expansion  of  operations  and for
additional offices if necessary.


ITEM 3.    LEGAL PROCEEDINGS

The Company is involved in several  lawsuits  incidental to the ordinary conduct
of its  business.  Under  the terms of the sale of the  Company's  environmental
business,  the  Company is also  required to  indemnify  the  purchaser  against
liabilities  arising out of pending  litigation and from claims  relating to the
performance of services prior to the sale. The Company does not believe that the
outcome of any or all these claims will have a material  adverse effect upon its
business or financial condition or results of operations.


ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None


                                       10
<PAGE>

                                     PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The common stock is traded on The Nasdaq Stock Market under the symbol NEWH. The
following table sets forth the range of high and low bid quotations per share of
common stock from January 1, 1998, through December 31, 1999, as reported by The
Nasdaq Stock Market.

1999                                                           HIGH         LOW
----                                                           ----         ---
1st Quarter ............    (January 1 - March 31)             18.30       15.00
2nd Quarter ............    (April 1 - June 30)                19.75       14.30
3rd Quarter ............    (July 1 - September 30)            19.75       15.38
4th Quarter ............    (October 1 - December 31)          15.88       11.38

1998                                                            HIGH         LOW
----                                                            ----         ---
1st Quarter ............    (January 1 - March 31)             12.40        9.80
2nd Quarter ............    (April 1 - June 30)                16.00       10.80
3rd Quarter ............    (July 1 - September 30)            18.00       13.30
4th Quarter ............    (October 1 - December 31)          18.50       11.30

As of March 10,  2000,  the  Company's  common  stock was held by 298 holders of
record. The Company has never paid cash dividends on its common stock and has no
present intention to pay cash dividends in the foreseeable  future.  The Company
currently  intends to retain any future  earnings  to finance  the growth of the
Company.

                                       11
<PAGE>
ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share)

<TABLE>
<CAPTION>
Selected Consolidated
Statements of Operations Data                                        1999          1998          1997          1996          1995
-----------------------------                                        ----          ----          ----          ----          ----
<S>                                                               <C>           <C>           <C>           <C>           <C>

Total revenues ...............................................    $ 111,476     $  72,629     $  52,633     $  41,269     $  23,733
Cost of revenues .............................................       50,301        32,749        26,814        20,599        13,164
Selling, general and administrative expenses .................       46,407        31,354        23,368        19,063        11,757
Write-off of management system ...............................        3,338          --            --            --            --
Settlement of franchise arbitration ..........................          303          --            --            --            --
                                                                  ---------     ---------     ---------     ---------     ---------
Operating income (loss) ......................................       11,127         8,526         2,451         1,607        (1,188)
Interest income ..............................................          643         1,424         1,301           211           231
Interest expense .............................................         (354)         (255)         (469)         (351)         (100)
Gain from release of certain franchise obligations ...........         --            --           2,600          --            --
                                                                  ---------     ---------     ---------     ---------     ---------
Income (loss) from continuing operations before income taxes .       11,416         9,695         5,883         1,467        (1,057)
Provision (benefit) for income taxes .........................        4,153         3,813         2,269           669          (440)
                                                                  ---------     ---------     ---------     ---------     ---------
Income (loss) from continuing operations .....................        7,263         5,882         3,614           798          (617)
                                                                  ---------     ---------     ---------     ---------     ---------
Income (loss) from discontinued operations ...................         --            --             349          (130)          424
Loss on disposal of discontinued operations ..................         --            --            --          (7,303)         --
                                                                  ---------     ---------     ---------     ---------     ---------
Income (loss) from discontinued operations ...................         --            --             349        (7,433)          424
                                                                  ---------     ---------     ---------     ---------     ---------
Net income (loss) ............................................    $   7,263     $   5,882     $   3,963     $  (6,635)    $    (193)
                                                                  =========     =========     =========     =========     =========

Basic Earnings Per Share
------------------------
Income (loss) per share from continuing operations ...........    $    0.76     $    0.64     $    0.41     $    0.09     $   (0.07)
Income (loss) per share from discontinued operations .........         --            --            0.04         (0.86)         0.05
                                                                  ---------     ---------     ---------     ---------     ---------
Net income (loss) per share ..................................    $    0.76     $    0.64     $    0.45     $   (0.77)    $   (0.02)
                                                                  =========     =========     =========     =========     =========

Diluted Earnings Per Share
--------------------------
Income (loss) per share from continuing operations ...........    $    0.72     $    0.61     $    0.40     $    0.09     $   (0.07)
Income (loss) per share from discontinued operations .........         --            --            0.04         (0.86)         0.05
                                                                  ---------     ---------     ---------     ---------     ---------
Net income (loss) per share ..................................    $    0.72     $    0.61     $    0.44     $   (0.77)    $   (0.02)
                                                                  =========     =========     =========     =========     =========
</TABLE>

<TABLE>
<CAPTION>

                                                    December 31,     December 31,      December 31,     December 28,    December 30,
Selected Consolidated Balance Sheet Data                1999             1998              1997             1996            1995
----------------------------------------            ------------     ------------      ------------     ------------    ------------
<S>                                                     <C>              <C>              <C>              <C>              <C>

Working capital ...............................         $  6,010         $ 20,951         $ 27,030         $ 23,066         $ 28,898
Total assets ..................................          105,084           86,746           66,571           56,477
                                                                                                                              60,472
Long term obligations
     less current portion .....................            6,730              267            1,516            2,330              650
Total stockholders' equity ....................           72,730           61,569           49,056           43,757           49,428

<FN>
(1)  Certain reclassifications were made to previous years' statements to conform with the presentation in 1999.

(2)  Per Share amounts have been adjusted to reflect the five-for-four split of the Company's common stock effected June 8,1999.
</FN>
</TABLE>

                                       12
<PAGE>

ITEM 7.     MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

The following  discussion  should be read in conjunction  with the  Consolidated
Financial  Statements  and related  notes and "SELECTED  CONSOLIDATED  FINANCIAL
DATA" included elsewhere in this report.

GENERAL

The  Company  operates  computer  training  centers  in the  United  States  and
franchises  computer training centers in the United States and abroad.  Prior to
1997,  the Company also operated an  environmental  remediation  business.  As a
result of the completion of the sale of Handex Environmental,  Inc. to ECB, Inc.
in December  1996,  the results of operations  for the  Company's  environmental
business segment have been classified as discontinued operations for all periods
presented in the accompanying  consolidated  financial  statements.  The Company
operates in two business segments:  one operates  wholly-owned computer training
centers and the other supplies  systems of  instruction,  sales,  and management
concepts concerning computer training to independent franchisees.

Corporate revenues are defined as revenues from company-owned  training centers,
initial franchise fees, royalties, and other revenues from franchise operations.
System-wide  revenues  are  defined as total  revenues  from all  centers,  both
company-owned and franchised.  System-wide revenues are used to gauge the growth
rate of the entire New Horizons training network.

Revenues from  company-owned  training  centers operated by New Horizons consist
primarily  of  training  fees and  fees  derived  from  the  sale of  courseware
material.  Cost of  revenues  consists  primarily  of  instructor  costs,  rent,
utilities,  classroom  equipment,   courseware  costs,  and  computer  hardware,
software   and   peripheral   expenses.   Included  in   selling,   general  and
administrative  expenses are  personnel  costs  associated  with  technical  and
facilities support, scheduling, training, accounting and finance, and sales.

Revenues from franchising  consist  primarily of initial  franchise fees paid by
franchisees  for the purchase of specific  franchise  territories  and franchise
rights,  training  royalty and  advertising  fees based on a percentage of gross
training revenues realized by the franchisees,  percentage royalty fees received
on the sale of  courseware,  and  revenue  earned from the  Corporate  Education
Solutions program Cost of revenues  consists  primarily of costs associated with
courseware  development  and  franchise  support  personnel  who provide  system
guidelines and advice on daily  operating  issues  including  sales,  marketing,
instructor training, and general business problems. Included in selling, general
and  administrative  expenses  are  technical  support,  accounting  and finance
support,  Corporate  Education  Solutions  support,  advertising  expenses,  and
franchise sales expenses.

RESULTS OF OPERATIONS 1999 VERSUS 1998 - CONTINUING OPERATIONS

Revenues
--------

Revenues  for 1999  increased  $38,847 to  $111,476  or 53.5%  over the  $72,629
realized in 1998.  The  increase in revenues  was  attributable  to  significant
growth in royalties,  the inclusion of the Memphis and Nashville,  Tennessee and
Hartford,  Connecticut  centers for a full year in 1999, the  acquisition of the
Albuquerque,  New Mexico,  Charlotte,  North Carolina,  Sacramento and Stockton,
California,  San Antonio,  Texas, and Denver,  Colorado franchises.  The centers
owned on January 1, 1999 had an aggregate year over year growth of 8.1%.

Revenues at  company-owned  centers  increased  64.7% to $86,520 from $52,545 in
1998. The increase was primarily  attributable to increased  revenues at the New
York and Cleveland centers, the inclusion of the Memphis, Nashville and Hartford
centers for a full year,  and the  acquisition  of the  Albuquerque,  Charlotte,
Sacramento, Stockton, San Antonio, and Denver franchises.

                                       13
<PAGE>
In the Company's  franchising  segment,  royalty fees for 1999 were $19,532,  up
20.6% over the 1998 total of $16,189.  The  increase  was  principally  due to a
16.2% revenue  increase at locations open more than one year and the addition of
21  franchise  locations  during the year,  less 11  locations  purchased by the
Company and  operated as  company-owned  centers.  Franchise  fees for 1999 were
$2,606,  up 52.9% from the 1998 total of $1,704.  At the end of 1999, there were
204 franchise  locations in operation,  up 5.2% over the 194 in operation at the
end of 1998.  One hundred  twenty one  locations  operate in the U.S. and Canada
while 83 operate in 38 other  countries  around  the  world.  Other  franchising
revenues for 1999  increased  $627, up 28.6% from the 1998 total of $2,191.  The
increase  was due  mainly  to  higher  revenues  from  the  Corporate  Education
Solutions program.

System-wide  revenues,  which are defined as  revenues  from all  centers,  both
company-owned and franchised, increased to $435,124 at the end of 1999, up 21.7%
from $357,503 in 1998.

Cost of Revenues
----------------

Cost of revenues  increased  $17,552 or 53.6% for 1999  compared  to 1998.  As a
percentage  of revenues,  cost of revenues  remained at 45.1% for 1999 and 1998.
The increase in cost of revenues in absolute  dollars was  primarily  due to the
inclusion of the Memphis, Nashville, and Hartford franchises for a full year and
the  acquisition  of  the  Albuquerque,  Charlotte,  Sacramento,  Stockton,  San
Antonio, and Denver franchises.

Selling, General and Administrative Expenses
---------------------------------------------

Selling, general and administrative expenses increased $15,053 or 48.0% for 1999
compared  to  1998.   As  a  percentage  of  revenues,   selling,   general  and
administrative  expenses  declined  to 41.6% for 1999 from  43.2% for 1998.  The
increase in absolute dollars for selling,  general and  administrative  expenses
was due  primarily  to the  inclusion  of the  Memphis,  Nashville  and Hartford
centers for a full year in 1999, the acquisition of the Albuquerque,  Charlotte,
Sacramento,  Stockton, San Antonio, and Denver franchises, and franchise support
for   international   operations.   The   decrease  in   selling,   general  and
administrative  expense as a percentage of revenues was  principally  due to the
significant  growth in revenues,  synergies  created  through the acquisition of
these centers, and control of the addition of non-revenue producing employees.

Interest Income (Expense)
-------------------------

Interest income for 1999 decreased $781 or 54.8% to $643 compared with $1,424 in
1998. As a percentage of revenues,  interest  income  decreased to 0.6% for 1999
from 2.0% for 1998. The Company earned $137 in tax-free  income,  down from $938
in 1998.

Interest  expense  increased  $99 to $354 for 1999 or 38.8%  compared to $255 in
1998. As a percentage of revenues, interest expense was 0.3% in 1999 and 0.4% in
1998.  The  increase  in  interest  expense in  absolute  dollars  was due to an
increase in debt resulting from the franchise buy-backs in 1999.

Income Taxes
------------

The provision for income taxes as a percentage of income before income taxes was
36.4% for 1999  compared to 39.3% for 1998.  The decrease in the  effective  tax
rate was due  principally  to the  increase  of foreign  tax  credits  and state
enterprise  zone tax credits.  The decrease  was  partially  offset by a smaller
percentage of the tax-free investment income to total income before taxes.

RESULTS OF OPERATIONS 1998 VERSUS 1997 - CONTINUING OPERATIONS

Revenues
--------

Revenues  for 1998  increased  $19,996  to  $72,629  or 38.0%  over the  $52,633
realized in 1997.  Revenues  include revenues from  company-owned  locations and
initial franchise fees and royalties from franchise operations.  The increase in
revenues was attributable to significant growth in royalties,  revenue increases
at the Santa Ana and Cleveland company-owned  locations,  and the acquisition of
the Memphis and Nashville, Tennessee and the Hartford, Connecticut franchises.

                                       14
<PAGE>

Revenues at  company-owned  centers  increased  35.8% to $52,545 from $38,692 in
1997. The increase was primarily attributable to a 16.3% increase at the centers
owned at January 1, 1998 and the  acquisition  of the  Memphis,  Nashville,  and
Hartford franchises.

In the Company's  franchising  segment,  royalty fees for 1998 were $16,189,  up
36.2% over the 1997 total of $11,887.  The  increase  was  principally  due to a
30.3% revenue  increase at locations open more than one year and the addition of
22 franchise  locations during the year, less three franchises  purchased by the
Company and operated as  company-owned  locations.  Franchise fees for 1998 were
$1,704,  up 35.8% from the 1997 total of $1,255.  At the end of 1998, there were
194 franchise locations in operation,  up 10.9% over the 175 in operation at the
end of 1997. One hundred seventeen  franchise  locations operate in the U.S. and
Canada  while  77  operate  in  28  other  countries  around  the  world.  Other
franchising  revenues for 1998 increased  $1,392, up 174% from the 1997 total of
$799.  The increase was due mainly to higher  revenues  from the Major  Accounts
Program.

System-wide  revenues,  which are defined as  revenues  from all  centers,  both
company-owned and franchised, increased to $357,503 at the end of 1998, up 33.7%
from $267,377 in 1997.

Cost of Revenues
----------------

Cost of  revenues  increased  $5,935 or 22.1% for 1998  compared  to 1997.  As a
percentage of revenues,  cost of revenues decreased to 45.1% for 1998 from 50.9%
for 1997.  The  increase in cost of revenues in absolute  dollars was due to the
acquisition  of Memphis,  Nashville,  and Hartford  franchises and the increased
training  costs at the  Santa Ana and  Cleveland  locations  resulting  from the
growth in revenues.  The decrease as a percentage  of revenue  resulted from the
control of the costs to deliver training.

Selling, General and Administrative Expenses
---------------------------------------------

Selling,  general and administrative expenses increased $7,986 or 34.2% for 1998
compared  to  1997.   As  a  percentage  of  revenues,   selling,   general  and
administrative  expenses  declined  to 43.2% for 1998 from  44.4% for 1997.  The
increase in absolute dollars for selling,  general and  administrative  expenses
was due  primarily  to growth in spending  in the areas of sales and  marketing,
national  advertising,  expansion of the Major Accounts  Program,  and franchise
support for  international  operations.  The  decrease  in selling,  general and
administrative  expense as a percentage of revenues was  principally  due to the
significant  growth in  revenues  and  control of the  addition  of  non-revenue
producing employees.

Investment Income (Expense)
---------------------------

Investment income for 1998 increased $123 or 9.5% to $1,424 compared with $1,301
in 1997. As a percentage of revenues,  investment  income  decreased to 2.0% for
1998 from 2.5% for 1997.  The Company  earned $938 in tax-free  income,  up from
$835 in 1997.  The increase in investment  income in 1998, in absolute  dollars,
was due  mainly to the  substantial  increase  in  short-term  investment  funds
resulting from the 1996 sale of the environmental business and the cash received
from the  release of certain  franchise  obligations  in 1997.  The  decrease in
investment income as a percentage of revenue was due to the growth in revenues.

Interest  expense  decreased  $214 to $255 for 1998 or 45.6% compared to $469 in
1997. As a percentage of revenues, interest expense was 0.4% in 1998 and 0.9% in
1997. The decrease in interest  expense in absolute  dollars was due mainly to a
reduction in debt.

                                       15
<PAGE>

Income Taxes
------------

The provision for income taxes as a percentage of income before income taxes was
39.3% for 1998  compared to 38.6% for 1997.  The increase in the  effective  tax
rate was due principally to increased  foreign taxes and the smaller  percentage
of the tax-free investment income to total income before taxes.

DISCONTINUED OPERATIONS

In 1996 the Company sold Handex  Environmental,  Inc. and has  reflected its net
assets and results of operations as discontinued  operations in the accompanying
consolidated  financial  statements.  Remaining assets and liabilities of Handex
Environmental are recorded at their expected realization value.

LIQUIDITY AND CAPITAL RESOURCES

As of December  31,  1999,  the  Company's  current  ratio was 1.3 to 1, working
capital was $6,010,  and its cash and cash equivalents  totaled $2,868.  Working
capital as of December 31, 1999, reflected a decrease of $14,941 from $20,951 as
of December 31, 1998.  The  decrease was due  principally  to the use of cash to
purchase six  franchises,  partially  offset by cash  generated  from  operating
activities and borrowings against a line of credit.

In 1999 cash used by investing activities increased by $14,557 to $19,504.  This
was  primarily  due to an  additional  $22,346  incurred in 1999 to purchase six
franchises  and the payment of direct  costs for prior  acquisitions  of $2,336.
These  increases in cash usage were partially  offset by the net increase in the
redemption of marketable securities of $8,530 in 1999 compared to 1998.

Cash  provided  by  operating  activities  was  $12,893,  an  increase of $2,408
compared to 1998.  The  increase  was due to an increase of $5,785 in net income
plus  non-cash  charges for  depreciation  and  amortization,  write-off  of the
management  system,  and  other  adjustments,  and the cash  flow  effect of the
increase in accounts receivable of $1,582. These increases were partially offset
by the cash  flow of the  payment  to the  Hartford  franchise  of  $3,000.  The
Company's net borrowing activities increased by $4,722.

The Company currently  maintains a $25 million credit facility with a commercial
bank, $20 million of which is for future business acquisitions and $5 million of
which is for  short-term  financing  requirements,  at an interest rate of LIBOR
(6.1% at  December  31,  1999) plus  1.75%.  Total  borrowings  in 1999 were $13
million  under the  acquisition  portion  of the line of credit  agreement.  The
outstanding balance as of December 31, 1999 was $6.7 million. As of December 31,
1999, the Company has $13.3 million and $5 million available for borrowing under
the  acquisition  and  short-term  financing  portions  of the credit  facility,
respectively.

The  nature  of  the  information  technology  and  training  industry  requires
substantial cash commitments for the purchase of computer  equipment,  software,
and training facilities.  During 1999 New Horizons spent approximately $6,748 on
capital items. Capital expenditures for 2000 are expected to total approximately
$4,800.

Management  believes that its current working capital position,  cash flows from
operations,  along with its credit  facility,  will be  adequate  to support its
current and anticipated capital and operating expenditures and its strategies to
grow its computer education and training business.

IMPACT OF ACCOUNTING PRONOUNCEMENTS

In June 1998 the Financial Accounting Standards Board (FASB) issued Statement of
Financial  Accounting Standards No. 133, "Accounting for Derivatives and Hedging
Activities"  ("SFAS No. 133").  SFAS No. 133 must be  implemented by the Company
for the year  ended  December  31,  2001.  The  effects  of SFAS No.  133 on the
Company's financial statements are not expected to be significant.

                                       16
<PAGE>

YEAR 2000

The Company  undertook a Year 2000  Compliance  Project ("Y2K Project") that was
designed to ensure that the Company could  effectively  conduct  business beyond
January 1, 2000, and that  disruption  from December 31, 1999 to January 1, 2000
would be minimized. The Company's Y2K Project addressed reporting compliance and
legal concerns and contained  various phases,  including  evaluation of systems,
planning  for system  fixes,  implementation  of system  fixes,  development  of
contingency  plans,  and testing of system  fixes.  Although  problems may still
arise, the Company's Y2K Project appears to have been successful. As of the date
of  this  annual  report,   there  have  been  no  significant  internal  issues
identified,  and inquiries  after January 1, 2000 of the Company's key suppliers
and customers have indicated that they have not experienced  significant  issues
either.

When the  Company's  systems  were  upgraded as part of its Y2K  Project,  other
improvements  to the Company's  systems were made. The cost of the Company's Y2K
Project, including such system upgrades, was approximately $500.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk  related to changes in interest  rates.  A
discussion of the Company's  accounting  policies for financial  instruments and
further disclosures relating to financial  instruments are included in the Notes
to Consolidated Financial Statements.  The Company monitors the risks associated
with interest rates and financial instrument positions.

The Company's  primary  interest  rate risk exposure  results from floating rate
debt on its line of credit.  At December  31, 1999 most of the  Company's  total
long-term  debt  consisted  of floating  rate debt.  If  interest  rates were to
increase 100 basis points (1.0%) from  December 31, 1999 rates,  and assuming no
changes in long-term  debt from the December  31, 1999  levels,  the  additional
annual  expense  would be  approximately  $67 on a pre-tax  basis.  The  Company
currently does not hedge its exposure to floating interest rate risk.

The Company's revenue derived from international operations is not material and,
therefore, the risk related to foreign currency exchange rates is not material.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Pages F-1 to F-20  contain  the  Financial  Statements  and  supplementary  data
specified for Item 8 of Part II of Form 10-K.

ITEM 9.     CHANGES  IN  AND DISAGREEMENTS WITH  ACCOUNTANTS ON  ACCOUNTING  AND
            FINANCIAL DISCLOSURE

None

                                       17
<PAGE>

                          Independent Auditors' Report
                          ----------------------------


The Board of Directors and Stockholders
New Horizons Worldwide, Inc.


     We  have  audited  the  accompanying  consolidated  balance  sheets  of New
Horizons Worldwide,  Inc. and subsidiaries (the Company) as of December 31, 1999
and  1998 and the  related  consolidated  statements  of  income,  comprehensive
income,  stockholders' equity, and cash flows for each of the three years in the
period  ended   December  31,  1999.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  such consolidated  financial statements present fairly, in
all material respects,  the financial position of New Horizons  Worldwide,  Inc.
and  subsidiaries  as of December  31,  1999 and 1998,  and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting  principles  generally accepted
in the United States of America.

DELOITTE & TOUCHE LLP
Costa Mesa, California
February 23, 2000


                                      F-1
<PAGE>

                           CONSOLIDATED BALANCE SHEETS

                  New Horizons Worldwide, Inc. and Subsidiaries

                     December 31, 1999 and December 31, 1998
                             (Dollars in thousands)



                                                           1999           1998
                                                           ----           ----
Assets
------
Current assets:
     Cash and cash equivalents ...................     $   2,868      $   6,873
     Investments .................................            --         15,821
     Accounts receivable, less allowance
       for doubtful accounts of $943
       in 1999 and $927 in 1998 (Note 2) .........        20,991         16,538
     Inventories .................................         1,226            784
     Prepaid expenses ............................         1,438          1,039
     Deferred income tax assets (Note 6) .........         2,526          2,202
     Other current assets ........................           791            773
                                                       ---------      ---------
         Total current assets ....................        29,840         44,030

Property, plant and equipment, net (Note 4) ......        14,797         13,818

Excess of cost over net assets of acquired
  companies, net of accumulated amortization of
  $3,420 in 1999 and $1,844 in 1998 (Note 12) ....        55,718         25,225
Cash surrender value of life insurance ...........         1,070            863
Other assets (Note 7) ............................         3,659          2,810
                                                       ---------      ---------
Total Assets .....................................     $ 105,084      $  86,746
                                                       =========      =========

Liabilities & Stockholders' Equity
----------------------------------
Current liabilities:
     Notes payable and current portion
     of long-term obligations (Note 3) ...........     $     189      $   3,910
     Accounts payable ............................         2,155          2,391
     Income taxes payable (Note 6) ...............           918            354
     Other current liabilities (Note 8) ..........        20,568         16,424
                                                       ---------      ---------
         Total current liabilities ...............        23,830         23,079

Long-term obligations, excluding current
  portion (Note 3) ...............................         6,730            267
Deferred income tax liability (Note 6) ...........           835            981
Deferred rent (Note 11) ..........................           885            658
Other long-term liabilities ......................           127            192
                                                       ---------      ---------
         Total liabilities .......................        32,407         25,177
                                                       ---------      ---------
Commitments and contingencies (Note 11) ..........            --             --

Stockholders' equity (Note 10):
     Preferred stock without par value, 2,000,000
       shares authorized, no shares issued .......            --             --
     Common stock, $.01 par value, 15,000,000
       shares authorized; issued and outstanding
       9,788,583 shares in 1999 and 9,558,531
       shares in 1998 ............................            97             95
     Additional paid-in capital ..................        37,098         33,202
     Retained earnings ...........................        36,780         29,517
     Treasury stock at cost - 185,000 shares
       in 1999 and 1998 ..........................        (1,298)        (1,298)
     Accumulated other comprehensive income ......            --             53
                                                       ---------      ---------
         Total stockholders' equity ..............        72,677         61,569
                                                       ---------      ---------
Total Liabilities & Stockholders' Equity .........     $ 105,084      $  86,746
                                                       =========      =========


           See accompanying notes to consolidated financial statements

                                      F-2
<PAGE>
                        CONSOLIDATED STATEMENTS OF INCOME

                  New Horizons Worldwide, Inc. and Subsidiaries

     Years ended December 31, 1999, December 31, 1998, and December 31, 1997
                    (Dollars in thousands, except per share)

                                                1999         1998         1997
                                                ----         ----         ----
Revenues
--------
  Franchising
      Franchise fees ....................   $   2,606    $   1,704    $   1,255
      Royalties .........................      19,532       16,189       11,887
      Other .............................       2,818        2,191          799
                                            ---------    ---------    ---------
      Total franchising revenues ........      24,956       20,084       13,941
  Company-owned training centers ........      86,520       52,545       38,692
                                            ---------    ---------    ---------
      Total revenues ....................     111,476       72,629       52,633

Cost of revenues ........................      50,301       32,749       26,814

Selling, general and administrative
  expenses ..............................      46,407       31,354       23,368

Write-off of management system
  (Note 5) ..............................       3,338           --           --

Settlement of franchise arbitration
  (Note 5) ..............................         303           --           --
                                            ---------    ---------    ---------
Operating income ........................      11,127        8,526        2,451

Interest income .........................         643        1,424        1,301

Interest expense ........................        (354)        (255)        (469)

Gain from release of certain
  franchise obligations .................          --           --        2,600
                                            ---------    ---------    ---------
Income from continuing operations
  before income taxes ...................      11,416        9,695        5,883

Provision for income taxes (Note 6) .....       4,153        3,813        2,269
                                            ---------    ---------    ---------
Income from continuing operations .......       7,263        5,882        3,614

Discontinued operations (Note 14):
     Income from discontinued
       operations net of applicable
       income taxes of $0 ...............          --           --          349
                                            ---------    ---------    ---------
Net income ..............................   $   7,263    $   5,882    $   3,963
                                            =========    =========    =========

Basic Earnings Per Share
------------------------
Income per share from continuing
  operations ............................   $    0.76    $    0.64    $    0.41
Income per share from discontinued
  operations ............................          --           --         0.04
                                            ---------    ---------    ---------
Net income per share ....................   $    0.76    $    0.64    $    0.45
                                            =========    =========    =========

Diluted Earnings Per Share
--------------------------
Income per share from continuing
  operations ............................   $    0.72    $    0.61    $    0.40
Income per share from discontinued
  operations ............................          --           --         0.04
                                            ---------    ---------    ---------
Net income per share ....................   $    0.72    $    0.61    $    0.44
                                            =========    =========    =========

           See accompanying notes to consolidated financial statements

                                      F-3
<PAGE>

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                  New Horizons Worldwide, Inc. and Subsidiaries

     Years ended December 31, 1999, December 31, 1998, and December 31, 1997
                             (Dollars in thousands)



                                                  1999         1998        1997
                                                  ----         ----        ----

Net income ................................     $ 7,263      $ 5,882     $ 3,963

Other comprehensive income:
     Unrealized holding gains on
available for sale securities arising
during year ...............................          --           53          --

     Reclassification adjustment for
     gains included in net income .........         (53)          --          --
                                                -------      -------     -------
Comprehensive income ......................     $ 7,210      $ 5,935     $ 3,963
                                                =======      =======     =======


                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                             New Horizons Worldwide, Inc. and Subsidiaries

                                Years ended December 31, 1999, December 31, 1998, and December 31, 1997
                                                             (In thousands)


                                                                                                           Accumulated
                                                                     Additional                             other com-      Stock-
                                                    Common Stock       paid-in    Retained     Treasury     prehensive     holders'
                                                  Shares    Amount     capital    earnings       stock        income       equity
                                                  ------    ------   ----------   --------     --------    -----------     ---------
<S>                                               <C>      <C>         <C>         <C>         <C>           <C>           <C>

Balance at January 1, 1997 ..................      8,907   $     89    $ 25,293    $ 19,672    $ (1,298)     $     --      $ 43,756
Issuance of common stock from exercise of
  stock options .............................        205          2       1,036          --          --            --         1,038
Income tax benefit from the exercise of
  stock options .............................         --         --         299          --          --            --           299
Net income ..................................         --         --          --       3,963          --            --         3,963
                                                  ------   --------    --------    --------    --------      --------      --------
Balance at December 31, 1997 ................      9,112         91      26,628      23,635      (1,298)           --        49,056

Issuance of common stock from exercise of
  stock options and warrants ................         75          1         396          --          --            --           397
Income tax benefit from the exercise of
  stock options and warrants ................         --         --         180          --          --            --           180
Issuance of common stock for acquisitions ...        371          3       5,451          --          --            --         5,454
Unrealized gain on investments ..............         --         --          --          --          --            53            53
Compensatory stock options and warrant grants         --         --         547          --          --            --           547
Net income ..................................         --         --          --       5,882          --            --         5,882
                                                  ------   --------    --------    --------    --------      --------      --------
Balance at December 31, 1998 ................      9,558         95      33,202      29,517      (1,298)           53        61,569

Issuance of common stock from exercise of
  stock options .............................          8         --          75          --          --            --            75
Income tax benefit from the exercise of
  stock options .............................         --         --          18          --          --            --            18
Issuance of common stock for acquisitions ...        223          2       3,665          --          --            --         3,667
Compensatory  warrant grants ................         --         --         138          --          --            --           138
Other comprehensive income ..................         --         --          --          --          --           (53)          (53)
Net income ..................................         --         --          --       7,263          --            --         7,263
                                                  ------   --------    --------    --------    --------      --------      --------
Balance at December 31, 1999 ................      9,789   $     97    $ 37,098    $ 36,780    $ (1,298)     $     --      $ 72,677
                                                  ======   ========    ========    ========    ========      ========      ========
<FN>


                                                         See accompanying notes to consolidated financial statement
</FN>
</TABLE>

                                      F-5
<PAGE>
<TABLE>
<CAPTION>

                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                             New Horizons Worldwide, Inc. and Subsidiaries

                                Years ended December 31, 1999, December 31, 1998, and December 31, 1997
                                                         (Dollars in thousands)

                                                                                          1999              1998              1997
                                                                                          ----              ----              ----
<S>                                                                                    <C>               <C>               <C>

Cash flows from operating activities
------------------------------------
     Net income ..............................................................         $  7,263          $  5,882          $  3,963
 Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation and amortization ...........................................            6,074             4,006             3,786
     Write-off of management system (Note 5) .................................            2,860                --                --
     Deferred  income taxes ..................................................             (470)             (355)             (839)
     Stock-based compensation ................................................              138               547                --
     Cash provided (used) from the change in
      (net of effects of acquisitions):
         Accounts receivable .................................................           (1,689)           (3,270)            5,816
         Inventories .........................................................             (113)              133              (114)
         Prepaid expenses and other current assets ...........................             (198)             (192)            3,954
         Other  assets .......................................................             (723)             (195)           (1,578)
         Accounts payable ....................................................             (590)             (477)              187
         Other current liabilities ...........................................             (362)            4,861                 4
         Income taxes payable ................................................              582              (515)            1,251
         Deferred rent .......................................................              121                60               363
         Non-cash charges and working capital changes
           from discontinued operations ......................................               --                --              (349)
                                                                                       --------          --------          --------
              Net cash provided  by operating activities .....................           12,893            10,485            16,444
                                                                                       --------          --------          --------
Cash flows from investing activities
------------------------------------
     Purchase of marketable securities .......................................             (279)          (21,810)          (22,758)
     Redemption of marketable securities .....................................           16,100            29,100                --
     Cash surrender value of life insurance ..................................             (207)             (105)              (84)
     Cash received on redemption of preferred stock ..........................               --                --             2,000
     Additions to property, plant and equipment ..............................           (6,748)           (8,359)           (4,450)
     Cash paid for acquired companies,
       net of cash acquired (Note 12) ........................................          (26,034)           (3,773)               --
     Cash paid for previous acquisitions (Note 12) ...........................           (2,336)               --                --
                                                                                       --------          --------          --------
         Net cash used by investing activities ...............................          (19,504)           (4,947)          (25,292)
                                                                                       --------          --------          --------
Cash flows from financing activities
------------------------------------
     Proceeds from issuance of common stock ..................................               75               397             1,038
     Proceeds from debt obligations ..........................................           12,906               181             1,264
     Principal payments on debt obligations ..................................          (10,375)           (2,372)           (1,736)
                                                                                       --------          --------          --------
        Net cash provided (used) by financing activities ....................            2,606            (1,794)              566
                                                                                       --------          --------          --------

Net increase (decrease) in cash and  cash equivalents ........................           (4,005)            3,744            (8,282)

Cash and cash equivalents at beginning of year ...............................            6,873             3,129            11,411
                                                                                       --------          --------          --------
Cash and cash equivalents at end of  year ....................................         $  2,868          $  6,873          $  3,129
                                                                                       ========          ========          ========

Supplemental disclosure of cash flow information
     Cash was paid for:
         Interest ............................................................         $    339          $    180          $    323
                                                                                       ========          ========          ========
         Income taxes ........................................................         $  4,091          $  4,303          $  1,530
                                                                                       ========          ========          ========

<FN>
                                      See accompanying notes to consolidated financial statements
</FN>
</TABLE>

                                      F-6
<PAGE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                  New Horizons Worldwide, Inc. and Subsidiaries

     Years ended December 31, 1999, December 31, 1998, and December 31, 1997
                             (Dollars in thousands)


Supplemental Disclosure of Noncash Transactions -

                                                          1999     1998     1997
                                                          ----     ----     ----
Noncash investing and financing activities:
    Income tax benefit from exercise of stock
      options and warrants ..........................     $ 18     $180     $299
                                                          ====     ====     ====

    Unrealized gain on investments ..................     $ --     $ 53     $ --
                                                          ====     ====     ====


The Company completed six acquisitions in 1999
  and three in 1998 summarized as follows (Note 12):
                                                            1999          1998
                                                            ----          ----
Fair value of assets acquired ......................     $ 34,076      $ 14,833

Short-term debt and other obligations incurred .....         (921)       (3,559)

Value of stock issued ..............................       (2,983)       (5,454)

Cash paid, net of cash acquired ....................      (26,034)       (3,773)
                                                          -------        ------

Liabilities assumed ................................     $  4,138      $  2,047
                                                         ========      ========


During the year ended  December 31, 1999 the Company  issued common stock with a
value of $684 as additional consideration for previous acquisitions.


                                      F-7
<PAGE>

                  NEW HORIZONS WORLDWIDE, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

           December 31, 1999, December 31, 1998, and December 31, 1997
                  (Dollars in thousands, except per share data)

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations
--------------------

New Horizons  Worldwide,  Inc. (New Horizons or the Company) owns and franchises
computer training centers.  The Company's  training centers provide  application
software and technical certification training to a wide range of individuals and
employer-sponsored  individuals  from  national  and  international  public  and
private  corporations,  service  organizations  and government  agencies.  As of
December  31, 1999,  the Company and its  franchisees  delivered  training in 26
company-owned and 204 franchised locations in 40 countries around the world.

Basis of Accounting and Principles of Consolidation
---------------------------------------------------

The  consolidated  financial  statements  include the  accounts of New  Horizons
Worldwide,  Inc.  and its  subsidiaries,  all of which  are  wholly  owned.  All
significant  inter-company  balances and  transactions  have been  eliminated in
consolidation.

Franchise Sales
---------------

The  terms of a typical  franchise  agreement  allow for the sale of  individual
franchises  to  operators of computer  learning  centers for an initial fee. The
initial fees are $25, $50 or $75 depending on the  estimated  number of personal
computers  within a given  territory.  Operators of existing  computer  training
centers  receive a 20%  reduction in the initial fee as a conversion  allowance.
Additionally,  franchisees are assessed the following fees, among other fees, as
defined by the franchise agreement:

a.   Continuing Monthly Royalty

     The fee  amount is equal to the  greater of 3% to 6% of gross  revenues  or
     certain minimums as defined depending on the size of the territory. Amounts
     commence accruing on the effective date of the franchise  agreement for new
     operators and in the sixth month after the effective  date of the franchise
     agreement for operators  converting their existing computer learning center
     to a New Horizons.

b.   Course Material and Computer-based Training Royalty

     The fee amount is equal to 9% of gross  revenues from course  materials and
     proprietary computer-based training products sold to third parties.

c.   Marketing and Advertising Fee

     The fee  amount is equal to 1% of gross  revenues  for  franchisees  in the
     United States and Canada and 0.2% for  international  franchisees who elect
     to  participate.  Amounts  commence  accruing  on the  date  the  franchise
     commences operation of the franchise business.

On February 28,  1997,  the Company  received  cash  consideration  of $2,600 in
return for releasing the franchise  obligations of an owner of four New Horizons
training  centers  in the  state  of  New  York.  The  Company  is  aggressively
attempting to re-franchise  the territories that became available as a result of
this  transaction.  As of December 31, 1999,  two of the  territories  have been
resold.


                                      F-8
<PAGE>

Revenue Recognition
-------------------

Revenues for training  services and  franchise  royalty fees are  recognized  as
earned.  Initial  franchise  fees are  recognized  when the Company has supplied
substantially  all of the services and met all of the  conditions of the sale of
the franchise rights.  Master franchise fees are earned ratably over the opening
of sub-franchises.

Investments
-----------

The  Company  accounts  for  investments  pursuant  to  Statement  of  Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity  Securities."  The Company's  investments  have been  categorized  as
"available  for sale" and, as a result,  are stated at fair value.  Accordingly,
any  unrealized  holding  gains and losses are to be included as a component  of
accumulated  other  comprehensive  income,  net of tax,  until  realized.  As of
December 31, 1999, the Company had no investments.

Inventories
-----------

Inventories  are  stated at the  lower of cost or  market.  Inventory  costs are
determined using the first-in, first-out (FIFO) method.

Property, Plant and Equipment
-----------------------------

Property,  plant and equipment are stated at cost. Depreciation is provided over
the estimated  useful lives of the  respective  assets,  using the straight line
method as follows:

       Equipment                3 to 5 years
       Furniture and fixtures   5 to 10 years
       Leasehold improvements   Useful life or term of lease, if shorter

Income Taxes
------------

The Company  accounts for income taxes under the asset and  liability  method in
accordance with SFAS No. 109,  "Accounting for Income Taxes." Under this method,
deferred tax assets and liabilities are recognized for the estimated  future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to  apply  to  taxable  income  in  the  years  when  those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period that includes the enactment date.

When options granted under the Company's  stock option plans are exercised,  the
Company  receives a tax deduction  related to the difference  between the market
value of its common  stock at the date of exercise  and the sum of the  exercise
price and any compensation  expense recognized for financial reporting purposes.
The tax benefit  resulting from this tax deduction is reflected as a decrease in
the  Company's  income tax  liability  and an  increase  to  additional  paid-in
capital.

Intangibles and Other Long-Lived Assets
---------------------------------------

The  excess  of  cost  over  net  assets   acquired  is  being  amortized  on  a
straight-line  basis  over  periods  ranging  from 25 to 40 years.  The  Company
assesses the  recoverability of its long-lived assets whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.


                                      F-9
<PAGE>

Cash and Cash Equivalents
-------------------------

For purposes of the statements of cash flows,  the Company  considers all highly
liquid debt instruments  with original  maturities of three months or less to be
cash equivalents.

Concentration of Credit Risk
----------------------------

The  Company's  credit  risk on trade  receivables  is  diversified  over a wide
geographic area and many  customers.  Ongoing  customer  credit  evaluations are
performed  with respect to the Company's  trade  receivables  and  collateral is
generally not required to be provided by the customer.

Earnings Per Share
------------------

The  Company  calculates  earnings  per share  (EPS)  pursuant to (SFAS) No. 128
"Earnings  Per Share."  The  computation  of Basic EPS is based on the  weighted
average  number of shares  outstanding  during  each year.  The  computation  of
Diluted EPS is based upon the  weighted  average  number of shares  outstanding,
plus  the  shares  that  would  be  outstanding  assuming  the  exercise  of all
outstanding  options and  warrants,  computed  using the treasury  stock method.
Dilutive  options and warrants are not considered in the calculation of net loss
per share.

The weighted average number of shares  outstanding used in determining Basic EPS
was 9,521,621 in 1999,  9,164,709 in 1998,  and 8,838,539 in 1997.  The weighted
average  number  of  shares  outstanding  used in  determining  Diluted  EPS was
10,021,991 in 1999,  9,601,776 in 1998,  and 9,117,836 in 1997.  The  difference
between the shares used for calculating  Basic and Diluted EPS relates to common
stock equivalents  consisting of stock options and warrants  outstanding  during
the respective periods.

During fiscal 1999 the  Company's  Board of Directors  approved a  five-for-four
split of the Company's common stock. This split was effected on June 8, 1999 for
shareholders of record on May 18, 1999. All per share and share  information has
been restated to reflect this stock split.

Stock Based Compensation
------------------------

The  Company  applies  Accounting   Principles  Board  Opinion  25  and  related
interpretations in accounting for employee stock-based compensation. The Company
adopted the pro forma and other  disclosure  requirements of SFAS No. 123, which
requires  presentation of the pro forma effect of the fair-value based method on
net income and net income per share in the financial statement  footnotes.  (See
Note 10)

Use of Estimates
----------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

New Accounting Pronouncements
-----------------------------

In June 1998 the FASB issued  SFAS No.  133,  "Accounting  for  Derivatives  and
Hedging  Activities."  SFAS No. 133 must be  implemented  by the Company for the
year ended  December  31,  2001.  The  effects of SFAS No. 133 on the  Company's
financial statements are not expected to be significant.


                                      F-10
<PAGE>

Reclassification
----------------

Certain  items  on  the  1998  and  1997   consolidated   statements  have  been
reclassified to conform to the 1999 presentation.

2.   ALLOWANCE FOR DOUBTFUL ACCOUNTS

     Allowance for doubtful accounts includes the following:


                Years ended December 31         1999       1998
                -----------------------         ----       ----
                Balance, beginning of year   $   927    $ 1,693

                Provisions                       169        156

                Deductions                      (153)      (922)
                                             -------    -------
                Balance, end of year         $   943    $   927
                                             =======    =======


3.   NOTES PAYABLE AND LONG-TERM OBLIGATIONS

     The Company's debt and capital lease obligations are as follows:
                                                              1999         1998
                                                              ----         ----
     Amount outstanding on line of credit with bank,
       bearing interest at LIBOR (6.1% at December 31,
       1999) plus 1.75%, payable in quarterly principal
       installments of $419 commencing March 2001,
       interest payable monthly ......................     $ 6,700      $    --

     Amounts due under capital leases with effective
       interest rates ranging from 8.5% to 14.6% per
       annum (Note 11) ...............................         219        1,013

     Note payable to a former franchisee pursuant to a
       franchise acquisition at 5% interest rate, paid
       January 1999 ..................................          --        3,000

     Notes payable to bank with effective interest
       rates of 7.4% and 7.6%, paid May 1999 .........          --          164
                                                           -------      -------
                                                             6,919        4,177

     Less: Current portion of notes payable and long-
       term obligations ..............................        (189)      (3,910)
                                                           -------      -------
                                                           $ 6,730      $   267
                                                           =======      =======

     The Company has a credit  facility with a bank providing for borrowings not
     to exceed $25 million in the form of two credit  facilities.  The Tranche A
     facility  provides for  borrowing of up to $20 million and is available for
     business  acquisitions  and has a term  repayment  option.  The  Tranche  A
     facility expires on December 31, 2000. The Tranche B facility  provides for
     borrowing  not to exceed $5 million and is  available  for general  working
     capital  needs.  The Tranche B facility  expires  September 30, 2002. As of
     December 31, 1999,  there was $6.7 million  borrowed  against the Tranche A
     facility.   The  credit  facility  is  unsecured  and  subject  to  certain
     restrictive  covenants  including minimum earnings before interest,  taxes,
     depreciation  and  amortization.  The Company was either in compliance with
     these covenants or had obtained applicable waivers at December 31, 1999.


                                      F-11
<PAGE>

     The  following  is a summary of future  payments  required  under the above
     obligations:

                      2000              $  189
                      2001               1,701
                      2002               1,679
                      2003               1,675
                      2004               1,675
                                        ------
                                        $6,919
                                        ======


4.   PROPERTY, PLANT AND EQUIPMENT

     The components of property, plant and equipment are summarized below:
                                                            1999          1998
                                                            ----          ----
     Land ............................................   $  5,099      $  5,099
     Leasehold improvements ..........................      2,720         2,046
     Equipment and software ..........................     17,917        14,432
     Furniture and fixtures ..........................      4,220         2,984
                                                         --------      --------
                                                           29,956        24,561
     Less accumulated depreciation and amortization ..    (15,159)      (10,743)
                                                         --------      --------
                                                         $ 14,797      $ 13,818
                                                         ========      ========

     On October 2, 1998, the Company  purchased 8.3 acres of undeveloped land in
     Santa Ana,  California  for  approximately  $5.1  million.  The Company had
     intended to  construct a building on the land that would serve as the world
     headquarters.  The  Company has signed a lease to  relocate  its  corporate
     headquarters and the Santa Ana training facility to Anaheim,  California in
     2001.  With the signing of the lease the  company  will now market the land
     for sale.  Management believes the land held for disposition is recorded at
     the lower of cost or net realizable value.

     Included in the Company's  property , plant and equipment are equipment and
     leasehold  improvements  under capital leases  amounting to $359 (1999) and
     $974 (1998),  net of accumulated  depreciation  of $4,582 (1999) and $3,863
     (1998).

5.   WRITE-OFF OF MANAGEMENT SYSTEM AND SETTLEMENT OF FRANCHISE ARBITRATION

     In the  fourth  quarter of 1999 the  Company  decided  to  discontinue  the
     development of its proprietary management system and, accordingly, recorded
     a charge of $3,338 comprised  primarily of capitalized  development  costs.
     The Company is  currently  evaluating  several  "off-the-shelf"  management
     systems to support company-wide sales force automation and class scheduling
     and registration.

     During the year ended December 31, 1999, the Company settled a dispute with
     a previously  terminated master  franchisee  resulting in a charge of $303,
     which is included in the accompanying statements of income.


                                      F-12
<PAGE>

6.   INCOME TAXES

     Income tax expense for the periods below differs from the amounts  computed
     by applying the U.S. federal income tax rate of 35% to the pretax income as
     a result of the following:

                                                    1999       1998       1997
                                                    ----       ----       ----
     Computed "expected" tax expense ..........   $ 3,996    $ 3,393    $ 2,059
     Amortization of excess of cost over net
       assets acquired ........................        63         15         15
     State and local tax expense, net of
       federal income tax effect ..............       494        578        345
     Foreign income tax .......................        --         --        201
     Interest income from tax-free investments        (48)      (319)      (284)
     Other ....................................      (352)       146        (67)
                                                  -------    -------    -------
     Income tax expense .......................   $ 4,153    $ 3,813    $ 2,269
                                                  =======    =======    =======

     Income tax expense consists of:
          Federal:
               Current ........................   $ 3,258    $ 2,843    $ 1,755
               Deferred .......................      (389)      (332)      (243)
          State and local:
               Current ........................       783        952        523
               Deferred .......................       (81)       (23)       (70)
           Foreign ............................       582        373        304
                                                  -------    -------    -------
                                                  $ 4,153    $ 3,813    $ 2,269
                                                  =======    =======    =======


     The tax  effects of  temporary  differences  that give rise to  significant
     portions of the  deferred tax assets and  liabilities  at December 31, 1999
     and 1998, are presented below:

                                                             1999          1998
                                                             ----          ----
     Deferred tax assets:
          Accounts receivable, principally
            due to allowance for doubtful
            accounts ..............................       $   340       $   509
          Reserve for uninsured losses and
            litigation ............................           163           308
          Accrued expenses ........................         1,106         1,013
          Property, plant and equipment,
            principally due to differences
            in depreciation .......................         1,147           221
          Foreign Tax Credit carryforward .........           157           262
          Deferred revenue ........................           464           197
          Other ...................................            64            --
                                                          -------       -------
                                                            3,441         2,510
                                                          -------       -------

     Deferred tax liabilities:
          Excess of cost over net assets of
            acquired companies ....................         1,611         1,224
          Loss on joint venture ...................           139           (22)
          Other ...................................            --            87
                                                          -------       -------
                                                            1,750         1,289
                                                          -------       -------

     Net deferred income taxes ....................       $ 1,691       $ 1,221
                                                          =======       =======

                                      F-13
<PAGE>
7.   OTHER ASSETS

     a.  Notes Receivable from Officers
         ------------------------------

     Included in other assets are notes  receivable from officers of the Company
     in the aggregate  amount of $1,385.  The notes receivable are demand notes,
     $860 of which is collateralized by the proceeds from certain life insurance
     policies and bear interest at 7.3%. The remaining $525 relates primarily to
     non-interest  bearing loans in connection  with such  officers'  relocation
     expenses.  The Company  does not intend to demand  repayment of these notes
     during fiscal 2000.

     b.  Non-cash Proceeds of Sale of Environmental Business
         ---------------------------------------------------

     Other assets consist of:
                                                      1999                1998
                                                      ----                ----
       Notes receivable from ECB, Inc.             $  3,681            $  3,931
       Valuation reserve for ECB, Inc.               (2,960)             (2,960)
       Notes receivable from officers                 1,385                 625
       Other                                          1,553               1,214
                                                   --------            --------
                                                   $  3,659            $  2,810
                                                   ========            ========

     The note  receivable  of  $3,681  from  ECB,  Inc.  (see  Note 14)  bearing
     interest,  payable  quarterly,  at a rate of 6%.  Effective March 31, 1998,
     interest is paid quarterly in arrears.  Annual principal payments commenced
     in April 1999 with the minimum  principal  payments  being $250,  $500, and
     $750, for 1999,  2000, and 2001,  respectively,  with the balance due April
     30, 2002.

8.   OTHER CURRENT LIABILITIES

     Other current liabilities consist of:
                                                             1999         1998
                                                             ----         ----
       Deferred revenues .............................    $  8,318     $  5,084
       Accounts payable to franchisees ...............       3,882        3,497
       Salaries, wages and commissions payable .......       3,266        2,813
       Unexpended advertising fund ...................         509          737
       Payable to former franchisee pursuant to
         a franchise acquisition .....................         294           --
       Accrued franchise arbitration expenses ........         279           --
       Accrued expenses in connection with the
         disposition of the environmental segment ....         667        1,078
       Accrued operating expenses and other
         liabilities .................................       3,353        3,215
                                                          --------     --------
                                                          $ 20,568     $ 16,424
                                                          ========     ========

9.   EMPLOYEE SAVINGS PLAN

     The Company has a 401(k) Profit  Sharing Trust and Plan in which  employees
     not currently covered by a collective  bargaining agreement are eligible to
     participate.  None of the  Company's  employees is  currently  covered by a
     collective  bargaining  agreement.  The  plan was  established  in 1995 and
     through December 31, 1998, was non-contributory. Effective January 1, 1999,
     the  Board  of   Directors   elected   to  match  25%  of  the   employees'
     contributions.

10.  STOCK OPTION PLAN

     The Company  maintains  a Key  Employees  Stock  Option Plan and an Omnibus
     Equity  Plan which  provide  for the  issuance  of  non-qualified  options,
     incentive  stock  options,  and  stock  appreciation  rights.  These  plans
     currently  provide for the  granting of options to purchase up to 1,267,572
     shares of common stock.  Incentive  stock options are exercisable for up to
     ten years, at an option price of not less than the fair market value on the
     date the  option is granted or at a price of not less than 110% of the fair
     market price in the case of an option granted to an individual  who, at the
     time  of  grant,  owns  more  than  10%  of  the  Company's  common  stock.
     Non-qualified  stock  options may be issued at such  exercise  price and on
     such other terms and conditions as the Compensation  Committee of the Board
     of  Directors   may   determine.   Optionees  may  also  be  granted  stock
     appreciation  rights under which they may, in lieu of exercising an option,
     elect to receive cash or common stock, or a combination  thereof,  equal to
     the excess of the fair  market  value of the  common  stock over the option
     price. All options were granted at fair market value at dates of grant.

                                      F-14
<PAGE>

     In 1999 and 1998 the  Company  granted to certain  officers  of the Company
     options to  purchase  up to a maximum of 57,916  shares and 51,875  shares,
     respectively,  of the Company's  common stock.  The options had an exercise
     price of $17.00  and $10.22  per  share,  respectively,  which was the fair
     market value on the date of grant.  The number of options was  dependent on
     the officers meeting certain performance  criteria. As of December 31, 1999
     and 1998, the officers had been granted  options to purchase  16,250 shares
     and 49,441 shares of common stock. For the year ended December 31, 1999 and
     1998 the Company recorded  compensation expense of zero and $410 associated
     with the option grants.

     Directors of the Company who are not  employees  currently  hold options to
     acquire a total of 312,500  shares  pursuant to option plans and agreements
     adopted exclusively for their benefit. The exercise price under all of such
     options was the fair market  value as of the date of grant,  and no further
     options  may be  awarded  under such plans and  agreements.  The  Company's
     Omnibus   Equity  Plan  permits  awards  of  options  to  be  made  to  the
     non-employee Directors of the Company in addition to its employees,  but no
     awards have been made to them under that plan.

     Changes in shares under option for 1999,  1998 and 1997 are  summarized  as
     follows:
<TABLE>
<CAPTION>

                                                             1999                         1998                          1997
                                                 -------------------------    -------------------------      -----------------------
                                                                  Weighted                     Weighted                     Weighted
                                                                   Average                      Average                      Average
                                                   Shares           Price       Shares           Price       Shares           Price
                                                 ---------       ---------    ---------       ---------      -------       ---------
<S>                                              <C>             <C>          <C>             <C>           <C>            <C>

    Outstanding, beginning of year  .....        1,102,878       $    8.75      840,312       $    7.26      774,551       $    6.16
        Granted .........................          273,808           15.81      312,566           12.29      250,000           11.62
        Exercised .......................           (7,812)          10.06      (43,750)           5.20     (168,051)           6.27
        Canceled ........................          (90,625)          12.87       (6,250)          10.22      (16,188)           7.09
                                                 ---------                      -------                      -------
    Outstanding, end of year ............        1,278,249            9.97    1,102,878            8.75      840,312            7.26
                                                 =========                    =========                      =======

    Options exercisable, end of year ....          876,125       $    8.22      669,062       $    7.32      517,812       $    5.70
                                                 =========                    =========                      =======

    Weighted average fair value of
     options granted during the year.....        $    6.58                    $     6.31                   $    6.17
                                                 =========                    ==========                   =========
</TABLE>

     Outstanding stock options at December 31, 1999 consist of the following:
<TABLE>
<CAPTION>

                                                    Options Outstanding                       Options Exercisable
                                         ---------------------------------------          ----------------------------
                                                        Weighted
                  Range of                               Average        Weighted                              Weighted
                  Exercise                              Remaining        Average                               Average
                   Prices                  Shares          Life           Price             Shares              Price
                                                         (Years)
             ---------------             ---------      ---------       --------          ---------           --------
<S>                                      <C>            <C>              <C>              <C>                <C>

             $ 4.80 - $ 7.05               593,750         4.0          $   6.23            593,750           $   6.23
               8.85 -  12.50               354,499         3.5             11.00            206,125              11.38
              13.38 -  18.88               330,000         4.7             15.57             76,250              15.20
                                         ---------                                        ---------
             $ 4.80 - $18.88             1,278,249         4.0          $   9.97            876,125           $   8.22
                                         =========         ===          ========          =========           ========
</TABLE>


                                      F-15
<PAGE>
     The fair  value of each  option  grant was  estimated  as of the grant date
     using the Black-Scholes  option-pricing model assuming a risk-free interest
     rate of 6.1%,  volatility  of 27%, and zero  dividend  yield for 1999 and a
     risk-free interest rate of 6.5%, volatility of 55%, and zero dividend yield
     for 1998,  with expected  lives of six years for both periods.  The Company
     applies Accounting Principles Board Opinion 25 and related  interpretations
     in accounting for its plans. If compensation  expense was determined  based
     on the  fair  value  method  under  the  provisions  of SFAS No.  123,  the
     Company's  net income and net income per share  would have been  reduced to
     the pro forma amounts indicated below:

                                                           1999           1998
                                                           ----           ----
        Net income                     As reported     $   7,263      $   5,882
                                       Pro forma           6,803          5,581

        Basic earnings per share       As reported     $    0.76      $    0.64
                                       Pro forma            0.71           0.61

        Diluted earnings per share     As reported     $    0.72      $    0.61
                                       Pro forma            0.68           0.58

     As of December 31, 1999,  there were 1,084,389 shares of common stock under
     the Stock Option Plans that were available for future grant.

     On December 31, 1997, the Company granted warrants to purchase up to 43,750
     shares of its common  stock at a price of $10.00 per share to a  consultant
     to the  Company.  The  Company  recorded  the fair value of these  warrants
     ($275) as  compensation  expense  over the two-year  vesting  period of the
     warrants.

11.  COMMITMENTS AND CONTINGENCIES

     Leases
     ------

     The Company leases its offices, training facilities,  and certain equipment
     under operating and capitalized lease obligations.  Operating leases expire
     on various  dates through 2009.  The Company  recognizes  rent expense on a
     straight  line basis and  records  deferred  rent  based on the  difference
     between  cash paid and  straight  line  expense.  Rent  expense was $5,457,
     $3,331, and $2,741 for 1999, 1998, and 1997, respectively.

     Under the terms of the leases,  future minimum  commitments at December 31,
     1999 are as follows:

     Year ending December 31                Capital Leases      Operating Leases
                                            --------------      ----------------
          2000 .........................      $    228            $  6,111
          2001 .........................            34               5,957
          2002 .........................             2               5,346
          2003 .........................            --               4,012
          2004 .........................            --               3,724
     2005 & after ......................            --               7,241
                                              --------            --------
     Total future minimum lease payment            264            $ 32,391
     Less: Amount representing interest            (45)           ========
                                              --------
                                                   219
     Less: Current portion .............          (189)
                                              --------
                                              $     30
                                              ========

     Litigation
     ----------

     The Company is involved in various claims and legal actions  arising in the
     ordinary  course of business.  In the opinion of  management,  the ultimate
     disposition of these matters will not have a material adverse effect on the
     Company's consolidated financial position or results of operations.

                                      F-16
<PAGE>

12.  ACQUISITIONS

     a.  Albuquerque, New Mexico franchise
         ---------------------------------

     On March 1, 1999,  the Company  purchased  the assets of its  franchise  in
     Albuquerque,  New Mexico.  The consideration  paid included $2,787 in cash,
     net of cash  acquired,  and  48,691  shares  (38,953  shares  prior  to the
     Company's  stock  split) of the  Company's  common  stock.  Based  upon the
     average price of the  Company's  stock seven days before and after the date
     of the transaction,  ($16.23 per share),  total consideration paid for this
     acquisition was $3,577.  The selling  shareholders will receive  additional
     consideration,  in cash and  stock,  if  certain  performance  targets  are
     achieved.  The  acquisition  has been recorded using the purchase method of
     accounting  and the  operating  results have been included in the Company's
     financial statements from the date of acquisition. The acquisition resulted
     in goodwill of $3,779 which is being amortized over 25 years.

     b.  Charlotte, North Carolina franchise
         -----------------------------------

     On April 1, 1999,  the Company  purchased  the assets of its  franchise  in
     Charlotte,  North Carolina. The consideration paid included $3,023 in cash,
     net of cash  acquired,  and  50,110  shares  (40,088  shares  prior  to the
     Company's  stock  split) of the  Company's  common  stock.  Based  upon the
     average price of the  Company's  stock seven days before and after the date
     of the transaction,  ($15.35 per share),  total consideration paid for this
     acquisition was $3,793.  The selling  shareholder  will receive  additional
     consideration,  in cash and  stock,  if  certain  performance  targets  are
     achieved.  The  acquisition  has been recorded using the purchase method of
     accounting  and the  operating  results have been included in the Company's
     financial statements from the date of acquisition. The acquisition resulted
     in goodwill of $4,121 which is being amortized over 25 years.

     c.  Sacramento and Stockton, California franchises
         ----------------------------------------------

     On April 1, 1999,  the Company  purchased  the assets of its  franchises in
     Sacramento and Stockton, California. The consideration paid included $2,903
     in  cash,  net of cash  acquired.  The  selling  shareholder  will  receive
     additional cash consideration if certain  performance targets are achieved.
     The  acquisition  has been recorded using the purchase method of accounting
     and the operating  results have been  included in the  Company's  financial
     statements  from the  date of  acquisition.  The  acquisition  resulted  in
     goodwill of $3,463 which is being amortized over 25 years.

     d.  San Antonio, Texas franchise
         ----------------------------

     On May 6, 1999,  the Company  purchased  the assets of its franchise in San
     Antonio, Texas. The consideration paid included $3,686 in cash, net of cash
     acquired,  and 63,244 shares  (50,595  shares prior to the Company's  stock
     split) of the Company's  common stock.  Based upon the average price of the
     Company's  stock seven days  before and after the date of the  transaction,
     ($16.50 per  share),  total  consideration  paid for this  acquisition  was
     $4,730. The selling shareholder will receive additional  consideration,  in
     cash  and  stock,  if  certain  performance   targets  are  achieved.   The
     acquisition  has been recorded using the purchase  method of accounting and
     the  operating  results  have  been  included  in the  Company's  financial
     statements  from the  date of  acquisition.  The  acquisition  resulted  in
     goodwill of $4,522 which is being amortized over 25 years.

     e.  Denver, Colorado franchise
         --------------------------

     On September 1, 1999, the Company  purchased the assets of its franchise in
     Denver,  Colorado.  The consideration paid included $13,635 in cash, net of
     cash acquired,  and 21,634 shares of the Company's common stock. Based upon
     the average  price of the  Company's  stock seven days before and after the
     date of the transaction,  ($17.56 per share),  total consideration paid for
     this  acquisition  was  $14,014.  The  selling  shareholders  will  receive
     additional consideration, in cash and stock, if certain performance targets
     are achieved.  The  acquisition has been recorded using the purchase method
     of accounting and the operating results have been included in the Company's
     financial statements from the date of acquisition. The acquisition resulted
     in goodwill of $13,164 which is being amortized over 25 years.


                                      F-17
<PAGE>

     f.  Cash paid for previous acquisitions
         -----------------------------------

     During the twelve  months  ended  December 31,  1999,  the Company  granted
     additional  consideration  for previous  acquisitions of $2,336 in cash and
     42,545 in shares of the Company's stock due to the acquired centers meeting
     certain performance targets.

     If the results from the acquired locations had been included in the results
     of operations at the beginning of each year presented  below, the Company's
     revenue,  net income,  and earnings per share would have  approximated  the
     following:

                                                1999           1998
                                                ----           ----
             Revenue ..................   $   123,114   $   100,616

             Net Income ...............         7,020         7,122

             Basic Earnings Per Share .          0.72          0.77

             Diluted Earnings Per Share          0.69          0.73


13.  QUARTERLY FINANCIAL DATA (UNAUDITED)

     Summarized quarterly financial data for continuing  operations for 1999 and
     1998 is as follows:

                                       First     Second    Third     Fourth
                                      Quarter   Quarter   Quarter   Quarter
                                      -------   -------   -------   -------
    Year ended December 31, 1999

     Revenues .....................   $22,102   $27,900   $30,581   $30,893
     Operating income .............     2,410     3,922     4,712        83
     Net income ...................     1,619     2,474     3,011       159
     Basic earnings per share .....      0.17      0.26      0.32      0.02
     Diluted earnings per share ...      0.16      0.25      0.30      0.02

                                       First     Second    Third     Fourth
                                      Quarter   Quarter   Quarter   Quarter
                                      -------   -------   -------   -------
    Year ended December 31, 1998

     Revenues .....................   $14,685   $17,810   $19,659   $20,475
     Operating income .............     1,073     2,267     2,827     2,359
     Net income ...................       811     1,637     1,869     1,565
     Basic earnings per share .....      0.09      0.18      0.20      0.17
     Diluted earnings per share ...      0.09      0.17      0.19      0.16


                                      F-18
<PAGE>

14.  DISCONTINUED OPERATIONS

     In 1996 the Company sold Handex  Environmental,  Inc. to ECB,  Inc. and has
     reflected  its  net  assets  and  results  of  operations  as  discontinued
     operations in the accompanying consolidated financial statements. Operating
     results for 1999, 1998, and 1997 were as follows:

                                                1999          1998          1997
                                                ----          ----          ----

     Net operating revenues ......            $   --        $   --        $   --
                                              ======        ======        ======

     Income before income taxes ..            $   --        $   --        $  349

     Income taxes ................                --            --            --
                                              ------        ------        ------

     Net income ..................            $   --        $   --        $  349
                                              ======        ======        ======


     Remaining  assets and liabilities of Handex  Environmental  are recorded at
     their expected realization value.

15.  SEGMENT REPORTING

     The Company  operates in two  business  segments -  company-owned  training
     centers and franchising  operations.  The  company-owned  training  centers
     segment  operates  wholly-owned  computer  training  centers  in the United
     States and  derives  its  revenues  from the  operating  revenues  of those
     centers.  The franchising  segment  franchises  computer  training  centers
     domestically  and  internationally  and supplies systems of instruction and
     sales and management  concepts  concerning computer training to independent
     franchisees.   The  franchising  segment  revenues  are  from  the  initial
     franchise  fees and  royalties  from the  franchise  operations  and  other
     revenue such as from the Corporate  Education  Solutions  program.  The two
     segments are managed separately because of the differences in the source of
     revenues and the services offered. Information on the Company's segments is
     as follows:


                                      F-19
<PAGE>
<TABLE>
<CAPTION>

                                                           Company-
                                                             owned                        Executive      Discontinued
                                                            Centers      Franchising        Office        Operations    Consolidated
                                                          ---------      -----------      ---------      ------------   ------------
<S>                                                       <C>             <C>            <C>              <C>             <C>
For the year ended December 31, 1999
------------------------------------
Revenues from external customers ...................      $  86,520       $  24,956       $      --       $      --       $ 111,476
Interest income ....................................            453             190              --              --             643
Interest expense ...................................           (331)            (23)             --              --            (354)
Depreciation and amortization expense                         5,183             891              --              --           6,074
Write-off of management system .....................             --           3,338              --              --           3,338
Income tax expense .................................          2,853           1,300              --              --           4,153
Net income from continuing operations ..............          5,027           2,236              --              --           7,263

Net deferred tax asset .............................            (80)          1,771              --              --           1,691
Total assets .......................................         85,537          16,294           3,253              --         105,084
Additions to property, plant and equipment .........          4,840           1,922             (14)             --           6,748

For the year ended December 31, 1998
------------------------------------
Revenues from external customers ...................      $  52,545       $  20,084       $      --       $      --       $  72,629
Interest income ....................................            971             453              --              --           1,424
Interest expense ...................................           (229)            (26)             --              --            (255)
Depreciation and amortization expense ..............          3,456             550              --              --           4,006
Income tax expense .................................          1,308           2,505              --              --           3,813
Net income from continuing operations ..............          2,526           3,356              --              --           5,882

Net deferred tax asset .............................            249             972              --              --           1,221
Total assets .......................................         45,194          21,631          19,921              --          86,746
Additions to property, plant and equipment .........          2,445           5,914              --              --           8,359

For the year ended December 31, 1997
------------------------------------
Revenues from external customers ...................      $  38,692       $  13,941       $      --       $      --       $  52,633
Gain from release of certain franchise obligations .             --           2,600              --              --           2,600
Interest income ....................................            866             435              --              --           1,301
Interest expense ...................................           (421)            (48)             --              --            (469)
Depreciation and amortization expense ..............          3,377             409              --              --           3,786
Income tax expense (benefit) .......................            (46)          2,315              --              --           2,269
Net income from continuing operations ..............            434           3,180              --              --           3,614
Income from discontinued operations, net of
  applicable income taxes ..........................             --              --              --             349             349

Net deferred tax asset .............................            655             211              --              --             866
Total assets .......................................         26,821          13,437          26,313              --          66,571
Additions to property, plant and equipment .........          2,536           1,914              --              --           4,450
</TABLE>


                                      F-20
<PAGE>


                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

The  information  required by this Item 10 as to the Directors of the Company is
incorporated  herein by reference to the information set forth under the caption
"Election of  Directors"  in the Company's  definitive  Proxy  Statement for the
Annual  Meeting  of  Stockholders  to be held on May 2,  2000,  since such Proxy
Statement will be filed with the  Securities  and Exchange  Commission not later
than 120 days after the end of the Company's  fiscal year pursuant to Regulation
14A.

EXECUTIVE OFFICERS OF THE REGISTRANT*

The following is a list of the executive officers of the Company.  The executive
officers  are  elected  each  year and  serve at the  pleasure  of the  Board of
Directors.

NAME                       AGE     POSITION
----                       ---     --------

Curtis Lee Smith, Jr.      72      Chairman of the Board

Thomas J. Bresnan          47      President and Chief Executive Officer

Stuart O. Smith            67      Vice Chairman of the Board and Secretary

Robert S. McMillan         48      Vice President, Treasurer and Chief Financial
                                     Officer

Kenneth M. Hagerstrom      41      President - Company-owned Center Division
                                   Executive Vice President - New Horizons
                                     Computer Learning Centers, Inc.

*The  description  of  executive  officers  called for in this Item is  included
pursuant to Instruction 3 to Section (b) of Item 401 of Regulation S-K.

Set forth below is a brief  description  of the  background  of those  executive
officers of the Company who are not Directors of the Company.  Information  with
respect to the background of those executive  officers who are also Directors of
the Company is  incorporated  herein by reference as set forth under the caption
"Election of  Directors"  in the Company's  definitive  Proxy  Statement for the
Annual Meeting of Stockholders to be held on May 2, 2000.


                                       18
<PAGE>

ROBERT S.  MCMILLAN  was named Vice  President,  Treasurer  and Chief  Financial
Officer of the Company in August 1997. He served as Chief  Financial  Officer of
New Horizons  Computer  Learning  Centers,  Inc.  beginning in 1995 and became a
Senior Vice President in January 1997. From 1992 to 1995, Mr. McMillan was Chief
Financial Officer of ZNYX Corporation, Fremont California. From 1990 to 1992, he
was Chairman, Chief Executive Officer and Chief Financial Officer of Omnivar, in
Burbank, California.

KENNETH  HAGERSTROM was named President of the Company-owned  Center Division of
New  Horizons  in  November  1997.  Additionally,  in October  1999 he was named
Executive Vice President of New Horizons Computer  Learning  Centers,  Inc. From
June 1997 until  November 1997 Mr.  Hagerstrom was the Director of Field Support
for New Horizons Computer Learning Centers,  Inc. From October 1995 to June 1997
he was  General  Manager  of  the  Company-owned  center  in New  York,  NY.  He
originally joined New Horizons network in 1994 at the Boston, MA franchise as an
Account  Executive and was promoted in 1995 to Sales Manager.  Before then, from
1982 to 1994, Mr. Hagerstrom was President of KMS Enterprises of Boston, MA.

ITEM 11.  EXECUTIVE COMPENSATION

The  information  required by this Item 11 is  incorporated  by reference to the
information set forth under the caption "Compensation of Directors and Executive
Officers" in the Company's  definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on May 2, 2000, since such Proxy Statement will be filed
with the  Securities  and Exchange  Commission not later than 120 days after the
end of the Company's fiscal year pursuant to Regulation 14A.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  required by this Item 12 is  incorporated  by reference to the
information  set forth under the caption "Share  Ownership of Principal  Holders
and  Management"  in the  Company's  definitive  Proxy  Statement for the Annual
Meeting of  Stockholders  to be held on May 2, 2000,  since such Proxy Statement
will be filed with the  Securities  and Exchange  Commission  not later than 120
days after the end of the Company's fiscal year pursuant to Regulation 14A.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required by this Item 13 is  incorporated  by reference to the
information set forth under the caption "Certain  Transactions" in the Company's
definitive  Proxy Statement for the Annual Meeting of Stockholders to be held on
May 2, 2000,  since such Proxy  Statement  will be filed with the Securities and
Exchange  Commission  not later  than 120 days  after  the end of the  Company's
fiscal year pursuant to Regulation 14A.


                                       19
<PAGE>

                                     PART IV

ITEM 14.  EXHIBITS AND REPORTS ON FORM 8-K

(a) (1)   Financial Statements

          The following  Consolidated Financial Statements of the Registrant and
          its subsidiaries are included in Part II, Item 8:

                                                                       Page
                                                                       ----

          Reports  of Independent Auditors                             F-1
          Consolidated Balance Sheets                                  F-2
          Consolidated Statements of Earnings                          F-3
          Consolidated Statements of Comprehensive Income              F-4
          Consolidated Statements of Stockholders' Equity              F-5
          Consolidated Statements of Cash Flows                    F-6 to F-7
          Notes to Consolidated Financial Statements               F-8 to F-20

(a) (2)   All other  schedules  for which  provision  is made in the  applicable
          accounting  regulation of  the  Securities and Exchange Commission are
          not required under the  related instructions or are  inapplicable and,
          therefore, have been omitted.

(a) (3)   Exhibits

          Reference is made to the Exhibit Index at sequential page 22 hereof.

(b)       Reports on Form 8-K
          -------------------

          No reports on Form 8-K were filed by the Registrant during the quarter
          ending December 31, 1999.


                                       20
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the Registrant has caused this Report to be signed on its
behalf by the  undersigned,  thereunto duly authorized at Santa Ana,  California
this 30th day of March, 2000.

                                               NEW HORIZONS WORLDWIDE, INC.


                                               By:      /s/Curtis Lee Smith, Jr.
                                               ---------------------------------
                                               Curtis Lee Smith, Jr., Chairman



     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated:

       Signature                         Title                         Date
       ---------                         -----                         ----

/s/Curtis Lee Smith, Jr.        Chairman                       )
------------------------        (Principal Executive Officer)  )
Curtis Lee Smith, Jr.                                          )
                                                               )
                                                               )
/s/Robert S. McMillan           Vice President, Treasurer and  )
-------------------------       Chief Financial Officer        )
Robert S. McMillan              (Principal Financial and       )
                                   Accounting Officer)         )
                                                               )
                                                               )
/s/Stuart O. Smith              Director                       )
-------------------------                                      )
Stuart O. Smith                                                )
                                                               )  March 30, 2000
                                                               )
/s/Thomas J. Bresnan            Director                       )
-------------------------                                      )
Thomas J. Bresnan                                              )
                                                               )
                                                               )
/s/David A. Goldfinger          Director                       )
-------------------------                                      )
David A. Goldfinger                                            )
                                                               )
                                                               )
/s/Richard L. Osborne           Director                       )
-------------------------                                      )
Richard L. Osborne                                             )
                                                               )
                                                               )
/s/Scott R. Wilson              Director                       )
-------------------------                                      )
Scott R. Wilson                                                )
                                                               )
                                                               )
/s/William H. Heller            Director                       )
-------------------------                                      )
William H. Heller                                              )
                                                               )

                                       21
<PAGE>

                                  EXHIBIT INDEX

Exhibit                    Exhibit
Number                     Description

3.1      Amended Certificate of Incorporation of the Registrant (1)

3.2      By-laws of the Registrant (1)

3.3      Amendment to Certificate of Incorporation of the Registrant (4)

4.1      Specimen Certificate for Share of Common Stock, $.01 par value,  of the
         Registrant (7)

4.2      Business Loan Agreement  between the  Registrant  and  Bank of America,
         N. A. (9)

10.1**   Omnibus Equity Plan of the Registrant (2)

10.2**   Standard  form  of  Stock  Option Agreement  executed  by recipients of
         options under Omnibus Equity Plan *

10.3**   Key Employees Stock Option Plan of the Registrant (1)

10.4**   Amendment No.1 to the Key Employees Stock Option Plan of the Registrant
         (7)

10.5**   Stock Option Agreement dated August 6, 1992, between the Registrant and
         Thomas J. Bresnan (7)

10.6**   Stock Option  Agreement dated January 22, 1998, between  Registrant and
         Charles G. Kinch based on performance criteria (6)

10.7**   Stock Option Agreement  dated January 22, 1998,  between the Registrant
         and Kenneth Hagerstrom based on performance criteria (6)

10.8**   Stock Option Agreement  dated January 22, 1998,  between the Registrant
         and Robert S. McMillan based on performance criteria (6)

10.9**   Stock Option Agreement dated January 15, 1999,  between  Registrant and
         Charles G. Kinch based on performance criteria (8)

10.10**  Stock Option  Agreement dated January 15, 1999,  between the Registrant
         and Kenneth Hagerstrom based on performance criteria (8)

10.11**  Stock Option  Agreement dated January 15, 1999,  between the Registrant
         and Robert S. McMillan based on performance criteria (8)

10.12**  Outside Directors Stock Option Plan of the Registrant (1)

10.13**  Amendment  No. 1 to the  Outside  Directors  Stock  Option  Plan of the
         Registrant (7)

10.14**  1997 Outside Directors Elective Stock Option Plan of the Registrant (2)

10.15**  Form of Option  Agreement executed by  recipients of options under 1997
         Outside Directors Elective Stock Option Plan (2)

10.16**  Stock Option Agreement dated September 19, 1996, between the Registrant
         and David A. Goldfinger (2)

10.17**  Stock Option Agreement dated September 19, 1996, between the Registrant
         and William Heller (2)

10.18**  Stock Option Agreement dated September 19, 1996, between the Registrant
         and Richard L. Osborne (2)

10.19**  Stock Option Agreement dated September 19, 1996, between the Registrant
         and Scott R. Wilson (2)

                                       22
<PAGE>

10.20**  Form  of  Indemnity  Agreement  with  Directors  and  Officers  of  the
         Registrant (7)

10.21**  New Horizons Worldwide 401(k) Profit Sharing Trust and Plan (7)

10.22    Warrants for the  purchase of 43,750  shares of Common Stock,  $.01 par
         value per share,  of the Registrant issued to The Nassau Group,  Inc. -
         December 31, 1997 (5)

10.23**  Stock Purchase Agreement dated November 4, 1996, between the Registrant
         and ECB, Inc. and certain exhibits thereto (3)

10.24**  Relocation  agreement  dated July 27, 1999 between the  Registrant  and
         Thomas J. Bresnan (9)

10.25**  Promissory note dated August 31, 1999 between the Registrant and Thomas
         J. Bresnan *

10.26**  Amendment  dated January 4, 2000 to  relocation  agreement  between the
         Registrant and Thomas J. Bresnan *

10.27**  Promissory  note dated  October 14, 1999  between  the  Registrant  and
         Kenneth M. Hagerstrom *

10.28**  Severance  agreement  dated January 4, 2000 between the  Registrant and
         Kenneth M. Hagerstrom *

10.29**  Severance agreement  dated January 4, 2000 between the  Registrant  and
         Robert S. McMillan *

10.30    Lease Agreement dated February 15, 2000 between New Horizons Worldwide,
         Inc. and Stadium Gateway Associates, LLC, guaranteed by the Registrant*


21.1     Subsidiaries of the Registrant *

27.0     Financial Data Schedule *


(1)  Incorporated  herein  by  reference  to  the  appropriate  exhibits  to the
     Registrant's Registration Statement on Form S-1 (File No. 33-28798).

(2)  Incorporated  herein  by  reference  to  the  appropriate  exhibits  to the
     Registrant's Registration Statement on Form S-8 (Reg. No. 333-56585).

(3)  Incorporated  herein  by  reference  to  the  appropriate  exhibit  to  the
     Registrant's  Quarterly  Report on Form 10-Q for the period ended September
     28, 1996.

(4)  Incorporated  herein  by  reference  to  the  appropriate  exhibit  to  the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  28,
     1996.

(5)  Incorporated  herein  by  reference  to  the  appropriate  exhibit  to  the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1997.

(6)  Incorporated  herein  by  reference  to  the  appropriate  exhibit  to  the
     Registrant's  Quarterly  Report on Form 10-Q for the period ended March 31,
     1998.

(7)  Incorporated  herein  by  reference  to  the  appropriate  exhibit  to  the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1998.

(8)  Incorporated  herein  by  reference  to  the  appropriate  exhibit  to  the
     Registrant's  Quarterly  Report on Form 10-Q for the period ended March 31,
     1999.

(9)  Incorporated  herein  by  reference  to  the  appropriate  exhibit  to  the
     Registrant's  Quarterly  Report on Form 10-Q for the period ended September
     30, 1999.


         *  Filed herewith

         **  Compensatory plan or arrangement

                                       23
<PAGE>

                       NONQUALIFIED STOCK OPTION AGREEMENT


     THIS AGREEMENT is entered into as of ________________,  ____ by and between
New  Horizons  Worldwide,  Inc., a Delaware  corporation  (the  "Company"),  and
________________________ (the "Optionee").

                                   WITNESSETH:

     WHEREAS,  the Company  maintains the New Horizons  Worldwide,  Inc. Omnibus
Equity Plan (the "Plan") for the benefit of eligible participants therein; and

     WHEREAS,  the Committee is currently  charged with  administering the Plan;
and

     WHEREAS,  the  Committee  has  determined  that the  Optionee,  as a person
eligible to receive awards under the Plan, should be granted  nonqualified stock
options to acquire Shares under the Plan upon the terms and conditions set forth
in this Agreement.

     NOW, THEREFORE, the Company and the Optionee hereby agree as follows:

1.   DEFINITIONS.

     (a)  The following  terms shall have the meanings set forth below  whenever
          used in this instrument:

          (i)  The word "Act" shall mean the federal  Securities Act of 1933, as
               amended.

          (ii) The word  "Agreement"  shall mean this  instrument  as originally
               executed and as it may later be amended.

          (iii)The word  "Company"  shall mean New Horizons  Worldwide,  Inc., a
               Delaware  corporation,  and any  successor  thereto  which  shall
               maintain the Plan.

                                       1
<PAGE>

          (iv) The word  "Disability"  or "Disabled"  shall mean the  Optionee's
               inability,  due to a mental or  physical  condition,  to  perform
               services  for  the  Company  and/or  an  Affiliate  substantially
               consistent  with past  practice,  as  determined by the Committee
               pursuant  to  written  certification  of  such  condition  from a
               physician acceptable to the Committee.

          (v)  The word  "Employee"  shall mean any person who is an employee of
               either the Company or any Affiliate.

          (vi) The words "Fair Market Value" means,  in respect of a Share,  its
               fair market value as determined in the reasonable judgment of the
               Committee at any time.

          (vii)The word  "Option"  shall mean the right and  option to  purchase
               Shares pursuant to the terms of this Agreement.

          (viii) The  words  "Option  Exercise  Date"  shall  mean  the date the
               Optionee exercises the Option by performing the acts described in
               Section 7 hereof.

          (ix) The word "Optionee"  shall mean the person to whom the Option has
               been granted pursuant to this Agreement.

          (x)  The words  "Personal  Representative"  shall mean,  following the
               Optionee's death, the person who shall have acquired,  by will or
               by the laws of descent  and  distribution,  the right to exercise
               the Option.

          (xi) The word  "Plan"  shall  mean the New  Horizons  Worldwide,  Inc.
               Omnibus Equity Plan, as it was  originally  adopted and as it may
               later be amended.

          (xii)The word "Spread" shall mean, as of the Option  Exercise Dare, an
               amount equal to the excess, if any, of the Fair Market Value of a
               Share in respect of which the Option is exercised over the Option
               Exercise Price.

                                       2
<PAGE>

          (xiii) The word  "Transferee"  shall mean the person or entity to whom
               rights to acquire  Shares  pursuant to the exercise of the Option
               shall have been transferred pursuant to Section 11 hereof.

     (b)  The following terms when used in the Agreement shall have the meanings
          given them in the Plan:  "Affiliate;"  "Board;"  "Change in  Control;"
          "Code;"  "Committee;"  "Consent;"  "Family  Members;" "Option Exercise
          Price;" "Shares."

2.   GRANT OF NONQUALIFIED  OPTION.  Effective as of the date of this Agreement,
     the Company grants to the Optionee, upon the terms and conditions set forth
     hereinafter,  the right and  option to  purchase  all or any  lesser  whole
     number of an aggregate of ___________________________ (______) Shares at an
     Option Exercise Price of $____ per Share. The Option shall for all purposes
     be a nonqualified  stock option subject to the federal income tax treatment
     described in Section 1.83-7 of the Federal Income Tax Regulations. Both the
     Company and the Optionee  shall,  on their  respective  federal  income tax
     returns,  report  any  transaction  relating  to  the  Option  in a  manner
     consistent with the preceding sentence.

3.   TERM OF OPTION. Except as otherwise provided herein, the term of the Option
     shall be for a period of _______  (_) years from the date  hereof,  and the
     Option shall expire at the close of regular business hours at the Company's
     principal executive office (currently located at 1231 East Dyer Road, Suite
     140, Santa Ana,  California  92705-5605) on the last day of the term of the
     Option, or, if earlier,  on the applicable  expiration date provided for in
     Sections 5, 6 and 7 hereof.

4.   EXERCISE DATES.  Except as otherwise provided herein, the Optionee shall be
     entitled  to  exercise  the  Option  with  respect  to the number of Shares
     indicated below on or after the date indicated opposite such number below:

                                       3
<PAGE>

     Initial and Additional         Total Shares with
     Number of Shares with          Respect to Which            Date Beginning
     Respect to Which the             the Option May            on Which Option
     Option May be Exercised          be Exercised              May be Exercised
     -----------------------        -----------------           ----------------






     Except as  provided  in  Sections  5 and 6 hereof,  the  Option  may not be
     exercised  at any time  unless the  Optionee  shall be an  Employee at such
     time.

5.   TERMINATION OF  EMPLOYMENT,  ETC. So long as the Optionee shall continue to
     be an Employee, the Option shall not be affected by (a) any temporary leave
     of absence  approved in writing by the Company or an Affiliate,  or (b) any
     change of duties or position  (including transfer to or from an Affiliate).
     If the Optionee ceases to be an Employee for any reason other than death or
     Disability,  the Option may be exercised only to the extent of the purchase
     rights, if any, which, pursuant to Section 4 hereof, existed as of the date
     the Optionee ceases to be an Employee and which have not  theretofore  been
     exercised;  provided,  however,  that  the  Committee  may in its  absolute
     discretion  determine  (but shall not be under any obligation to determine)
     that such  purchase  rights  shall be deemed to include  additional  Shares
     which are  subject to the  Option.  Except as  provided in Section 6 below,
     upon an Optionee's ceasing to be an Employee, such purchase rights shall in
     any event  terminate  upon the earlier of either (a) three (3) months after
     the date the Optionee ceased to be an Employee (one (1) year after the date
     the  Optionee  ceased to be an  Employee  if the  Optionee  dies or becomes
     Disabled  within three (3) months after ceasing to be an Employee),  or (b)
     the last  day of the  term of the  Option.  Notwithstanding  the  preceding
     provisions  of  this  Section  5,  unless  the  Committee  shall  otherwise
     determine,  upon (a) the Optionee's  ceasing to be an Employee by reason of
     an involuntary  termination of such status for good cause, as determined by
     the  Committee,  or (b)  the  Optionee's  voluntary  termination  with  the
     intention  of  rendering  services  to a  competitor  of the Company or any
     Affiliate or otherwise  entering into  competition  with the Company or any
     Affiliate directly or indirectly,  or (c) the commission by the Optionee of
     a material breach of his  obligations  under any agreement with the Company
     or any Affiliate,  the Optionee's  right to purchase Shares pursuant to the
     exercise of the Option shall terminate.

                                       4
<PAGE>

6.   OPTIONEE'S DEATH OR DISABILITY.  If, while the Optionee is an Employee, the
     Optionee dies or becomes Disabled,  the Optionee or the Optionee's Personal
     Representative  may immediately  exercise the Option with respect to all of
     the Shares subject to the Option regardless of whether the Optionee had the
     right  under  Section 4 hereof to  exercise  the  Option at the time of his
     death or  Disability.  The  Option  shall in any event  terminate  upon the
     earlier of either (a) the first anniversary of the date the Optionee ceased
     to be an Employee; or (b) the last day of the term of the Option.

7.   CHANGE IN CONTROL.  Notwithstanding  the provisions of Section 4 hereof, in
     connection with a Change in Control,  the Optionee shall have the immediate
     and nonforfeitable  right to exercise the Option with respect to all Shares
     covered by the Option.  The  Optionee  shall be  entitled  to exercise  the
     Option as provided in the  immediately  preceding  sentence  regardless  of
     whether the  surviving  corporation  in any merger or  consolidation  shall
     adopt and maintain the Plan.  In the event the Option  becomes  exercisable
     pursuant to this  Section 7, the Company  shall  notify the Optionee of his
     right to exercise the Option. Upon a Change in Control described in Section
     1.6(b)(iii)  of the Plan, the Option,  to the extent not  exercised,  shall
     terminate unless the surviving corporation assumes the Option. In the event
     of a Change in Control  described in Section  1.6(b)(iv)  of the Plan,  the
     Option,  to the extent not exercised,  shall terminate upon consummation of
     the Change in Control.

                                       5
<PAGE>

8.   ADJUSTMENT UPON CHANGES IN  CAPITALIZATION.  The number of Shares which may
     be purchased upon exercise of an Option and the Option Exercise Price shall
     be  appropriately  adjusted as the  Committee  may determine for any change
     after the date of the  Agreement in the number of issued  Shares  resulting
     from the subdivision or combination of Shares or other capital adjustments,
     or the payment of a stock dividend,  or other change in the Shares effected
     without  receipt  of  consideration  by the  Company;  provided,  that  any
     fractional  Shares  resulting from any such adjustment shall be eliminated.
     Adjustments  under  this  Section 8 shall be made by the  Committee,  whose
     determination  as to the  adjustments to be made,  and the extent  thereof,
     shall be final, binding and conclusive.

9.   EXERCISE  OF OPTION.  The  Option may be  exercised  by  delivering  to the
     Chairman,  Vice  Chairman,  President  or Chief  Financial  Officer  of the
     Company at the then principal  office address of the recipient  officer,  a
     completed Notice of Exercise of Option (obtainable from the Chief Financial
     Officer of the Company)  setting forth the number of Shares with respect to
     which the Option is being  exercised.  Such Notice shall be  accompanied by
     payment in full for the Shares,  unless other arrangements  satisfactory to
     the  Committee for prompt  payment of such amount are made.  Payment of the
     Option  Exercise  Price may be made in any  manner  permitted  by the Plan,
     subject to the consent of the Committee as applicable.  With the consent of
     the Committee, the Optionee may effect a cashless exercise of the Option as
     described  in the  Plan.  With the  consent  of the  Committee  in its sole
     discretion,  payment for Shares acquired upon exercise of the Option may be
     made by delivery to the Company of an assignment of a sufficient  amount of
     the proceeds  from the sale of Shares  acquired upon exercise of the Option
     to pay for all or some of the Shares  acquired  upon exercise of the Option
     and an  authorization  to the broker or selling agent to pay that amount to
     the Company,  which sale shall be made at the  Optionee's  direction on the
     Option Exercise Date; provided, that the Committee may require the Optionee
     to furnish an opinion of counsel  acceptable to the Committee to the effect
     that such delivery would not result in the Optionee incurring any liability
     under Section 16 of the Act and does not require any Consent.

                                       6
<PAGE>

10.  ISSUANCE  OF  SHARE  CERTIFICATES.  Subject  to the last  sentence  of this
     Section 10, upon receipt by the Company  prior to  expiration of the Option
     of a duly completed Notice of Exercise of Option accompanied by payment for
     the Shares being  purchased  pursuant to such Notice (and,  with respect to
     any Option  exercised  pursuant to Section 11 hereof by someone  other than
     the  Optionee,  accompanied  in  addition  by  proof  satisfactory  to  the
     Committee of the right of such person to exercise the Option),  the Company
     shall deliver to the Optionee,  within thirty (30) days of such receipt,  a
     certificate  for the number of Shares so purchased.  The Optionee shall not
     have any of the rights of a  stockholder  with  respect to the Shares which
     are subject to the Option unless and until a certificate  representing such
     Shares is issued to the  Optionee.  The  Company  shall not be  required to
     issue any  certificates for Shares upon the exercise of the Option prior to
     (i)  obtaining  any  Consents  which  the  Committee  shall,  in  its  sole
     discretion,   determine  to  be  necessary  or   advisable,   or  (ii)  the
     determination by the Committee,  in its sole  discretion,  that no Consents
     need be obtained.

                                       7
<PAGE>

11.  SUCCESSORS IN INTEREST, ETC. This Agreement shall be binding upon and inure
     to the benefit of any successor of the Company and the heirs,  estate,  and
     Personal  Representative of the Optionee.  A deceased  Optionee's  Personal
     Representative  shall act in the place and stead of the  deceased  Optionee
     with respect to exercising an Option or taking any other action pursuant to
     this Agreement.  The Option shall not be transferable other than by will or
     the laws of descent  and  distribution,  and the  Option  may be  exercised
     during the lifetime of the Optionee only by the Optionee;  provided, that a
     guardian or other legal representative who has been duly appointed for such
     Optionee may exercise the Option on behalf of the Optionee. Notwithstanding
     the  preceding  sentence,  with the  consent of the  Committee  in its sole
     discretion,  the  Optionee  may  transfer  the  rights  under the Option in
     respect of some or all of the Shares  which are  subject to the Option to a
     Family Member or a trust for the exclusive  benefit of the Optionee  and/or
     Family  Members,  or a  partnership  or other  entity  affiliated  with the
     Optionee that may be approved by the Committee. All terms and conditions of
     any  Option,  including  provisions  relating  to  the  termination  of the
     Optionee's  employment with the Company and its Affiliates,  shall continue
     to apply  following a transfer made in accordance  with this Section 11 and
     the Transferee  shall have no greater right to exercise the Option than the
     Optionee  would  have in the  absence  of the  transfer.  The Option may be
     exercised  by the  Transferee  only in  accordance  with the  terms of this
     Agreement and the  Transferee's  exercise of the Option shall be subject to
     the  Transferee  and/or  the  Optionee  satisfying  all of  the  conditions
     relating  to the  exercise  of the Option  including,  without  limitation,
     provisions  concerning  payment  of  the  Option  Exercise  Price  and  tax
     withholding.

12.  PROVISIONS OF PLAN CONTROL.  This Agreement is subject to all of the terms,
     conditions, and provisions of the Plan and to such rules, regulations,  and
     interpretations relating to the Plan as may be adopted by the Committee and
     as may be in  effect  from  time to time.  A copy of the  Plan is  attached
     hereto as Exhibit "A" and is incorporated herein by reference. In the event
     and to the extent that this Agreement conflicts or is inconsistent with the
     terms, conditions,  and provisions of the Plan, the Plan shall control, and
     this Agreement shall be deemed to be modified accordingly.

                                       8
<PAGE>

13.  NO LIABILITY  UPON  DISTRIBUTION  OF SHARES.  The  liability of the Company
     under this  Agreement  and any  distribution  of Shares made  hereunder  is
     limited  to  the   obligations  set  forth  herein  with  respect  to  such
     distribution  and no term or provision of this Agreement shall be construed
     to impose any  liability  on the Company or the  Committee  in favor of any
     person with respect to any loss, cost or expense which the person may incur
     in connection  with or arising out of any  transaction  in connection  with
     this Agreement.

14.  NO RIGHT TO BE EMPLOYED,  ETC.  Nothing in this Agreement shall confer upon
     the Optionee any right to continue as an Employee,  or to serve as a member
     of the Board, or to interfere with or limit either the right of the Company
     or an Affiliate to terminate his employment at any time or the right of the
     stockholders  of the Company to remove him as a member of the Board for any
     reason or with no reason.

15.  RESALE  LIMITATIONS.  The  Optionee  acknowledges  and agrees  that (a) the
     Shares he may acquire  upon  exercise of the Option may not be  transferred
     unless they become  registered  under the Act or unless the holder  thereof
     establishes to the  satisfaction of the Company that an exemption from such
     registration  is  available,  (b) the Company  will have no  obligation  to
     provide any such registration or take such steps as are necessary to permit
     sale of such Shares without registration pursuant to Rule 144 under the Act
     or otherwise, (c) at such time as such Shares may be disposed of in routine
     sales  without  registration  in reliance  on Rule 144 under the Act,  such
     disposition  may be made only in limited  amounts in accordance with all of
     the terms and  conditions  of Rule 144 and (d) if the Rule 144 exemption is
     not available,  compliance with some other exemption from registration will
     be required.

                                       9
<PAGE>

16.  WITHHOLDING TAXES.

     (a)  Whenever  Shares are to be  delivered  pursuant to the exercise of the
          Option,  the Committee may require as a condition of delivery that the
          Optionee remit an amount sufficient to satisfy all federal,  state and
          other governmental  withholding tax requirements  related thereto. The
          Company may, as a condition of the exercise of the Option, deduct from
          any salary or other payments due to the Optionee, an amount sufficient
          to satisfy all federal,  state and other governmental  withholding tax
          requirements  related  thereto or to the  delivery of any Shares under
          the Plan.

     (b)  With the  consent of the  Committee  in its sole  discretion,  (i) the
          Optionee may satisfy all or part of any  withholding  requirements  by
          delivery of unrestricted Shares owned by the Optionee for at least one
          year (or such other period as the  Committee may  determine)  having a
          Fair Market Value  (determined as of the date of such delivery)  equal
          to all or  part of the  amount  to be  withheld;  provided,  that  the
          Committee may require the Optionee to furnish an opinion of counsel or
          other  evidence  acceptable  to the  Committee to the effect that such
          delivery  would not result in the  Optionee  incurring  any  liability
          under  Section 16 of the Act and does not require  any Consent  and/or
          (ii) the Optionee may direct that Shares to be issued  pursuant to the
          exercise of the Option be used to satisfy any withholding  obligation;
          provided,  that for purposes of  satisfying  any such  obligation  the
          value of a Share shall be equal to the Spread.

17.  CONSTRUCTION.  The captions and section numbers appearing in this Agreement
     are inserted only as a matter of  convenience.  They do not define,  limit,
     construe  or  describe  the  scope  or  intent  of the  provisions  of this
     Agreement.  The  use  of  the  singular  or  plural  herein  shall  not  be
     restrictive  as to  number  and  shall be  interpreted  in all cases as the
     context shall require. The use of the feminine, masculine or neuter pronoun
     shall not be restrictive as to gender and shall be interpreted in all cases
     as the context may require.

                                       10
<PAGE>

18.  TIME  PERIODS,  ETC. Any action  required to be taken under this  Agreement
     within a  certain  number  of days  shall be taken  within  that  number of
     calendar  days;  provided,  however,  that if the last day for taking  such
     action falls on a weekend or a holiday,  the period  during such action may
     be taken shall be  automatically  extended to the next business day. If the
     day for taking any action, or on which any action may be taken,  under this
     Agreement falls on a weekend or a holiday,  such action may be taken on the
     next business day.

19.  GOVERNING  LAW.  This  Agreement  shall be  governed  by and  construed  in
     accordance  with  the  laws of the  State of  Delaware  and any  applicable
     federal law.

20.  NOTICES.  Except  as  otherwise  expressly  provided  herein,  all  notices
     hereunder  shall be in writing and  delivered  or mailed by  registered  or
     certified mail, return receipt requested, or by private, overnight delivery
     services (such as Federal Express) as follows:

                      If to the Company:
                      New Horizons Worldwide, Inc.
                      1231 East Dyer Road, Suite 140
                      Santa Ana, California 92705-5605
                      Attention:  Chief Financial Officer

                      If to the Optionee:

                      Last address set forth on the records
                      of the Company or its Affiliates

     or at such other address as either party may hereafter  designate by giving
     notice to the other party as set forth above.

21.  FURTHER  ASSURANCES.  From time to time  after the  exercise  of an Option,
     either party, upon request of the other and without further  consideration,
     shall  execute  and  deliver  to  the  requesting  party  any  document  or
     instrument, and shall take any other action as may be reasonably requested,
     to  give  effect  to the  exercise  of the  Option  and the  terms  of this
     Agreement.

                                       11
<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer, and the Optionee has hereunto set his
hand, all as of the day and year first above written.

                                                    NEW HORIZONS WORLDWIDE, INC.
                                                    (the "Company")


                                                    By:________________________
                                                       Its: ___________________



                                                    ___________________________
                                                    (the "Optionee")



                                       12
<PAGE>

                                 PROMISSORY NOTE


$300,000.00                                                  August 31, 1999


     FOR VALUE  RECEIVED,  Thomas J.  Bresnan  ("Maker")  promises to pay to the
order of New Horizons  Worldwide,  Inc.  ("Holder")  the  principal sum of Three
Hundred Thousand Dollars  ($300,000.00) in a single lump sum on August 31, 2004.
No interest shall be payable on such principal  amount unless and until it shall
have  become  due and  payable  hereunder,  after  which it shall  accrue and be
payable at the rate of ten percent (10%) per annum.

     All payments of principal and interest shall be paid in lawful money of the
United States of America to Holder at 1231 East Dyer Road, Suite 140, Santa Ana,
California  92705-5605,  or at such other place as the Holder shall designate in
writing to Maker from time to time.

     This Note may be prepaid  in whole or in part by Maker at any time  without
premium or penalty.

     This Note shall,  at the option of the Holder,  become  immediately due and
payable in the event (a) the Maker shall fail to make the  payment of  principal
when due; or (b) any court of  competent  jurisdiction  shall enter an order (i)
adjudicating  the bankruptcy of Maker,  (ii) appointing a trustee or approving a
petition  for, or effecting  an  arrangement  in  bankruptcy,  a  reorganization
pursuant to the Federal  Bankruptcy  Act or any other judicial  modification  or
alteration  of the rights of Holder or of any other  creditors,  or Maker  shall
file any  petition  or take or  consent  to any other  action  seeking  any such
judicial order, or make an assignment for the benefit of its creditors.

     Maker hereby waives  presentment,  demand for payment,  notice of dishonor,
notice of  protest,  and all other  notices or demands  in  connection  with the
delivery,  acceptance,  performance,  default,  endorsement or guarantee of this
Note.


                                                ________________________________
                                                Thomas J. Bresnan

<PAGE>


                                                  January 4, 2000

Thomas J. Bresnan
Chief Executive Officer
New Horizons Worldwide, Inc.
1231 East Dyer Road, Suite 110
Santa Ana, California 92705-5605

Dear Tom:

     This letter is intended  to amend your  letter  agreement  with the Company
dated July 27, 1999 concerning your relocation to California.  Specifically,  it
is hereby agreed as follows:

     1. Paragraph 4b shall be deleted and replaced by the following:

        "You will receive a lump sum benefit of $1,000,000;"

     2. A new paragraph 4e shall be added as follows:

          "If, in connection  with a Change of Control,  you incur any liability
     for excise tax under Section 4999 of the Internal  Revenue Code of 1986, as
     amended (relating to "excess parachute  payments") the Company will pay you
     an  additional  amount  so that  you will be in the  same  position,  after
     payment of all federal,  state and local taxes,  as you would have been had
     you not been subject to such excise tax."

     Please  confirm your  agreement with the foregoing by executing this letter
and the enclosed  duplicate in the space  provided and return one of such copies
to me.

                                                     Very truly yours,


                                                     Curtis Lee Smith, Jr.
                                                     Chairman of the Board

AGREED:

_______________________________
Thomas J. Bresnan
<PAGE>

                                 PROMISSORY NOTE


$100,000.00                                                    October 14, 1999


     FOR VALUE RECEIVED,  Kenneth M. Hagerstrom ("Maker") promises to pay to the
order of New  Horizons  Worldwide,  Inc.  ("Holder")  the  principal  sum of One
Hundred Thousand Dollars ($100,000.00) in a single lump sum on October 14, 2004.
No interest shall be payable on such principal  amount unless and until it shall
have  become  due and  payable  hereunder,  after  which it shall  accrue and be
payable at the rate of ten percent (10%) per annum.

     All payments of principal and interest shall be paid in lawful money of the
United States of America to Holder at 1231 East Dyer Road, Suite 140, Santa Ana,
California  92705-5605,  or at such other place as the Holder shall designate in
writing to Maker from time to time.

     This Note may be prepaid  in whole or in part by Maker at any time  without
premium or penalty.

     This Note shall,  at the option of the Holder,  become  immediately due and
payable in the  event(a)  the Maker shall fail to make the payment of  principal
when due; or (b) any court of  competent  jurisdiction  shall enter an order (i)
adjudicating  the bankruptcy of Maker,  (ii) appointing a trustee or approving a
petition  for, or effecting  an  arrangement  in  bankruptcy,  a  reorganization
pursuant to the Federal  Bankruptcy  Act or any other judicial  modification  or
alteration  of the rights of Holder or of any other  creditors,  or Maker  shall
file any  petition  or take or  consent  to any other  action  seeking  any such
judicial order, or make an assignment for the benefit of its creditors.

     Maker hereby waives  presentment,  demand for payment,  notice of dishonor,
notice of  protest,  and all other  notices or demands  in  connection  with the
delivery,  acceptance,  performance,  default,  endorsement or guarantee of this
Note.


                                                ________________________________
                                                Kenneth M. Hagerstrom

<PAGE>


January 4, 2000


Mr. Kenneth Hagerstrom
New Horizons Computer Learning Centers, Inc.
1231 E. Dyer Road, Suite 110
Santa Ana, CA 92705

Dear Ken:

This letter will  describe a severance  pay program which the Board of Directors
of New Horizons Worldwide, Inc. (the "Company") has approved for you and certain
other key executives of the Company and its  subsidiaries  and affiliates  (each
being  hereinafter  referred to as a "Subsidiary").  The program was approved by
the Board in an effort to provide the participants with assurances regarding the
economic  consequences of certain  terminations of employment and of a change of
control of the Company.  In that regard,  the following  arrangements are hereby
being made  available  to you.  Capitalized  terms not  previously  defined  are
defined in paragraph 7 below.

1.   You will be entitled to receive a Salary Continuation  Benefit for a period
     of six (6) months  should  your  employment  be  terminated  by the Company
     without Good Cause, by you for Good Reason, or as a result of your death or
     Disability.

2.   You will be  entitled  to receive a Lump Sum Benefit not later than one day
     after a Change of Control of the Company, if such should occur on or before
     December  31, 2001 and you remain  employed by the Company or a  Subsidiary
     through the date of such change of control.

3.   If, in  connection  with a Change of Control,  you incur any  liability for
     excise tax under  Section  4999 of the Internal  Revenue  Code of 1986,  as
     amended (relating to "excess parachute payments"), the Company will pay you
     an additional  amount (the "Tax  Gross-Up  Payment") so that you will be in
     the same position, after payment of all federal, state, and local taxes, as
     you would have been had you not been subject to such excise tax.

4.   The Salary Continuation Benefit, Lump Sum Benefit, and Tax Gross-Up Payment
     shall be in  addition to any other  benefits  payable by the Company or any
     Subsidiary or under any insurance payable to you.

5.   Your rights hereunder shall not be construed as a commitment by the Company
     or any Subsidiary to maintain your employment for any period of time, which
     shall  remain "at will" and be subject to  termination  at any time for any
     reason.
<PAGE>

6.   Your  rights  hereunder  will inure to the  benefit of your heirs and legal
     representatives,  but shall  otherwise not be assignable by you without the
     Company's  consent.  The Company's  obligations  hereunder shall be binding
     upon and inure to the benefit of its  successors  and assigns.  The Company
     further  agrees to cause its  obligations  hereunder to become binding upon
     any successor  resulting  from a Change of Control in the same manner as if
     no such  transaction  had occurred,  and the term  "Company" as used herein
     shall be so construed.

7.   By your  acknowledgment  below,  you hereby  confirm  the  confidentiality,
     non-competition,  non-solicitation and non-interference covenants set forth
     in your agreement with New Horizons Worldwide, Inc. dated December 13, 1997
     and that such  obligations  will survive your  termination of employment to
     the extent therein set forth.

8.   For  purposes  hereof the terms set forth  below  shall  have the  meanings
     thereafter set forth:

     (a)  "Change  of  Control"  shall have the  meaning  given such term in the
          Omnibus Equity Plan of the Company.

     (b)  "Disability"  shall mean any physical or mental impairment (a) because
          of which you do not perform the  principal  duties of your  employment
          for a period of at least 120  consecutive  days or for 180 days during
          any twelve month period or (b) which,  in the judgment of the Board of
          Directors  of  the  Company  based  on a  written  certification  of a
          physician  acceptable to it,  renders you incapable of performing  the
          principal duties of your employment.

     (c)  "Good   Cause"   shall  mean  (i)-any   fraud,   misappropriation   or
          embezzlement  by you in connection with the business of the Company or
          any  Subsidiary;  (ii)-any act of gross  negligence,  gross  corporate
          waste or disloyalty  by you with respect to, or the  commission of any
          intentional  tort  by you  against,  the  Company  or any  Subsidiary;
          (iii)-any conviction of or nolo contendere plea to a felony or a first
          degree  misdemeanor  by you that has or can  reasonably be expected to
          have a material  detrimental  effect on the Company or any Subsidiary;
          (iv)-repeated  absenteeism (other than medical leave, disability leave
          or other  approved  absence),  illegal drug use or  excessive  alcohol
          consumption by you; (v)-any gross neglect or persistent neglect by you
          to perform the duties assigned to you by the Board of Directors of the
          Company or a Subsidiary  or any designee to whom you report,  provided
          that you shall first have  received a written  notice which sets forth
          in  reasonable  detail  the  manner  in  which  you  have  grossly  or
          persistently  neglected  such duties and you shall have failed to cure
          the same within a period of 30 days after such notice is given, unless
          the same cannot  reasonably  be cured  within said 30-day  period,  in
          which  event you shall  have up to an  additional  90 days to cure the
          same so long as you are  diligently  seeking  to cure  the  same,  and
          provided,  further,  that the  Company  shall not be  required to give
          written  notice of,  nor shall you have a period to cure,  the same or
          any  similar  gross  neglect  or  persistent  neglect  as to which the
          Company shall have previously given written notice and which you shall
          have previously cured;  (vi)-any public conduct by you that has or can
          reasonably  be expected to have a material  detrimental  effect on the
          Company or any Subsidiary; or (vii) any voluntary resignation or other
          termination of employment effected by you under circumstances in which
          the Company or a Subsidiary could effect such termination  pursuant to
          the foregoing.
<PAGE>
     (d)  "Good Reason" shall mean (i)-a significant reduction in your position,
          duties, responsibilities, authority or power; (ii)-a reduction of your
          base salary;  or (iii)-a material  reduction or  discontinuance of the
          benefits  (taken as a whole) provided to you, unless such reduction or
          discontinuance  similarly  affects  other  senior  executives  of  the
          Company or a Subsidiary.

     (e)  "Lump Sum Benefit" shall mean $425,000,  less  applicable  withholding
          taxes.

     (f)  "Salary  Continuation  Benefit"  shall mean (i) your base salary as in
          effect  at the date of  termination  of  employment,  less  applicable
          withholding  taxes  (which  shall be  payable in  accordance  with the
          payroll  practices  then in effect) and (ii) an amount  sufficient  to
          reimburse you for the cost of purchasing  health insurance through the
          Company or a Subsidiary should you exercise your COBRA rights.

9.   This agreement  constitutes  the entire  understanding  between the parties
     concerning  its subject  matter,  supersedes any prior  agreements,  may be
     amended  only by a writing  signed by both parties and shall be governed by
     the  laws of the  State of  California  without  regard  to  principles  of
     conflicts of laws.

I hope you are pleased with this new benefit and are in agreement. If so, kindly
execute this letter and the enclosed duplicate in the space provided, and return
one of them to me.

Very truly yours,



Thomas J. Bresnan
Chief Executive Officer

AGREED:

____________________________________
Kenneth Hagerstrom

Date:    ___________________________

<PAGE>

January 4, 2000


Mr. Robert McMillan
New Horizons Computer Learning Centers, Inc.
1231 E. Dyer Road, Suite 110
Santa Ana, CA 92705

Dear Bob:

This letter will  describe a severance  pay program which the Board of Directors
of New Horizons Worldwide, Inc. (the "Company") has approved for you and certain
other key executives of the Company and its  subsidiaries  and affiliates  (each
being  hereinafter  referred to as a "Subsidiary").  The program was approved by
the Board in an effort to provide the participants with assurances regarding the
economic  consequences of certain  terminations of employment and of a change of
control of the Company.  In that regard,  the following  arrangements are hereby
being made  available  to you.  Capitalized  terms not  previously  defined  are
defined in paragraph 7 below.

1.   You will be entitled to receive a Salary Continuation  Benefit for a period
     of six (6) months  should  your  employment  be  terminated  by the Company
     without Good Cause, by you for Good Reason, or as a result of your death or
     Disability.

2.   You will be  entitled  to receive a Lump Sum Benefit not later than one day
     after a Change of Control of the Company, if such should occur on or before
     December  31, 2001 and you remain  employed by the Company or a  Subsidiary
     through the date of such change of control.

3.   If, in  connection  with a Change of Control,  you incur any  liability for
     excise tax under  Section  4999 of the Internal  Revenue  Code of 1986,  as
     amended (relating to "excess parachute payments"), the Company will pay you
     an additional  amount (the "Tax  Gross-Up  Payment") so that you will be in
     the same position, after payment of all federal, state, and local taxes, as
     you would have been had you not been subject to such excise tax.

4.   The Salary Continuation Benefit, Lump Sum Benefit, and Tax Gross-Up Payment
     shall be in  addition to any other  benefits  payable by the Company or any
     Subsidiary or under any insurance payable to you.

5.   Your rights hereunder shall not be construed as a commitment by the Company
     or any Subsidiary to maintain your employment for any period of time, which
     shall  remain "at will" and be subject to  termination  at any time for any
     reason.  6. Your rights  hereunder  will inure to the benefit of your heirs
     and legal  representatives,  but shall  otherwise  not be assignable by you
     without the Company's consent. The Company's obligations hereunder shall be
     binding upon and inure to the benefit of its  successors  and assigns.  The
     Company further agrees to cause its obligations hereunder to become binding
     upon any successor resulting from a Change of Control in the same manner as
     if no such transaction had occurred,  and the term "Company" as used herein
     shall be so construed.
<PAGE>
6.   Your  rights  hereunder  will inure to the  benefit of your heirs and legal
     representatives,  but shall otherwise not be  assignable by you without the
     Company's  consent.  The Company's  obligations  hereunder shall be binding
     upon and inure to the benefit of its  successors  and assigns.  The Company
     further  agrees to cause its  obligations  hereunder to become binding upon
     any successor  resulting  from a Change of control in the same manner as if
     no such  transaction  had occurred,  and the term  "Company" as used herein
     shall be so construed.

7.   By your  acknowledgment  below,  you hereby  confirm  the  confidentiality,
     non-competition,  non-solicitation and non-interference covenants set forth
     in your agreement with New Horizons  Education Corp. dated October 17, 1995
     and that such  obligations  will survive your  termination of employment to
     the extent therein set forth.

8.   For  purposes  hereof the terms set forth  below  shall  have the  meanings
     thereafter set forth:

     (a)  "Change  of  Control"  shall have the  meaning  given such term in the
          Omnibus Equity Plan of the Company.

     (b)  "Disability"  shall mean any physical or mental impairment (a) because
          of which you do not perform the  principal  duties of your  employment
          for a period of at least 120  consecutive  days or for 180 days during
          any twelve month period or (b) which,  in the judgment of the Board of
          Directors  of  the  Company  based  on a  written  certification  of a
          physician  acceptable to it,  renders you incapable of performing  the
          principal duties of your employment.

     (c)  "Good   Cause"   shall  mean  (i) any   fraud,   misappropriation   or
          embezzlement  by you in connection with the business of the Company or
          any  Subsidiary;  (ii) any act of gross  negligence,  gross  corporate
          waste or disloyalty  by you with respect to, or the  commission of any
          intentional  tort  by you  against,  the  Company  or any  Subsidiary;
          (iii) any conviction of or nolo contendere plea to a felony or a first
          degree  misdemeanor  by you that has or can  reasonably be expected to
          have a material  detrimental  effect on the Company or any Subsidiary;
          (iv) repeated  absenteeism (other than medical leave, disability leave
          or other  approved  absence),  illegal drug use or  excessive  alcohol
          consumption by you; (v) any gross neglect or persistent neglect by you
          to perform the duties assigned to you by the Board of Directors of the
          Company or a Subsidiary  or any designee to whom you report,  provided
          that you shall first have  received a written  notice which sets forth
          in  reasonable  detail  the  manner  in  which  you  have  grossly  or
          persistently  neglected  such duties and you shall have failed to cure
          the same within a period of 30 days after such notice is given, unless
          the same cannot  reasonably  be cured  within said 30-day  period,  in
          which  event you shall  have up to an  additional  90 days to cure the
          same so long as you are  diligently  seeking  to cure  the  same,  and
          provided,  further,  that the  Company  shall not be  required to give
          written  notice of,  nor shall you have a period to cure,  the same or
          any  similar  gross  neglect  or  persistent  neglect  as to which the
          Company shall have previously given written notice and which you shall
          have previously cured;  (vi) any public conduct by you that has or can
          reasonably  be expected to have a material  detrimental  effect on the
          Company or any Subsidiary; or (vii) any voluntary resignation or other
          termination of employment effected by you under circumstances in which
          the Company or a Subsidiary could effect such termination  pursuant to
          the foregoing.
<PAGE>

     (d)  "Good Reason" shall mean (i)-a significant reduction in your position,
          duties, responsibilities, authority or power; (ii)-a reduction of your
          base salary;  or (iii)-a material  reduction or  discontinuance of the
          benefits  (taken as a whole) provided to you, unless such reduction or
          discontinuance  similarly  affects  other  senior  executives  of  the
          Company or a Subsidiary.

     (e)  "Lump Sum Benefit" shall mean $300,000,  less  applicable  withholding
          taxes.

     (f)  "Salary  Continuation  Benefit"  shall mean (i) your base salary as in
          effect  at the date of  termination  of  employment,  less  applicable
          withholding  taxes  (which  shall be  payable in  accordance  with the
          payroll  practices  then in effect) and (ii) an amount  sufficient  to
          reimburse you for the cost of purchasing  health insurance through the
          Company or a Subsidiary should you exercise your COBRA rights.

9.   This agreement  constitutes  the entire  understanding  between the parties
     concerning  its subject  matter,  supersedes any prior  agreements,  may be
     amended  only by a writing  signed by both parties and shall be governed by
     the  laws of the  State of  California  without  regard  to  principles  of
     conflicts of laws.

I hope you are pleased with this new benefit and are in agreement. If so, kindly
execute this letter and the enclosed duplicate in the space provided, and return
one of them to me.

Very truly yours,



Thomas J. Bresnan
Chief Executive Officer

AGREED:

__________________________________
Robert McMillan

Date:    __________________________

<PAGE>





                                  OFFICE LEASE



                                 STADIUM GATEWAY











                       STADIUM GATEWAY ASSOCIATES, L.L.C.

                      a Delaware limited liability company,

                                  as Landlord,

                                       and

                          NEW HORIZONS WORLDWIDE, INC.,

                             a Delaware corporation,

                                   as Tenant.



<PAGE>



                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
ARTICLE 1   PREMISES, BUILDING, PROJECT, AND COMMON AREAS......................3
ARTICLE 2   LEASE TERM.........................................................4
ARTICLE 3   BASE RENT..........................................................6
ARTICLE 4   ADDITIONAL RENT....................................................6
ARTICLE 5   USE OF PREMISES...................................................12
ARTICLE 6   SERVICES AND UTILITIES............................................13
ARTICLE 7   REPAIRS...........................................................14
ARTICLE 8   ADDITIONS AND ALTERATIONS.........................................15
ARTICLE 9   COVENANT AGAINST LIENS............................................16
ARTICLE 10  INSURANCE.........................................................16
ARTICLE 11  DAMAGE AND DESTRUCTION............................................18
ARTICLE 12  NONWAIVER.........................................................20
ARTICLE 13  CONDEMNATION......................................................20
ARTICLE 14  ASSIGNMENT AND SUBLETTING.........................................20
ARTICLE 15  SURRENDER OF PREMISES; OWNERSHIP AND  REMOVAL OF TRADE FIXTURES...23
ARTICLE 16  HOLDING OVER......................................................23
ARTICLE 17  ESTOPPEL CERTIFICATES.............................................23
ARTICLE 18  SUBORDINATION.....................................................23
ARTICLE 19  DEFAULTS; REMEDIES................................................24
ARTICLE 20  COVENANT OF QUIET ENJOYMENT.......................................25
ARTICLE 21  INTENTIONALLY OMITTED.............................................26
ARTICLE 22  INTENTIONALLY OMITTED.............................................26
ARTICLE 23  SIGNS.............................................................26
ARTICLE 24  COMPLIANCE WITH LAW...............................................27
ARTICLE 25  LATE CHARGES......................................................27
ARTICLE 26  LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT..............27
ARTICLE 27  ENTRY BY LANDLORD.................................................28
ARTICLE 28  TENANT PARKING....................................................28
ARTICLE 29  MISCELLANEOUS PROVISIONS..........................................29

EXHIBITS
A        OUTLINE OF PREMISES
B        TENANT WORK LETTER
C        FORM OF NOTICE OF LEASE TERM DATES
D        RULES AND REGULATIONS
E        FORM OF TENANT'S ESTOPPEL CERTIFICATE
F        RECOGNITION OF COVENANTS, CONDITIONS, AND RESTRICTIONS


                                      (i)
<PAGE>

                                      INDEX

Abatement Event..............................................................14
Additional Passes.............................................................1
Additional Rent...............................................................6
Affiliate....................................................................22
all risks....................................................................17
Alterations..................................................................15
Applicable Laws..............................................................27
Applicable Reassessment......................................................11
as built.....................................................................15
Bank Prime Loan..............................................................27
Base Rent.....................................................................6
Base Taxes...................................................................10
Base Year.....................................................................7
BOMA..........................................................................3
Brokers......................................................................31
Builder's All Risk...........................................................16
Building......................................................................3
Building Common Areas.........................................................3
Building Hours...............................................................13
building standard............................................................11
Building Structure............................................................3
Building Systems..............................................................3
Buyout Premium................................................................5
CC&Rs........................................................................13
Code..........................................................................1
Commenced Construction........................................................4
Common Areas..................................................................3
Competing Business...........................................................12
Construction Commencement Date................................................4
Cosmetic Alterations.........................................................15
Cost Pools...................................................................10
Damage Termination Notice....................................................19
Direct Competitor............................................................12
Direct Expenses...............................................................7
Early Termination Notice......................................................4
Eligibility Period...........................................................14
Estimate.....................................................................10
Estimate Statement...........................................................10
Estimated Excess.............................................................10
Excess.......................................................................10
Excess Rent...................................................................5
Existing Landlord.............................................................5
Existing Lease Transferees....................................................5
Existing Lease Transfers......................................................5
Existing Premises.............................................................5
Expense Year..................................................................7
Force Majeure................................................................30
Hazardous Material............................................................8
Holidays.....................................................................13
HVAC.........................................................................13
Initial Term..................................................................4
Landlord......................................................................1
Landlord Parties.............................................................16
Landlord Repair Notice.......................................................18
Landlord's Reimbursement Amount...............................................5
Last Load Weekday Events.....................................................28
Lease.........................................................................1
Lease Commencement Date.......................................................4
Lease Expiration Date.........................................................4
Lease Year....................................................................4
Lines........................................................................32
Mail.........................................................................30
Market Rent...................................................................6
Monument Design  Specifications..............................................26
Monument Sign Notice.........................................................26
Notices......................................................................30
Objectionable Name...........................................................27
Operating Expenses............................................................7
Option Rent...................................................................6
Option Rent Notice............................................................6
Option Term...................................................................6
Original Improvements........................................................17

                                      (ii)
<PAGE>
Original Tenant...............................................................6
Other Improvements...........................................................32
Overlap Period...............................................................14
Parking Agreement............................................................13
Premises......................................................................3
Primary Passes................................................................1
Project.......................................................................3
Proposition 13...............................................................10
Proposition 13 Protection Amount.............................................11
Proposition 13 Purchase Price................................................11
Quoted Rent..................................................................21
Reassessment.................................................................11
Renovations..................................................................32
rent.........................................................................25
Rent..........................................................................6
Rooftop Sign.................................................................26
Rooftop Sign Design Specifications...........................................26
Rooftop Sign Notice..........................................................26
Sportstown Anaheim REA.......................................................13
Stadium Gateway...............................................................3
Statement....................................................................10
Subject Space................................................................20
Summary.......................................................................1
Tax Expenses..................................................................9
Tenant........................................................................1
Tenant Parties...............................................................16
Tenant Work Letter............................................................3
Tenant's Monument Signage....................................................26
Tenant's Security System.....................................................14
Tenant's Share...............................................................10
Termination Fee...............................................................5
Transfer.....................................................................22
Transfer Notice..............................................................20
Transfer Premium.............................................................21
Transferee...................................................................20
Transferee's Rent............................................................21
Transfers....................................................................20
Utility Estimate.............................................................13
worth at the time of award...................................................25

                                     (iii)
<PAGE>

                                 STADIUM GATEWAY

                                  OFFICE LEASE

     This Office Lease (the "Lease"),  dated as of the date set forth in Section
1 of the Summary of Basic Lease  Information (the "Summary"),  below, is made by
and between STADIUM GATEWAY  ASSOCIATES,  L.L.C., a Delaware  limited  liability
company ("Landlord"),  and NEW HORIZONS WORLDWIDE,  INC., a Delaware corporation
("Tenant").

                       SUMMARY OF BASIC LEASE INFORMATION

TERMS OF LEASE                          DESCRIPTION

 1.  Date:                              February 15, 2000

 2.  Premises(Article 1).

     2.1  Building:                     261,554 square foot office building to
                                        be constructed by Landlord, located in
                                        the Stadium Gateway, generally as
                                        depicted on Exhibit A-1 to the Office
                                        Lease.

     2.2  Premises:                     Approximately 75,000 rentable square
                                        feet of space located on a portion of
                                        the first (1st) and all of the second
                                        (2nd) floors of the Building, as further
                                        set forth in Exhibit A to the Office
                                        Lease.

 3.  Lease Term
     (Article 2).

     3.1  Length of Term:               10 years.

     3.2  Lease Commencement Date:      January 1, 2002

     3.3  Lease Expiration Date:        The last day of the tenth (10th) year
                                        following the Lease Commencement Date.

 4.  Base Rent (Article 3):

                                                 Monthly      Annual Rental Rate
                             Annual            Installment       per Rentable
     Lease Year            Base Rent          of Base Rent        Square Foot

       1-5            $   1,800,750.00      $   150,062.50         $   24.01

       6-10           $   1,890,750.00      $   157,562.50         $   25.21


 5.  Base Year(Article 4):              Calendar year 2002.

 6.  Tenant's Share                     Approximately 28.67%.
     (Article 4):

7.   Permitted Use                      Computer training classrooms (subject to
     (Article 5):                       the limitation set forth in Section 5.2
                                        of this Lease) and general office
                                        purposes consistent with the character
                                        of the Building as a first-class office
                                        building.

8.   Security Deposit                   NONE.
     (Article 21):

9.   Parking Pass Ratio                 Subject to the terms of Article 28, four
     (Article 28):                      (4) unreserved parking passes for every
                                        1,000 rentable square feet of the
                                        Premises ("Primary Passes"), together
                                        with three hundred (300) additional
                                        passes in the area to be designated by
                                        Landlord ("Additional Passes").

                                       1
<PAGE>

10.  Address of Tenant
     (Section 29.18):                New Horizons Worldwide, Inc.
                                         1231 E. Dyer Road
                                         Suite 110
                                         Santa Ana, California  92705-5643
                                         Attention:  Mr. Robert S. McMillan
                                         (Prior to Lease Commencement Date)

                                         and

                                         New Horizons Worldwide, Inc.
                                         1900 South State College Boulevard
                                         Suite 100
                                         Anaheim, California 92806
                                         Attention:  Mr. Robert S. McMillan
                                         (After Lease Commencement Date)

11.  Address of Landlord(Section 29.18): See Section 29.18 of the Lease.

12.  Broker(s)(Section 29.24):           TENANT:

                                          CB Richard Ellis
                                          17700 Castleton Street
                                          City of Industry, California 91748

                                          and


                                          LANDLORD:

                                          Cushman and Wakefield
                                          1920 Main Street
                                          Suite 100
                                          Irvine, California 92614


                                       2
<PAGE>

                                   ARTICLE 1

                  PREMISES, BUILDING, PROJECT, AND COMMON AREAS

1.1  Premises, Building, Project and Common Areas.

    1.1.1 THE PREMISES.  Notwithstanding anything in this Lease to the contrary,
          Landlord  and Tenant  hereby  acknowledge  and agree that (i) Landlord
          does not currently hold fee title to the Project, and (ii) if Landlord
          does  not  obtain   fee  title  to  the   Project  on  or  before  the
          "Construction  Commencement Date" (defined in Section 2.2 below) then,
          Landlord or Tenant  shall be entitled to  terminate  this Lease and in
          such event,  Tenant shall be entitled to the liquidated damages as set
          forth in Section 2.2,  below, of this Lease. Subject to the foregoing,
          Landlord  hereby  leases to  Tenant  and  Tenant  hereby  leases  from
          Landlord  the  premises  set forth in Section 2.2 of the Summary  (the
          "Premises").  The  outline of the  Premises  is set forth in Exhibit A
          attached  hereto  and each  floor or  floors of the  Premises  has the
          number of  rentable  square  feet as set forth in  Section  2.2 of the
          Summary.  The parties  hereto  agree that the lease of the Premises is
          upon and subject to the terms,  covenants  and  conditions  herein set
          forth,  and Tenant  covenants as a material part of the  consideration
          for  this  Lease  to keep  and  perform  each  and all of such  terms,
          covenants and  conditions by it to be kept and performed and that this
          Lease is made upon the  condition  of such  performance.  The  parties
          hereto hereby acknowledge that the purpose of Exhibit A is to show the
          approximate  location of the Premises in the  "Building," as that term
          is defined in Section  1.1.2,  below,  only,  and such  Exhibit is not
          meant to constitute an agreement, representation or warranty as to the
          construction of the Premises, the precise area thereof or the specific
          location  of  the   "Common   Areas,"  as  that  term  is  defined  in
          Section 1.1.3,  below, or the elements thereof or of the accessways to
          the  Premises  or the  "Project,"  as that term is  defined in Section
          1.1.2,  below.  Except as specifically  set forth in this Lease and in
          the Tenant Work Letter  attached hereto as Exhibit B (the "Tenant Work
          Letter"),  Landlord  shall not be  obligated to provide or pay for any
          improvement  work  or  services  related  to  the  improvement  of the
          Premises. Tenant also acknowledges that neither Landlord nor any agent
          of Landlord  has made any  representation  or warranty  regarding  the
          condition of the Premises, the Building or the Project or with respect
          to the suitability of any of the foregoing for the conduct of Tenant's
          business,  except  as  specifically  set  forth in this  Lease and the
          Tenant Work Letter.  Except as provided in the Tenant Work Letter, the
          taking of  possession  of the  Premises by Tenant  shall  conclusively
          establish that the Premises and the Building were at such time in good
          and  sanitary  order,   condition  and  repair.   Notwithstanding  the
          foregoing,  Landlord shall deliver the "Base, Shell and Core" (as that
          term is  defined in  Section 1.1  of the  Tenant  Work  Letter) of the
          Building,  which  Base,  Shell and Core  shall  include  the  building
          structure  ("Building  Structure") and the building systems ("Building
          Systems") as set forth in Schedule 1 to the Tenant Work Letter,  as of
          the  "Delivery  Date" as that term is  defined in  Section 1.1  of the
          Tenant Work Letter in the required  "Delivery  Condition"  (defined in
          Section 1.1 of the Tenant Work Letter).

    1.1.2 THE BUILDING AND THE PROJECT.  The Premises are a part of the building
          set forth in Section 2.1 of the Summary (the "Building"). The Building
          is part of a mixed use,  retail and office  project known as " Stadium
          Gateway"  ("Stadium  Gateway")  For purposes of this Lease,  this term
          "Project,",  shall  mean,  collectively,   (i) the  Building  and  the
          Building  Common  Areas,   (ii)  the  land  (which  is  improved  with
          landscaping, parking facilities and other improvements) upon which the
          Building is  located,  (iii)  those  portions  of the Stadium  Gateway
          Project to be used by Landlord  and the  occupants  and tenants of the
          Building pursuant to and (iv) at Landlord's reasonable discretion, any
          additional real property, areas, land, buildings or other improvements
          added thereto,  provided such addition shall not materially  adversely
          affect Tenant's  rights or materially  increase  Tenant's  obligations
          under this Lease.

    1.1.3 COMMON  AREAS.  Tenant  shall have the  non-exclusive  right to use in
          common with other tenants in the Project, and subject to the rules and
          regulations  referred to in Article 5 of this Lease, those portions of
          the Project which are provided,  from time to time,  for use in common
          by Landlord,  Tenant and any other tenants of the Project (such areas,
          together  with  such  other  portions  of the  Project  designated  by
          Landlord,  in its discretion,  including  certain areas designated for
          the exclusive use of certain tenants,  or to be shared by Landlord and
          certain tenants,  are  collectively  referred to herein as the "Common
          Areas").  The term  "Building  Common  Areas," as used in this  Lease,
          shall  mean the  portions  of the  Common  Areas  located  within  the
          Building  designated  as such by  Landlord.  The  manner  in which the
          Common Areas are  maintained  and operated  shall be at the reasonable
          discretion  of Landlord  and the use thereof  shall be subject to such
          rules,  regulations and restrictions as Landlord may make from time to
          time.   Landlord  reserves  the  right  to  close  temporarily,   make
          alterations or additions to, or change the location of elements of the
          Project and the Common Areas; provided, such alterations, additions or
          changes  do not  materially  interfere  with  Tenant's  access  to the
          Premises.

1.2  VERIFICATION OF RENTABLE SQUARE FEET OF PREMISES AND BUILDING. For purposes
     of this Lease,  "rentable  square  feet" and "usable  square feet" shall be
     calculated  pursuant to Standard  Method of Measuring  Floor Area in Office
     Building,  ANSI Z65.1 - 1996  ("BOMA").  Within  thirty (30) days after the
     Lease Commencement Date, Landlord's space  planner/architect  shall measure
     the rentable and usable square feet of the  Premises,  and  thereafter  the
     rentable  and usable  square  feet of the  Premises  and the  Building  are
     subject   to   verification   from  time  to  time  by   Landlord's   space
     planner/architect  and such  verification  shall be made in accordance with
     the  provisions  of this  Section 1.2. In the event that  Landlord's  space
     planner/architect  shall  determine  that the  rentable  or  usable  square
     footages  shall be  different  from  those set forth in this  Lease,  then,
     within ten (10)  business  days  following  notice  thereof from  Landlord,
     Tenant  shall be entitled to object in writing to such  determination  (the
     "Objection Notice"), in which event the parties shall meet and discuss such
     measurements within ten (10) business days following  Landlord's receipt of
     the  Objection  Notice.  If the parties  cannot agree upon the rentable and
     usable square footages  within such ten (10) business day period,  then the
     rentable  and  usable  square  footage  shall be  determined,  at  Tenant's
     expense,  in accordance  with the BOMA standard by a third party  architect
     selected  by  Landlord  and  approval  by  Tenant  in  Tenant's  reasonable
     discretion  (the "Third Party  Architect").  The finding of the Third Party
     Architect  shall be binding upon  Landlord and Tenant.  In the event that a
     remeasurement  pursuant to the terms of this Section 1.2  establishes  that
     the rentable  and/or usable square  footages  shall be different from those
     set forth in this Lease, all amounts,  percentages and figures appearing or
     referred  to in this Lease  based upon such  incorrect  amount  (including,
     without limitation, the amount of the "Rent" and any "Security Deposit," as
     those  terms are  defined in  Section  4.1 and  Article  21 of this  Lease,
     respectively) shall be modified in accordance with such  determination.  If
     such  determination is made, it will be confirmed in writing by Landlord to
     Tenant.

                                       3
<PAGE>

                                   ARTICLE 2

                                   LEASE TERM

2.1  INITIAL TERM.  The terms and provisions of this Lease shall be effective as
     of the date of this  Lease.  The term of this  Lease (the  "Initial  Term")
     shall be as set forth in Section 3.1 of the Summary,  shall commence on the
     date set forth in  Section  3.2 of the  Summary  (the  "Lease  Commencement
     Date"),  and shall  terminate  on the date set forth in Section  3.3 of the
     Summary  (the  "Lease   Expiration  Date")  unless  this  Lease  is  sooner
     terminated as hereinafter  provided.  For purposes of this Lease,  the term
     "Lease Year" shall mean each  consecutive  twelve (12) month period  during
     the Lease Term; provided, however, that the first Lease Year shall commence
     on the Lease Commencement Date and end on the last day of the twelfth month
     thereafter and the second and each succeeding  Lease Year shall commence on
     the first day of the next  calendar  month;  and further  provided that the
     last Lease Year shall end on the Lease  Expiration Date. At any time during
     the Lease Term,  Landlord may deliver to Tenant a notice in the form as set
     forth  in  Exhibit  C,  attached  hereto,  as a  confirmation  only  of the
     information  set forth  therein,  which Tenant shall  execute and return to
     Landlord within ten (10) days of receipt thereof.

2.2  PRE-COMMENCEMENT  DATE TERMINATION RIGHt.  Notwithstanding  anything to the
     contrary  contained in this Lease, in the event Landlord has not "Commenced
     Construction"  (defined,  below) of the  Building on or before July 1, 2000
     (the  "Construction  Commencement  Date"),  Tenant  shall  be  entitled  to
     terminate   this  Lease  upon  written   notice  to  Landlord  (the  "Early
     Termination  Notice"),  provided such Early Termination Notice is delivered
     to Landlord no later than the  earlier of (i) the date  Landlord  Commenced
     Construction  on the Building and (ii) 5:00 p.m.,  Pacific  Daylight  Time,
     July 31, 2000.  In the event Tenant does not deliver the Early  Termination
     Notice within the time period hereinabove provided,  Tenant shall be deemed
     to have waived  Tenant's  right to terminate  the Lease as provided in this
     Section  2.2. For purposes of this Lease,  "Commenced  Construction"  shall
     mean  that  Landlord  shall  have  commenced  demolition,   excavation,  or
     foundation  work  with  respect  to the  Building  in  accordance  with any
     applicable  permit  issued  by the  City of  Anaheim.  Notwithstanding  the
     foregoing,  the  Construction  Commencement  Date shall be  extended by any
     "Force Majeure"  (defined in Section 29.16,  below) delay;  provided in the
     event the  Construction  Commencement  Date is delayed  by a Force  Majeure
     delay beyond  December  31, 2000,  Tenant shall have the right to terminate
     this Lease as hereinafter set forth;  however,  in such event, Tenant shall
     not be  entitled  to  recover  any  damages  based on such  termination  as
     hereinafter  set forth in this Section  2.2. In the event  Landlord has not
     Commenced Construction on or before the Construction  Commencement Date, as
     the same may be extended by Force  Majeure  delays,  and Tenant  terminates
     this Lease as  hereinabove  provided in this Section  2.2,  Tenant shall be
     entitled  to recover  damages in the amount of Five  Hundred  Thousand  and
     No/100 Dollars  ($500,000.00)  from  Landlord,  which Landlord shall pay to
     Tenant within  fourteen (14) days following  written  demand  therefor from
     Tenant.  LANDLORD  AND  TENANT  AGREE  THAT IT  WOULD  BE  IMPRACTICAL  AND
     EXTREMELY  DIFFICULT TO ESTIMATE THE DAMAGES WHICH TENANT MAY SUFFER IN THE
     EVENT LANDLORD FAILS TO COMMENCE CONSTRUCTION ON OR BEFORE THE CONSTRUCTION
     COMMENCEMENT  DATE.  THEREFORE,  LANDLORD AND TENANT DO HEREBY AGREE THAT A
     REASONABLE  ESTIMATE OF THE TOTAL NET DETRIMENT THAT TENANT WOULD SUFFER IN
     THE EVENT THAT  LANDLORD  DOES NOT COMMENCE  CONSTRUCTION  ON OR BEFORE THE
     CONSTRUCTION  COMMENCEMENT DATE IS AND SHALL BE TENANT'S SOLE AND EXCLUSIVE
     REMEDY  (WHETHER AT LAW OR  EQUITY),  AND AN AMOUNT  EQUAL TO FIVE  HUNDRED
     THOUSAND AND NO/100 DOLLARS  ($500,000.00).  SAID AMOUNT SHALL BE THE FULL,
     AGREED AND LIQUIDATED  DAMAGES  RECOVERABLE BY TENANT,  ALL OTHER CLAIMS TO
     DAMAGES OR OTHER  REMEDIES  BEING HEREIN  EXPRESSLY  WAIVED BY TENANT.  THE
     PAYMENT  OF  SUCH  AMOUNT  AS  LIQUIDATED  DAMAGES  IS  NOT  INTENDED  AS A
     FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA  CIVIL CODE SECTIONS
     3275 OR 3369,  BUT IS INTENDED TO CONSTITUTE  LIQUIDATED  DAMAGES TO TENANT
     PURSUANT TO CALIFORNIA  CIVIL CODE  SECTIONS  1671,  1676 AND 1677.  TENANT
     HEREBY WAIVES THE  PROVISIONS OF CALIFORNIA  CIVIL CODE SECTION 3389.  UPON
     TERMINATION OF THIS LEASE AS PROVIDED IN THIS SECTION 2.2, THIS LEASE SHALL
     BE  TERMINATED   AND  NEITHER  PARTY  SHALL  HAVE  ANY  FURTHER  RIGHTS  OR
     OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT FOR THE RIGHT OF TENANT TO
     COLLECT SUCH LIQUIDATED DAMAGES FROM LANDLORD.

     Landlord's Initials:   __________            Tenant's Initials:   _________

2.3  Tenant's Existing Lease Obligation.

    2.3.1 REIMBURSEMENT  OF TENANT'S  EXISTING LEASE  OBLIGATIONS.  In the event
          this Lease is not terminated as provided in Section 2.2 above,  or for
          any other  reason on or before July 1, 2001,  effective  as of July 1,
          2001,  subject  to the  terms  of this  Section  2.3,  Landlord  shall
          reimburse  Tenant for Tenant's  "Monthly  Rent" and "Common  Operating
          Costs," as those terms are defined in the  "Existing  Lease"  (defined
          below),  accruing  under the Existing Lease after the later of (i) the
          date  occurring  ninety (90) days after the "Delivery  Date",  as that
          term is  defined  in Section 1 of the  Tenant  Work  Letter,  (ii) the
          occurrence of the "Base, Shell, and Core Completion Delivery Date", as
          that term is defined in Section 1 of the Tenant Work Letter, and (iii)
          July 1, 2001, and for no other  obligations  under the Existing Lease,
          up to  the  aggregate  amount  of  Eight  Hundred  Forty-Six  Thousand
          Forty-Eight    and   No/100   Dollars    ($846,048.00)    ("Landlord's
          Reimbursement Amount"). Landlord shall pay the "Existing Landlord", as
          defined below, for such amount, or portions thereof,  as and when they
          are due by  Tenant  under the  Existing  Lease;  provided  that to the
          extent  Tenant  does not vacate  the  "premises"  under the  "Existing
          Lease" as that term is defined  below,  on or before  ninety (90) days
          after the  commencement  of Landlord's  obligation  to pay  Landlord's
          Reimbursement  Amount,   Landlord's  obligations  hereunder  shall  be
          suspended until Tenant vacates such Premises. Landlord's Reimbursement
          Amount shall not include and Landlord shall not be required to pay for
          any rent  applicable  to the  "Temporary  Premises,"  as that  term is
          defined in the Existing  Lease.  For the purposes of this Section 2.3,
          the  "Existing  Lease" shall mean that certain  Building  Lease by and
          between Orange County Tech Center Associates, L.P., a Delaware limited
          partnership  (the  "Existing  Landlord")  and  New  Horizons  Computer
          Learning Centers,  Inc., a Delaware  corporation,  dated September 15,
          1995,  as amended by that  certain  First  Amendment  to Lease,  dated
          January 24, 1997  relating to certain  "Temporary  Premises"  and that
          Second  Amendment to Lease,  dated October 1, 1997 relating to certain
          "Mezzanine  Space", for premises located at 1231 East Dyer Road, Santa
          Ana,  California.  Landlord's  Reimbursement  Amount,  or any  portion
          thereof,  shall be made solely in accordance with this Section 2.3. To
          the  extent  Landlord  does not pay  Landlord's  Reimbursement  Amount
          within ten (10) business days notice from Tenant to Landlord that such
          amount is due to the Existing  Landlord,  upon five (5) business  days
          notice by Tenant  to  Landlord,  Tenant  shall be  entitled  to offset
          against  any Rent next due under  this  Lease  the  applicable  unpaid
          portion of the Landlord's Reimbursement Amount plus any late penalties
          incurred by Tenant in connection with Landlord's failure to timely pay
          under the Existing Lease.

                                       4
<PAGE>

    2.3.2 LANDLORD'S   SUBLEASING   RIGHTS.   In   consideration  of  Landlord's
          reimbursement to Tenant as hereinabove  provided,  Landlord shall have
          the right to solicit and negotiate with, on Tenant's behalf, potential
          subtenants,    assignees   or   other   occupants   ("Existing   Lease
          Transferees")  for one (1) or more  subleases,  assignments  or  other
          occupancy  agreements  ("Existing  Lease  Transfers") for space leased
          pursuant to the Existing Lease (the "Existing Premises"). Accordingly,
          Tenant shall  cooperate  fully with Landlord in any manner  reasonably
          requested  by  Landlord  with  respect  to  any  potential  transfers,
          including,  but not limited to,  showing the  Premises,  communicating
          with the potential Existing Lease  Transferees,  assisting Landlord to
          the fullest extent possible in communicating with and negotiating with
          the Existing  Landlord to obtain any consent of the Existing  Landlord
          with  respect to any proposed  Existing  Lease  Transfer,  which shall
          include  submitting  to the  Existing  Landlord  all  information  and
          documentation  regarding the terms of such Existing Lease Transfer for
          approval by the Existing Landlord,  assisting Landlord with respect to
          seeking the  Existing  Landlord's  approval of any  alteration  to the
          Existing   Premises,   and  executing  all   commercially   reasonable
          documentation  required to effect any such  Existing  Lease  Transfer.
          Further,  to  preserve  Landlord's  right  to  transfer  the  Existing
          Premises as set forth  hereunder,  Tenant shall not negotiate  with or
          enter into any Existing Lease Transfers for the Existing Premises,  or
          any portion  thereof,  without the prior  consent of  Landlord,  which
          consent may be withheld in Landlord's sole discretion. In the event of
          an Existing  Lease  Transfer  for the  Existing  Premises,  or portion
          thereof,  all rent received by Tenant  pursuant to such Existing Lease
          Transfer  shall be paid by Tenant to  Landlord  and,  in the event the
          rent or other  consideration  payable by the Existing Lease Transferee
          under such Existing Lease Transfer  exceeds the rent payable by Tenant
          to the Existing  Landlord under the Existing Lease with respect to the
          subject space (hereinafter the "Excess Rent"), Tenant shall distribute
          such Excess Rent in the following  order:  (i) first,  to the Existing
          Landlord to the extent required  pursuant to the Existing Lease;  (ii)
          next, to Landlord in an amount equal to all costs expended by Landlord
          in  connection  with any such  sublease,  including but not limited to
          costs  relating to any changes,  alterations  or  improvements  to the
          subleased   premises,   any  free  rent  reasonably  provided  to  the
          sublessee, legal fees, marketing costs, and any brokerage commissions;
          (iii)  next,  to  Landlord  in an amount  equal to any  portion of the
          Landlord  Reimbursement Amount theretofore paid by Landlord to Tenant;
          and (iv)  lastly,  only  after  full  payment  of all  amounts  in the
          preceding  clauses (i) - (iii),  the balance,  if any, to Landlord and
          Tenant, in equal shares.  Tenant's obligation to disburse Excess Rent,
          or any portion  thereof to the  Landlord as provided  herein  shall be
          deemed  Additional Rent under this Lease, and any failure by Tenant to
          promptly pay such amounts shall be a default under this Lease.

    2.3.3 LANDLORD'S  BUYOUT/TERMINATION  RIGHTS.  In further  consideration  of
          Landlord's  reimbursement to Tenant as hereinabove provided,  Landlord
          shall  have the  right to  negotiate,  on  Tenant's  behalf,  with the
          Existing  Landlord for an early  termination  of the  Existing  Lease.
          Tenant shall  cooperate  fully with Landlord in any manner  reasonably
          requested  by  Landlord  in  connection  with  any  such  termination,
          including,  without limitation,  assisting Landlord in the negotiation
          of any transaction  with the Existing  Landlord.  Tenant shall further
          execute all commercially  reasonable  documentation required to effect
          any such early termination,  provided either such transaction does not
          increase Tenant's current obligations under the Existing Lease. In the
          event Landlord negotiates a termination of the Existing Lease, and the
          Existing  Landlord pays to Tenant any amount in  connection  therewith
          (the "Buyout  Premium"),  Tenant shall  disburse the Buyout Premium as
          follows:  (i)  first,  to  Landlord  in an amount  equal to all or any
          portion of the  Landlord  Reimbursement  Amount  paid or to be paid by
          Landlord;  (ii)  next,  to  Landlord  in an  amount  equal  to  all of
          Landlord's  costs incurred in connection  with the  negotiation of the
          buyout,  including  but  not  limited  to  legal  fees  and  brokerage
          commissions,  if any; and (iii) lastly, only after full payment of the
          amounts set forth in the preceding  clauses (i) and (ii), the balance,
          if any, to Landlord and Tenant, in equal shares.  Tenant's  obligation
          to pay the Buyout  Premium,  or any  portion  thereof,  to Landlord as
          provided  herein shall be deemed to be Additional  Rent due under this
          Lease,  and failure to promptly  pay such  amounts  shall be a default
          under this  Lease.  In the event  that  Landlord  negotiates  an early
          termination  of the Existing  Lease which  includes a termination  fee
          payable by Tenant to the Existing Landlord (the "Termination Fee") and
          such Termination Fee is less than the Landlord's Reimbursement Amount,
          after  deducting any portion of the  Landlord's  Reimbursement  Amount
          previously  paid by Landlord,  Landlord shall pay the  Termination Fee
          (provided  that  Landlord  shall not be  obligated to pay to Tenant or
          otherwise  disburse any difference between the Termination Fee and any
          then remaining  balance of Landlord's  Reimbursement  Amount).  If the
          Termination Fee is greater than the then remaining balance of Landlord
          Reimbursement Amount, then Tenant shall have the right to elect to pay
          the difference or reject the proposed termination agreement.

                                       5
<PAGE>

2.4  OPTION TERM.

    2.4.1 OPTION RIGHT.  Landlord  hereby grants the Tenant named in the Summary
          (the "Original Tenant"), one (1) option to extend the Lease Term for a
          period of five (5) years (the  "Option  Term"),  which option shall be
          exercisable  only by written notice delivered by Tenant to Landlord as
          provided  below,  provided  that,  as of the date of  delivery of such
          notice,  Tenant is not in default  under this Lease and Tenant has not
          previously been in default under this Lease beyond the applicable cure
          period  provided  in this Lease  more than three (3) times  during the
          initial Lease Term. Upon the proper exercise of such option to extend,
          and provided that, as of the end of the initial Lease Term,  Tenant is
          not in default  under this Lease  beyond the  applicable  cure  period
          provided in this Lease and Tenant has not  previously  been in default
          under this Lease beyond the  applicable  cure period  provided in this
          Lease more than three (3) times  during the initial  Lease  Term,  the
          Lease Term, for the entire Premises then being leased by Tenant, shall
          be extended  for a period of five (5) years.  The rights  contained in
          this Section 2.4 shall be personal to Original  Tenant and may only be
          exercised by Original Tenant (and not any assignee, sublessee or other
          transferee  of the  Original  Tenant's  interest  in  this  Lease)  if
          Original  Tenant occupies at least  seventy-five  percent (75%) of the
          Premises.

    2.4.2 OPTION RENT.  The Rent  payable by Tenant  during the Option Term (the
          "Option  Rent")  shall  be  equal to the  greater  of (i) one  hundred
          percent  (100%)  of the  base  rent  (plus  any  additional  rent  and
          considering  any "base year" or "expense  stop"  applicable  thereto),
          including all escalations, at which tenants, as of the commencement of
          the  Option  Term,  are  leasing  non-sublease,  non-encumbered  space
          comparable  in  size,  location  and  quality  to the  Premises  for a
          comparable  term,  which  comparable  space is located in the Building
          taking  into  consideration  the  following  concessions:  (a)  rental
          abatement   concessions,   if  any,  being  granted  such  tenants  in
          connection with such comparable  space and (b) tenant  improvements or
          allowances  provided  or to be  provided  for such  comparable  space,
          taking  into  account,  and  deducting  the  value  of,  the  existing
          improvements  in the  Premises,  such  value to be based upon the age,
          quality  and  layout of the  improvements  and the extent to which the
          same could be utilized by Tenant  based upon the fact that the precise
          tenant improvements existing in the Premises are specifically suitable
          to Tenant (the "Market Rent") and (ii) the sum of (1) the monthly Base
          Rent due under this Lease for the Lease  month  immediately  preceding
          the  commencement  of the Option Term,  and (2) the amount of Tenant's
          Share of Direct Expenses payable by Tenant on an annual,  per rentable
          square  foot  basis  for  the  Premises   immediately   prior  to  the
          commencement  of the Option Term.  If, in  determining  the applicable
          Market Rent, Tenant is entitled to a tenant  improvement or comparable
          allowance  for the  improvement  of the  Premises,  Landlord  may,  at
          Landlord's  sole  option,  elect to grant all or a portion of any such
          allowance in accordance  with the following:  (1) to grant some or all
          of such allowance to Tenant in the form as described  above (i.e.,  as
          an  improvement  allowance),  and/or (2) to offset  against the rental
          rate  component  of the  Market  Rent  all or a  portion  of any  such
          allowance (in which case such portion of any such  allowance  provided
          in the form of a rental offset shall not be granted to Tenant.

    2.4.3 EXERCISE OF OPTION.  The option contained in this Section 2.4 shall be
          exercised by Tenant, if at all, and only in the following manner:  (i)
          Tenant shall deliver  written  notice to Landlord not less than twelve
          (12) months prior to the expiration of the initial Lease Term, stating
          that Tenant may be interested in exercising its option; (ii) Landlord,
          after receipt of Tenant's  notice,  shall deliver  notice (the "Option
          Rent  Notice") to Tenant not less than eleven (11) months prior to the
          expiration of the initial  Lease Term,  setting forth the Option Rent;
          and (iii) if Tenant wishes to exercise such option,  Tenant shall,  on
          or before the date  occurring  nine (9) months prior to the expiration
          of the initial Lease Term,  exercise the option by delivering  written
          notice thereof to Landlord.

                                   ARTICLE 3

                                    BASE RENT

     Tenant shall pay, without prior notice or demand, to Landlord or Landlord's
agent at the management office of the Project, or, at Landlord's option, at such
other place as Landlord may from time to time  designate in writing,  by a check
for  currency  which,  at the time of  payment,  is legal  tender for private or
public  debts in the United  States of America,  base rent ("Base  Rent") as set
forth in Section 4 of the Summary,  payable in equal monthly installments as set
forth in Section 4 of the  Summary in advance on or before the first day of each
and every calendar month during the Lease Term,  without any setoff or deduction
whatsoever  except as  otherwise  provided in this Lease.  The Base Rent for the
first full month of the Lease  Term shall be paid by Tenant to  Landlord  within
ten (10) business days  following  delivery of notice by Landlord to Tenant that
Landlord has Commenced  Construction  as provided in Section 2.2,  above. If any
Rent payment date (including the Lease  Commencement Date) falls on a day of the
month  other than the first day of such month or if any payment of Rent is for a
period which is shorter than one month,  the Rent for any fractional month shall
accrue on a daily basis for the period from the date such  payment is due to the
end of such  calendar  month or to the end of the  Lease  Term at a rate per day
which is equal to 1/365 of the  applicable  annual Rent.  All other  payments or
adjustments  required  to be made  under the terms of this  Lease  that  require
proration on a time basis shall be prorated on the same basis. ARTICLE 4

                                 ADDITIONAL RENT

4.1  GENERAL  TERMS.  In addition to paying the Base Rent specified in Article 3
     of this Lease,  Tenant  shall pay  "Tenant's  Share" of the annual  "Direct
     Expenses,"  as those terms are defined in Sections  4.2.6 and 4.2.2 of this
     Lease,  respectively,  which are in excess of the amount of Direct Expenses
     applicable  to the "Base  Year," as that term is defined in Section  4.2.1,
     below;  provided,  however,  that in no event shall any  decrease in Direct
     Expenses  for any  Expense  Year below  Direct  Expenses  for the Base Year
     entitle  Tenant to any decrease in Base Rent or any credit against sums due
     under this Lease. Such payments by Tenant,  together with any and all other
     amounts payable by Tenant to Landlord  pursuant to the terms of this Lease,
     are hereinafter  collectively referred to as the "Additional Rent", and the
     Base Rent and the Additional  Rent are herein  collectively  referred to as
     "Rent." All amounts due under this  Article 4 as  Additional  Rent shall be
     payable  for the same  periods  and in the same  manner  as the Base  Rent.
     Without  limitation  on other  obligations  of  Tenant  which  survive  the
     expiration  of the  Lease  Term,  the  obligations  of  Tenant  to pay  the
     Additional Rent provided for in this Article 4 shall survive the expiration
     of the Lease Term.

                                       6
<PAGE>

4.2  DEFINITIONS  OF KEY TERMS  RELATING  TO  ADDITIONAL  RENT.  As used in this
     Article 4, the  following  terms shall have the  meanings  hereinafter  set
     forth:

    4.2.1 "Base  Year"  shall  mean the  period  set  forth in  Section 5 of the
          Summary.

    4.2.2 "Direct Expenses" shall mean "Operating Expenses" and "Tax Expenses."

    4.2.3 "Expense  Year" shall mean each  calendar year in which any portion of
          the Lease Term falls, through and including the calendar year in which
          the Lease Term expires, provided that Landlord, upon notice to Tenant,
          may change the Expense Year from time to time to any other twelve (12)
          consecutive  month  period,  and,  in the  event of any  such  change,
          Tenant's Share of Direct Expenses shall be equitably  adjusted for any
          Expense Year involved in any such change.

    4.2.4 "Operating  Expenses"  shall mean all  expenses,  costs and amounts of
          every  kind and  nature  which  Landlord  pays or  accrues  during any
          Expense  Year  because  of  or  in  connection   with  the  ownership,
          management, maintenance, security, repair, replacement, restoration or
          operation of the Project, or any portion thereof. Without limiting the
          generality of the foregoing,  Operating  Expenses  shall  specifically
          include any and all of the  following:  (i) the cost of supplying  all
          utilities,  excluding HVAC (except to the extent paid by Tenant or any
          other tenant  directly to the service  provider or to  Landlord),  the
          cost of operating, repairing, maintaining, and renovating the utility,
          telephone, mechanical, sanitary, storm drainage, and elevator systems,
          and the  cost of  maintenance  and  service  contracts  in  connection
          therewith;  (ii)  the  cost of  licenses,  certificates,  permits  and
          inspections  and the cost of contesting  any  governmental  enactments
          which  may  affect  Operating  Expenses,  and the  costs  incurred  in
          connection with a transportation  system management program or similar
          program;  (iii)  the cost of all  insurance  carried  by  Landlord  in
          connection with the Project; (iv) the cost of landscaping,  relamping,
          and  all  supplies,   tools,  equipment  and  materials  used  in  the
          operation,  repair and  maintenance  of the  Project,  or any  portion
          thereof;  (v) costs  incurred in  connection  with the  parking  areas
          servicing the Project; (vi) fees and other costs, including management
          fees,  consulting  fees,  legal  fees  and  accounting  fees,  of  all
          contractors   and  consultants  in  connection  with  the  management,
          operation, maintenance and repair of the Project; (vii) payments under
          any  equipment  rental  agreements  and the fair  rental  value of any
          management office space; (viii) wages, salaries and other compensation
          and benefits,  including taxes levied thereon,  of all persons engaged
          in the operation,  maintenance and security of the Project; (ix) costs
          under  any  instrument  pertaining  to the  sharing  of  costs  by the
          Project;  (x) operation,  repair,  maintenance  and replacement of all
          systems and equipment and components  thereof of the Building  (except
          to the  extent  paid by  Tenant or any other  tenant  directly  to the
          service provider or to Landlord); (xi) the cost of janitorial,  alarm,
          security and other  services  (except to the extent paid by any tenant
          directly to the service provider or Landlord), replacement of wall and
          floor   coverings,   ceiling  tiles  and  fixtures  in  common  areas,
          maintenance and replacement of curbs and walkways, repair to roofs and
          re-roofing;  (xii) amortization (including interest on the unamortized
          cost) of the cost of  acquiring  or the  rental  expense  of  personal
          property used in the maintenance, operation and repair of the Project,
          or any portion  thereof;  (xiii) the cost of capital  improvements  or
          other  costs  incurred  in  connection  with the Project (A) which are
          intended to effect  economies in the operation or  maintenance  of the
          Project, or any portion thereof,  (B) that are required to comply with
          present  or   anticipated   conservation   programs,   (C)  which  are
          replacements or modifications  of  nonstructural  items located in the
          Common  Areas  required  to keep the  Common  Areas  in good  order or
          condition,  (D)  that  are  required  under  any  governmental  law or
          regulation,  or (E) that  relate to the HVAC  system for the  Project;
          provided,  however,  that any capital  expenditure  shall be amortized
          with  interest over its  reasonable  useful life;  (xiv) costs,  fees,
          charges or  assessments  imposed  by, or  resulting  from any  mandate
          imposed on Landlord by, any  federal,  state or local  government  for
          fire and police  protection,  trash removal,  community  services,  or
          other services which do not constitute  "Tax Expenses" as that term is
          defined in Section 4.2.5, below; and (xv) payments under any easement,
          license, operating  agreement,  declaration, restrictive  covenant, or
          instrument  pertaining t o  the  sharing  of  costs  by  the  Building
          (including,  without limitation, costs payable  under the  "Sportstown
          Anaheim REA" and "Parking Agreement" [defined in Section 5.3, below]).
          Notwithstanding  the foregoing, Operating Expenses shall not, however,
          include:

          (a)  costs,  including  marketing  costs,  legal fees, space planners'
               fees,  advertising and promotional  expenses,  and brokerage fees
               incurred  in  connection   with  the  original   construction  or
               development,  or original or future  leasing of the Project,  and
               costs,  including permit,  license and inspection costs, incurred
               with respect to the installation of tenant  improvements made for
               new tenants in the Project or incurred in renovating or otherwise
               improving,  decorating, painting or redecorating vacant space for
               tenants or other  occupants of the Project  (excluding,  however,
               such costs relating to any common areas of the Project or parking
               facilities);

          (b)  except  as set forth in items  (xii),  (xiii),  and (xiv)  above,
               depreciation,  interest and  principal  payments on mortgages and
               other  debt  costs,  if any,  penalties  and  interest,  costs of
               capital   repairs   and   alterations,   and  costs  of   capital
               improvements and equipment;

          (c)  costs for which  the  Landlord  is  reimbursed  by any  tenant or
               occupant  of the  Project or by  insurance  by its carrier or any
               tenant's  carrier or by anyone else, and electric power costs for
               which any tenant directly contracts with the local public service
               company;

          (d)  any bad debt loss,  rent loss,  or reserves for bad debts or rent
               loss;

          (e)  costs  associated  with  the  operation  of the  business  of the
               partnership or entity which constitutes the Landlord, as the same
               are  distinguished  from the costs of  operation  of the  Project
               (which  shall  specifically  include,  but  not  be  limited  to,
               accounting  costs  associated with the operation of the Project).
               Costs  associated  with  the  operation  of the  business  of the
               partnership  or entity which  constitutes  the  Landlord  include
               costs of  partnership  accounting  and  legal  matters,  costs of
               defending any lawsuits with any mortgagee  (except as the actions
               of the Tenant may be in issue),  costs of  selling,  syndicating,
               financing,  mortgaging  or  hypothecating  any of the  Landlord's
               interest in the Project,  and costs  incurred in connection  with
               any disputes between Landlord and its employees, between Landlord
               and Project management,  or between Landlord and other tenants or
               occupants,  and Landlord's general corporate overhead and general
               and administrative expenses;

                                       7
<PAGE>

          (f)  the  wages  and  benefits  of any  employee  who does not  devote
               substantially  all of his or her  employed  time  to the  Project
               unless such wages and benefits are prorated to reflect time spent
               on operating  and managing  the Project  vis-a-vis  time spent on
               matters   unrelated  to  operating   and  managing  the  Project;
               provided,  that in no event shall Operating Expenses for purposes
               of this Lease  include  wages  and/or  benefits  attributable  to
               personnel above the level of Project manager or Project engineer;

          (g)  amount paid as ground rental for the Project by the Landlord;

          (h)  except  for a  Project  management  fee  to  the  extent  allowed
               pursuant to item (m), below,  overhead and profit  increment paid
               to the Landlord or to  subsidiaries or affiliates of the Landlord
               for  services in the  Project to the extent the same  exceeds the
               costs  of  such  services  rendered  by  qualified,   first-class
               unaffiliated third parties on a competitive basis;

          (i)  any compensation  paid to clerks,  attendants or other persons in
               commercial  concessions  operated by the Landlord,  provided that
               any  compensation  paid to any  concierge at the Project shall be
               includable as an Operating Expense;

          (j)  rentals  and other  related  expenses  incurred  in  leasing  air
               conditioning  systems,  elevators  or  other  equipment  which if
               purchased  the cost of which  would be  excluded  from  Operating
               Expenses as a capital cost,  except  equipment not affixed to the
               Project which is used in providing janitorial or similar services
               and, further  excepting from this exclusion such equipment rented
               or leased to remedy or ameliorate  an emergency  condition in the
               Project ;

          (k)  all items and  services  for which  Tenant or any other tenant in
               the  Project  reimburses  Landlord  or  which  Landlord  provides
               selectively  to one or more tenants  (other than Tenant)  without
               reimbursement;

          (l)  costs,  other than those  incurred  in ordinary  maintenance  and
               repair, for sculpture,  paintings,  fountains or other objects of
               art;

          (m)  fees payable by Landlord for  management of the Project in excess
               of three and one-half  percent (3.5%) (the  "Management Fee Cap")
               of Landlord's gross rental  revenues,  adjusted and grossed up to
               reflect a one hundred  percent  (100%)  occupancy of the Building
               with all tenants paying rent, including base rent, pass-throughs,
               and parking fees (but  excluding the cost of after hours services
               or  utilities)  from the Project for any calendar year or portion
               thereof;

          (n)  any costs expressly excluded from Operating Expenses elsewhere in
               this Lease;

          (o)  rent  for  any  office  space  occupied  by  Project   management
               personnel  to the extent the size or rental  rate of such  office
               space  exceeds  the size or fair  market  rental  value of office
               space   occupied  by  management   personnel  of  the  Comparable
               Buildings in the vicinity of the Building,  with adjustment where
               appropriate for the size of the applicable project;

          (p)  costs arising from the gross  negligence or wilful  misconduct of
               Landlord  or its  agents,  employees,  vendors,  contractors,  or
               providers of materials or services;

          (q)  costs  incurred  to comply  with laws  relating to the removal of
               hazardous material (as defined under applicable law) and asbestos
               containing material  (collectively,  "Hazardous  Material") which
               was in existence  in the Building or on the Project  prior to the
               Lease Commencement Date, and was of such a nature that a federal,
               State or  municipal  governmental  authority,  if it had then had
               knowledge  of the  presence of such  Hazardous  Material,  in the
               state,  and  under the  conditions  that it then  existed  in the
               Building or on the Project,  would have then required the removal
               of such  Hazardous  Material  or other  remedial  or  containment
               action with respect  thereto;  costs incurred with respect to any
               Hazardous  Material  which was in existence in the Building or on
               the  Project  prior to the  Lease  Commencement  Date,  and which
               Landlord  is  obligated  to abate or  remediate  after  the Lease
               Commencement  Date in accordance with an abatement or remediation
               plan which was in effect  prior to the Lease  Commencement  Date;
               and costs incurred to remove, remedy, contain, or treat Hazardous
               Material,  which Hazardous  Material is brought into the Building
               or onto the  Project  after the date  hereof by  Landlord  or any
               other  tenant of the  Project  and is of such a  nature,  at that
               time, that a federal, State or municipal governmental  authority,
               if it had then had  knowledge of the  presence of such  Hazardous
               Material,  in the state,  and under the conditions,  that it then
               exists  in  the  Building  or on the  Project,  would  have  then
               required the removal of such Hazardous Material or other remedial
               or containment action with respect thereto;

          (r)  costs   arising   from   Landlord's   charitable   or   political
               contributions;

          (s)  any gifts provided to any entity whatsoever,  including,  but not
               limited  to,   Tenant,   other   tenants,   employees,   vendors,
               contractors, prospective tenants and agents;

          (t)  the   cost  of  any   magazine,   newspaper,   trade   or   other
               subscriptions;

                                       8
<PAGE>

          (u)  any costs covered by any warranty,  rebate,  guarantee or service
               contract  which are actually  collected by Landlord  (which shall
               not prohibit  Landlord from passing through the costs of any such
               service contract if otherwise includable in Operating Expenses);

          (v)  marketing costs,  including leasing commissions,  attorneys' fees
               in connection  with the  negotiation  and preparation of letters,
               deal  memos,   letters  of  intent,   leases,   subleases  and/or
               assignments,  space planning costs,  and other costs and expenses
               incurred in connection  with lease,  sublease  and/or  assignment
               negotiations and transactions with present or prospective tenants
               or other occupants of the Building, including attorneys' fees and
               other costs and expenditures incurred in connection with disputes
               with  present or  prospective  tenants or other  occupants of the
               Building:

          (w)  advertising and promotional  expenditures,  and costs of signs in
               or on the Building identifying the owner of the Building or other
               tenants' signs;

          (x)  bad debt  expenses and  interest,  principal,  points and fees on
               debts (except in connection with the financing of items which may
               be  included  in  Operating  Expenses)  or  amortization  on  any
               mortgage or  mortgages or any other debt  instrument  encumbering
               the  Building  or the  Project  (including  the land on which the
               Building is situated);

          (y)  tax  penalties  incurred  as a result of  Landlord's  negligence,
               inability or  unwillingness to make payments or file returns when
               due; and

          (z)  all assessments and premiums which are not  specifically  charged
               to Tenant  because of what Tenant has done,  which can be paid by
               Landlord  in  installments,  shall  be  paid by  Landlord  in the
               maximum  number of  installments  permitted by law (except to the
               extent  inconsistent  with the general practice of the Comparable
               Buildings)  and shall be included as  Operations  Expenses in the
               year in which the  assessment or premium  installment is actually
               paid; and

          (aa) costs  relating  to the HVAC  system  servicing  the  Premises or
               Building  and costs of  electricity  to the  extent  supplied  to
               tenant occupied portions of the Building.

     If Landlord is not furnishing  any particular  work or service (the cost of
which, if performed by Landlord,  would be included in Operating  Expenses) to a
tenant  who has  undertaken  to  perform  such  work or  service  in lieu of the
performance  thereof  by  Landlord,  Operating  Expenses  shall be  deemed to be
increased by an amount equal to the  additional  Operating  Expenses which would
reasonably  have been  incurred  during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If the Project is not
at least one hundred percent (100%) occupied during all or a portion of the Base
Year or any Expense Year,  Landlord may elect to make an appropriate  adjustment
to the components of Operating Expenses for such year to determine the amount of
Operating  Expenses  that  would have been  incurred  had the  Project  been one
hundred percent (100%) occupied; and the amount so determined shall be deemed to
have been the amount of Operating Expenses for such year. Operating Expenses for
the  Base  Year  shall  not  include  market-wide  labor-rate  increases  due to
extraordinary  circumstances,  including,  but  not  limited  to,  boycotts  and
strikes,   and  utility  rate  increases  due  to  extraordinary   circumstances
including, but not limited to, conservation surcharges,  boycotts,  embargoes or
other shortages,  or amortized costs relating to capital improvements.  Landlord
shall not (i) make a profit by charging  items to  Operating  Expenses  that are
otherwise also charged separately to others and (ii) subject to Landlord's right
to  adjust  the  components  of  Operating  Expenses  described  above  in  this
paragraph,  collect Operating  Expenses from Tenant and all other tenants in the
Building in an amount in excess of what Landlord  actually  incurs for the items
included  in  Operating  Expenses.  In no event shall the  components  of Direct
Expenses  for any  Expense  Year  related to  electrical  costs be less than the
components of Direct Expenses  related to electrical costs in the Base Year. All
assessments and premiums which are not specifically charged to Tenant because of
what Tenant has done,  which can be paid by Landlord in  installments,  shall be
paid by Landlord in the maximum number of installments  permitted by law and not
included  as  Expenses  except in the year in which the  assessment  or  premium
installment is actually paid; provided, however, that if the prevailing practice
in other  comparable  office buildings in the vicinity of the Building is to pay
such  assessments  or premiums on an earlier  basis,  and Landlord  pays on such
basis,  such  assessments  or premiums  shall be included in Expenses as paid by
Landlord.

     4.2.5 Taxes.

          4.2.5.1 "Tax Expenses" shall mean all federal, state, county, or local
               governmental  or  municipal   taxes,   fees,   charges  or  other
               impositions of every kind and nature,  whether general,  special,
               ordinary or extraordinary,  (including,  without limitation, real
               estate taxes,  general and special  assessments,  transit  taxes,
               leasehold  taxes  or  taxes  based  upon  the  receipt  of  rent,
               including gross receipts or sales taxes applicable to the receipt
               of rent, unless required to be paid by Tenant,  personal property
               taxes imposed upon the fixtures, machinery, equipment, apparatus,
               systems  and  equipment,   appurtenances,   furniture  and  other
               personal  property  used in connection  with the Project,  or any
               portion  thereof),  which  shall be paid or  accrued  during  any
               Expense Year (without regard to any different fiscal year used by
               such  governmental  or  municipal  authority)  because  of  or in
               connection  with the  ownership,  leasing  and  operation  of the
               Project, or any portion thereof.  For purposes of this Lease, Tax
               Expenses shall be calculated as if the Tenant Improvements in the
               Building are fully constructed and the Project, the Building, and
               all tenant  improvements  in the Building were fully assessed for
               real estate tax purposes, and accordingly,  Tax Expenses shall be
               deemed to be increased appropriately.

          4.2.5.2 Tax Expenses shall include, without limitation: (i) Any tax on
               the rent, right to rent or other income from the Project,  or any
               portion  thereof,  or as against  the  business  of  leasing  the
               Project, or any portion thereof;  (ii) Any assessment,  tax, fee,
               levy or charge in addition to, or in  substitution,  partially or
               totally,  of any assessment,  tax, fee, levy or charge previously
               included  within the  definition  of real  property tax, it being
               acknowledged  by Tenant  and  Landlord  that  Proposition  13 was
               adopted by the voters of the State of California in the June 1978
               election  ("Proposition  13") and that assessments,  taxes, fees,
               levies and charges may be imposed by  governmental  agencies  for
               such  services  as fire  protection,  street,  sidewalk  and road
               maintenance,  refuse removal and for other governmental  services
               formerly provided without charge to property owners or occupants,
               and,  in further  recognition  of the  decrease  in the level and
               quality of  governmental  services  and  amenities as a result of
               Proposition 13, Tax Expenses shall also include any  governmental
               or private  assessments or the Project's  contribution  towards a
               governmental  or private  cost-sharing  agreement  provided  such
               agreements  are entered into as a  substitution  for services and
               amenities normally provided by governmental  agencies;  and (iii)
               Any  assessment,  tax,  fee,  levy,  or  charge  allocable  to or
               measured  by  the  area  of the  Premises  or  the  Rent  payable
               hereunder,  including,  without limitation, any business or gross
               income  tax or excise  tax with  respect  to the  receipt of such
               rent,  or  upon  or  with  respect  to the  possession,  leasing,
               operating,  management,  maintenance,  alteration, repair, use or
               occupancy by Tenant of the Premises, or any portion thereof.

                                       9
<PAGE>

          4.2.5.3  Any  costs  and  expenses  (including,   without  limitation,
               reasonable  attorneys'  fees)  incurred in attempting to protest,
               reduce or minimize Tax Expenses shall be included in Tax Expenses
               in the Expense Year such expenses are paid.  Tax refunds shall be
               credited  against Tax Expenses and refunded to Tenant  regardless
               of when  received,  based on the Expense Year to which the refund
               is  applicable,  provided that in no event shall the amount to be
               refunded  to Tenant for any such  Expense  Year  exceed the total
               amount paid by Tenant as Additional Rent under this Article 4 for
               such Expense  Year.  If Tax  Expenses  for any period  during the
               Lease Term or any extension  thereof are increased  after payment
               thereof for any reason, including,  without limitation,  error or
               reassessment by applicable governmental or municipal authorities,
               Tenant shall pay Landlord upon demand  Tenant's Share of any such
               increased  Tax  Expenses  included by  Landlord  as Building  Tax
               Expenses  pursuant  to the terms of this  Lease.  Notwithstanding
               anything to the contrary  contained in this Section 4.2.5 (except
               as set forth in Section 4.2.5.1,  above), there shall be excluded
               from Tax Expenses (i) all excess profits taxes,  franchise taxes,
               gift taxes,  capital  stock  taxes,  inheritance  and  succession
               taxes,  estate taxes,  federal and state income taxes,  and other
               taxes to the  extent  applicable  to  Landlord's  general  or net
               income (as opposed to rents,  receipts or income  attributable to
               operations at the Project),  (ii) any items included as Operating
               Expenses, and (iii) any items paid by Tenant under Section 4.5 of
               this Lease.

          4.2.5.4 The amount of Tax Expenses for the Base Year  attributable  to
               the valuation of the Project,  inclusive of tenant  improvements,
               shall be known as the "Base  Taxes".  If in any  comparison  year
               subsequent to the Base Year, the amount of Tax Expenses decreases
               below  the  amount  of  Base  Taxes,  then  for  purposes  of all
               subsequent  comparison  years,  including the comparison  year in
               which such decrease in Tax Expenses occurred, the Base Taxes, and
               therefore the Base Year, shall be decreased by an amount equal to
               the decrease in Tax Expenses.

    4.2.6 "Tenant's  Share" shall mean the  percentage set forth in Section 6 of
          the Summary.

4.3  Allocation of Direct Expenses.

    4.3.1 Landlord  shall  have  the  right,  from  time to time,  to  equitably
          allocate  some or all of the Direct  Expenses  for the  Project  among
          different portions or occupants of the Project (the "Cost Pools"),  in
          Landlord's  reasonable  discretion.  Such Cost Pools may include,  but
          shall not be limited to, the office  space  tenants of the  Building ,
          and the retail  space  tenants of the  Building . The Direct  Expenses
          within  each such Cost Pool  shall be  allocated  and  charged  to the
          tenants within such Cost Pool in an equitable manner.

4.4  CALCULATION AND PAYMENT OF ADDITIONAL  RENt. If for any Expense Year ending
     or commencing within the Lease Term,  Tenant's Share of Direct Expenses for
     such Expense Year exceeds  Tenant's Share of Direct Expenses  applicable to
     the Base Year,  then Tenant shall pay to Landlord,  in the manner set forth
     in Section  4.4.1,  below,  and as Additional  Rent, an amount equal to the
     excess (the "Excess").

    4.4.1 STATEMENT OF ACTUAL  DIRECT  EXPENSES AND PAYMENT BY TENANT.  Landlord
          shall  endeavor to give to Tenant  following  the end of each  Expense
          Year, a statement (the  "Statement")  which shall state on a line-item
          by line-item  basis the Direct  Expenses  incurred or accrued for such
          preceding  Expense Year, and which shall indicate the amount,  if any,
          of the Excess.  Upon  receipt of the  Statement  for each Expense Year
          commencing  or ending  during the Lease Term, if an Excess is present,
          Tenant shall pay, with its next installment of Base Rent due, the full
          amount of the Excess for such Expense Year, less the amounts,  if any,
          paid during such Expense Year as  "Estimated  Excess," as that term is
          defined in Section  4.4.2,  below.  The  failure of Landlord to timely
          furnish  the  Statement  for any  Expense  Year  shall  not  prejudice
          Landlord or Tenant from  enforcing  its rights  under this  Article 4.
          Even  though the Lease Term has  expired  and Tenant has  vacated  the
          Premises,  when the final  determination  is made of Tenant's Share of
          Direct  Expenses for the Expense Year in which this Lease  terminates,
          if an Excess if  present,  Tenant  shall,  within  fourteen  (14) days
          following receipt by Tenant of a statement therefor from Landlord, pay
          to Landlord  such amount as  calculated  pursuant to this Section 4.4,
          and if such final determination indicates that Tenant has paid more as
          Estimated  Excess  than was owed,  Landlord  shall  repay such  excess
          amount within thirty (30) days.  The  provisions of this Section 4.4.1
          shall survive the expiration or earlier termination of the Lease Term.

    4.4.2 STATEMENT OF ESTIMATED  DIRECT EXPENSES.  In addition,  Landlord shall
          endeavor  to give  Tenant a yearly  expense  estimate  statement  (the
          "Estimate  Statement")  which  shall set forth  Landlord's  reasonable
          estimate (the  "Estimate") of what the total amount of Direct Expenses
          for the  then-current  Expense Year shall be and the estimated  excess
          (the  "Estimated  Excess")  as  calculated  by  comparing  the  Direct
          Expenses  for  such  Expense  Year,  which  shall  be  based  upon the
          Estimate,  to the amount of Direct  Expenses  for the Base  Year.  The
          failure of Landlord to timely  furnish the Estimate  Statement for any
          Expense Year shall not preclude  Landlord from enforcing its rights to
          collect any Estimated  Excess under this Article 4, nor shall Landlord
          be prohibited from revising any Estimate Statement or Estimated Excess
          theretofore  delivered  to the extent  necessary.  Thereafter,  Tenant
          shall pay, with its next  installment  of Base Rent due, a fraction of
          the Estimated Excess for the then-current Expense Year (reduced by any
          amounts  paid  pursuant to the next to last  sentence of this  Section
          4.4.2). Such fraction shall have as its numerator the number of months
          which have elapsed in such current  Expense Year,  including the month
          of such  payment,  and  twelve  (12) as its  denominator.  Until a new
          Estimate  Statement is furnished  (which Landlord shall have the right
          to deliver to Tenant at any time), Tenant shall pay monthly,  with the
          monthly Base Rent installments,  an amount equal to one-twelfth (1/12)
          of the  total  Estimated  Excess  set forth in the  previous  Estimate
          Statement delivered by Landlord to Tenant.

                                       10
<PAGE>

4.5  TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.

    4.5.1 Tenant  shall be liable  for and shall pay before  delinquency,  taxes
          levied against Tenant's equipment,  furniture,  fixtures and any other
          personal  property  located in or about the Premises;  provided,  upon
          notice by Landlord to Tenant of any such levy,  Tenant  shall have the
          right to protest the same so long as, if  required,  Tenant  makes any
          required payment, under protest,  during the pendency of such protest.
          If any such taxes on Tenant's equipment,  furniture,  fixtures and any
          other  personal  property are levied  against  Landlord or  Landlord's
          property or if the assessed value of Landlord's  property is increased
          by the  inclusion  therein  of a value  placed  upon  such  equipment,
          furniture,  fixtures or any other  personal  property  and if Landlord
          pays the taxes based upon such  increased  assessment,  which Landlord
          shall have the right to do regardless of the validity thereof but only
          under proper protest if requested by Tenant,  Tenant shall upon demand
          repay  to  Landlord  the  taxes  so  levied  against  Landlord  or the
          proportion  of  such  taxes   resulting  from  such  increase  in  the
          assessment, as the case may be.

    4.5.2 If the tenant  improvements in the Premises,  whether installed and/or
          paid for by  Landlord or Tenant and whether or not affixed to the real
          property  so as to  become  a part  thereof,  are  assessed  for  real
          property  tax  purposes at a valuation  higher than the  valuation  at
          which tenant improvements conforming to Landlord's "building standard"
          in other space in the  Building  are  assessed,  then the Tax Expenses
          levied  against  Landlord  or the  property  by reason of such  excess
          assessed valuation shall be deemed to be taxes levied against personal
          property of Tenant and shall be governed by the  provisions of Section
          4.5.1, above.

    4.5.3 Notwithstanding any contrary provision herein,  Tenant shall pay prior
          to delinquency  any (i) rent tax or sales tax,  service tax,  transfer
          tax or value  added tax,  or any other  applicable  tax on the rent or
          services  herein or  otherwise  respecting  this Lease,  or (ii) taxes
          assessed upon or with respect to the possession,  leasing,  operation,
          management,  maintenance,  alteration,  repair,  use or  occupancy  by
          Tenant of the  Premises or any portion of the Project,  including  the
          Project parking facilities.

4.6  TENANT'S PAYMENT OF CERTAIN TAX EXPENSES.  Notwithstanding  anything to the
     contrary contained in this Lease, in the event that, at any time during the
     first  five (5) Lease  Years of the  initial  Lease  Term  only,  any sale,
     refinancing, or change in ownership of the Building is consummated,  and as
     a result  thereof,  and to the extent  that in  connection  therewith,  the
     Building is reassessed (the "Reassessment") for real estate tax purposes by
     the appropriate governmental authority pursuant to the terms of Proposition
     13 (as adopted by the voters of the State of California  in the June,  1978
     election),  then the terms of this Section 4.6 shall  apply.  4.6.1 The Tax
     Increase.  For  purposes of this Article 4, the term "Tax  Increase"  shall
     mean that portion of the Tax Expenses, as calculated  immediately following
     the  Reassessment,  which  is  attributable  solely  to  the  Reassessment.
     Accordingly, the term Tax Increase shall not include any portion of the Tax
     Expenses, as calculated  immediately following the Reassessment,  which (i)
     is attributable to the initial assessment of the value of the Building,  or
     the tenant  improvements  located in the Building,  (ii) is attributable to
     assessments which were pending immediately prior to the Reassessment, which
     assessments were conducted during, and included in, such  Reassessment,  or
     which  assessments  were  otherwise  rendered  unnecessary   following  the
     Reassessment,  (iii) is attributable to the annual inflationary increase of
     real estate taxes,  or (iv) is  attributable  to any Tax Expenses  incurred
     during the Base Year (with such Tax Expenses  incurred during the Base Year
     calculated  without  regard to any  Proposition 8 reduction in Tax Expenses
     for the Base Year).

     4.6.1 THE TAX  INCREASE  For  purposes of this  Article  4, the  term  "Tax
          Increase"  shall mean that portion of the Tax Expenses,  as calculated
          immediately  following the Reassessment,  which is attributable solely
          to the  Reassessment.  Accordingly,  the term Tax  Increase  shall not
          include any portion of the Tax  Expenses,  as  calculated  immediately
          following the  Reassessment,  which (i) is attributable to the initial
          assessment  of the value of the Building,  or the tenant  improvements
          located in the Building,  (ii) is  attributable  to assessments  which
          were pending immediately prior to the Reassessment,  which assessments
          were conducted during,  and included in, such  Reassessment,  or which
          assessments  were  otherwise   rendered   unnecessary   following  the
          Reassessment,   (iii)  is  attributable  to  the  annual  inflationary
          increase  of real estate  taxes,  or (iv) is  attributable  to any Tax
          Expenses  incurred  during  the Base  Year  (with  such  Tax  Expenses
          incurred  during  the  Base  Year  calculated  without  regard  to any
          Proposition 8 reduction in Tax Expenses for the Base Year).

    4.6.2 PROTECTION. During the first (1st) five (5) Lease Years of the initial
          Lease Term,  Tenant  shall not be  obligated to pay any portion of the
          Tax Increase.

    4.6.3 LANDLORD'S  RIGHT TO PURCHASE THE  PROPOSITION  13  PROTECTION  AMOUNT
          ATTRIBUTABLE TO A PARTICULAR REASSESSMENT.  The amount of Tax Expenses
          which  Tenant is not  obligated to pay or will not be obligated to pay
          during  the  initial  Lease  Term  in  connection  with  a  particular
          Reassessment  pursuant  to the  terms  of this  Section4.6,  shall  be
          sometimes  referred  to  hereafter  as a  "Proposition  13  Protection
          Amount." If the occurrence of a Reassessment is reasonably foreseeable
          by Landlord and the Proposition 13 Protection  Amount  attributable to
          such  Reassessment can be reasonably  quantified or estimated for each
          Lease Year  commencing  with the Lease Year in which the  Reassessment
          will occur,  the terms of this Section  4.6.3 shall apply to each such
          Reassessment.  Upon notice to Tenant, Landlord shall have the right to
          purchase  the  Proposition  13  Protection   Amount  relating  to  the
          applicable Reassessment (the "Applicable  Reassessment"),  at any time
          during  the Lease  Term,  by  paying to Tenant an amount  equal to the
          "Proposition  13  Purchase  Price,"  as that  term is  defined  below,
          provided  that the right of any  successor of Landlord to exercise its
          right of  repurchase  hereunder  shall not  apply to any  Reassessment
          which  results  from the event  pursuant  to which such  successor  of
          Landlord  became  the  Landlord  under  this  Lease.  As used  herein,
          "Proposition  13 Purchase  Price" shall mean the present  value of the
          Proposition 13 Protection  Amount  remaining  during the initial Lease
          Term, as of the date of payment of the  Proposition  13 Purchase Price
          by Landlord.  Such present value shall be calculated  (i) by using the
          portion of the Proposition 13 Protection  Amount  attributable to each
          remaining  Lease Year (as though the  portion of such  Proposition  13
          Protection  Amount benefited Tenant at the end of each Lease Year), as
          the amounts to be  discounted,  and (ii) by using  discount  rates for
          each  amount to be  discounted  equal to (A) the prime rate  quoted by
          Bank  of  America  N.T.  &  S.A.  as of the  date  of  payment  of the
          Proposition  13 Protection  Amount by Landlord,  minus (B) one percent
          (1%) per annum.  Upon such  payment  of the  Proposition  13  Purchase
          Price,  the  provisions of Section 4.6.2 of this Lease shall not apply
          to any Tax Increase attributable to the Applicable Reassessment. Since
          Landlord is estimating  the  Proposition  13 Purchase  Price because a
          Reassessment has not yet occurred, then when such Reassessment occurs,
          if Landlord has underestimated the Proposition 13 Purchase Price, upon
          notice by Landlord to Tenant, Tenant's Rent next due shall be credited
          with the amount of such underestimation, and if Landlord overestimates
          the  Proposition  13 Purchase  Price,  then upon notice by Landlord to
          Tenant,  Rent  next  due  shall  be  increased  by the  amount  of the
          overestimation.

                                       11
<PAGE>

4.7  LANDLORD'S  BOOKS AND  RECORDS.  Within  one (1) year  after  receipt  of a
     Statement by Tenant,  if Tenant  disputes the amount of Additional Rent set
     forth in the Statement,  a reputable  certified  public  accountant  (which
     accountant  is a member of a reputable  independent  nationally  recognized
     accounting  firm and has had previous  experience  in  reviewing  financial
     operating  records of landlords  of office  buildings;  provided  that such
     accountant  is  not  retained  by  Tenant  on  a  contingency  fee  basis),
     designated and paid for by Tenant, may, after reasonable notice to Landlord
     and at reasonable  times,  inspect  Landlord's  records with respect to the
     Statement  at  Landlord's  offices,  provided  that  Tenant  is not then in
     default  under this Lease and Tenant has paid all  amounts  required  to be
     paid under the applicable Estimate Statement and Statement, as the case may
     be. In connection  with such  inspection,  Tenant and Tenant's  agents must
     agree in  advance  to follow  Landlord's  reasonable  rules and  procedures
     regarding   inspections  of  Landlord's   records,   and  shall  execute  a
     commercially   reasonable    confidentiality   agreement   regarding   such
     inspection.  Tenant's  failure to commence  its  inspection  of  Landlord's
     records with respect to a dispute as to the amount of  Additional  Rent set
     forth in any  Statement  within  one (1) year of  tenant's  receipt of such
     Statement,  and  to  diligently  pursue  the  resolution  of  such  dispute
     thereafter,  shall be deemed to be Tenant's  approval of such Statement and
     Tenant, thereafter,  waives the right or ability to dispute the amounts set
     forth in such Statement.  If after such  inspection,  Tenant still disputes
     such  Additional  Rent, a  determination  as to the proper  amount shall be
     made, at Tenant's  expense,  by an independent  certified public accountant
     (the "Accountant")  selected by Landlord and subject to Tenant's reasonable
     approval; provided that if such determination by the Accountant proves that
     Direct  Expenses were  overstated by more than five percent (5%),  then the
     cost of the Accountant and the cost of such determination shall be paid for
     by Landlord.  Landlord shall be required to maintain  records of all Direct
     Expenses set forth in each Statement  delivered to Tenant for two (2) years
     following  Landlord's  delivery of the  applicable  Statement.  In no event
     shall this  Section 4.7 be deemed to allow any review of any of  Landlord's
     records by any  subtenant  of Tenant.  Tenant  agrees that this Section 4.7
     shall be the sole  method to be used by Tenant to dispute the amount of any
     Direct  Expenses  payable or not payable by Tenant pursuant to the terms of
     this Lease,  and Tenant  hereby waives any other rights at law or in equity
     relating thereto. Notwithstanding anything in this Section to the contrary,
     nothing herein shall limit Tenant's rights at law or in equity with respect
     to a claim of fraud by Tenant against Landlord.

                                   ARTICLE 5

                                 USE OF PREMISES

5.1  PERMITTED USE.  Tenant shall use the Premises  solely for the Permitted Use
     set forth in Section 7 of the  Summary  and Tenant  shall not use or permit
     the  Premises or the  Project to be used for any other  purpose or purposes
     whatsoever  without the prior  written  consent of  Landlord,  which may be
     withheld in Landlord's sole discretion.

5.2  PROHIBITED  USES.  The uses  prohibited  under  this Lease  shall  include,
     without  limitation,  use of the  Premises  or a  portion  thereof  for (i)
     offices  or any other  facilities  of any  agency  or bureau of the  United
     States or any state or  political  subdivision  thereof;  (ii)  offices  or
     agencies of any foreign  governmental  or  political  subdivision  thereof;
     (iii) offices or any other  facilities of any health care  professionals or
     service organization; (iv) schools or other training facilities (other than
     a school conducting,  solely, short term,  seminar-type,  computer training
     classes for  professionals of the same quality and type conducted by Tenant
     in  the  Premises  as of the  Lease  Commencement  Date),  except  only  as
     permitted  pursuant to Section 7 of the Summary;  (v) retail or  restaurant
     uses;  or  (vi)  communications  firms  such  as  radio  and/or  television
     stations. Tenant further covenants and agrees that Tenant shall not use, or
     suffer or permit any person or persons  to use,  the  Premises  or any part
     thereof for any use or purpose  contrary to the provisions of the Rules and
     Regulations set forth in Exhibit D, attached hereto, or in violation of the
     laws of the  United  States of  America,  the State of  California,  or the
     ordinances,  regulations or  requirements  of the local municipal or county
     governing body or other lawful  authorities  having  jurisdiction  over the
     Project)  including,   without  limitation,   any  such  laws,  ordinances,
     regulations or requirements  relating to hazardous materials or substances,
     as those terms are defined by  applicable  laws now or hereafter in effect.
     Tenant or its  invitees  shall not do or permit  anything  to be done in or
     about the Premises or Project  which will in any way damage the  reputation
     of the Project or obstruct or interfere with the rights of other tenants or
     occupants  of the  Building,  or injure  or annoy  them or use or allow the
     Premises  or  the  Project  to  be  used  for  any  improper,  unlawful  or
     objectionable  purpose,  nor shall  Tenant  cause,  maintain  or permit any
     nuisance in, on or about the Premises. Tenant and its invitees shall comply
     with all recorded covenants,  conditions, and restrictions now or hereafter
     affecting the Project.

5.3  DIRECT  COMPETITORS.  In the event,  and so long as the  Original  Tenant's
     primary  business  continues to be  conducting  short term,  seminar  type,
     computer   training   classes  for  both   corporate   students  and  other
     individuals,  Landlord  shall not enter into any direct  lease for space in
     the  Project  with  any  "Direct  Competitor",  as  that  term  is  defined
     herein below, of Tenant. Landlord's approval of another Tenant's request to
     assign or sublease all or any portion of its premises shall not be deemed a
     violation  by Landlord of this  Section  5.3.  For purposes of this Section
     5.3, a "Direct Competitor" of Tenant shall be limited to an entity which is
     engaged in, as its primary  business,  the conduct of short term,  computer
     training  classes for both corporate  students and other  individuals  (the
     "Competing Business").  Nothing herein shall prohibit Landlord from leasing
     space in the Project to a tenant that engages in the Competing  Business as
     part of its  business,  but which does not  intend to and is not  permitted
     under its lease to engage in the Competing Business at the Project.  In the
     event Landlord believes that a proposed tenant may be deemed to be a Direct
     Competitor of Tenant,  Landlord  shall deliver a written  request to Tenant
     that Tenant notify  Landlord as to whether Tenant deems the proposed tenant
     to be a Direct  Competitor  of Tenant.  Tenant shall have ten (10) business
     days following  receipt of such request within which to notify  Landlord of
     any  objection  to the proposed  tenant on the grounds  that such  proposed
     tenant is a Direct  Competitor.  In the event  Tenant  does not provide any
     objection  to  Landlord  within  said ten (10)  business  day  period,  the
     proposed  tenant  shall be deemed not to be a Direct  Competitor  under the
     provisions of this Lease,  and Landlord shall be free to lease space in the
     Project to such proposed  tenant.  The rights set forth in this Section 5.3
     shall be personal to the Original  Tenant (and not any assignee,  sublessee
     or transferee of the Tenant's  interest in this Lease) and may be exercised
     by  the  Original  Tenant  only  while  it is  in  occupancy  of  at  least
     seventy-five percent (75%) the entire Premises and so long as Tenant is not
     in default under this Lease beyond the applicable  cure period  provided in
     this Lease.

                                       12
<PAGE>

5.4  RECORDED  DOCUMENTS.  Tenant  shall  comply  with all  recorded  covenants,
     conditions,  and restrictions  currently affecting the Project,  and Tenant
     acknowledges  that the  Project  may be subject  to any  future  covenants,
     conditions,  and  restrictions  which Landlord,  in Landlord's  discretion,
     deems reasonably necessary or desirable (collectively, the "CC&Rs"). Tenant
     agrees  that this Lease  shall be subject  and  subordinate  to such CC&Rs.
     Landlord shall have the right to require Tenant to execute and acknowledge,
     within fifteen (15) business days of a request by Landlord,  a "Recognition
     of Covenants, Conditions, and Restriction," in a form substantially similar
     to that  attached  hereto as Exhibit F, agreeing to and  acknowledging  the
     CC&Rs. Tenant acknowledges that the CC&Rs will include, without limitation,
     (i) that certain Declaration of Covenants,  Conditions and Restrictions and
     Grant of  Reciprocal  Easements  for  Sportstown  Anaheim (the  "Sportstown
     Anaheim  REA")  to be  recorded  against  Stadium  Gateway  (including  the
     Project),  and (ii) that certain Parking  Agreement  concerning  Landlord's
     rights to use the Stadium Gateway  parking areas (the "Parking  Agreement")
     to be recorded against Stadium Gateway and the Project.

                                   ARTICLE 6

                             SERVICES AND UTILITIES

6.1  STANDARD TENANT SERVICES.  Landlord shall provide the following services on
     all days (unless otherwise stated below) during the Lease Term.

    6.1.1 Subject to limitations imposed by all governmental rules,  regulations
          and guidelines applicable thereto,  Landlord shall, provide subject to
          reimbursement  to  Landlord  by Tenant or direct  payment by Tenant as
          provided  in  Sections   6.1.2.   of  this  Lease,   heating  and  air
          conditioning  ("HVAC") when  necessary  for normal  comfort for normal
          office use in the Premises  twenty-four (24) hours per day;  provided,
          however,  for  purposes  of this  Lease,  as  hereinafter  set  forth,
          "Building  Hours"  shall be deemed to include only the hours from 8:00
          A.M. to 6:00 P.M.  Monday through  Friday,  and on Saturdays from 9:00
          A.M. to 1:00 P.M.,  except for the date of  observation  of New Year's
          Day,  Memorial Day,  Independence  Day, Labor Day,  Thanksgiving  Day,
          Christmas  Day  and,  at  Landlord's  discretion,   other  locally  or
          nationally recognized holidays (collectively, the "Holidays").

    6.1.2 Landlord shall provide adequate  electrical  wiring and facilities for
          connection to Tenant's lighting fixtures and incidental use equipment,
          provided that (i) the connected  electrical load of the incidental use
          equipment  does not exceed an  average of 3.5 watts per usable  square
          foot of the  Premises  on a  monthly  basis,  and the  electricity  so
          furnished  for  incidental  use  equipment  will be at a  nominal  one
          hundred twenty (120) volts and no electrical circuit for the supply of
          such  incidental  use  equipment  will  require  a  current   capacity
          exceeding twenty (20) amperes,  and (ii) the connected electrical load
          of Tenant's  lighting fixtures does not exceed an average of 1.5 watts
          per usable  square foot of the  Premises on a monthly  basis,  and the
          electricity  so furnished  for Tenant's  lighting will be at a nominal
          one  hundred  twenty  (120)  volts,  which  electrical  usage shall be
          subject to applicable laws and regulations, including Title 24. Tenant
          shall bear the cost of replacement of lamps, starters and ballasts for
          non-Building  standard lighting  fixtures within the Premises.  To the
          extent  possible,  Tenant's  utilities  (including  use for incidental
          equipment,  lighting  fixtures,  and  Building  Systems and  equipment
          (including HVAC)) shall be separately  metered and Tenant shall pay to
          Landlord  all  costs  incurred  by  Landlord  for all such  separately
          metered  utilities  furnished  to the  Premises  as  well  as for  the
          installation and maintenance of such separate  metering  devices.  For
          any utilities that cannot be separately  metered,  Tenant shall pay to
          Landlord an amount  reasonably  allocated by Landlord to the Premises,
          based on the use by the Premises, as established by Landlord partially
          through the use of the Building energy management  system. In addition
          to the cost of the  utilities,  Tenant shall pay to Landlord all costs
          reasonably  and actually  incurred by Landlord in connection  with the
          operation,  repair, maintenance,  improvement,  and replacement of any
          portion  of the  HVAC  system  located  within  the  Premises,  (and a
          pro-rata  share of any such costs with  respect to any  portion of the
          HVAC system which serves the Premises,  but is not actually located in
          the Premises) including any portion thereof that would be deemed to be
          part of the Building Systems,  provided such costs shall be reasonably
          competitively  priced.  With  respect  to any  utilities  that are not
          separately  metered,  Landlord  shall have the right to provide Tenant
          with Landlord's  reasonable  estimate of what the total amount of such
          utility  charges  for the then  current  Expense  Year  (the  "Utility
          Estimate")  and shall  deliver such Utility  Estimate to Tenant at the
          same time Landlord delivers the Estimate Statement under Section 4.4.2
          of this Lease.  Tenant shall  thereafter  pay, on a monthly basis,  in
          addition to Base Rent,  the  Utilities  Estimate in the same manner as
          applicable to the  Estimated  Excess under Section 4.4.2 of this Lease
          and any  reconciliations  with respect to the Utilities Estimate shall
          be made in the  same  manner  as set  forth in  Section  4.4.1 of this
          Lease.

    6.1.3 Landlord  shall provide city water from the regular  Building  outlets
          for  drinking,  lavatory and toilet  purposes in the  Building  Common
          Areas.

                                       13
<PAGE>


    6.1.4 Landlord  shall  not  provide  janitorial  services  to the  Premises.
          Tenant shall be  responsible,  at Tenant's sole cost and expense,  for
          providing janitorial services to the Premises adequate to maintain the
          Premises in the condition required under this Lease.

    6.1.5 Landlord shall provide nonexclusive,  non-attended automatic passenger
          elevator  service  during  the  Building  Hours,  and  shall  have one
          elevator available at all other times.

6.2  OVERSTANDARD TENANT USE. Tenant shall not, without Landlord's prior written
     consent,   use  heat-generating   machines,   machines  other  than  normal
     fractional  horsepower office machines, or equipment or lighting other than
     Building standard lights in the Premises,  which may affect the temperature
     otherwise  maintained by the air conditioning  system or increase the water
     normally  furnished  for the Premises by Landlord  pursuant to the terms of
     Section 6.1 of this Lease.  If such consent is given,  Landlord  shall have
     the  right  to  install  supplementary  air  conditioning  units  or  other
     facilities in the Premises,  including supplementary or additional metering
     devices,  and  the  cost  thereof,  including  the  cost  of  installation,
     operation and  maintenance,  increased wear and tear on existing  equipment
     and other similar charges, shall be paid by Tenant to Landlord upon billing
     by  Landlord.  To the extent  Tenant uses water,  electricity,  heat or air
     conditioning in excess of the normal  Building  Hours,  Tenant shall pay to
     Landlord,  upon  billing,  the  cost of the  installation,  operation,  and
     maintenance  of equipment  which is  installed,  if any, in order to supply
     such excess  consumption,  and the cost of the  increased  wear and tear on
     existing Building Systems and equipment caused by such excess  consumption.
     Tenant's use of electricity  shall never exceed the capacity of the feeders
     to the Project or the risers or wiring installation.

6.3  INTERRUPTION OF USE. In the event that Tenant is prevented from using,  and
     does not use, the Premises or any portion  thereof,  as a result of (i) any
     repair,  maintenance or alteration performed by Landlord, or which Landlord
     failed to perform,  after the Lease  Commencement  Date and required by the
     Lease, which substantially interferes with Tenant's use of the Premises, or
     (ii) any failure to provide  services,  utilities or access to the Premises
     (either such set of circumstances as set forth in items (i) or (ii), above,
     to be known as an  "Abatement  Event"),  then  Tenant  shall give  Landlord
     notice of such Abatement  Event,  and if such Abatement Event continues for
     five (5)  consecutive  business days after  Landlord's  receipt of any such
     notice or ten (10)  non-consecutive  business  days in a twelve  (12) month
     period  (provided  Landlord is sent a notice  pursuant to Section  29.18 of
     this Lease of each of such  Abatement  Event) (in either  such  event,  the
     "Eligibility  Period"),  then the Base Rent and Tenant's  Share of Building
     Direct Expenses and Tenant's  obligation to pay for parking shall be abated
     or reduced,  as the case may be, after expiration of the Eligibility Period
     for such time that Tenant continues to be so prevented from using, and does
     not use,  the Premises or a portion  thereof,  in the  proportion  that the
     rentable area of the portion of the Premises that Tenant is prevented  from
     using,  and does not use, bears to the total rentable area of the Premises;
     provided,  however,  in the event that Tenant is prevented from using,  and
     does not use, a portion of the  Premises  for a period of time in excess of
     the  Eligibility  Period and the  remaining  portion of the Premises is not
     sufficient to allow Tenant to effectively conduct its business therein, and
     if Tenant does not conduct its business from such remaining  portion,  then
     for such time after  expiration  of the  Eligibility  Period  during  which
     Tenant is so prevented from  effectively  conducting its business  therein,
     the Base Rent and Tenant's Share of Building  Direct  Expenses and Tenant's
     obligation to pay for parking for the entire  Premises  shall be abated for
     such time as Tenant  continues to be so prevented from using,  and does not
     use,  the  Premises.  If,  however,  Tenant  reoccupies  any portion of the
     Premises during such period, the rent allocable to such reoccupied portion,
     based on the proportion that the rentable area of such  reoccupied  portion
     of the Premises bears to the total rentable area of the Premises,  shall be
     payable  by Tenant  from the date  Tenant  reoccupies  such  portion of the
     Premises.  If Tenant's right to abatement occurs during a free rent period,
     Tenant's free rent period shall be extended for the number of days that the
     abatement  period  overlapped  the free  rent  period  ("Overlap  Period").
     Landlord  shall  have the right to extend the Lease  Expiration  Date for a
     period of time equal to the Overlap  Period if  Landlord  sends a notice to
     Tenant  of such  election  within  ten (10) days  following  the end of the
     extended free rent period. Such right to abate Base Rent and Tenant's Share
     of Building Direct Expenses shall be Tenant's sole and exclusive  remedy at
     law or in equity for an Abatement Event. Except as provided in this Section
     19.4.2,  nothing  contained herein shall be interpreted to mean that Tenant
     is excused from paying Rent due hereunder. To the extent Tenant is entitled
     to abatement without regard to the Eligibility Period,  because of an event
     described in Articles 11 or 13 of this Lease,  then the Eligibility  Period
     shall not be applicable.

6.4  THE  TENANT'S  SECURITY  SYSTEM.  Tenant  may,  at  Tenant's  sole cost and
     expense,  install its own security system  ("Tenant's  Security System") in
     the  Premises;   provided,   however,  that  Tenant  shall  coordinate  the
     installation  and  operation of Tenant's  Security  System with Landlord to
     assure that Tenant's Security System is compatible with Landlord's security
     system and the  Building  Systems.  To the extent  that  Tenant's  Security
     System is not compatible with  Landlord's  security system and the Building
     Systems,  Tenant  shall not be  entitled  to install  or  operate  Tenant's
     Security System.  Once installed,  Tenant shall be solely  responsible,  at
     Tenant's sole cost and expenses, for the monitoring,  operation and removal
     of Tenant's  Security System.  The installation of Tenant's Security System
     shall be governed by Article 8 of this Lease.

                                       14
<PAGE>

                                   ARTICLE 7

                                     REPAIRS

     Tenant shall, at Tenant's own expense, pursuant to the terms of this Lease,
including without limitation Article 8 hereof, keep the Premises,  including all
improvements,  fixtures and furnishings  therein, and the floor or floors of the
Building on which the Premises are located,  in good order, repair and condition
at all times during the Lease Term. In addition,  Tenant shall,  at Tenant's own
expense,  but  under the  supervision  and  subject  to the  prior  approval  of
Landlord,  and within  any  reasonable  period of time  specified  by  Landlord,
pursuant  to the terms of this Lease,  including  without  limitation  Article 8
hereof, promptly and adequately repair all damage to the Premises and replace or
repair all  damaged,  broken,  or worn  fixtures and  appurtenances,  except for
damage  caused by  ordinary  wear and tear or beyond the  reasonable  control of
Tenant;  provided however,  that, at Landlord's  reasonable option, or if Tenant
fails to make such  repairs,  Landlord  may, but need not, make such repairs and
replacements,  and Tenant  shall pay  Landlord  the cost  thereof,  including  a
percentage  of the cost thereof (to be uniformly  established  for the Building)
sufficient to reimburse Landlord for all overhead, general conditions,  fees and
other costs or expenses  arising from Landlord's  involvement  with such repairs
and  replacements  forthwith  upon being  billed for same.  Notwithstanding  the
foregoing,  Landlord  shall be  responsible  for repairs to the exterior  walls,
foundation and roof of the Building,  the  structural  portions of the floors of
the  Building,  and the systems and  equipment  of the  Building,  except to the
extent that such repairs are required due to the negligence or wilful misconduct
of Tenant; provided,  however, that if such repairs are due to the negligence or
wilful  misconduct of Tenant,  Landlord shall  nevertheless make such repairs at
Tenant's  expense,  and except to the extent  that Tenant is required to pay for
the costs of repair to the Building HVAC system  located  within the Premises as
provided in Section  6.1.2,  above.  Landlord may, but shall not be required to,
enter the Premises at all  reasonable  times to make such repairs,  alterations,
improvements  or additions to the Premises or to the Project or to any equipment
located in the Project as Landlord shall desire or deem necessary or as Landlord
may be required to do by governmental or  quasi-governmental  authority or court
order or decree,  provided,  however, except for (i) emergencies,  (ii) repairs,
alterations,   improvements   or   additions   required   by   governmental   or
quasi-governmental  authorities or court order or decree, or (iii) repairs which
are the  obligation  of Tenant  hereunder,  any such entry into the  Premises by
Landlord  shall be performed in a manner so as not to materially  interfere with
Tenant's use of, or access to, the  Premises.  Tenant  hereby waives any and all
rights under and benefits of  subsection 1 of Section 1932 and Sections 1941 and
1942 of the  California  Civil  Code or  under  any  similar  law,  statute,  or
ordinance now or hereafter in effect.

                                   ARTICLE 8

                            ADDITIONS AND ALTERATIONS

8.1  LANDLORD'S  CONSENT TO ALTERATIONS.  Tenant may not make any  improvements,
     alterations,  additions  or  changes  to the  Premises  or any  mechanical,
     plumbing  or  HVAC  facilities  or  systems   pertaining  to  the  Premises
     (collectively, the "Alterations") without first procuring the prior written
     consent of Landlord to such  Alterations,  which consent shall be requested
     by Tenant not less than thirty (30) days prior to the commencement thereof,
     and which consent shall not be unreasonably withheld by Landlord,  provided
     it shall be deemed  reasonable  for Landlord to withhold its consent to any
     Alteration which adversely  affects the structural  portions or the systems
     or  equipment  of the  Building  or is  visible  from the  exterior  of the
     Building.  Notwithstanding the foregoing, Tenant shall be permitted to make
     Alterations  following  ten (10)  business  days  notice to  Landlord,  but
     without  Landlord's  prior consent,  to the extent that such Alterations do
     not adversely  affect the systems and  equipment of the Building,  exterior
     appearance  of the Building,  or structural  aspects of the Building and do
     not cost in excess of Ten Thousand and No/100 Dollars  ($10,000.00)  in the
     aggregate (the "Cosmetic  Alterations").  The  construction  of the initial
     improvements  to the Premises  shall be governed by the terms of the Tenant
     Work Letter and not the terms of this Article 8.

8.2  MANNER OF CONSTRUCTION.  Landlord may impose, as a condition of its consent
     to any  and all  Alterations  or  repairs  of the  Premises  or  about  the
     Premises,  such  requirements as Landlord in its reasonable  discretion may
     deem desirable,  including, but not limited to, the requirement that Tenant
     utilize for such  purposes  only  contractors,  subcontractors,  materials,
     mechanics  and  materialmen  selected  by Tenant from a list  provided  and
     approved by Landlord, the requirement that upon Landlord's request,  Tenant
     shall, at Tenant's expense,  remove such Alterations upon the expiration or
     any early  termination of the Lease Term. If such  Alterations will involve
     the use of or disturb  hazardous  materials or  substances  existing in the
     Premises,  Tenant  shall  comply  with  Landlord's  rules  and  regulations
     concerning such hazardous  materials or substances.  Tenant shall construct
     such Alterations and perform such repairs in a good and workmanlike manner,
     in  conformance  with any and all  applicable  federal,  state,  county  or
     municipal  laws,  rules and  regulations  and pursuant to a valid  building
     permit,  issued by the City of Anaheim,  all in conformance with Landlord's
     construction  rules and  regulations.  In the  event  Tenant  performs  any
     Alterations  in the Premises  which require or give rise to  governmentally
     required changes to the Base, Shell and Core. In performing the work of any
     such Alterations, Tenant shall have the work performed in such manner so as
     not to obstruct access to the Project or any portion thereof,  by any other
     tenant of the  Project,  and so as not to obstruct the business of Landlord
     or other tenants in the Project. Tenant shall not use (and upon notice from
     Landlord  shall  cease  using)  contractors,   services,   workmen,  labor,
     materials or equipment  that,  in  Landlord's  reasonable  judgment,  would
     disturb labor  harmony with the  workforce or trades  engaged in performing
     other work, labor or services in or about the Building or the Common Areas.
     In addition to Tenant's  obligations  under  Article 9 of this Lease,  upon
     completion  of  any  Alterations,  Tenant  agrees  to  cause  a  Notice  of
     Completion  to be recorded  in the office of the  Recorder of the County of
     Orange in  accordance  with  Section 3093 of the Civil Code of the State of
     California  or any  successor  statute,  and  Tenant  shall  deliver to the
     Building  management  office a reproducible copy of the "as built" drawings
     of the  Alterations as well as all permits,  approvals and other  documents
     issued by any governmental agency in connection with the Alterations.

8.3  PAYMENT FOR  IMPROVEMENTS.  In the event Tenant  orders any  alteration  or
     repair work  directly from  Landlord,  or from the  contractor  selected by
     Landlord,  the charges for such work shall be deemed  Additional Rent under
     this Lease,  payable  upon billing  therefor,  either  periodically  during
     construction or upon the substantial completion of such work, at Landlord's
     option. Upon completion of such work, Tenant shall deliver to Landlord,  if
     payment is made directly to contractors,  evidence of payment, contractors'
     affidavits  and full and final waivers of all liens for labor,  services or
     materials.  If Tenant orders any work directly from Landlord,  Tenant shall
     pay to Landlord a percentage  of the cost of such work (such  percentage to
     be  established  on a uniform  basis for the  Building  and/or the Project)
     sufficient to compensate  Landlord for all  overhead,  general  conditions,
     fees and other costs and expenses arising from Landlord's  involvement with
     such work. If Tenant does not order the work directly from Landlord, Tenant
     shall reimburse Landlord for Landlord's  reasonable,  actual  out-of-pocket
     costs and expenses  actually  incurred in connection with Landlord's review
     of such work.

                                       15
<PAGE>

8.4  CONSTRUCTION  INSURANCE.  In addition to the  requirements of Article 10 of
     this Lease,  in the event that Tenant makes any  Alterations,  prior to the
     commencement  of such  Alterations,  Tenant  shall  provide  Landlord  with
     evidence that Tenant carries  "Builder's  All Risk"  insurance in an amount
     approved by Landlord  covering the  construction of such  Alterations,  and
     such other  insurance  as Landlord  may require,  it being  understood  and
     agreed that all of such Alterations  shall be insured by Tenant pursuant to
     Article 10 of this Lease immediately upon completion  thereof. In addition,
     Landlord  may,  in its  discretion,  require  Tenant  to  obtain a lien and
     completion bond or some alternate form of security satisfactory to Landlord
     in an  amount  sufficient  to  ensure  the  lien-free  completion  of  such
     Alterations and naming Landlord as a co-obligee.

8.5  LANDLORD'S PROPERTY.  All Alterations,  improvements,  fixtures,  equipment
     and/or  appurtenances  which  may be  installed  or  placed in or about the
     Premises,  from time to time, shall be at the sole cost of Tenant and shall
     be and become the property of  Landlord,  except that Tenant may remove any
     Alterations,  improvements,  fixtures  and/or  equipment  which  Tenant can
     substantiate to Landlord have not been paid for with any Tenant improvement
     allowance funds provided to Tenant by Landlord, provided Tenant repairs any
     damage to the Premises and Building  caused by such removal and returns the
     affected  portion of the Premises to a building  standard  tenant  improved
     condition as reasonably  determined by Landlord.  If requested by Tenant at
     the time Tenant requests  Landlord's  consent to any  Alteration,  Landlord
     shall give written  notice to Tenant at the time Landlord  consents to such
     Alterations  of  whether  or not  Tenant  shall be  required  to remove any
     Alterations  upon the expiration or earlier  termination of this Lease.  If
     Landlord does not so require removal of the applicable Alteration(s) at the
     time of Landlord's consent, Tenant shall not be responsible for the removal
     of any such Alterations upon the expiration or earlier  termination of this
     Lease.  If Tenant fails to complete any required  removal  and/or to repair
     any damage caused by the removal of any  Alterations or improvements in the
     Premises required to be removed hereunder,  and return the affected portion
     of the  Premises  to a  building  standard  tenant  improved  condition  as
     determined by Landlord,  Landlord may do so and may charge the cost thereof
     to Tenant. Tenant hereby protects, defends,  indemnifies and holds Landlord
     harmless from any liability, cost, obligation,  expense or claim of lien in
     any manner relating to the installation, placement, removal or financing of
     any such  Alterations,  improvements,  fixtures and/or  equipment in, on or
     about  the  Premises,   which  obligations  of  Tenant  shall  survive  the
     expiration or earlier termination of this Lease.

                                   ARTICLE 9

                             COVENANT AGAINST LIENS

     Tenant  shall  keep  the  Project  and  Premises  free  from  any  liens or
encumbrances  arising  out  of  the  work  performed,   materials  furnished  or
obligations  incurred  by or on behalf of  Tenant,  and shall  protect,  defend,
indemnify and hold Landlord  harmless from and against any claims,  liabilities,
judgments or costs (including,  without limitation,  reasonable  attorneys' fees
and costs)  arising out of same or in  connection  therewith.  Tenant shall give
Landlord notice at least twenty (20) days prior to the  commencement of any such
work  on the  Premises  (or  such  additional  time  as may be  necessary  under
applicable  laws) to afford  Landlord the  opportunity  of posting and recording
appropriate notices of non-responsibility.  Tenant shall remove any such lien or
encumbrance by bond or otherwise  within five (5) days after notice by Landlord,
and if Tenant  shall fail to do so,  Landlord  may pay the amount  necessary  to
remove such lien or encumbrance, without being responsible for investigating the
validity thereof.  The amount so paid shall be deemed Additional Rent under this
Lease payable upon demand,  without limitation as to other remedies available to
Landlord  under this Lease.  Nothing  contained  in this Lease  shall  authorize
Tenant to do any act which shall  subject  Landlord's  title to the  Building or
Premises to any liens or  encumbrances  whether  claimed by  operation of law or
express  or  implied  contract.  Any  claim  to a lien or  encumbrance  upon the
Building or Premises  arising in connection with any such work or respecting the
Premises not performed by or at the request of Landlord  shall be null and void,
or at  Landlord's  option  shall attach only  against  Tenant's  interest in the
Premises and shall in all respects be  subordinate  to  Landlord's  title to the
Project, Building and Premises.

                                   ARTICLE 10

                                    INSURANCE

10.1 INDEMNIFICATION  AND WAIVER.  Tenant  hereby  assumes all risk of damage to
     property or injury to persons in, upon or about the Premises from any cause
     whatsoever and agrees that Landlord,  its partners,  subpartners  and their
     respective  officers,   agents,   servants,   employees,   and  independent
     contractors (collectively, "Landlord Parties") shall not be liable for, and
     are hereby  released  from any  responsibility  for,  any damage  either to
     person or property or resulting from the loss of use thereof,  which damage
     is sustained by Tenant or by other persons claiming through Tenant.  Tenant
     shall indemnify,  defend,  protect,  and hold harmless the Landlord Parties
     from any and all loss,  cost,  damage,  expense  and  liability  (including
     without limitation court costs and reasonable  attorneys' fees) incurred in
     connection with or arising from any cause in, on or about the Premises, any
     acts,  omissions  or  negligence  of Tenant or of any person  claiming  by,
     through  or  under  Tenant,  or  of  the  contractors,   agents,  servants,
     employees,  invitees, guests or licensees of Tenant or any such person, in,
     on or about the  Project or any breach of the terms of this  Lease,  either
     prior to, during, or after the expiration of the Lease Term,  provided that
     the  terms  of the  foregoing  indemnity  shall  not  apply  to  the  gross
     negligence or willful misconduct of Landlord. Should Landlord be named as a
     defendant in any suit brought  against Tenant in connection with or arising
     out of Tenant's occupancy of the Premises, Tenant shall pay to Landlord its
     costs and expenses incurred in such suit, including without limitation, its
     actual  professional fees such as appraisers',  accountants' and attorneys'
     fees. Landlord shall indemnify,  defend, protect, and hold harmless Tenant,
     its parent or subsidiaries,  its partners,  and their respective  officers,
     agents,  servants,  employees,  and independent contractors  (collectively,
     "Tenant  Parties")  from  any and  all  loss,  cost,  damage,  expense  and
     liability   (including   without  limitation  court  costs  and  reasonable
     attorneys' fees) arising from the gross negligence or wilful  misconduct of
     Landlord in, on or about the Project, and Landlord's breach of the terms of
     this  Lease,  except  to the  extent  caused  by the  negligence  or wilful
     misconduct of the Tenant Parties.  Notwithstanding anything to the contrary
     set forth in this Lease,  either  party's  agreement to indemnify the other
     party as set forth in this Section 10.1 shall be  ineffective to the extent
     the matters for which such party  agreed to  indemnify  the other party are
     covered by insurance required to be carried by the  non-indemnifying  party
     pursuant to this Lease.  Further,  Tenant's agreement to indemnify Landlord
     and Landlord's  agreement to indemnify Tenant pursuant to this Section 10.1
     are not  intended  to and shall not relieve  any  insurance  carrier of its
     obligations under policies required to be carried by Tenant pursuant to the
     provisions  of this Lease,  to the extent such  policies  cover the matters
     subject  to  the  parties'  indemnification  obligations;  nor  shall  they
     supersede any inconsistent  agreement of the parties set forth in any other
     provision of this Lease.  The provisions of this Section 10.1 shall survive
     the  expiration  or sooner  termination  of this Lease with  respect to any
     claims or liability arising in connection with any event occurring prior to
     such  expiration or termination.  Notwithstanding  anything to the contrary
     contained in this Lease, nothing in this Lease shall impose any obligations
     on Tenant or Landlord  to be  responsible  or liable  for,  and each hereby
     releases the other from all liability for, consequential damages other than
     those  consequential  damages  incurred by Landlord  in  connection  with a
     holdover  of the  Premises  by  Tenant  after  the  expiration  or  earlier
     termination  of this Lease or incurred by Landlord in  connection  with any
     repair, physical construction or improvement work performed by or on behalf
     of Tenant in the Project.  Notwithstanding  the foregoing,  for purposes of
     this Lease,  consequential  damages shall not be deemed to include property
     damage or personal injury damages.

                                       16
<PAGE>

10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY  INSURANCE.  Landlord
     shall carry  commercial  general  liability  insurance  with respect to the
     Building  during the Lease  Term,  and shall  further  insure the  Building
     during  the  Lease  Term  against  loss or  damage  due to fire  and  other
     casualties covered within the classification of fire and extended coverage,
     vandalism coverage and malicious mischief,  sprinkler leakage, water damage
     and special extended coverage. Such coverage shall be in such amounts, from
     such  companies,  and on such other terms and  conditions,  as Landlord may
     from time to time  reasonably  determine.  Additionally,  at the  option of
     Landlord,  such  insurance  coverage  may include the risks of  earthquakes
     and/or flood damage and additional  hazards,  a rental loss endorsement and
     one or  more  loss  payee  endorsements  in  favor  of the  holders  of any
     mortgages  or deeds of trust  encumbering  the  interest of Landlord in the
     Building  or the  ground or  underlying  lessors  of the  Building,  or any
     portion thereof.  Notwithstanding the foregoing  provisions of this Section
     10.2,  the  coverage  and  amounts  of  insurance  carried by  Landlord  in
     connection  with the Building  shall,  at a minimum,  be  comparable to the
     coverage and amounts of insurance  which are carried by reasonably  prudent
     landlords of Comparable Buildings, and Worker's Compensation and Employer's
     Liability coverage as required by applicable law. Tenant shall, at Tenant's
     expense,  comply with all insurance company requirements  pertaining to the
     use of the Premises.  If Tenant's conduct or use of the Premises causes any
     increase in the  premium  for such  insurance  policies  then Tenant  shall
     reimburse  Landlord for any such  increase.  Tenant,  at Tenant's  expense,
     shall comply with all rules,  orders,  regulations or  requirements  of the
     American  Insurance  Association  (formerly  the  National  Board  of  Fire
     Underwriters) and with any similar body.

10.3 TENANT'S  INSURANCE.  Tenant shall maintain the following  coverages in the
     following amounts.

     10.3.1 Commercial General Liability  Insurance covering the insured against
          claims  of  bodily  injury,   personal   injury  and  property  damage
          (including  loss of use thereof)  arising out of Tenant's  operations,
          and contractual liabilities (covering the performance by Tenant of its
          indemnity  agreements) including a Broad Form endorsement covering the
          insuring provisions of this Lease and the performance by Tenant of the
          indemnity  agreements  set forth in Section  10.1 of this  Lease,  for
          limits of liability not less than:

          Bodily Injury and                        $5,000,000 each occurrence
          Property Damage Liability                $5,000,000 annual aggregate

          Personal Injury Liability                $5,000,000 each occurrence
                                                   $5,000,000 annual aggregate
                                                   0% Insured's participation

     10.3.2  Physical  Damage  Insurance  covering  (i)  all  office  furniture,
          business and trade fixtures,  office equipment,  free-standing cabinet
          work, movable partitions,  merchandise and all other items of Tenant's
          property  on the  Premises  installed  by,  for,  or at the expense of
          Tenant,  (ii) the  "Tenant  Improvements,"  as that term is defined in
          Section  2.1 of the Tenant  Work  Letter,  and any other  improvements
          which  exist  in  the  Premises  as of  the  Lease  Commencement  Date
          (excluding the Base Building) (the "Original Improvements"), and (iii)
          all other  improvements,  alterations  and  additions  to the Premises
          which do not  comprise  part of the  Building  Structure  or  Building
          Systems. Such insurance shall be written on an "all risks" of physical
          loss or damage basis,  for the full replacement cost value (subject to
          reasonable  deductible amounts) new without deduction for depreciation
          of the covered items and in amounts that meet any co-insurance clauses
          of the policies of insurance and shall include  coverage for damage or
          other loss  caused by fire or other peril  including,  but not limited
          to, vandalism and malicious mischief, theft, water damage of any type,
          including  sprinkler  leakage,  bursting  or  stoppage  of pipes,  and
          explosion,  and providing business  interruption coverage for a period
          of one year.

     10.3.3 Worker's  Compensation  and  Employer's  Liability or other  similar
          insurance  pursuant to all  applicable  state and local  statutes  and
          regulations.

                                       17
<PAGE>

10.4 FORM OF POLICIES.  The minimum limits of policies of insurance  required of
     Tenant  under this Lease  shall in no event limit the  liability  of Tenant
     under this Lease.  Such insurance  shall (i) name  Landlord,  and any other
     party the  Landlord  so  specifies  that has a  financial  interest  in the
     Building, as an additional insured, including Landlord's managing agent, if
     any; (ii)  specifically  cover the  liability  assumed by Tenant under this
     Lease,  including,  but not limited to, Tenant's  obligations under Section
     10.1 of this Lease; (iii) be issued by an insurance company having a rating
     of not less  than AX in  Best's  Insurance  Guide  or  which  is  otherwise
     acceptable  to  Landlord  and  licensed  to do  business  in the  State  of
     California;  (iv) be  primary  insurance  as to all claims  thereunder  and
     provide  that  any   insurance   carried  by  Landlord  is  excess  and  is
     non-contributing  with any insurance  requirement of Tenant; (v) be in form
     and content reasonably  acceptable to Landlord;  and (vi) provide that said
     insurance  shall not be  canceled or coverage  changed  unless  thirty (30)
     days'  prior  written  notice  shall  have been given to  Landlord  and any
     mortgagee  of  Landlord.  Tenant  shall  deliver said policy or policies or
     certificates  thereof to Landlord on or before the Lease  Commencement Date
     and at least thirty (30) days before the expiration  dates thereof.  In the
     event  Tenant  shall fail to procure  such  insurance,  or to deliver  such
     policies or  certificate,  Landlord may, at its option,  after  delivery of
     five (5) days prior  written  notice to  Tenant,  and  Tenant's  failure to
     deliver  such  certificates  to  Landlord  within such five (5) day period,
     procure such policies for the account of Tenant, and the cost thereof shall
     be paid to Landlord  within five (5) days after delivery to Tenant of bills
     therefor.

10.5 SUBROGATION.  Landlord and Tenant agree to have their respective  insurance
     companies issuing property damage insurance waive any rights of subrogation
     that such  companies may have against  Landlord or Tenant,  as the case may
     be, so long as the insurance carried by Landlord and Tenant,  respectively,
     is not  invalidated  thereby.  As long as such waivers of  subrogation  are
     contained  in their  respective  insurance  policies,  Landlord  and Tenant
     hereby waive any right that either may have against the other on account of
     any loss or damage to their respective  property to the extent such loss or
     damage is  insurable  under  policies  of  insurance  for fire and all risk
     coverage, or other similar property insurance.

10.6 ADDITIONAL  INSURANCE  OBLIGATIONS.  Tenant shall carry and maintain during
     the entire Lease Term, at Tenant's sole cost and expense, increased amounts
     of the insurance  required to be carried by Tenant pursuant to this Article
     10 and such  other  reasonable  types  of  insurance  coverage  and in such
     reasonable amounts covering the Premises and Tenant's  operations  therein,
     as may be  reasonably  requested  by  Landlord  but in no event  shall such
     increased  amounts of insurance or such other reasonable types of insurance
     coverage be in excess of that being  required by  landlords  of  comparable
     buildings,  for comparable  uses, in the Central Orange County,  California
     area.

                                   ARTICLE 11

                             DAMAGE AND DESTRUCTION

11.1 REPAIR OF DAMAGE TO PREMISES BY  LANDLORD.  Tenant  shall  promptly  notify
     Landlord  of any damage to the  Premises  resulting  from fire or any other
     casualty.  If the Premises or any Common Areas serving or providing  access
     to the Premises shall be damaged by fire or other casualty,  Landlord shall
     promptly  and  diligently,  subject  to  reasonable  delays  for  insurance
     adjustment or other  matters  beyond  Landlord's  reasonable  control,  and
     subject to all other terms of this  Article 11,  restore the Base  Building
     and such Common Areas.  Such restoration shall be to substantially the same
     condition of the Base  Building and the Common Areas prior to the casualty,
     except for  modifications  required by zoning and building  codes and other
     laws or by the holder of a mortgage on the Building or Project or any other
     modifications  to the Common Areas deemed  desirable by Landlord,  provided
     that access to the Premises and any common  restrooms  serving the Premises
     shall not be materially impaired.  Upon the occurrence of any damage to the
     Premises,  upon  notice  (the  "Landlord  Repair  Notice")  to Tenant  from
     Landlord,  Tenant shall assign to Landlord (or to any party  designated  by
     Landlord) all insurance proceeds payable to Tenant under Tenant's insurance
     required under Section 10.3 of this Lease, and Landlord shall repair damage
     to the Tenant Improvements and the Original  Improvements  installed in the
     Premises   and  shall   return  such  Tenant   Improvements   and  Original
     Improvements to their original condition; provided that if the cost of such
     repair by Landlord  exceeds the amount of  insurance  proceeds  received by
     Landlord from Tenant's insurance  carrier,  as assigned by Tenant, the cost
     of such  repairs  shall be paid by Tenant to Landlord  prior to  Landlord's
     commencement  of repair of the damage.  In the event that Landlord does not
     deliver the Landlord  Repair  Notice  within sixty (60) days  following the
     date the casualty becomes known to Landlord, Tenant shall, at its sole cost
     and expense,  repair any damage to the Tenant Improvements and the Original
     Improvements  installed  in the  Premises  and  shall  return  such  Tenant
     Improvements and Original Improvements to their original condition. Whether
     or  not  Landlord   delivers  a  Landlord  Repair  Notice,   prior  to  the
     commencement  of  construction,   Tenant  shall  submit  to  Landlord,  for
     Landlord's  review and  approval,  all plans,  specifications  and  working
     drawings  relating  thereto,  and Landlord shall select the  contractors to
     perform  such  improvement  work.  Landlord  shall  not be  liable  for any
     inconvenience or annoyance to Tenant or its visitors, or injury to Tenant's
     business  resulting  in any way from  such  damage or the  repair  thereof;
     provided  however,  that if such fire or other  casualty shall have damaged
     the Premises or Common  Areas  necessary  to Tenant's  occupancy,  Landlord
     shall allow Tenant a proportionate abatement of Rent to the extent Landlord
     is reimbursed from the proceeds of rental interruption  insurance purchased
     by  Landlord  as part of  Operating  Expenses,  during  the time and to the
     extent the Premises  are unfit for  occupancy  for the  purposes  permitted
     under this Lease, and not occupied by Tenant as a result thereof; provided,
     further,  however,  that  if  the  damage  or  destruction  is  due  to the
     negligence or wilful misconduct of Tenant or any of its agents,  employees,
     contractors,  invitees  or  guests,  Tenant  shall be  responsible  for any
     reasonable,  applicable  insurance  deductible  (which  shall be payable to
     Landlord  upon demand) and there shall be no rent  abatement.  In the event
     that Landlord shall not deliver the Landlord Repair Notice,  Tenant's right
     to rent abatement  pursuant to the preceding sentence shall terminate as of
     the date which is  reasonably  determined to be the date Tenant should have
     completed  repairs to the  Premises  assuming  Tenant used  reasonable  due
     diligence in connection therewith.

                                       18
<PAGE>

11.2 LANDLORD'S OPTION TO REPAIR.  Notwithstanding  the terms of Section 11.1 of
     this Lease,  Landlord may elect not to rebuild and/or restore the Premises,
     Building  and/or  Project,  and instead  terminate this Lease, by notifying
     Tenant in writing of such termination within sixty (60) days after the date
     of  discovery  of the  damage,  such notice to include a  termination  date
     giving Tenant sixty (60) days to vacate the  Premises,  but Landlord may so
     elect only if the  Building  or  Project  shall be damaged by fire or other
     casualty or cause,  whether or not the  Premises are  affected,  and one or
     more of the following conditions is present:  (i) in Landlord's  reasonable
     judgment,  repairs cannot reasonably be completed within one hundred eighty
     (180) days after the date of discovery of the damage (when such repairs are
     made without the payment of overtime or other premiums); (ii) the holder of
     any  mortgage on the  Building or Project or ground  lessor with respect to
     the Building or Project shall  require that the  insurance  proceeds or any
     portion thereof be used to retire the mortgage debt, or shall terminate the
     ground lease,  as the case may be; or (iii) the damage is not fully covered
     by Landlord's  insurance policies.  If Landlord does not elect to terminate
     this Lease  pursuant to  Landlord's  termination  right as provided  above,
     Landlord  shall,  within  sixty  (60) days of the date of  damage,  deliver
     written notice to Tenant specifying  Landlord's  reasonable  opinion of the
     date  of  completion  of the  repairs,  and if the  repairs  to be  made by
     Landlord cannot,  in the reasonable  opinion of the Landlord,  be completed
     within one (1) year after being commenced  (which one (1) year period shall
     be subject to  extension  as a result of any event of "Force  Majeure,"  as
     that term is  defined in Section  29.16 of this  Lease),  Tenant may elect,
     within thirty (30) days after the date of Landlord's  notice,  to terminate
     this Lease by written notice to Landlord effective as of the date specified
     in the notice,  which date shall not be less than thirty (30) days nor more
     than  sixty  (60)  days  after the date  such  notice  is given by  Tenant.
     Furthermore,  if neither Landlord nor Tenant has terminated this Lease, and
     the repairs to be made by Landlord are not actually  completed  within such
     one (1) year  period  (as  extended  for an event of Force  Majeure),  then
     Tenant shall have the right to  terminate  this Lease during the first five
     (5) business days of each calendar  month  following the end of such period
     until such time as the  repairs to be made by  Landlord  are  complete,  by
     notice  to  landlord  (the  "Damage  Termination  Notice"),   which  Damage
     Termination  Date shall not be less than ten (10) business  days  following
     the end of each  such  month.  Notwithstanding  the  foregoing,  if  Tenant
     delivers a Damage Termination Notice to Landlord,  then Landlord shall have
     the right to suspend the  occurrence of the Damage  Termination  Date for a
     period ending thirty (30) days after the Damage  Termination Date set forth
     in the Damage Termination  Notice by delivering to Tenant,  within five (5)
     business days of Landlord's  receipt of the Damage  Termination  Notice,  a
     certification  of Landlord's  contractor  responsible for the repair of the
     damage certifying that it is such contractor's good faith judgment that the
     repairs to be made by  Landlord  shall be  substantially  completed  within
     thirty (30) days after the Damage  Termination  Date. If such repairs shall
     be  substantially  completed  prior to the  expiration  of such  thirty-day
     period,  then the Damage Termination Notice shall be of no force or effect,
     but if such  repairs  shall  not be  substantially  completed  within  such
     thirty-day  period,  then this Lease shall terminate upon the expiration of
     such  thirty-day  period.  At any time,  from time to time,  after the date
     occurring sixty (60) days after the date of the damage,  Tenant may request
     that Landlord inform Tenant of Landlord's reasonable opinion of the date of
     completion of the repairs to be made by Landlord and Landlord shall respond
     to such request  within ten (10) business  days. In addition,  in the event
     that the Premises, the Building, and/or the Project is destroyed or damaged
     to any substantial  extent during the last  twenty-four  (24) months of the
     Lease Term,  then  notwithstanding  anything  contained in this Article 11,
     Landlord  shall have the option to terminate  this Lease by giving  written
     notice to Tenant of the  exercise  of such option  within  thirty (30) days
     after  Landlord's  discovery of the damage or  destruction,  in which event
     this Lease  shall cease and  terminate  as of the date of such  notice.  In
     addition, in the event that the Premises, the Building,  and/or the Project
     is destroyed to any  substantial  extent during the last twelve (12) months
     of the Lease Term, then notwithstanding  anything contained in this Article
     11,  Landlord  shall  have the  option to  terminate  this  Lease by giving
     written  notice to Tenant of the exercise of such option within thirty (30)
     days after such  damage or  destruction,  in which  event this Lease  shall
     cease and  terminate  as of the date of such  notice.  Notwithstanding  the
     foregoing,  if the damage  occurs during the last twelve (12) months of the
     Lease  Term and such  damage  cannot be  repaired  within  sixty  (60) days
     following  the  date  of  the  casualty  and  such  casualty  substantially
     interferes with Tenant's use of or access to the Premises,  then Tenant may
     elect,  no earlier than thirty (30) days after the date of the discovery of
     the damage  and not later than sixty (60) days after the date of  discovery
     of such  damage,  to  terminate  this Lease by written  notice to  Landlord
     effective as of the date  specified in the notice,  which date shall not be
     less than  thirty  (30) days nor more than  sixty  (60) days after the date
     such  notice is given by Tenant.  Upon any such  termination  of this Lease
     pursuant  to this  Section  11.2,  Tenant  shall  pay  the  Base  Rent  and
     Additional Rent, properly  apportioned up to such date of termination,  and
     both parties hereto shall thereafter be freed and discharged of all further
     obligations  hereunder  except as provided for in  provisions of this Lease
     which by their terms survive the  expiration or earlier  termination of the
     Lease Term.

11.3 WAIVER OF STATUTORY  PROVISIONS.  The  provisions of this Lease,  including
     this  Article 11,  constitute  an express  agreement  between  Landlord and
     Tenant with respect to any and all damage to, or destruction of, all or any
     part of the  Premises,  the  Building  or the  Project,  and any statute or
     regulation  of the  State of  California,  including,  without  limitation,
     Sections  1932(2) and 1933(4) of the California Civil Code, with respect to
     any rights or obligations  concerning  damage or destruction in the absence
     of an express  agreement  between  the  parties,  and any other  statute or
     regulation,  now or hereafter in effect,  shall have no application to this
     Lease or any damage or destruction to all or any part of the Premises,  the
     Building or the Project.

                                       19
<PAGE>

                                   ARTICLE 12

                                    NONWAIVER

     No  provision  of this Lease shall be deemed  waived by either party hereto
unless expressly waived in a writing signed thereby.  The waiver by either party
hereto of any breach of any term,  covenant or condition  herein contained shall
not be deemed to be a waiver of any subsequent breach of same or any other term,
covenant or  condition  herein  contained.  The  subsequent  acceptance  of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term,  covenant  or  condition  of this  Lease,  other than the
failure  of  Tenant  to pay the  particular  Rent  so  accepted,  regardless  of
Landlord's  knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein  stipulated shall be
deemed a waiver of Landlord's right to receive the full amount due, and Landlord
may accept  such check or  payment  without  prejudice  to  Landlord's  right to
recover the full amount due.

                                   ARTICLE 13

                                  CONDEMNATION

     If the whole or any part of the  Premises,  Building  or  Project  shall be
taken by power of eminent domain or condemned by any competent authority for any
public or  quasi-public  use or purpose,  or if any adjacent  property or street
shall be so taken or condemned,  or reconfigured or vacated by such authority in
such manner as to require the use,  reconstruction  or remodeling of any part of
the Premises,  Building or Project,  or if Landlord  shall grant a deed or other
instrument in lieu of such taking by eminent  domain or  condemnation,  Landlord
shall  have  the  option  to  terminate  this  Lease  effective  as of the  date
possession  is  required  to be  surrendered  to the  authority.  If  more  than
twenty-five  percent (25%) of the rentable square feet of the Premises is taken;
if more than ten percent (10%) of the parking passes  allocated to the Tenant as
provided in this Lease is taken;  or if access to the Premises is  substantially
impaired; or if any portion of the public streets or highways in the vicinity of
the  Premises is taken and such taking  materially,  adversely  interferes  with
access to the Premises or the parking areas servicing the Premises, in each case
for a period in excess of one hundred  eighty (180) days,  Tenant shall have the
option to terminate this Lease  effective as of the date  possession is required
to be  surrendered  to the  authority.  Tenant  shall not because of such taking
assert any claim against Landlord or the authority for any compensation  because
of such taking and Landlord  shall be entitled to the entire award or payment in
connection  therewith,  except  that  Tenant  shall  have the  right to file any
separate claim available to Tenant for any taking of Tenant's  personal property
and fixtures  belonging to Tenant and removable by Tenant upon expiration of the
Lease Term pursuant to the terms of this Lease, and for moving expenses, so long
as such claims do not  diminish  the award  available  to  Landlord,  its ground
lessor with respect to the Building or Project or its mortgagee,  and such claim
is payable separately to Tenant. All Rent shall be apportioned as of the date of
such  termination.  If any part of the Premises  shall be taken,  and this Lease
shall not be so terminated,  the Rent shall be  proportionately  abated.  Tenant
hereby  waives any and all rights it might  otherwise  have  pursuant to Section
1265.130 of The California Code of Civil Procedure.  Notwithstanding anything to
the contrary contained in this Article 13, in the event of a temporary taking of
all or any portion of the  Premises for a period of one hundred and eighty (180)
days or less,  then this  Lease  shall not  terminate  but the Base Rent and the
Additional  Rent shall be abated for the period of such taking in  proportion to
the ratio that the amount of rentable square feet of the Premises taken bears to
the total  rentable  square feet of the Premises.  Landlord shall be entitled to
receive the entire award made in connection with any such temporary taking.

                                   ARTICLE 14

                            ASSIGNMENT AND SUBLETTING

14.1 TRANSFERS. Tenant shall not, without the prior written consent of Landlord,
     assign,  mortgage,  pledge,  hypothecate,  encumber,  or permit any lien to
     attach to, or otherwise  transfer,  this Lease or any  interest  hereunder,
     permit any  assignment,  or other  transfer  of this Lease or any  interest
     hereunder by operation of law, sublet the Premises or any part thereof,  or
     enter into any license or  concession  agreements  or otherwise  permit the
     occupancy or use of the  Premises or any part thereof by any persons  other
     than Tenant and its  employees  and  contractors  (all of the foregoing are
     hereinafter  sometimes  referred to  collectively  as  "Transfers"  and any
     person to whom any  Transfer  is made or  sought to be made is  hereinafter
     sometimes  referred to as a  "Transferee").  If Tenant  desires  Landlord's
     consent to any  Transfer,  Tenant shall notify  Landlord in writing,  which
     notice (the  "Transfer  Notice")  shall include (i) the proposed  effective
     date of the  Transfer,  which  shall not be less than  thirty (30) days nor
     more than one hundred  eighty  (180) days after the date of delivery of the
     Transfer  Notice,  (ii) a description  of the portion of the Premises to be
     transferred (the "Subject  Space"),  (iii) all of the terms of the proposed
     Transfer  and the  consideration  therefor,  including  calculation  of the
     "Transfer  Premium",  as that term is  defined in Section  14.3  below,  in
     connection  with  such  Transfer,  the name  and  address  of the  proposed
     Transferee,   and  a  copy  of  all  existing   executed   and/or  proposed
     documentation  pertaining to the proposed Transfer,  including all existing
     operative  documents  to be  executed  to  evidence  such  Transfer  or the
     agreements  incidental or related to such Transfer,  provided that Landlord
     shall  have the right to  require  Tenant to  utilize  Landlord's  standard
     Transfer  documents in connection with the  documentation of such Transfer,
     (iv) current financial  statements of the proposed Transferee  certified by
     an  officer,  partner  or  owner  thereof,  business  credit  and  personal
     references and history of the proposed Transferee and any other information
     reasonably required by Landlord which will enable Landlord to determine the
     financial  responsibility,   character,  and  reputation  of  the  proposed
     Transferee,  nature of such  Transferee's  business and proposed use of the
     Subject Space and (v) an executed  estoppel  certificate from Tenant in the
     form  attached  hereto as Exhibit E. Any Transfer  made without  Landlord's
     prior written consent shall, at Landlord's  option, be null, void and of no
     effect,  and shall,  at Landlord's  option,  constitute a default by Tenant
     under  this  Lease.  Whether  or not  Landlord  consents  to  any  proposed
     Transfer,  Tenant shall pay Landlord's  review and processing fees, as well
     as  any  reasonable  professional  fees  (including,   without  limitation,
     attorneys',  accountants',  architects',  engineers' and consultants' fees)
     incurred by  Landlord,  within  thirty (30) days after  written  request by
     Landlord provided, such fee shall not exceed $2,000.00 per occurrence.

                                       20
<PAGE>

14.2 LANDLORD'S CONSENT. Landlord shall not unreasonably withhold its consent to
     any proposed  Transfer of the Subject Space to the  Transferee on the terms
     specified in the Transfer Notice. Without limitation as to other reasonable
     grounds for withholding  consent, the parties hereby agree that it shall be
     reasonable  under this Lease and under any  applicable  law for Landlord to
     withhold  consent  to  any  proposed  Transfer  where  one or  more  of the
     following apply:

     14.2.1 The  Transferee  is of a  character  or  reputation  or engaged in a
          business which is not  consistent  with the quality of the Building or
          the Project, or would be a significantly less prestigious  occupant of
          the Building than Tenant;

     14.2.2 The  Transferee  intends to use the Subject Space for purposes which
          are not permitted under this Lease;

     14.2.3 The  Transferee is either a governmental  agency or  instrumentality
          thereof;

     14.2.4 The Transfer  occurs  during the period from the Lease  Commencement
          Date  until the  earlier of (i) the  second  anniversary  of the Lease
          Commencement Date or (ii) the date at least ninety-five  percent (95%)
          of the rentable  square feet of the  Building is leased,  and the rent
          charged by Tenant to such Transferee  during the term of such Transfer
          (the "Transferee's Rent"),  calculated using a present value analysis,
          is less than  ninety-five  percent  (95%) of the rent being  quoted by
          Landlord  at the time of such  Transfer  for  comparable  space in the
          Building for a comparable term (the "Quoted Rent"), calculated using a
          present value analysis;

     14.2.5 The Transferee is not a party that has, at least,  substantially the
          same financial worth and/or financial stability as Tenant;

     14.2.6 The proposed  Transfer  would cause a violation of another lease for
          space in the Project, or would give an occupant of the Project a right
          to cancel its lease; or

     14.2.7 Either  the  proposed  Transferee,  or any  person or  entity  which
          directly or indirectly, controls, is controlled by, or is under common
          control  with,  the proposed  Transferee,  (i)  occupies  space in the
          Project at the time of the request for consent, or (ii) is negotiating
          with Landlord to lease space in the Project at such time, or (iii) has
          negotiated with Landlord during the thirty (30)-day period immediately
          preceding the Transfer Notice, provided that this Section 14.2.7 shall
          only be  applicable  with  respect  to  Transfers  in excess of 10,000
          rentable  square feet, and then only to the extent  Landlord has space
          in  the  Project   reasonably   capable  of  satisfying  the  proposed
          transferee's needs.

          If  Landlord  consents to any  Transfer  pursuant to the terms of this
          Section 14.2 (and does not exercise any recapture  rights Landlord may
          have  under  Section  14.4 of this  Lease),  Tenant may within six (6)
          months after Landlord's consent,  but not later than the expiration of
          said  six-month  period,  enter into such  Transfer of the Premises or
          portion thereof,  upon  substantially the same terms and conditions as
          are set forth in the Transfer  Notice  furnished by Tenant to Landlord
          pursuant to Section 14.1 of this Lease, provided that if there are any
          changes  in the terms  and  conditions  from  those  specified  in the
          Transfer  Notice  (i) such that  Landlord  would  initially  have been
          entitled to refuse its  consent to such  Transfer  under this  Section
          14.2,  or (ii) which  would  cause the  proposed  Transfer  to be more
          favorable  to the  Transferee  than the terms  set  forth in  Tenant's
          original  Transfer  Notice,  Tenant shall again submit the Transfer to
          Landlord  for its  approval  and other  action  under this  Article 14
          (including  Landlord's right of recapture,  if any, under Section 14.4
          of this  Lease).  Notwithstanding  anything  to the  contrary  in this
          Lease, if Tenant or any proposed  Transferee  claims that Landlord has
          unreasonably  withheld or delayed its consent  under  Section  14.2 or
          otherwise  has breached or acted  unreasonably  under this Article 14,
          Tenant  shall  have the right to sue  Landlord  for  contract  damages
          suffered by Tenant as a result  thereof (other than damages for injury
          to  or  interference  with,   Tenant's  business,   including  without
          limitation,  loss of profits,  however  occurring),  but Tenant hereby
          waives any right to terminate the Lease as a result thereof.

14.3 TRANSFER  PREMIUM.  If  Landlord  consents  to a  Transfer,  as a condition
     thereto which the parties hereby agree is  reasonable,  Tenant shall pay to
     Landlord  fifty percent  (50%) of any  "Transfer  Premium," as that term is
     defined in this  Section  14.3,  received by Tenant  from such  Transferee.
     "Transfer   Premium"  shall  mean  all  rent,   additional  rent  or  other
     consideration payable by such Transferee in connection with the Transfer in
     excess of the Rent and  Additional  Rent payable by Tenant under this Lease
     during the term of the Transfer on a per rentable square foot basis if less
     than all of the Premises is  transferred,  after  deducting the  reasonable
     expenses   incurred  by  Tenant  for  (i)  any  changes,   alterations  and
     improvements to the Premises in connection with the Transfer, (ii) any free
     base rent reasonably provided to the Transferee, (iii) legal fees, and (iv)
     any  brokerage  commissions  in  connection  with the  Transfer.  "Transfer
     Premium" shall also include,  but not be limited to, key money, bonus money
     or other cash consideration paid by Transferee to Tenant in connection with
     such Transfer,  and any payment in excess of fair market value for services
     rendered  by Tenant  to  Transferee  or for  assets,  fixtures,  inventory,
     equipment,  or furniture  transferred by Tenant to Transferee in connection
     with such Transfer.  In the  calculations of the Rent (as it relates to the
     Transfer Premium  calculated under this Section 14.3), and the Transferee's
     Rent and Quoted Rent under Section 14.2 of this Lease, the Rent paid during
     each annual period for the Subject Space, and the Transferee's Rent and the
     Quoted  Rent,  shall be computed  after  adjusting  such rent to the actual
     effective rent to be paid, taking into  consideration any and all leasehold
     concessions granted in connection therewith, including, but not limited to,
     any  rent  credit  and  tenant  improvement  allowance.   For  purposes  of
     calculating any such effective rent all such concessions shall be amortized
     on a straight-line basis over the relevant term.

                                       21
<PAGE>

14.4 LANDLORD'S  OPTION AS TO SUBJECT  SPACE.  Notwithstanding  anything  to the
     contrary  contained  in this  Article 14, with  respect to any  Transfer in
     which the rentable  square footage of such transfer,  when  aggregated with
     the rentable square footage of all prior  Transfers,  exceeds fifty percent
     (50%) of the rentable  square footage of the Premises.  Landlord shall have
     the option,  by giving  written  notice to Tenant  within  thirty (30) days
     after receipt of any Transfer Notice,  to recapture the Subject Space. Such
     recapture  notice shall cancel and terminate this Lease with respect to the
     Subject Space as of the date stated in the Transfer Notice as the effective
     date  of the  proposed  Transfer  until  the  last  day of the  term of the
     Transfer  as set forth in the  Transfer  Notice (or at  Landlord's  option,
     shall cause the Transfer to be made to Landlord or its agent, in which case
     the parties shall execute the Transfer  documentation promptly thereafter).
     In the event of a recapture  by  Landlord,  if this Lease shall be canceled
     with respect to less than the entire  Premises,  the Rent  reserved  herein
     shall be  prorated  on the basis of the  number  of  rentable  square  feet
     retained  by Tenant in  proportion  to the number of  rentable  square feet
     contained  in the  Premises,  and this Lease as so amended  shall  continue
     thereafter in full force and effect,  and upon request of either party, the
     parties  shall  execute  written  confirmation  of the  same.  If  Landlord
     declines,  or fails to elect in a timely  manner to  recapture  the Subject
     Space under this Section 14.4, then, provided Landlord has consented to the
     proposed  Transfer,  Tenant  shall be entitled  to proceed to transfer  the
     Subject  Space to the proposed  Transferee,  subject to  provisions of this
     Article 14.

14.5 EFFECT OF TRANSFER.  If Landlord consents to a Transfer,  (i) the terms and
     conditions  of this Lease  shall in no way be deemed to have been waived or
     modified,  (ii) such  consent  shall not be deemed  consent to any  further
     Transfer by either  Tenant or a  Transferee,  (iii) Tenant shall deliver to
     Landlord,  promptly  after  execution,  an  original  executed  copy of all
     documentation  pertaining to the Transfer in form reasonably  acceptable to
     Landlord,  (iv) Tenant  shall  furnish upon  Landlord's  request a complete
     statement,  certified by an independent  certified  public  accountant,  or
     Tenant's chief financial  officer,  setting forth in detail the computation
     of any  Transfer  Premium  Tenant has  derived  and shall  derive from such
     Transfer,  and (v) no Transfer  relating to this Lease or agreement entered
     into with  respect  thereto,  whether with or without  Landlord's  consent,
     shall relieve Tenant or any guarantor of the Lease from any liability under
     this Lease, including,  without limitation,  in connection with the Subject
     Space.  Landlord or its authorized  representatives shall have the right at
     all  reasonable  times to audit the  books,  records  and  papers of Tenant
     relating to any Transfer,  and shall have the right to make copies thereof.
     If the Transfer Premium respecting any Transfer shall be found understated,
     Tenant shall, within thirty (30) days after demand, pay the deficiency, and
     if understated by more than five percent (5%),  Tenant shall pay Landlord's
     costs of such audit.

14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term "Transfer" shall
     also  include (i) if Tenant is a  partnership,  the  withdrawal  or change,
     voluntary,  involuntary  or by operation of law, of fifty  percent (50%) or
     more of the  partners,  or  transfer  of  fifty  percent  (50%)  or more of
     partnership   interests,   within  a  twelve  (12)-month   period,  or  the
     dissolution of the partnership  without immediate  reconstitution  thereof,
     and (ii) if Tenant is a closely held corporation  (i.e., whose stock is not
     publicly held and not traded through an exchange or over the counter),  (A)
     the dissolution, merger, consolidation or other reorganization of Tenant or
     (B) the sale or other  transfer of an aggregate of fifty  percent  (50%) or
     more of the voting shares of Tenant (other than to immediate family members
     by reason of gift or death),  within a twelve (12)-month period, or (C) the
     sale,  mortgage,  hypothecation  or pledge of an aggregate of fifty percent
     (50%) or more of the value of the  unencumbered  assets of Tenant  within a
     twelve (12)-month  period.  If Tenant is a publicly held  corporation,  the
     provisions of this Section 14.6 shall not apply.

14.7 OCCURRENCE OF DEFAULT.  Any Transfer  hereunder  shall be  subordinate  and
     subject  to the  provisions  of this  Lease,  and if this  Lease  shall  be
     terminated  during the term of any Transfer,  Landlord shall have the right
     to: (i) treat such Transfer as cancelled and repossess the Subject Space by
     any  lawful  means,  or (ii)  require  that such  Transferee  attorn to and
     recognize Landlord as its landlord under any such Transfer. If Tenant shall
     be in default under this Lease, Landlord is hereby irrevocably  authorized,
     as Tenant's  agent and  attorney-in-fact,  to direct any Transferee to make
     all payments under or in connection with the Transfer  directly to Landlord
     (which Landlord shall apply towards Tenant's  obligations under this Lease)
     until  such  default  is  cured.   Such   Transferee   shall  rely  on  any
     representation by Landlord that Tenant is in default hereunder, without any
     need for confirmation thereof by Tenant. Upon any assignment,  the assignee
     shall assume in writing all obligations and covenants of Tenant  thereafter
     to be performed or observed  under this Lease.  No collection or acceptance
     of rent by  Landlord  from any  Transferee  shall be deemed a waiver of any
     provision of this Article 14 or the approval of any Transferee or a release
     of Tenant from any  obligation  under this Lease,  whether  theretofore  or
     thereafter  accruing.  In no  event  shall  Landlord's  enforcement  of any
     provision  of this  Lease  against  any  Transferee  be  deemed a waiver of
     Landlord's  right to enforce any term of this Lease  against  Tenant or any
     other  person.  If Tenant's  obligations  hereunder  have been  guaranteed,
     Landlord's  consent  to any  Transfer  shall not be  effective  unless  the
     guarantor also consents to such Transfer.

14.8 NON-TRANSFERS.  Notwithstanding  anything to the contrary contained in this
     Article 14, an assignment or subletting of all or a portion of the Premises
     to (a) an affiliate of Tenant (an entity which is controlled by,  controls,
     or is under common control with,  Tenant),  (b) an entity which merges with
     or acquires or is acquired by, Tenant, or (c) a transferee of substantially
     all of the assets of Tenant  (items (a),  (b),  and (c) to be  collectively
     referred to herein as an "Affiliate"), shall not be deemed a Transfer under
     this  Article  14,  provided  that  Tenant  notifies  Landlord  of any such
     assignment or sublease and promptly supplies Landlord with any documents or
     information  requested by Landlord regarding such assignment or sublease or
     such  Affiliate,  and further  provided that such assignment or sublease is
     not a  subterfuge  by Tenant to avoid its  obligations  under  this  Lease.
     "Control," as used in this Section 14.8, shall mean the ownership, directly
     or indirectly, of at least fifty-one percent (51%) of the voting securities
     of, or possession  of the right to vote,  in the ordinary  direction of its
     affairs, of at least fifty-one percent (51%) of the voting interest in, any
     person or entity.

                                       22
<PAGE>

                                   ARTICLE 15

                      SURRENDER OF PREMISES; OWNERSHIP AND
                            REMOVAL OF TRADE FIXTURES

15.1 SURRENDER  OF  PREMISES.  No act or thing done by  Landlord or any agent or
     employee of Landlord during the Lease Term shall be deemed to constitute an
     acceptance by Landlord of a surrender of the Premises unless such intent is
     specifically  acknowledged in writing by Landlord.  The delivery of keys to
     the  Premises to  Landlord  or any agent or employee of Landlord  shall not
     constitute  a surrender  of the  Premises or effect a  termination  of this
     Lease,  whether or not the keys are  thereafter  retained by Landlord,  and
     notwithstanding  such  delivery  Tenant  shall be entitled to the return of
     such keys at any  reasonable  time upon request until this Lease shall have
     been properly terminated. The voluntary or other surrender of this Lease by
     Tenant,  whether  accepted  by  Landlord  or not,  or a mutual  termination
     hereof,  shall  not work a merger,  and at the  option  of  Landlord  shall
     operate as an  assignment  to Landlord  of all  subleases  or  subtenancies
     affecting  the  Premises  or  terminate  any  or  all  such  sublessees  or
     subtenancies.

15.2 REMOVAL OF TENANT  PROPERTY  BY TENANT.  Upon the  expiration  of the Lease
     Term, or upon any earlier termination of this Lease, Tenant shall,  subject
     to the provisions of this Article 15, quit and surrender  possession of the
     Premises  to Landlord  in as good order and  condition  as when Tenant took
     possession and as thereafter improved by Landlord and/or Tenant, reasonable
     wear and tear and repairs which are specifically made the responsibility of
     Landlord hereunder  excepted.  Upon such expiration or termination,  Tenant
     shall, without expense to Landlord,  remove or cause to be removed from the
     Premises all debris and rubbish,  and such items of  furniture,  equipment,
     business and trade fixtures, free-standing cabinet work, movable partitions
     and other  articles of personal  property  owned by Tenant or  installed or
     placed by Tenant at its expense in the Premises,  and such similar articles
     of any other persons  claiming  under Tenant,  as Landlord may, in its sole
     discretion,  require  to be  removed,  and Tenant  shall  repair at its own
     expense  all  damage  to the  Premises  and  Building  resulting  from such
     removal.

                                   ARTICLE 16

                                  HOLDING OVER

     If Tenant  holds  over  after the  expiration  of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such  tenancy  shall be from  month-to-month  only,  and shall not  constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable at a monthly  rate  equal to the  product of (i) the Rent  applicable
during the last  rental  period of the Lease Term under this  Lease,  and (ii) a
percentage  equal to the sum of (A) for the  first  six (6)  months  of any such
holdover,  150% and (B) for any period  thereafter,  200%.  Such  month-to-month
tenancy shall be subject to every other applicable term,  covenant and agreement
contained  herein.  Nothing  contained  in this Article 16 shall be construed as
consent by  Landlord  to any  holding  over by Tenant,  and  Landlord  expressly
reserves the right to require Tenant to surrender  possession of the Premises to
Landlord as provided in this Lease upon the  expiration or other  termination of
this Lease.  The  provisions  of this Article 16 shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord  provided herein
or at law. If Tenant fails to surrender  the  Premises  within  thirty (30) days
following the  termination or expiration of this Lease, in addition to any other
liabilities  to Landlord  accruing  therefrom,  Tenant  shall  protect,  defend,
indemnify and hold Landlord harmless from all loss, costs (including  reasonable
attorneys' fees) and liability resulting from such failure,  including,  without
limiting the  generality  of the  foregoing,  any claims made by any  succeeding
tenant  founded upon such failure to surrender  and any lost profits to Landlord
resulting therefrom.

                                   ARTICLE 17

                              ESTOPPEL CERTIFICATES

     Within ten (10) days  following  a request in writing by  Landlord,  Tenant
shall  execute,  acknowledge  and deliver to  Landlord an estoppel  certificate,
which, as submitted by Landlord,  shall be  substantially in the form of Exhibit
E,  attached  hereto (or such other form as may be required  by any  prospective
mortgagee  or  purchaser of the  Project,  or any portion  thereof),  indicating
therein  any  exceptions  thereto  that may exist at that  time,  and shall also
contain any other  information  reasonably  requested by Landlord or  Landlord's
mortgagee or prospective  mortgagee.  Any such certificate may be relied upon by
any  prospective  mortgagee  or  purchaser of all or any portion of the Project.
Tenant shall execute and deliver  whatever other  instruments  may be reasonably
required  for such  purposes.  At any time during the Lease Term,  Landlord  may
require  Tenant to  provide  Landlord  with a current  financial  statement  and
financial  statements  of the two  (2)  years  prior  to the  current  financial
statement year.  Such statements  shall be prepared in accordance with generally
accepted  accounting  principles  and, if such is the normal practice of Tenant,
shall be audited  by an  independent  certified  public  accountant.  Failure of
Tenant to timely execute,  acknowledge and deliver such estoppel  certificate or
other  instruments  shall  constitute  an  acceptance  of  the  Premises  and an
acknowledgment  by Tenant that statements  included in the estoppel  certificate
are true and correct, without exception.

                                       23
<PAGE>

                                   ARTICLE 18

                                  SUBORDINATION

     This Lease  shall be subject  and  subordinate  to all  present  and future
ground or  underlying  leases of the  Building or Project and to the lien of any
mortgage, trust deed or other encumbrances now or hereafter in force against the
Building  or  Project  or any  part  thereof,  if  any,  and  to  all  renewals,
extensions,  modifications,  consolidations and replacements thereof, and to all
advances  made or hereafter  to be made upon the  security of such  mortgages or
trust  deeds,  unless  the  holders  of such  mortgages,  trust  deeds  or other
encumbrances,  or the lessors  under such  ground  lease or  underlying  leases,
require in writing that this Lease be superior thereto. The receipt by Tenant of
commercially  reasonable  non-disturbance  agreements(s) in favor of Tenant from
any ground lessor,  mortgage holders,  or lien holders of Landlord who come into
existence  with  respect  to the  Building  or  Project at any time prior to the
expiration  of the  Lease  Term  shall  be a  condition  precedent  to  Tenant's
agreement  to be bound by the terms of this  Article 18.  Tenant  covenants  and
agrees in the event any  proceedings are brought for the foreclosure of any such
mortgage or deed in lieu  thereof  (or if any ground  lease is  terminated),  to
attorn,  without any  deductions or set-offs  whatsoever,  to the  lienholder or
purchaser or any successors  thereto upon any such  foreclosure  sale or deed in
lieu  thereof  (or to the  ground  lessor),  if so  requested  to do so by  such
purchaser or lienholder or ground  lessor,  and to recognize  such  purchaser or
lienholder  or ground  lessor as the lessor  under  this  Lease,  provided  such
lienholder  or purchaser  or ground  lessor shall agree to accept this Lease and
not  disturb  Tenant's  occupancy,  so long as Tenant  timely  pays the rent and
observes and performs the terms,  covenants  and  conditions of this Lease to be
observed and performed by Tenant.  Landlord's interest herein may be assigned as
security at any time to any  lienholder.  Tenant shall,  within five (5) days of
request by Landlord,  execute such further instruments or assurances as Landlord
may  reasonably  deem  necessary  to evidence or confirm  the  subordination  or
superiority of this Lease to any such mortgages,  trust deeds,  ground leases or
underlying  leases.  Tenant  waives  the  provisions  of any  current  or future
statute,  rule or law  which may give or  purport  to give  Tenant  any right or
election  to  terminate  or  otherwise  adversely  affect  this  Lease  and  the
obligations of the Tenant  hereunder in the event of any foreclosure  proceeding
or sale.

                                   ARTICLE 19

                               DEFAULTS; REMEDIES

19.1 Events of Default.  The occurrence of any of the following shall constitute
     a default of this Lease by Tenant:

     19.1.1 Any failure by Tenant to pay any Rent or any other  charge  required
          to be paid under this Lease, or any part thereof, when due unless such
          failure is cured  within  five (5)  business  days after  notice  that
          payment is overdue; or

     19.1.2 Except  where a  specific  time  period is  otherwise  set forth for
          Tenant's  performance  in this  Lease,  in which  event the failure to
          perform by Tenant within such time period shall be a default by Tenant
          under this Section 19.1.2, any failure by Tenant to observe or perform
          any  other  provision,  covenant  or  condition  of this  Lease  to be
          observed or  performed  by Tenant  where such  failure  continues  for
          thirty (30) days after written notice thereof from Landlord to Tenant;
          provided  that if the  nature  of such  default  is such that the same
          cannot  reasonably  be cured  within a thirty (30) day period,  Tenant
          shall not be deemed to be in default if it diligently  commences  such
          cure within such period and thereafter  diligently proceeds to rectify
          and cure such default,  but in no event  exceeding a period of time in
          excess of thirty (30) days after written  notice thereof from Landlord
          to Tenant; or

     19.1.3  Abandonment  of all or a  substantial  portion of the  Premises  by
          Tenant; or

     19.1.4 Vacation of the ground floor portion of the Premises,  except to the
          extent  Tenant covers the windows of such portion of the Premises in a
          manner  reasonably  acceptable to Landlord or lights the Premises in a
          manner reasonably satisfactory to Landlord (in order that such portion
          of the Premises shall not appear to be vacated); or

     19.1.5 The  failure  by Tenant  to  observe  or  perform  according  to the
          provisions  of  Articles  5, 14,  17 or 18 of this  Lease  where  such
          failure  continues  for more than two (2)  business  days after notice
          from Landlord.

          The notice periods provided herein are in lieu of, and not in addition
          to, any notice periods provided by law.

19.2 REMEDIES  UPON  DEFAULT.  Upon the  occurrence  of any event of  default by
     Tenant, Landlord shall have, in addition to any other remedies available to
     Landlord  at law or in equity  (all of which  remedies  shall be  distinct,
     separate  and  cumulative),  the  option to  pursue  any one or more of the
     following  remedies,  each  and  all  of  which  shall  be  cumulative  and
     nonexclusive, without any notice or demand whatsoever.

     19.2.1  Terminate  this  Lease,  in which event  Tenant  shall  immediately
          surrender  the  Premises to  Landlord,  and if Tenant  fails to do so,
          Landlord may, without  prejudice to any other remedy which it may have
          for possession or arrearages in rent,  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,  without  being
          liable for prosecution or any claim or damages therefor;  and Landlord
          may recover from Tenant the following:

          (i)  The worth at the time of any unpaid rent which has been earned at
               the time of such termination; plus

          (ii) The worth at the time of award of the  amount by which the unpaid
               rent which would have been  earned  after  termination  until the
               time of award  exceeds the amount of such rental loss that Tenant
               proves could have been reasonably avoided; plus

                                       24
<PAGE>

          (iii)The worth at the time of award of the  amount by which the unpaid
               rent for the  balance  of the Lease  Term after the time of award
               exceeds the amount of such rental loss that Tenant  proves  could
               have been reasonably avoided; plus

          (iv) Any other  amount  necessary to  compensate  Landlord for all the
               detriment  proximately  caused by Tenant's failure to perform its
               obligations  under this Lease or which in the ordinary  course of
               things would be likely to result therefrom, ; and

          (v)  At Landlord's  election,  such other amounts in addition to or in
               lieu of the  foregoing as may be  permitted  from time to time by
               applicable law.

     The term "rent" as used in this  Section  19.2 shall be deemed to be and to
     mean all sums of every  nature  required  to be paid by Tenant to  Landlord
     pursuant to the terms of this Lease.  As used in  Paragraphs  19.2.1(i) and
     (ii), above, the "worth at the time of award" shall be computed by allowing
     interest at the rate set forth in Article 25 of this Lease,  but in no case
     greater than the maximum amount of such interest  permitted by law. As used
     in Paragraph  19.2.1(iii)  above, the "worth at the time of award" shall be
     computed by  discounting  such amount at the  discount  rate of the Federal
     Reserve Bank of San Francisco at the time of award plus one percent (1%).

     19.2.2 Landlord  shall have the remedy  described in California  Civil Code
          Section  1951.4  (lessor may continue  lease in effect after  lessee's
          breach and  abandonment  and recover rent as it becomes due, if lessee
          has the  right  to  sublet  or  assign,  subject  only  to  reasonable
          limitations).  Accordingly,  if Landlord  does not elect to  terminate
          this Lease on account of any  default by Tenant,  Landlord  may,  from
          time to time,  without  terminating  this  Lease,  enforce  all of its
          rights and remedies  under this Lease,  including the right to recover
          all rent as it becomes due.

     19.2.3 Landlord  shall at all times have the  rights  and  remedies  (which
          shall be cumulative  with each other and cumulative and in addition to
          those rights and remedies  available under Sections 19.2.1 and 19.2.2,
          above,  or any law or other  provision of this Lease),  without  prior
          demand or notice  except as  required by  applicable  law, to seek any
          declaratory,  injunctive or other equitable  relief,  and specifically
          enforce this Lease, or restrain or enjoin a violation or breach of any
          provision hereof.

19.3 SUBLEASES OF TENANT.  If Landlord elects to terminate this Lease on account
     of any default by Tenant,  as set forth in this Article 19,  Landlord shall
     have the right to terminate any and all subleases, licenses, concessions or
     other  consensual  arrangements  for possession  entered into by Tenant and
     affecting the Premises or may, in Landlord's  sole  discretion,  succeed to
     Tenant's interest in such subleases, licenses, concessions or arrangements.
     In the event of Landlord's  election to succeed to Tenant's interest in any
     such subleases, licenses, concessions or arrangements,  Tenant shall, as of
     the date of notice by Landlord of such  election,  have no further right to
     or interest in the rent or other consideration receivable thereunder.

19.4 FORM OF PAYMENT  AFTER  DEFAULT.  Following  the  occurrence of an event of
     default by Tenant, Landlord shall have the right to require that any or all
     subsequent  amounts paid by Tenant to Landlord  hereunder,  whether to cure
     the default in question or  otherwise,  be paid in the form of cash,  money
     order,  cashier's or certified check drawn on an institution  acceptable to
     Landlord, or by other means approved by Landlord, notwithstanding any prior
     practice of accepting payments in any different form.

19.5 EFFORTS  TO RELET.  No  re-entry  or  repossession,  repairs,  maintenance,
     changes, alterations and additions, reletting, appointment of a receiver to
     protect Landlord's interests hereunder,  or any other action or omission by
     Landlord  shall be construed  as an election by Landlord to terminate  this
     Lease or Tenant's  right to  possession,  or to accept a  surrender  of the
     Premises, nor shall same operate to release Tenant in whole or in part from
     any of Tenant's  obligations  hereunder,  unless express  written notice of
     such  intention is sent by Landlord to Tenant.  Tenant  hereby  irrevocably
     waives any right  otherwise  available under any law to redeem or reinstate
     this Lease.

19.6 LANDLORD  DEFAULT.  Notwithstanding  anything to the  contrary set forth in
     this  Lease,  Landlord  shall  be in  default  in  the  performance  of any
     obligation  required to be performed by Landlord  pursuant to this Lease if
     Landlord fails to perform such obligation within thirty (30) days after the
     receipt of notice from Tenant  specifying in detail  Landlord's  failure to
     perform; provided,  however, if the nature of Landlord's obligation is such
     that more than  thirty (30) days are  required  for its  performance,  then
     Landlord shall not be in default under this Lease if it shall commence such
     performance  within such thirty (30) day period and  thereafter  diligently
     pursue the same to completion,  provided  however,  to the extent expressly
     set forth in Section 6.3 of this Lease,  Tenant shall have the remedies set
     forth  therein in the event of  Landlord's  failure to perform in less than
     thirty (30) days with respect to the matters itemized in said Section 6.3.

                                   ARTICLE 20

                           COVENANT OF QUIET ENJOYMENT

     Landlord  covenants that Tenant,  on paying the Rent,  charges for services
and other payments herein reserved and on keeping,  observing and performing all
the  other  terms,  covenants,  conditions,  provisions  and  agreements  herein
contained  on the part of  Tenant to be kept,  observed  and  performed,  shall,
during the Lease Term,  peaceably and quietly have,  hold and enjoy the Premises
subject to the terms,  covenants,  conditions,  provisions and agreements hereof
without  interference by any persons lawfully  claiming by or through  Landlord.
The foregoing covenant is in lieu of any other covenant express or implied.

                                       25
<PAGE>

                                   ARTICLE 21
                              INTENTIONALLY OMITTED

                                   ARTICLE 22
                              INTENTIONALLY OMITTED

                                   ARTICLE 23

                                      SIGNS

23.1 FULL FLOORS.  Subject to  Landlord's  prior written  approval,  in its sole
     discretion,  and provided all signs are in keeping with the quality, design
     and style of the Building and Project,  Tenant, if the Premises comprise an
     entire floor of the  Building,  at its sole cost and  expense,  may install
     identification  signage anywhere in the Premises  including in the elevator
     lobby of the  Premises,  provided  that such signs must not be visible from
     the exterior of the Building.

23.2 MULTI-TENANT  FLOORS.  If other tenants  occupy space on the floor on which
     the Premises is located,  Tenant's identifying signage shall be provided by
     Landlord,  at Tenant's  cost,  and such signage shall be comparable to that
     used by Landlord for other similar  floors in the Building and shall comply
     with Landlord's Building standard signage program.

23.3 PROHIBITED SIGNAGE AND OTHER ITEMS. Any signs,  notices,  logos,  pictures,
     names  or  advertisements  which  are  installed  and  that  have  not been
     separately  approved by Landlord may be removed  without notice by Landlord
     at the sole  expense of Tenant.  Tenant  may not  install  any signs on the
     exterior  or roof of the  Project or the Common  Areas.  Any signs,  window
     coverings,   or  blinds   (even  if  the  same  are   located   behind  the
     Landlord-approved  window  coverings  for the  Building),  or  other  items
     visible from the exterior of the Premises or Building,  shall be subject to
     the prior approval of Landlord, in its sole discretion.

23.4 BUILDING  DIRECTORY.  A building directory shall be located in the lobby of
     the  Building.  Tenant shall have the right,  at  Landlord's  sole cost and
     expense  with  respect to the initial  installation,  to use  fifteen  (15)
     spaces in such  directory  to display  names under  Tenant's  entry in such
     directory. Any additions or changes to Tenant's names following the initial
     installation shall be at Tenant's sole cost and expense.

23.5 BUILDING TOP SIGNAGE.  Subject to the terms of this  Section  23.5,  Tenant
     shall have the  non-exclusive  right to place a sign on the  rooftop of the
     Building (the "Rooftop Sign"), at Tenant's sole cost and expense;  provided
     that (i) the size, location, color, quality, graphics,  materials,  design,
     style, and size (collectively, the "Rooftop Sign Design Specifications") of
     the Rooftop Sign shall be subject to Landlord's prior written approval,  in
     Landlord's reasonable discretion, (ii) the Rooftop Sign shall be subject to
     all Applicable Laws and the CC&Rs (including, without limitation, the terms
     of the Stadium  Gateway  REA),  and (iii)  Tenant's  right to maintain  the
     Rooftop  Sign shall be personal to the  Original  Tenant or an Affiliate of
     the  Original  Tenant  (and  not any  other  assignee,  sublessee  or other
     transferee of the Original  Tenant's interest in this Lease) and subject to
     the Original Tenant's or its Affiliates'  occupancy of the entire Premises.
     In the event that Tenant  desires to exercise its right to have the Rooftop
     Sign installed and Tenant has satisfied items (ii) and (iii),  above,  then
     Tenant shall provide  written  notice to Landlord of the same (the "Rooftop
     Sign  Notice")  and shall  provide  Landlord  with the Rooftop  Sign Design
     Specifications  desired by Tenant. In the event that Landlord approves such
     Rooftop Sign Design  Specifications,  in Landlord's sole  discretion,  then
     Tenant shall  install the Rooftop  Sign, at Tenant's sole cost and expense,
     in accordance with the terms of Article 8, above. Tenant shall maintain the
     Rooftop Sign at Tenant's  sole cost and  expense.  Upon the  expiration  or
     earlier  termination  of this  Lease or in the event that  Tenant  fails to
     satisfy  the  requirements  of items (ii) and (iii),  above,  Tenant  shall
     remove the  Rooftop  Sign and repair  any  damage  caused by such  removal.
     Notwithstanding anything in this Lease to the contrary,  Tenant's obtaining
     of government approval for the Rooftop Sign shall in no event be considered
     a condition precedent to Tenant's obligations under this Lease.

23.6 MONUMENT SIGN. Subject to the terms of this Section 23.6, Tenant shall have
     the  non-exclusive  right to install,  at Tenant's  sole cost and  expense,
     Tenant's name on one line of the Building  monument  sign, in a location on
     such  Building  Monument  Sign  to be  designated  by  Landlord  ("Tenant's
     Monument Signage");  provided that (i) the size, location,  color, quality,
     graphics,  materials,  design,  style, and size (collective,  the "Monument
     Design  Specifications")  of Tenant's  Monument Signage shall be subject to
     Landlord's prior written  approval,  in Landlord's  reasonable  discretion,
     (ii) Tenant's  Monument Signage shall be subject to all Applicable Laws and
     the CC&Rs (including,  without limitation, the terms of the Stadium Gateway
     REA), and (iii) Tenant's right to maintain  Tenant's Monument Signage shall
     be personal to the Original  Tenant or an Affiliate of the Original  Tenant
     only (and not any other  assignee,  sublessee  or other  transferee  of the
     Original  Tenant's  interest  in this  Lease) and  subject to the  Original
     Tenant's or its Affiliate's  occupancy of at least 75% of the Premises.  In
     the event that  Tenant  desires to exercise  its right to install  Tenant's
     Monument  Signage,  then Tenant shall provide written notice to Landlord of
     the same (the "Monument  Sign Notice") and shall provide  Landlord with the
     Monument  Design  Specifications  desired  by  Tenant.  In the  event  that
     Landlord approves such Monument Design  Specifications,  in Landlord's sole
     discretion,  then  Tenant  shall  install  Tenant's  Monument  Signage,  at
     Tenant's sole cost and expense,  in accordance with the terms of Article 8,
     above.  Tenant shall maintain  Tenant's  Monument  Signage at Tenant's sole
     cost and expense. Upon the expiration or earlier termination of this Lease,
     Tenant  shall  remove  Tenant's  Monument  Signage,  if any, and repair any
     damage caused by such removal.

                                       26
<PAGE>

23.7 OBJECTIONABLE  NAME.  Should  the name of the  Original  Tenant be  legally
     changed to another name, or should Tenant assign its rights hereunder to an
     Affiliate,  Tenant shall be entitled to modify,  at Tenant's  sole cost and
     expense, Tenant's Monument Signage and Rooftop Sign, if any, to reflect the
     new  name,  but only if the new  name is not an  "Objectionable  Name,"  as
     defined  below.  The term  "Objectionable  Name"  shall mean any name which
     relates  to  an  entity  which  is  of a  character  or  reputation,  or is
     associated with a political  orientation or faction,  which is inconsistent
     with the  quality of the  Building,  or which  would  otherwise  reasonably
     offend a landlord of the  comparable  buildings  or  projects,  taking into
     consideration  the level and  visibility  of  signage  rights  inherent  in
     Tenant's Monument Signage and Rooftop Sign.

                                   ARTICLE 24

                               COMPLIANCE WITH LAW

     Tenant shall not do anything or suffer  anything to be done in or about the
Premises or the Project  which will in any way conflict  with any law,  statute,
ordinance or other governmental rule,  regulation or requirement now in force or
which may  hereafter  be  enacted or  promulgated  by the City of Anaheim or any
other governing entity ("Applicable Laws"). At its sole cost and expense, Tenant
shall promptly comply with all such governmental  measures.  Should any standard
or  regulation  now or  hereafter  be imposed on  Landlord or Tenant by a state,
federal or local  governmental body charged with the  establishment,  regulation
and  enforcement  of  occupational,  health or safety  standards for  employers,
employees,  landlords  or  tenants,  then  Tenant  agrees,  at its sole cost and
expense, to comply promptly with such standards or regulations.  Tenant shall be
responsible,  at its sole  cost and  expense,  to make  all  alterations  to the
Premises as are  required to comply with the  governmental  rules,  regulations,
requirements  or  standards  described  in this  Article 24. The judgment of any
court of  competent  jurisdiction  or the  admission  of Tenant in any  judicial
action,  regardless  of whether  Landlord  is a party  thereto,  that Tenant has
violated any of said governmental measures,  shall be conclusive of that fact as
between Landlord and Tenant.  Notwithstanding  the foregoing,  in complying with
laws, statues,  ordinances and governmental rules,  regulations and requirements
and with the  requirements  of any board of fire  underwriter  or  similar  body
relating to or affecting the condition, use of occupancy of the Premises, Tenant
(i) shall be  responsible,  at Tenant's sole cost and expense,  to make required
alterations,  additions or improvements  to the Premises,  but (ii) shall not be
responsible for any alterations, additions or improvements to the Building or to
the Common  Areas  except to the extent any such  obligations  are  triggered by
Tenant's  Alterations,  the Tenant  Improvements,  or the use of the Premises by
Tenant  for  non-general  office  use and (iii)  shall not be  required  to make
structural  repairs or capital  improvements  to the  Premises  or the  Building
except to the extent any such obligations are triggered by Tenant's Alterations,
the Tenant  Improvements,  or the use of the Premises by Tenant for  non-general
office use. Landlord shall comply with all Applicable Laws,  (including  without
limitation  Applicable  Laws  relating to Hazardous  Materials)  relating to the
Building  Structure and the Building Systems or the real property upon which the
Project is located,  provided that  compliance  with such Applicable Laws is not
the  responsibility  of Tenant  under this  Lease,  and  provided  further  that
Landlord's  failure to comply  therewith would prohibit Tenant from obtaining or
maintaining a certificate of occupancy for the Premises,  or would  unreasonably
and materially  affect the safety of Tenant's  employees or create a significant
health hazard for Tenant's employees.  Landlord shall be permitted to include in
Operating Expenses any costs or expenses incurred by Landlord under this Article
24 to the extent consistent with the terms of Section 4.2.4, above.

                                   ARTICLE 25

                                  LATE CHARGES

     If any  installment  of Rent or any other sum due from Tenant  shall not be
received by Landlord or Landlord's  designee within five (5) business days after
said  amount is due,  then Tenant  shall pay to Landlord a late charge  equal to
five percent (5%) of the overdue  amount plus any  attorneys'  fees  incurred by
Landlord by reason of Tenant's failure to pay Rent and/or other charges when due
hereunder.  The late  charge  shall be deemed  Additional  Rent and the right to
require it shall be in addition to all of  Landlord's  other rights and remedies
hereunder  or at law and shall not be  construed  as  liquidated  damages  or as
limiting  Landlord's  remedies  in any  manner.  In  addition to the late charge
described  above,  any Rent or other amounts owing  hereunder which are not paid
within ten (10) days after the date they are due shall  bear  interest  from the
date when due  until  paid at a rate per  annum  equal to the  lesser of (i) the
annual "Bank Prime Loan" rate cited in the Federal Reserve  Statistical  Release
Publication G.13(415), published on the first Tuesday of each calendar month (or
such other  comparable  index as Landlord and Tenant shall reasonably agree upon
if such rate ceases to be published) plus four (4) percentage  points,  and (ii)
the highest rate permitted by applicable law.

                                   ARTICLE 26

              LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

26.1 LANDLORD'S  CURE.  All covenants and  agreements to be kept or performed by
     Tenant under this Lease shall be performed by Tenant at Tenant's  sole cost
     and expense and without any  reduction  of Rent,  except to the extent,  if
     any,  otherwise  expressly provided herein. If Tenant shall fail to perform
     any obligation  under this Lease, and such failure shall continue in excess
     of the time allowed under  Section  19.1.2,  above,  unless a specific time
     period is otherwise  stated in this Lease,  Landlord  may, but shall not be
     obligated  to,  make any such  payment or perform  any such act on Tenant's
     part  without  waiving  its  rights  based  upon any  default of Tenant and
     without releasing Tenant from any obligations hereunder.

26.2 TENANT'S  REIMBURSEMENT.  Except  as may be  specifically  provided  to the
     contrary in this Lease,  Tenant  shall pay to  Landlord,  upon  delivery by
     Landlord to Tenant of statements  therefor:  (i) sums equal to expenditures
     reasonably made and obligations incurred by Landlord in connection with the
     remedying by Landlord of Tenant's  defaults  pursuant to the  provisions of
     Section 26.1; (ii) sums equal to all losses,  costs,  liabilities,  damages
     and expenses  referred to in Article 10 of this Lease; and (iii) sums equal
     to all expenditures made and obligations incurred by Landlord in collecting
     or  attempting to collect the Rent or in enforcing or attempting to enforce
     any rights of  Landlord  under this Lease or  pursuant  to law,  including,
     without limitation, all legal fees and other amounts so expended.  Tenant's
     obligations  under this Section 26.2 shall survive the expiration or sooner
     termination of the Lease Term.

                                       27
<PAGE>

                                   ARTICLE 27

                                ENTRY BY LANDLORD

     Landlord  reserves the right at all  reasonable  times and upon  reasonable
notice to Tenant  (except in the case of an  emergency) to enter the Premises to
(i) inspect them; (ii) show the Premises to prospective  purchasers,  mortgagees
or  tenants,  or to  current or  prospective  mortgagees,  ground or  underlying
lessors or  insurers;  (iii) post notices of  nonresponsibility;  or (iv) alter,
improve or repair the Premises or the Building,  or for structural  alterations,
repairs or improvements to the Building or the Building's systems and equipment.
Notwithstanding  anything to the contrary contained in this Article 27, Landlord
may enter the Premises at any time to (A) perform services required of Landlord,
including  janitorial  service  (but only in the event  Tenant fails to maintain
adequate  janitorial  service);  (B) take  possession  due to any breach of this
Lease in the manner  provided  herein;  and (C) perform any  covenants of Tenant
which  Tenant fails to perform.  Landlord may make any such entries  without the
abatement of Rent and may take such  reasonable  steps as required to accomplish
the stated  purposes.  Tenant  hereby  waives any claims for  damages or for any
injuries or  inconvenience  to or  interference  with  Tenant's  business,  lost
profits, any loss of occupancy or quiet enjoyment of the Premises, and any other
loss occasioned thereby.  For each of the above purposes,  Landlord shall at all
times have a key with which to unlock all the doors in the  Premises,  excluding
Tenant's  vaults,  safes and special  security  areas  designated  in advance by
Tenant.  In an  emergency,  Landlord  shall have the right to use any means that
Landlord  may deem  proper to open the doors in and to the  Premises.  Any entry
into the Premises by Landlord in the manner hereinbefore  described shall not be
deemed to be a forcible or unlawful  entry into, or a detainer of, the Premises,
or an  actual  or  constructive  eviction  of  Tenant  from any  portion  of the
Premises.  No provision of this Lease shall be construed as obligating  Landlord
to perform any repairs, alterations or decorations except as otherwise expressly
agreed to be performed by Landlord herein.

                                   ARTICLE 28

                                 TENANT PARKING

     Tenant  acknowledges  that  the  Project  parking  facilities  serving  the
Premises  are operated by an unrelated  third party  pursuant to the  Sportstown
Anaheim  REA and  Parking  Agreement,  and  Landlord's  right to use the Project
parking  facilities and therefore  Tenant's  parking rights under this Lease are
subject to the  Sportstown  Anaheim  REA and Parking  Agreement.  Subject to the
foregoing,  Tenant  shall  have  the  right  to  use,  commencing  on the  Lease
Commencement  Date, four (4) unreserved  parking passes for every 1,000 rentable
square feet of the Premises (the  "Primary  Passes") and 300  additional  passes
(the "Additional  Passes")  (collectively,  the "Parking Passes"),  on a monthly
basis without  charge  throughout  the Lease Term,  which  Parking  Passes shall
pertain to the Project  parking  facilities.  All Parking  Passes  allocated  to
Tenant herein are generally subject to reduction during hours other than between
6:30 AM to 6:30 PM,  Monday  through  Friday and 6:30 AM to 12:30 PM on Saturday
and Sunday, as deemed necessary by Landlord in order for Landlord to comply with
the  terms  of the  Sportstown  Anaheim  REA  and  the  Parking  Agreement.  The
Additional  Passes shall,  in addition to any other terms of this Section 28, be
subject to the following limitations: (i) the Additional Passes shall be located
in the area  designated by Landlord as required for Landlord's  compliance  with
the Parking Agreement; (ii) the Additional Passes shall be available only during
the hours of 9:00 A.M. - 3:30 P.M., Monday through Friday,  excluding  holidays;
(iii)  the use of the  Additional  Passes is  personal  to the  Tenant  and such
Additional Passes may not be used by any Transferee;  and (iv) Tenant's right to
use the Additional  Passes is conditioned on Tenant's  continued  operation as a
computer  training  facility.  The  Additional  Parking  Passes  may  further be
subject,  on certain  days,  in  certain  events  (collectively,  the "Last Load
Weekday  Events"),  as set forth in the Parking  Agreement,  to reduction  after
12:00 P.M.,  Monday through Friday, as deemed necessary by Landlord in order for
Landlord to comply with the terms of the Sportstown  Anaheim REA and the Parking
Agreement. Notwithstanding the foregoing, in the event the Additional Passes are
reduced as a result of a Last Load Weekday Event,  Landlord shall provide Tenant
with  alternate  Additional  Passes,  which parking  passes shall be among those
parking passes which are usable by Landlord under the Parking  Agreement and are
not subject to a Last Load Weekday Event.  Such alternate parking pass usage may
be provided by Landlord through the use of valet parking or stacked parking,  at
Landlord's  option.  Tenant's  continued  right  to use the  parking  passes  is
conditioned  upon  Tenant  abiding  by  all  rules  and  regulations  which  are
prescribed  from time to time for the orderly  operation  and use of the parking
facility  where the parking  passes are located,  including any sticker or other
identification  system established by Landlord,  Tenant's  cooperation in seeing
that Tenant's employees and visitors also comply with such rules and regulations
and Tenant not being in default under this Lease.  Tenant's  continued  right to
use the parking  passes is further  conditioned  upon Tenant  abiding by all the
terms and conditions of the CC&Rs, including, without limitation, the Sportstown
Anaheim REA and Parking Agreement.  Landlord  specifically reserves the right to
change the size,  configuration,  design,  layout  and all other  aspects of the
Project parking  facilities at any time and Tenant  acknowledges and agrees that
Landlord  may,  without  incurring  any  liability  to Tenant  and  without  any
abatement  of Rent under this Lease,  from time to time,  relocate  the areas in
which Tenant is able to use its parking  passes,  as  determined  by Landlord in
order for  Landlord to comply with the terms of the  Sportstown  Anaheim REA and
the  Parking  Agreement,  close-off  or restrict  access to the Project  parking
facilities  for purposes of permitting or  facilitating  any such  construction,
alteration   or   improvements.   Landlord   may   delegate   its   rights   and
responsibilities  hereunder  to a parking  operator  in which case such  parking
operator shall have all the rights of control attributed hereby to the Landlord.
The parking passes  allocated to Tenant pursuant to this Article 28 are provided
to Tenant  solely for use by Tenant's own  personnel  and such passes may not be
transferred,  assigned,  subleased  or  otherwise  alienated  by Tenant  without
Landlord's prior approval. Tenant may validate visitor parking by such method or
methods as the Landlord may establish,  at the validation rate from time to time
generally applicable to visitor parking.

                                       28
<PAGE>

                                   ARTICLE 29

                            MISCELLANEOUS PROVISIONS

29.1 TERMS;  CAPTIONS.  The words  "Landlord"  and "Tenant" as used herein shall
     include  the  plural as well as the  singular.  The  necessary  grammatical
     changes required to make the provisions hereof apply either to corporations
     or  partnerships  or  individuals,  men or women,  as the case may require,
     shall in all cases be assumed as though in each case fully  expressed.  The
     captions of Articles and Sections are for convenience only and shall not be
     deemed to limit, construe, affect or alter the meaning of such Articles and
     Sections.

29.2 BINDING EFFECT.  Subject to all other provisions of this Lease, each of the
     covenants,  conditions  and  provisions  of this Lease shall  extend to and
     shall,  as the case may  require,  bind or inure to the benefit not only of
     Landlord  and of  Tenant,  but also of  their  respective  heirs,  personal
     representatives,  successors  or assigns,  provided  this clause  shall not
     permit any assignment by Tenant contrary to the provisions of Article 14 of
     this Lease.

29.3 NO AIR RIGHTS.  No rights to any view or to light or air over any property,
     whether belonging to Landlord or any other person, are granted to Tenant by
     this Lease.  If at any time any  windows of the  Premises  are  temporarily
     darkened  or the light or view  therefrom  is  obstructed  by reason of any
     repairs, improvements, maintenance or cleaning in or about the Project, the
     same shall be without  liability to Landlord  and without any  reduction or
     diminution of Tenant's obligations under this Lease.

29.4 MODIFICATION  OF LEASE.  Should any  current or  prospective  mortgagee  or
     ground lessor for the Building or Project  require a  modification  of this
     Lease,  which  modification  will not cause an increased cost or expense to
     Tenant or in any other way materially  and adversely  change the rights and
     obligations of Tenant hereunder, then and in such event, Tenant agrees that
     this Lease may be so modified and agrees to execute whatever  documents are
     reasonably required therefor and to deliver the same to Landlord within ten
     (10) days following a request  therefor.  At the request of Landlord or any
     mortgagee or ground lessor,  Tenant agrees to execute a short form of Lease
     and deliver the same to Landlord within ten (10) days following the request
     therefor.

29.5 TRANSFER OF LANDLORD'S INTEREST.  Tenant acknowledges that Landlord has the
     right to  transfer  all or any  portion of its  interest  in the Project or
     Building and in this Lease, and Tenant agrees that in the event of any such
     transfer, provided any such proposed transferee agrees in writing to assume
     Landlord's  obligations  under the Lease following such transfer,  Landlord
     shall  automatically  be released from all  liability  under this Lease and
     Tenant  agrees to look solely to such  transferee  for the  performance  of
     Landlord's  obligations  hereunder  after  the  date of  transfer  and such
     transferee  shall be deemed to have  fully  assumed  and be liable  for all
     obligations of this Lease to be performed by Landlord, including the return
     of any Security Deposit, and Tenant shall attorn to such transferee. Tenant
     further acknowledges that Landlord may assign its interest in this Lease to
     a mortgage lender as additional security and agrees that such an assignment
     shall not release  Landlord from its obligations  hereunder and that Tenant
     shall continue to look to Landlord for the  performance of its  obligations
     hereunder.

29.6 PROHIBITION  AGAINST RECORDING.  Except as provided in Section 29.4 of this
     Lease,  neither this Lease, nor any memorandum,  affidavit or other writing
     with  respect  thereto,  shall be  recorded  by Tenant or by anyone  acting
     through, under or on behalf of Tenant.

29.7 LANDLORD'S TITLE.  Landlord's title is and always shall be paramount to the
     title of Tenant.  Nothing herein  contained  shall empower Tenant to do any
     act which can, shall or may encumber the title of Landlord.

29.8 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be deemed or
     construed  by the  parties  hereto  or by any  third  party to  create  the
     relationship  of principal and agent,  partnership,  joint  venturer or any
     association between Landlord and Tenant.

29.9 APPLICATION  OF PAYMENTS.  Landlord  shall have the right to apply payments
     received  from  Tenant  pursuant  to this  Lease,  regardless  of  Tenant's
     designation  of  such  payments,  to  satisfy  any  obligations  of  Tenant
     hereunder,  in such order and amounts as Landlord,  in its sole discretion,
     may elect.

29.10 TIME OF ESSENCE. Time is of the essence with respect to the performance of
     every provision of this Lease in which time of performance is a factor.

29.11 PARTIAL INVALIDITY.  If any term, provision or condition contained in this
     Lease shall, to any extent, be invalid or  unenforceable,  the remainder of
     this Lease,  or the  application  of such term,  provision  or condition to
     persons or  circumstances  other  than  those  with  respect to which it is
     invalid or unenforceable, shall not be affected thereby, and each and every
     other  term,  provision  and  condition  of this  Lease  shall be valid and
     enforceable to the fullest extent possible permitted by law.

29.12 NO WARRANTY. In executing and delivering this Lease, Tenant has not relied
     on any representations,  including,  but not limited to, any representation
     as to the amount of any item  comprising  Additional  Rent or the amount of
     the  Additional  Rent in the aggregate or that  Landlord is furnishing  the
     same  services to other  tenants,  at all, on the same level or on the same
     basis,  or any warranty or any statement of Landlord which is not set forth
     herein or in one or more of the exhibits attached hereto.

                                       29
<PAGE>

29.13 LANDLORD EXCULPATION. The liability of Landlord or the Landlord Parties to
     Tenant  for any  default  by  Landlord  under  this  Lease  or  arising  in
     connection  herewith or with  Landlord's  operation,  management,  leasing,
     repair, renovation,  alteration or any other matter relating to the Project
     or the Premises shall be limited solely and  exclusively to an amount which
     is equal to the lesser of (a) the  interest of Landlord in the  Building or
     (b) the equity interest Landlord would have in the Building if the Building
     were  encumbered by  third-party  debt in an amount equal to eighty percent
     (80%)  of the  value  of the  Building  (as such  value  is  determined  by
     Landlord),  provided  that in no event shall such  liability  extend to any
     sales or insurance proceeds received by Landlord or the Landlord Parties in
     connection with the Project,  Building or Premises.  Neither Landlord,  nor
     any of the Landlord Parties shall have any personal liability therefor, and
     Tenant hereby  expressly  waives and releases  such  personal  liability on
     behalf of itself and all persons claiming by, through or under Tenant.  The
     limitations of liability contained in this Section 29.13 shall inure to the
     benefit  of  Landlord's  and  the  Landlord  Parties'  present  and  future
     partners,  beneficiaries,   officers,  directors,  trustees,  shareholders,
     agents and employees, and their respective partners,  heirs, successors and
     assigns.  Under no  circumstances  shall any  present or future  partner of
     Landlord  (if Landlord is a  partnership),  or trustee or  beneficiary  (if
     Landlord or any partner of Landlord is a trust), have any liability for the
     performance of Landlord's obligations under this Lease. Notwithstanding any
     contrary provision herein,  neither Landlord nor the Landlord Parties shall
     be liable under any  circumstances for injury or damage to, or interference
     with,  Tenant's  business,  including  but not limited to, loss of profits,
     loss of rents or other  revenues,  loss of  business  opportunity,  loss of
     goodwill or loss of use, in each case, however occurring.

29.14 ENTIRE  AGREEMENT.  Except  with respect to any written  letter  agreement
     expressly  referencing this Lease, if any,  executed by Landlord and Tenant
     and dated as of the date hereof,  it is understood  and  acknowledged  that
     there are no oral  agreements  between the parties  hereto  affecting  this
     Lease and this Lease constitutes the parties' entire agreement with respect
     to the  leasing of the  Premises  and  supersedes  and  cancels any and all
     previous   negotiations,    arrangements,    brochures,    agreements   and
     understandings, if any, between the parties hereto or displayed by Landlord
     to Tenant with  respect to the subject  matter  thereof,  and none  thereof
     shall be used to  interpret  or  construe  this  Lease.  None of the terms,
     covenants,  conditions or provisions of this Lease can be modified, deleted
     or added to except in writing signed by the parties hereto.

29.15 RIGHT TO LEASE. Landlord reserves the absolute right, subject to the terms
     of Section 5.3 of this Lease, to effect such other tenancies in the Project
     as Landlord in the exercise of its sole business  judgment shall  determine
     to best promote the  interests of the Building or Project.  Tenant does not
     rely on the fact, nor does Landlord represent,  that any specific tenant or
     type or number of tenants shall, during the Lease Term, occupy any space in
     the Building or Project.

29.16 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes, lockouts,
     labor  disputes,  acts of God,  inability  to obtain  services,  labor,  or
     materials or reasonable  substitutes therefor,  governmental actions, civil
     commotions,  fire or other casualty, and other causes beyond the reasonable
     control of the party  obligated  to  perform,  except  with  respect to the
     obligations  imposed  with  regard to Rent and other  charges to be paid by
     Tenant pursuant to this Lease and except as to Tenant's  obligations  under
     Articles  5  and  24 of  this  Lease  (collectively,  a  "Force  Majeure"),
     notwithstanding  anything to the contrary  contained  in this Lease,  shall
     excuse  the  performance  of such  party  for a  period  equal  to any such
     prevention,  delay or stoppage and,  therefore,  if this Lease  specifies a
     time period for  performance  of an obligation  of either party,  that time
     period  shall be  extended  by the  period  of any  delay  in such  party's
     performance caused by a Force Majeure.

29.17 WAIVER OF REDEMPTION BY TENANT. Tenant hereby  waives,  for Tenant and for
     all those  claiming  under  Tenant,  any and all  rights  now or  hereafter
     existing  to  redeem  by order or  judgment  of any  court or by any  legal
     process or writ,  Tenant's  right of occupancy  of the  Premises  after any
     termination of this Lease.

29.18 NOTICES. All notices, demands,statements, designations, approvals or other
     communications  (collectively,  "Notices") given or required to be given by
     either party to the other hereunder or by law shall be in writing, shall be
     (A) sent by United States  certified or registered  mail,  postage prepaid,
     return receipt  requested  ("Mail"),  (B) transmitted by telecopy,  if such
     telecopy is promptly  followed by a Notice sent by Mail, (C) delivered by a
     nationally recognized overnight courier, or (D) delivered  personally.  Any
     Notice shall be sent,  transmitted,  or  delivered,  as the case may be, to
     Tenant at the  appropriate  address set forth in Section 10 of the Summary,
     or to such  other  place as  Tenant  may from time to time  designate  in a
     Notice to Landlord,  or to Landlord at the addresses set forth below, or to
     such other places as Landlord  may from time to time  designate in a Notice
     to  Tenant.  Any Notice  will be deemed  given (i) three (3) days after the
     date it is  posted  if  sent  by  Mail,  (ii)  the  date  the  telecopy  is
     transmitted, (iii) the date the overnight courier delivery is made, or (iv)
     the date  personal  delivery is made or attempted to be made.  If Tenant is
     notified of the identity and address of  Landlord's  mortgagee or ground or
     underlying  lessor,  Tenant  shall  give to such  mortgagee  or  ground  or
     underlying lessor written notice of any default by Landlord under the terms
     of this Lease by registered or certified mail, and such mortgagee or ground
     or underlying  lessor shall be given a reasonable  opportunity to cure such
     default prior to Tenant's  exercising any remedy available to Tenant. As of
     the date of this Lease, any Notices to Landlord must be sent,  transmitted,
     or delivered, as the case may be, to the following addresses:

                           STADIUM GATEWAY ASSOCIATES, L.L.C.
                           1970 East Grand Avenue
                           Suite 300
                           El Segundo, California  90245
                           Attention:  Jack L. Mahoney

                           and

                                       30
<PAGE>

                           Allen, Matkins, Leck, Gamble & Mallory
                           1999 Avenue of the Stars, Suite 1800
                           Los Angeles, California 90067
                           Attention:  Anton N. Natsis, Esq.

29.19 JOINT  AND  SEVERAL.  If there is more  than one  Tenant, the  obligations
     imposed upon Tenant under this Lease shall be joint and several.

29.20 AUTHORITY.  If  Tenant  is  a  corporation,  trust  or  partnership,  each
     individual  executing this Lease on behalf of Tenant hereby  represents and
     warrants that Tenant is a duly formed and existing  entity  qualified to do
     business  in  California  and that Tenant has full right and  authority  to
     execute  and deliver  this Lease and that each person  signing on behalf of
     Tenant is authorized to do so. In such event, Tenant shall, within ten (10)
     days  after  execution  of this  Lease,  deliver to  Landlord  satisfactory
     evidence of such authority and, if a corporation,  upon demand by Landlord,
     also  deliver to Landlord  satisfactory  evidence  of (i) good  standing in
     Tenant's state of  incorporation  and (ii)  qualification to do business in
     California.

29.21 ATTORNEYS' FEES. In the event that either  Landlord or Tenant should bring
     suit for the  possession of the  Premises,  for the recovery of any sum due
     under this Lease,  or because of the breach of any  provision of this Lease
     or for any other  relief  against the other,  then all costs and  expenses,
     including  reasonable  attorneys'  fees,  incurred by the prevailing  party
     therein shall be paid by the other party,  which  obligation on the part of
     the  other  party  shall  be  deemed  to have  accrued  on the  date of the
     commencement  of such  action and shall be  enforceable  whether or not the
     action is prosecuted to judgment.

29.22 GOVERNING LAW; WAIVER OF TRIAL BY JURY.  This Lease shall be construed and
     enforced in  accordance  with the laws of the State of  California.  IN ANY
     ACTION OR PROCEEDING  ARISING HEREFROM,  LANDLORD AND TENANT HEREBY CONSENT
     TO (I)  THE  JURISDICTION  OF ANY  COMPETENT  COURT  WITHIN  THE  STATE  OF
     CALIFORNIA,  (II) SERVICE OF PROCESS BY ANY MEANS  AUTHORIZED BY CALIFORNIA
     LAW, AND (III) IN THE INTEREST OF SAVING TIME AND EXPENSE,  TRIAL WITHOUT A
     JURY IN ANY ACTION,  PROCEEDING  OR  COUNTERCLAIM  BROUGHT BY EITHER OF THE
     PARTIES  HERETO  AGAINST  THE OTHER OR THEIR  SUCCESSORS  IN RESPECT OF ANY
     MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF
     LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES,  AND/OR ANY
     CLAIM FOR INJURY OR DAMAGE,  OR ANY EMERGENCY OR STATUTORY  REMEDY.  IN THE
     EVENT LANDLORD  COMMENCES ANY SUMMARY  PROCEEDINGS OR ACTION FOR NONPAYMENT
     OF  BASE  RENT  OR  ADDITIONAL   RENT,   TENANT  SHALL  NOT  INTERPOSE  ANY
     COUNTERCLAIM OF ANY NATURE OR DESCRIPTION  (UNLESS SUCH COUNTERCLAIM  SHALL
     BE MANDATORY) IN ANY SUCH  PROCEEDING OR ACTION,  BUT SHALL BE RELEGATED TO
     AN INDEPENDENT ACTION AT LAW.

29.23 SUBMISSION  OF LEASE.  Submission of this  instrument  for  examination or
     signature by Tenant does not  constitute a  reservation  of,  option for or
     option to lease,  and it is not  effective  as a lease or  otherwise  until
     execution and delivery by both Landlord and Tenant.

29.24 BROKERS. Landlord and Tenant  hereby  warrant to each other that they have
     had no dealings with any real estate broker or agent in connection with the
     negotiation of this Lease, excepting only the real estate brokers or agents
     specified in Section 12 of the Summary (the "Brokers"),  and that they know
     of no other real estate  broker or agent who is entitled to a commission in
     connection  with this Lease.  Each party agrees to indemnify and defend the
     other  party  against and hold the other  party  harmless  from any and all
     claims,  demands,  losses,  liabilities,  lawsuits,  judgments,  costs  and
     expenses  (including  without limitation  reasonable  attorneys' fees) with
     respect to any leasing commission or equivalent  compensation alleged to be
     owing on  account of any  dealings  with any real  estate  broker or agent,
     other than the Brokers,  occurring by, through,  or under the  indemnifying
     party.

29.25 INDEPENDENT COVENANTS.  This  Lease  shall  be  construed  as  though  the
     covenants  herein  between  Landlord  and  Tenant are  independent  and not
     dependent and Tenant hereby  expressly waives the benefit of any statute to
     the contrary and agrees that if Landlord  fails to perform its  obligations
     set forth  herein,  Tenant  shall not be  entitled  to make any  repairs or
     perform any acts  hereunder at  Landlord's  expense or to any setoff of the
     Rent or other amounts owing hereunder against Landlord.

29.26 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord shall have the right at any
     time to change the name of the  Project or Building  and to install,  affix
     and  maintain  any and all signs on the exterior and on the interior of the
     Project or Building as Landlord may, in Landlord's sole discretion, desire.
     Tenant shall not use the name of the Project or Building or use pictures or
     illustrations  of the Project or Building in advertising or other publicity
     or for  any  purpose  other  than  as the  address  of the  business  to be
     conducted by Tenant in the Premises,  without the prior written  consent of
     Landlord.

29.27 COUNTERPARTS. This Lease may be  executed  in  counterparts  with the same
     effect as if both  parties  hereto had  executed  the same  document.  Both
     counterparts  shall be  construed  together  and shall  constitute a single
     lease.

29.28 CONFIDENTIALITY. Tenant acknowledges  that the  content of  this Lease and
     any related documents are confidential information.  Tenant shall keep such
     confidential  information strictly confidential and shall not disclose such
     confidential  information  to any  person or  entity  other  than  Tenant's
     financial,  legal,  and space  planning  consultants  or as  required  with
     respect to any governmentally required securities filings.

                                       31
<PAGE>

29.29 TRANSPORTATION  MANAGEMENT. Tenant  shall fully comply with all present or
     future  governmentally   mandated  programs  intended  to  manage  parking,
     transportation  or traffic in and around the  Building,  and in  connection
     therewith,  Tenant  shall take  responsible  action for the  transportation
     planning and management of all employees located at the Premises by working
     directly  with  Landlord,   any  governmental   transportation   management
     organization or any other governmental transportation-related committees or
     entities.

29.30 BUILDING RENOVATIONS.  It  is  specifically  understood  and  agreed  that
     Landlord  has made no  representation  or  warranty  to  Tenant  and has no
     obligation and has made no promises to alter, remodel,  improve,  renovate,
     repair or decorate the Premises,  Building, or any part thereof and that no
     representations  respecting  the  condition of the Premises or the Building
     have  been made by  Landlord  to Tenant  except as  specifically  set forth
     herein or in the Tenant Work Letter.  However,  Tenant hereby  acknowledges
     that  Landlord  is  currently  renovating  or may  during  the  Lease  Term
     renovate,  improve, alter, or modify (collectively,  the "Renovations") the
     Project,  the Building and/or the Premises including without limitation the
     parking  structure,   common  areas,  systems  and  equipment,   roof,  and
     structural  portions of the same,  which  Renovations may include,  without
     limitation,  (i)  installing  sprinklers  in the Building  common areas and
     tenant spaces,  (ii) modifying the common areas and tenant spaces to comply
     with applicable laws and regulations, including regulations relating to the
     physically disabled,  seismic conditions, and building safety and security,
     and (iii)  installing new floor covering,  lighting,  and wall coverings in
     the Building common areas, and in connection with any Renovations, Landlord
     may, among other things, erect scaffolding or other necessary structures in
     the  Building,  limit or  eliminate  access  to  portions  of the  Project,
     including  portions of the common  areas,  or perform work in the Building,
     which work may create noise,  dust or leave debris in the Building.  Tenant
     hereby agrees that such  Renovations  and Landlord's  actions in connection
     with such Renovations shall in no way constitute a constructive eviction of
     Tenant nor entitle Tenant to any abatement of Rent.  Landlord shall have no
     responsibility  or for any  reason be liable  to Tenant  for any  direct or
     indirect injury to or interference  with Tenant's business arising from the
     Renovations,  nor shall Tenant be entitled to any  compensation  or damages
     from  Landlord for loss of the use of the whole or any part of the Premises
     or of  Tenant's  personal  property  or  improvements  resulting  from  the
     Renovations or Landlord's  actions in connection with such Renovations,  or
     for any  inconvenience  or  annoyance  occasioned  by such  Renovations  or
     Landlord's actions.

29.31 NO VIOLATION.  Tenant  hereby  warrants  and  represents  that neither its
     execution of nor  performance  under this Lease shall cause Tenant to be in
     violation of any agreement,  instrument,  contract, law, rule or regulation
     by which Tenant is bound, and Tenant shall protect,  defend,  indemnify and
     hold  Landlord  harmless  against any  claims,  demands,  losses,  damages,
     liabilities, costs and expenses, including, without limitation,  reasonable
     attorneys'  fees and costs,  arising from Tenant's  breach of this warranty
     and representation.

29.32 COMMUNICATIONS AND COMPUTER LINES. Tenant may install, maintain,  replace,
     remove  or  use  any   communications   or   computer   wires  and   cables
     (collectively,  the  "Lines") at the  Project in or serving  the  Premises,
     provided that (i) Tenant shall obtain Landlord's prior written consent, use
     an experienced  and qualified  contractor  approved in writing by Landlord,
     and comply  with all of the other  provisions  of  Articles 7 and 8 of this
     Lease,  (ii) an acceptable  number of spare Lines and space for  additional
     Lines shall be maintained for existing and future occupants of the Project,
     as determined in Landlord's  reasonable  opinion,  (iii) the Lines therefor
     (including  riser  cables)  shall be  appropriately  insulated  to  prevent
     excessive electromagnetic fields or radiation, and shall be surrounded by a
     protective  conduit  reasonably  acceptable  to  Landlord,  (iv) any new or
     existing  Lines  servicing  the Premises  shall comply with all  applicable
     governmental  laws and  regulations,  (v) as a condition to permitting  the
     installation of new Lines, Landlord may require that Tenant remove existing
     Lines  located  in or  serving  the  Premises  and  repair  any  damage  in
     connection  with  such  removal,  and (vi)  Tenant  shall  pay all costs in
     connection  therewith.  Landlord  reserves the right to require that Tenant
     remove any Lines located in or serving the Premises  which are installed in
     violation of these provisions, or which are at any time in violation of any
     laws or represent a dangerous or potentially dangerous condition.

29.33    DEVELOPMENT OF THE PROJECT.


     29.33.1 SUBDIVISION.  Landlord  reserves the right to further subdivide all
          or a portion of the  Project.  Tenant  agrees to execute and  deliver,
          upon demand by Landlord and in the form  requested  by  Landlord,  any
          additional documents needed to conform this Lease to the circumstances
          resulting from such subdivision.

     29.33.2 THE OTHER  IMPROVEMENTS.  If  portions  of the  Project or property
          adjacent to the Project  (collectively,  the "Other Improvements") are
          owned by an entity other than Landlord,  Landlord,  at its option, may
          enter into an agreement  with the owner or owners of any or all of the
          Other  Improvements  to provide  (i) for  reciprocal  rights of access
          and/or use of the  Project  and the Other  Improvements,  (ii) for the
          common management, operation,  maintenance,  improvement and/or repair
          of all or any portion of the Project and the Other Improvements, (iii)
          for the  allocation  of a portion of the Direct  Expenses to the Other
          Improvements  and the  operating  expenses  and  taxes  for the  Other
          Improvements  to the Project,  and (iv) for the use or  improvement of
          the Other  Improvements  and/or  the  Project in  connection  with the
          improvement, construction, and/or excavation of the Other Improvements
          and/or  the  Project.  Nothing  contained  herein  shall be  deemed or
          construed to limit or otherwise affect  Landlord's right to convey all
          or any  portion  of the  Project  or any  other of  Landlord's  rights
          described in this Lease.

      29.33.3  CONSTRUCTION   OF   PROJECT  AND   OTHER   IMPROVEMENTS.   Tenant
               acknowledges  that  portions  of the  Project  and/or  the  Other
               Improvements  may  be  under   construction   following  Tenant's
               occupancy of the Premises,  and that such construction may result
               in levels of noise, dust,  obstruction of access,  etc. which are
               in excess of that present in a fully constructed project.  Tenant
               hereby waives any and all rent offsets or claims of  constructive
               eviction which may arise in connection with such construction.

                                       32
<PAGE>

29.34 TELECOMMUNICATION EQUIPMENT. At any time during the Lease Term, Tenant may
     install and operate for Tenant's  exclusive  use, at Tenant's sole cost and
     expense,  one (1)  satellite  dish not to exceed one (1) meter in size upon
     the roof of the Building,  including structural platforms,  if any, cabling
     and    other    equipment    incidental    thereto    (collectively,    the
     "Telecommunication Equipment"),  without the payment of any additional Base
     Rent, except that Tenant shall pay for all utilities  necessary to Tenant's
     operation  of the  Telecommunication  Equipment.  Tenant  shall  submit  to
     Landlord,   for   Landlord's   prior  written   approval,   all  plans  and
     specifications  for the  installation of the  Telecommunication  Equipment,
     which  approval may not be  unreasonably  withheld or delayed,  provided it
     shall be  reasonable  for Landlord to withhold its approval if any proposed
     Telecommunication Equipment will adversely affect the Building structure or
     the  Building  systems.  Once  Landlord  has  approved  Tenant's  plans and
     specifications for the Telecommunication Equipment, Tenant may not alter or
     modify such plans and  specifications,  or the actual  installation  of the
     Telecommunication  Equipment,  without  Landlord's  prior written  consent,
     which consent shall be granted or withheld in accordance with the standards
     set forth  hereinabove in this Section 29.34.  Tenant shall use the roof of
     the Building  solely for the  Telecommunication  Equipment  and not for any
     other  purpose.  Landlord  and its agents may enter and inspect the roof of
     the Building at any time in the event of an emergency, and otherwise at any
     reasonable time upon reasonable  prior notice and without any  unreasonable
     interference  with  Tenant's  operations.  If Tenant  installs any locks to
     secure   the   Telecommunication   Equipment,    concurrently   with   such
     installation,  Tenant  shall  deliver to Landlord a key for any such locks.
     Tenant agrees and  acknowledges  that it shall use the roof of the Building
     at its sole risk, and Tenant  absolves and fully releases  Landlord and the
     Landlord Parties from any and all cost, loss, damage,  expense,  liability,
     and cause of action, whether foreseeable or not, arising from any cause (i)
     that Tenant may suffer to its personal  property located on the roof of the
     Building, or (ii) that Tenant or Tenant's officers,  agents,  employees, or
     independent  contractors may suffer as a direct or indirect  consequence of
     Tenant's use of the roof of the Building, the Telecommunication  Equipment,
     or access  areas to the roof of the  Building,  unless  caused by the gross
     negligence or willful misconduct of Landlord. Landlord has made no warranty
     or representation that the Telecommunication  Equipment is permitted by law
     and Tenant  assumes all  liability  and risk in  obtaining  all permits and
     approvals  necessary for the installation and use of the  Telecommunication
     Equipment.  Landlord  does not warrant or guaranty that Tenant will receive
     unobstructed  transmission  or reception  to or from the  Telecommunication
     Equipment  and Tenant  assumes all risk  involved in the  transmission  and
     reception   to  and  from   the   Telecommunication   Equipment.   Tenant's
     installation and use of the Telecommunication Equipment shall be subject to
     compliance with any and all Applicable Laws, including, but not limited to,
     satisfying  all  applicable  requirements  of  the  Federal  Communications
     Commission and the Federal Aviation Administration and to the CC&Rs. Tenant
     shall  maintain  such  Telecommunication  Equipment in good  condition  and
     repair,  at  Tenant's  sole  cost  and  expense.   Tenant's   installation,
     maintenance  and use of the  Telecommunication  Equipment  shall be further
     subject to all applicable  terms and  conditions of this Lease,  including,
     but not limited to, the indemnification and insurance  provisions set forth
     in Article 10 of this Lease. Prior to the expiration or earlier termination
     of this Lease, Tenant shall, at Tenant's sole cost and expense,  remove all
     of  Tenant's  Telecommunication  Equipment  and  repair  any and all damage
     caused by Tenant's  installation  or removal of such  equipment.  If Tenant
     fails to complete such removal or fails to repair any damage caused by such
     installation  or removal by the  expiration or earlier  termination of this
     Lease,  then Landlord may perform such work and charge the reasonable  cost
     thereof to Tenant, which amounts shall be immediately payable by Tenant.

29.35 NON-DISCRIMINATION. Tenant  herein  covenants  by  and  for  itself  , its
     successors and assigns,  and all persons  claiming under or through Tenant,
     and this Lease is made and accepted upon and subject to the condition  that
     there shall be no  discrimination  against or  segregation of any person or
     group of persons, on account of race, color, creed, religion,  sex, marital
     status,   national  origin,   or  ancestry  in  the  leasing,   subleasing,
     transferring,  use,  occupancy,  tenure,  or employment of the Premises nor
     shall the Tenant, or any person claiming under or through Tenant, establish
     or permit any such practice or practices of  discrimination  or segregation
     with reference to the  selection,  location,  number,  use, or occupancy of
     tenants, lessees, sublessees, subtenants, or vendees in the Premises herein
     leased.

IN  WITNESS  WHEREOF, Landlord and Tenant have caused this Lease to be executed
     the day and date first above written.

                          "Landlord":

                          STADIUM GATEWAY ASSOCIATES, L.L.C.,
                          a Delaware limited liability company

                                   By:    HPMC Development Partners II, L.P.,
                                          a Delaware limited partnership,
                                          its Managing Member

                                   By:    HCG Development, L.L.C.,
                                          a Delaware limited liability company,
                                          its General Partner

                                   By:
                                                Jack L. Mahoney
                                                Vice President


                                       33
<PAGE>

                                          "Tenant":

                                          NEW HORIZONS WORLDWIDE, INC.,
                                          a Delaware corporation

                                   By:
                                         Its:
                                   By:
                                         Its:


                                       34
<PAGE>



                                    EXHIBIT A


                                 STADIUM GATEWAY

                               OUTLINE OF PREMISES


                                   EXHIBIT A
                                       1
<PAGE>






                                    EXHIBIT B


                               SPORTSTOWN ANAHEIM

                               TENANT WORK LETTER

     This Tenant Work Letter shall set forth the terms and  conditions  relating
to the  construction  of the  Premises.  This Tenant Work Letter is  essentially
organized  chronologically  and addresses the issues of the  construction of the
Premises,  in sequence, as such issues will arise during the actual construction
of the  Premises.  All  references  in this  Tenant  Work  Letter to Articles or
Sections of "this Lease" shall mean the relevant  portions of Articles 1 through
29 of the Office  Lease to which this  Tenant Work Letter is attached as Exhibit
B, and all  references  in this Tenant  Work Letter to Sections of "this  Tenant
Work Letter"  shall mean the  relevant  portions of Sections 1 through 5 of this
Tenant Work Letter.

                                    SECTION 1

                   DELIVERY OF THE PREMISES AND BASE BUILDING

     Landlord  shall  deliver to Tenant  the "Base,  Shell and Core," as defined
below,  of the Building on or before April 1, 2001 (the "Delivery  Date"),  in a
condition which is adequate to allow Tenant to construct the Tenant Improvements
without any  material  interference  or delay.  The  delivery  condition  on the
Delivery  Date, as hereinabove  specified,  is referred to, for purposes of this
Lease,  as the  "Delivery  Condition."  Notwithstanding  the  foregoing,  Tenant
acknowledges  and agrees that  Landlord  may not have  received and shall not be
required  to have  received by the  Delivery  Date a  temporary  certificate  of
occupancy for the Building  and/or  Premises,  and that Landlord shall be in the
process of completing construction of the Base, Shell and Core concurrently with
Tenant's completion of the Tenant Improvements. Tenant and Tenant's agents shall
not interfere with Landlord's construction of the Base, Shell and Core and shall
coordinate  the  construction  of the Tenant  Improvements  with Landlord to the
extent  necessary  to avoid any such  interference.  Landlord  shall  deliver to
Tenant the completed Base,  Shell and Core of the Building on or before June 30,
2001,  at which time,  the Base,  Shell and Core shall  comply  with  applicable
building codes and other  governmental  laws,  ordinances and regulations  which
were enacted prior to the date of this Lease, for unoccupied space to the extent
necessary  to  allow  Tenant  to  obtain  a  certificate  of  occupancy  (or its
equivalent)  for the use of the Premises for general  office  purposes  upon the
completion  of the Tenant  Improvements  (collectively,  the "Code") (the "Base,
Shell, and Core Completion  Delivery Date"). In the event Tenant interferes with
Landlord's  construction of the Base, Shell and Core, and Tenant's  interference
is the cause of  Landlord's  delay in  delivering  the  Base,  Shell and Core to
Tenant as required pursuant to this Section, Tenant shall not be entitled to any
extension of the Lease  Commencement Date as hereinbelow  provided to the extent
such delays are caused by Tenant's  interference  and the Base,  Shell, and Core
Completion  Delivery  Date  shall be deemed to be the date the same  would  have
occurred but for such  interference  by Tenant.  In the event  Landlord does not
deliver the Base,  Shell and Core to Tenant as provided  herein on or before the
Delivery Date,  and/or on or before June 30, 2001, in the condition  required as
of each  respective  date, and such delay actually causes Tenant to be unable to
substantially  complete the "Tenant  Improvements"  (defined below) on or before
July 1, 2001, the Lease  Commencement  Date shall be extended by one (1) day for
each day of delay in  substantially  completing the Tenant  Improvements  beyond
July 1, 2001,  resulting  solely  from  Landlord's  failure to deliver the Base,
Shell and Core to Tenant on the Delivery  Date or on June 30, 2001, as required.
For purposes of this Lease,  the "Base,  Shell and Core" shall  include only the
items set forth on Schedule 1 attached hereto.

                                   SECTION 2

                               TENANT IMPROVEMENTS

2.1  TENANT IMPROVEMENT ALLOWANCE. Tenant shall be entitled to a one-time tenant
     improvement allowance (the "Tenant Improvement Allowance") in the amount of
     Thirty-Three  and No/100  Dollars  ($33.00)  per usable  square foot of the
     Premises for the costs relating to the initial design and  construction  of
     Tenant's  improvements,  which are permanently affixed to the Premises (the
     "Tenant  Improvements").  In no event shall  Landlord be  obligated to make
     disbursements  pursuant to this Tenant Work Letter in a total  amount which
     exceeds the Tenant  Improvement  Allowance.  In  addition  to, and not as a
     deduction from, the Tenant Improvement  Allowance,  provided that the Lease
     has not been terminated as provided in Section 2.2 of the Lease, or for any
     other  reason,  and provided that Tenant is not in default under the Lease,
     Landlord  shall,  within five (5) business days following  occupancy of the
     Premises  by Tenant  for  business  purposes,  deliver to Tenant the sum of
     Three  Hundred  Thirty  Thousand  and  No/100  Dollars  ($330,000.00),   as
     reimbursement  for Tenant's  moving expenses (the "Moving  Allowance").  In
     addition,  as long as the commission due to the Brokers in connection  with
     this Lease is reduced by $50,000.00,  as evidenced by written  agreement of
     the Brokers with respect to such decrease,  the Moving  Allowance  shall be
     increased  by  $50,000.00.

2.2  DISBURSEMENT OF THE TENANT IMPROVEMENT ALLOWANCE.

     2.2.1 TENANT IMPROVEMENT ALLOWANCE ITEMS.  Except as otherwise set forth in
          this Tenant Work Letter,  the Tenant  Improvement  Allowance  shall be
          disbursed  by  Landlord  only  for  the  following   items  and  costs
          (collectively the "Tenant Improvement Allowance Items"):

          2.2.1.1 Payment of the fees of the "Architect" and the "Engineers," as
               those  terms are  defined  in  Section  3.1 of this  Tenant  Work
               Letter,  which  fees  shall,   notwithstanding  anything  to  the
               contrary  contained  in this  Tenant Work  Letter,  not exceed an
               aggregate  amount  equal to $3.50 per usable  square  foot of the
               Premises,  and payment of the fees  incurred  by, and the cost of
               documents  and  materials  supplied by,  Landlord and  Landlord's
               consultants in connection  with the preparation and review of the
               "Construction  Drawings,"  as that term is defined in Section 3.1
               of this Tenant Work Letter;

                                    EXHIBIT B
                                       1
<PAGE>

          2.2.1.2 The payment of plan check, permit and license fees relating to
               construction of the Tenant Improvements;

          2.2.1.3  The  cost  of  construction   of  the  Tenant   Improvements,
               including,  without  limitation,  testing and  inspection  costs,
               freight  elevator  usage,  hoisting and trash removal costs,  and
               contractors' fees and general conditions;

          2.2.1.4  The  cost  of  connection  to  Landlord's   Building   energy
               management system;

          2.2.1.5 The cost of Tenant's Increased Restroom Facilities;

          2.2.1.6 The cost of any changes in the Base Building when such changes
               are  required by the  Construction  Drawings  (including  if such
               changes  are due to the fact  that such  work is  prepared  on an
               unoccupied basis), such cost to include all direct  architectural
               and/or  engineering  fees and  expenses  incurred  in  connection
               therewith

          2.2.1.7 The cost of any changes to the Construction Drawings or Tenant
               Improvements  required  by all  applicable  building  codes  (the
               "Code");

          2.2.1.8 The cost of the "Coordination Fee," as that term is defined in
               Section 4.2.2 of this Tenant Work Letter;

          2.2.1.9 Sales and use taxes and Title 24 fees; and


          2.2.1.10 All other costs to be expended by Tenant in  connection  with
               the construction of the Tenant Improvements.

     2.2.2 DISBURSEMENT OF TENANT IMPROVEMENT ALLOWANCE. During the construction
          of the Tenant Improvements,  Landlord shall make monthly disbursements
          of the Tenant Improvement  Allowance for Tenant Improvement  Allowance
          Items for the  benefit of Tenant and shall  authorize  the  release of
          monies for the benefit of Tenant as follows.

     2.2.2.1 MONTHLY  DISBURSEMENTS.  On or before  the first  (1st) day of each
          calendar month, as determined by Landlord,  during the construction of
          the  Tenant   Improvements   (or  such  other  date  as  Landlord  may
          designate),  Tenant  shall  deliver  to  Landlord:  (i) a request  for
          payment of the "Contractor," as that term is defined in Section 4.1 of
          this Tenant Work Letter,  approved by Tenant, in a form to be provided
          by  Landlord,  showing  the  schedule,  by  trade,  of  percentage  of
          completion of the Tenant  Improvements in the Premises,  detailing the
          portion of the work  completed  and the  portion not  completed;  (ii)
          invoices  from all of  "Tenant's  Agents,"  as that term is defined in
          Section  4.1.2 of this  Tenant Work  Letter,  for labor  rendered  and
          materials  delivered to the Premises;  (iii) executed  mechanic's lien
          releases  from all of  Tenant's  Agents  which  shall  comply with the
          appropriate  provisions,  as  reasonably  determined  by Landlord,  of
          California Civil Code Section 3262(d);  and (iv) all other information
          reasonably  requested by Landlord.  Tenant's request for payment shall
          be deemed  Tenant's  acceptance  and  approval  of the work  furnished
          and/or  the  materials  supplied  as set  forth  in  Tenant's  payment
          request.  Thereafter,  Landlord  shall  deliver a check to Tenant made
          jointly  payable to Contractor and Tenant in payment of the lesser of:
          (A) the amounts so requested  by Tenant,  as set forth in this Section
          2.2.2.1,  above,  less a ten percent (10%)  retention  (the  aggregate
          amount of such retentions to be known as the "Final  Retention"),  and
          (B) the  balance  of any  remaining  available  portion  of the Tenant
          Improvement  Allowance (not including the Final  Retention),  provided
          that  Landlord  does not dispute  any  request  for  payment  based on
          non-compliance  of any work with the "Approved  Working  Drawings," as
          that term is defined in Section 3.4 below,  or due to any  substandard
          work,  or for any other  reason.  Landlord's  payment of such  amounts
          shall not be deemed  Landlord's  approval  or  acceptance  of the work
          furnished  or  materials  supplied  as set forth in  Tenant's  payment
          request.

     2.2.2.2 FINAL  RETENTION.  Subject to the  provisions  of this  Tenant Work
          Letter, a check for the Final Retention  payable jointly to Tenant and
          Contractor  shall be  delivered  by Landlord to Tenant  following  the
          completion of construction  of the Premises,  provided that (i) Tenant
          delivers to Landlord  properly  executed  mechanics  lien  releases in
          compliance  with both  California  Civil Code Section  3262(d)(2)  and
          either  Section  3262(d)(3) or Section  3262(d)(4),  (ii) Landlord has
          determined that no substandard work exists which adversely affects the
          mechanical,   electrical,   plumbing,  heating,  ventilating  and  air
          conditioning,  life-safety  or  other  systems  of the  Building,  the
          curtain wall of the Building,  the structure or exterior appearance of
          the Building,  or any other tenant's use of such other tenant's leased
          premises in the  Building and (iii)  Architect  delivers to Landlord a
          certificate,  in a form reasonably acceptable to Landlord,  certifying
          that the  construction of the Tenant  Improvements in the Premises has
          been substantially completed.

     2.2.2.3 OTHER TERMS. Landlord shall only be obligated to make disbursements
          from the Tenant Improvement Allowance to the extent costs are incurred
          by  Tenant  for  Tenant   Improvement   Allowance  Items.  All  Tenant
          Improvement Allowance Items for which the Tenant Improvement Allowance
          has been made available shall be deemed Landlord's  property under the
          terms of this Lease.

                                    EXHIBIT B
                                       2
<PAGE>

2.3  STANDARD   TENANT   IMPROVEMENT    PACKAGE.    Landlord   has   established
     specifications (the  "Specifications") for the Building standard components
     to be used in the  construction of the Tenant  Improvements in the Premises
     (collectively,  the "Standard Improvement  Package"),  which Specifications
     shall be supplied to Tenant by Landlord. The quality of Tenant Improvements
     shall  be  equal  to  or  of  greater  quality  than  the  quality  of  the
     Specifications,  provided  that the Tenant  Improvements  shall comply with
     certain Specifications as designated by Landlord. Landlord may make changes
     to the  Specifications  for the Standard  Improvement  Package from time to
     time.

                                    SECTION 3

                              CONSTRUCTION DRAWINGS

3.1  SELECTION  OF  ARCHITECT/CONSTRUCTION  DRAWINGS.  Tenant  shall  retain the
     architect/space  planner  selected  by Tenant and  reasonably  approved  by
     Landlord (the "Architect") to prepare the "Construction  Drawings," as that
     term is defined in this  Section 3.1.  Tenant shall retain the  engineering
     consultants  designated by Landlord (the  "Engineers") to prepare all plans
     and engineering  working drawings  relating to the structural,  mechanical,
     electrical, plumbing, HVAC, lifesafety, and sprinkler work in the Premises,
     which work is not part of the Base  Building.  The plans and drawings to be
     prepared  by  Architect  and  the  Engineers   hereunder   shall  be  known
     collectively  as the  "Construction  Drawings." All  Construction  Drawings
     shall  comply  with the drawing  format and  specifications  determined  by
     Landlord, and shall be subject to Landlord's approval. Tenant and Architect
     shall verify,  in the field,  the dimensions and conditions as shown on the
     relevant  portions of the base  building  plans,  and Tenant and  Architect
     shall be  solely  responsible  for the same,  and  Landlord  shall  have no
     responsibility   in  connection   therewith.   Landlord's   review  of  the
     Construction Drawings as set forth in this Section 3, shall be for its sole
     purpose  and shall not imply  Landlord's  review of the same,  or  obligate
     Landlord to review the same, for quality,  design, Code compliance or other
     like matters.  Accordingly,  notwithstanding that any Construction Drawings
     are reviewed by Landlord or its space  planner,  architect,  engineers  and
     consultants,  and  notwithstanding  any advice or  assistance  which may be
     rendered to Tenant by  Landlord or  Landlord's  space  planner,  architect,
     engineers, and consultants,  Landlord shall have no liability whatsoever in
     connection  therewith  and shall not be  responsible  for any  omissions or
     errors  contained in the  Construction  Drawings,  and Tenant's  waiver and
     indemnity  set  forth  in  this  Lease  shall  specifically  apply  to  the
     Construction  Drawings.

3.2  FINAL SPACE PLAN.  Tenant shall supply Landlord with four (4) copies signed
     by Tenant of its final space plan for the Premises before any architectural
     working  drawings or engineering  drawings have been  commenced.  The final
     space plan (the "Final Space Plan") shall include a layout and  designation
     of all  offices,  rooms and other  partitioning,  their  intended  use, and
     equipment to be contained  therein.  Landlord may request  clarification or
     more  specific  drawings  for special  use items not  included in the Final
     Space Plan.  Landlord  shall advise  Tenant  within five (5) business  days
     after  Landlord's  receipt of the Final Space Plan for the  Premises if the
     same is  unsatisfactory  or  incomplete  in any  respect.  If  Tenant is so
     advised,  Tenant shall promptly cause the Final Space Plan to be revised to
     correct any deficiencies or other matters Landlord may reasonably require.

3.3  FINAL  WORKING  DRAWINGS.  After the Final Space Plan has been  approved by
     Landlord,  Tenant shall  supply the  Engineers  with a complete  listing of
     standard and non-standard equipment and specifications,  including, without
     limitation,  B.T.U.  calculations,   electrical  requirements  and  special
     electrical  receptacle   requirements  for  the  Premises,  to  enable  the
     Engineers  and the Architect to complete the "Final  Working  Drawings" (as
     that term is  defined  below) in the  manner as set forth  below.  Upon the
     approval  of the Final  Space Plan by Landlord  and  Tenant,  Tenant  shall
     promptly   cause  the   Architect   and  the   Engineers  to  complete  the
     architectural  and  engineering  drawings for the  Premises,  and Architect
     shall  compile  a  fully  coordinated  set  of  architectural,  structural,
     mechanical,  electrical  and plumbing  working  drawings in a form which is
     complete  to allow  subcontractors  to bid on the work  and to  obtain  all
     applicable permits  (collectively,  the "Final Working Drawings") and shall
     submit the same to Landlord for  Landlord's  approval.  Tenant shall supply
     Landlord  with four (4)  copies  signed by  Tenant  of such  Final  Working
     Drawings.  Landlord shall advise Tenant within five (5) business days after
     Landlord's  receipt of the Final  Working  Drawings for the Premises if the
     same is  unsatisfactory  or  incomplete  in any  respect.  If  Tenant is so
     advised,  Tenant shall  immediately  revise the Final  Working  Drawings in
     accordance  with such review and any  disapproval of Landlord in connection
     therewith.

3.4  APPROVED WORKING DRAWINGS.  The Final Working Drawings shall be approved by
     Landlord (the "Approved  Working  Drawings")  prior to the  commencement of
     construction  of the Premises by Tenant.  After approval by Landlord of the
     Final  Working  Drawings,  Tenant may  submit  the same to the  appropriate
     municipal  authorities for all applicable  building permits.  Tenant hereby
     agrees  that  neither   Landlord  nor  Landlord's   consultants   shall  be
     responsible  for obtaining any building  permit or certificate of occupancy
     for  the   Premises  and  that   obtaining   the  same  shall  be  Tenant's
     responsibility;  provided,  however,  that Landlord  shall  cooperate  with
     Tenant in executing permit  applications  and performing other  ministerial
     acts  reasonably  necessary  to enable  Tenant to obtain any such permit or
     certificate of occupancy.  No changes,  modifications or alterations in the
     Approved  Working Drawings may be made without the prior written consent of
     Landlord, which consent may not be unreasonably withheld.

                                    EXHIBIT B
                                       3
<PAGE>
                                    SECTION 4

                     CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1      TENANT'S SELECTION OF CONTRACTORS.

     4.1.1 THE CONTRACTOR.  A general  contractor shall be retained by Tenant to
          construct   the   Tenant   Improvements.   Such   general   contractor
          ("Contractor")  shall be  selected  by Tenant  from a list of  general
          contractors supplied by Landlord, and Tenant shall deliver to Landlord
          notice of its selection of the Contractor upon such selection.

     4.1.2 TENANT'S  AGENTS.  All  subcontractors,  laborers,  materialmen,  and
          suppliers used by Tenant (such subcontractors,  laborers, materialmen,
          and  suppliers,  and  the  Contractor  to  be  known  collectively  as
          "Tenant's  Agents")  must be  approved in writing by  Landlord,  which
          approval shall not be  unreasonably  withheld or delayed.  If Landlord
          does not approve any of Tenant's  proposed  subcontractors,  laborers,
          materialmen   or  suppliers,   Tenant  shall  submit  other   proposed
          subcontractors,  laborers,  materialmen  or suppliers  for  Landlord's
          written approval.

4.2  CONSTRUCTION OF TENANT IMPROVEMENTS BY TENANT'S AGENTS.

     4.2.1 CONSTRUCTION CONTRACT; COST BUDGET.Prior to Tenant's execution of the
          construction  contract and general  conditions  with  Contractor  (the
          "Contract"),  Tenant  shall  submit the  Contract to Landlord  for its
          approval,  which  approval  shall  not  be  unreasonably  withheld  or
          delayed.  Prior to the  commencement of the construction of the Tenant
          Improvements,  and after  Tenant has  accepted all bids for the Tenant
          Improvements, Tenant shall provide Landlord with a detailed breakdown,
          by  trade,  of the  final  costs to be  incurred  or which  have  been
          incurred,  as set forth more  particularly in Sections 2.2.1.1 through
          2.2.1.8,  above, in connection with the design and construction of the
          Tenant  Improvements  to be performed by or at the direction of Tenant
          or the  Contractor,  which  costs  form a basis for the  amount of the
          Contract  (the  "Final   Costs").   Prior  to  the   commencement   of
          construction of the Tenant Improvements,  Tenant shall supply Landlord
          with a check in an amount (the  "Over-Allowance  Amount") equal to the
          difference between the amount of the Final Costs and the amount of the
          Tenant  Improvement   Allowance  (less  any  portion  thereof  already
          disbursed  by  Landlord,  or in the  process  of  being  disbursed  by
          Landlord,  on or before the commencement of construction of the Tenant
          Improvements).   The  Over-Allowance  Amount  shall  be  disbursed  by
          Landlord  prior  to the  disbursement  of any  of the  then  remaining
          portion of the Tenant  Improvement  Allowance,  and such  disbursement
          shall be  pursuant  to the same  procedure  as the Tenant  Improvement
          Allowance.  In the  event  that,  after  the  Final  Costs  have  been
          delivered by Tenant to Landlord,  the costs relating to the design and
          construction of the Tenant  Improvements  shall change, any additional
          costs necessary to such design and construction in excess of the Final
          Costs, shall be paid by Tenant to Landlord  immediately as an addition
          to the  Over-Allowance  Amount or at Landlord's  option,  Tenant shall
          make  payments  for such  additional  costs out of its own funds,  but
          Tenant shall continue to provide Landlord with the documents described
          in  Sections  2.2.2.1  (i),  (ii),  (iii) and (iv) of this Tenant Work
          Letter,  above, for Landlord's  approval,  prior to Tenant paying such
          costs.

     4.2.2 TENANT'S AGENTS.

          4.2.2.1 LANDLORD'S  GENERAL  CONDITIONS FOR TENANT'S AGENTS AND TENANT
               IMPROVEMENT WORK.  Tenant's and Tenant's Agent's  construction of
               the Tenant Improvements shall comply with the following:  (i) the
               Tenant  Improvements  shall be constructed  in strict  accordance
               with the Approved  Working  Drawings;  (ii) Tenant's Agents shall
               submit   schedules   of  all  work   relating  to  the   Tenant's
               Improvements to Contractor and Contractor shall,  within five (5)
               business days of receipt  thereof,  inform Tenant's Agents of any
               changes which are necessary  thereto,  and Tenant's  Agents shall
               adhere to such  corrected  schedule;  (iii) Tenant shall abide by
               all rules made by Landlord's Building manager with respect to the
               use of freight,  loading dock and service  elevators,  storage of
               materials,  coordination  of work with the  contractors  of other
               tenants, and any other matter in connection with this Tenant Work
               Letter,  including,  without limitation,  the construction of the
               Tenant  Improvements  and (iv) Tenant shall provide Landlord with
               ten (10) days advance notice prior to commencing  construction of
               the Tenant  Improvements,  to allow Landlord  sufficient  time to
               post notices of nonresponsibility.  Tenant shall pay a logistical
               coordination  fee  (the  "Coordination  Fee") to  Landlord  in an
               amount  equal to the product of (i) one percent (1%) and (ii) the
               sum of  the  Tenant  Improvement  Allowance,  the  Over-Allowance
               Amount, as such amount may be increased hereunder,  and any other
               amounts  expended  by Tenant in  connection  with the  design and
               construction of the Tenant  Improvements,  which Coordination Fee
               shall  be  for  services  relating  to  the  coordination  of the
               construction of the Tenant Improvements.

          4.2.2.2 INDEMNITY. Tenant's indemnity of Landlord as set forth in this
               Lease shall also apply with respect to any and all costs, losses,
               damages,  injuries and liabilities  related in any way to any act
               or omission of Tenant or Tenant's  Agents,  or anyone directly or
               indirectly  employed  by  any  of  them,  or in  connection  with
               Tenant's  non-payment  of any  amount  arising  out of the Tenant
               Improvements and/or Tenant's disapproval of all or any portion of
               any request for payment.  Such indemnity by Tenant,  as set forth
               in this  Lease,  shall  also  apply  with  respect to any and all
               costs, losses,  damages,  injuries and liabilities related in any
               way to Landlord's  performance of any ministerial acts reasonably
               necessary   (i)  to  permit   Tenant  to   complete   the  Tenant
               Improvements,  and (ii) to enable  Tenant to obtain any  building
               permit or certificate of occupancy for the Premises.

          4.2.2.3 REQUIREMENTS OF TENANT'S AGENTS. Each of Tenant's Agents shall
               guarantee  to Tenant  and for the  benefit of  Landlord  that the
               portion of the Tenant  Improvements  for which it is  responsible
               shall be free from any defects in workmanship and materials for a
               period of not less than one (1) year from the date of  completion
               thereof.  Each of Tenant's  Agents shall be  responsible  for the
               replacement or repair,  without  additional  charge,  of all work
               done or furnished  in  accordance  with its  contract  that shall
               become  defective within one (1) year after the later to occur of
               (i)  completion  of the  work  performed  by such  contractor  or
               subcontractors   and  (ii)  the  Lease   Commencement  Date.  The
               correction of such work shall include, without additional charge,
               all additional  expenses and damages  incurred in connection with
               such  removal  or  replacement  of all or any part of the  Tenant
               Improvements, and/or the Building and/or common areas that may be
               damaged or disturbed  thereby.  All such warranties or guarantees
               as to materials or  workmanship  of or with respect to the Tenant
               Improvements  shall be contained  in the Contract or  subcontract
               and shall be  written  such that such  guarantees  or  warranties
               shall inure to the benefit of both Landlord and Tenant,  as their
               respective  interests may appear, and can be directly enforced by
               either.  Tenant  covenants to give to Landlord any  assignment or
               other  assurances  which may be necessary to effect such right of
               direct enforcement.

                                    EXHIBIT B
                                       4
<PAGE>

          4.2.2.4 INSURANCE REQUIREMENTS.

               4.2.2.4.1 GENERAL  COVERAGES.  All of Tenant's Agents shall carry
                    worker's  compensation   insurance  covering  all  of  their
                    respective employees,  and shall also carry public liability
                    insurance,  including  property damage,  all with limits, in
                    form and with  companies  as are  required  to be carried by
                    Tenant as set forth in this Lease.

               4.2.2.4.2 SPECIAL  COVERAGES.  Tenant shall carry  "Builder's All
                    Risk" insurance in an amount  approved by Landlord  covering
                    the construction of the Tenant Improvements,  and such other
                    insurance as Landlord may require,  it being  understood and
                    agreed  that the  Tenant  Improvements  shall be  insured by
                    Tenant  pursuant to this Lease  immediately  upon completion
                    thereof.  Such  insurance  shall  be in  amounts  and  shall
                    include  such  extended  coverage  endorsements  as  may  be
                    reasonably required by Landlord  including,  but not limited
                    to, the requirement  that all of Tenant's Agents shall carry
                    excess  liability  and  Products  and  Completed   Operation
                    Coverage  insurance,  each in amounts not less than $500,000
                    per incident,  $1,000,000 in aggregate, and in form and with
                    companies  as are  required  to be  carried by Tenant as set
                    forth in this Lease.

               4.2.2.4.3 GENERAL TERMS.  Certificates for all insurance  carried
                    pursuant  to this  Section  4.2.2.4  shall be  delivered  to
                    Landlord  before the  commencement  of  construction  of the
                    Tenant Improvements and before the Contractor's equipment is
                    moved onto the site.  All such  policies of  insurance  must
                    contain a  provision  that the company  writing  said policy
                    will give Landlord  thirty (30) days prior written notice of
                    any  cancellation  or  lapse  of the  effective  date or any
                    reduction  in the  amounts of such  insurance.  In the event
                    that the Tenant Improvements are damaged by any cause during
                    the  course  of  the  construction  thereof,   Tenant  shall
                    immediately  repair  the  same at  Tenant's  sole  cost  and
                    expense. Tenant's Agents shall maintain all of the foregoing
                    insurance  coverage in force  until the Tenant  Improvements
                    are fully completed and accepted by Landlord, except for any
                    Products and Completed Operation Coverage insurance required
                    by Landlord,  which is to be  maintained  for ten (10) years
                    following  completion of the work and acceptance by Landlord
                    and Tenant.  All policies carried under this Section 4.2.2.4
                    shall insure  Landlord and Tenant,  as their  interests  may
                    appear,  as well as  Contractor  and  Tenant's  Agents.  All
                    insurance,  except  Workers'  Compensation,   maintained  by
                    Tenant's  Agents shall  preclude  subrogation  claims by the
                    insurer  against anyone insured  thereunder.  Such insurance
                    shall  provide that it is primary  insurance as respects the
                    owner and that any other  insurance  maintained  by owner is
                    excess  and  noncontributing  with  the  insurance  required
                    hereunder.  The  requirements  for the  foregoing  insurance
                    shall not derogate from the provisions  for  indemnification
                    of Landlord by Tenant under  Section  4.2.2.2 of this Tenant
                    Work Letter. Landlord may, in its discretion, require Tenant
                    to obtain a lien and completion  bond or some alternate form
                    of security satisfactory to Landlord in an amount sufficient
                    to  ensure   the   lien-free   completion   of  the   Tenant
                    Improvements and naming Landlord as a co-obligee.

     4.2.3 GOVERNMENTAL COMPLIANCE.  The Tenant Improvements shall comply in all
          respects with the  following:  (i) the Code and other state,  federal,
          city or quasi-governmental laws, codes, ordinances and regulations, as
          each may apply  according  to the  rulings of the  controlling  public
          official,  agent or other  person;  (ii)  applicable  standards of the
          American Insurance Association  (formerly,  the National Board of Fire
          Underwriters)  and the National  Electrical  Code;  and (iii) building
          material manufacturer's specifications.

     4.2.4 INSPECTION BY LANDLORD.  Landlord shall have the right to inspect the
          Tenant  Improvements at all times,  provided however,  that Landlord's
          failure  to  inspect  the  Tenant   Improvements  shall  in  no  event
          constitute a waiver of any of  Landlord's  rights  hereunder nor shall
          Landlord's inspection of the Tenant Improvements constitute Landlord's
          approval of the same.  Should  Landlord  disapprove any portion of the
          Tenant  Improvements,  Landlord shall notify Tenant in writing of such
          disapproval  and shall specify the items  disapproved.  Any defects or
          deviations   in,  and/or   disapproval  by  Landlord  of,  the  Tenant
          Improvements  shall be  rectified by Tenant at no expense to Landlord,
          provided however,  that in the event Landlord determines that a defect
          or deviation  exists or disapproves  of any matter in connection  with
          any portion of the Tenant  Improvements and such defect,  deviation or
          matter might adversely  affect the mechanical,  electrical,  plumbing,
          heating,  ventilating and air  conditioning or life-safety  systems of
          the Building,  the structure or exterior appearance of the Building or
          any  other  tenant's  use of  such  other  tenant's  leased  premises,
          Landlord  may,  take  such  action as  Landlord  deems  necessary,  at
          Tenant's  expense and without  incurring  any  liability on Landlord's
          part, to correct any such defect, deviation and/or matter,  including,
          without  limitation,  causing  the  cessation  of  performance  of the
          construction of the Tenant Improvements until such time as the defect,
          deviation and/or matter is corrected to Landlord's satisfaction.

     4.2.5 MEETINGS.  Commencing upon the execution of this Lease,  Tenant shall
          hold weekly meetings at a reasonable  time, with the Architect and the
          Contractor  regarding the progress of the  preparation of Construction
          Drawings  and  the  construction  of the  Tenant  Improvements,  which
          meetings  shall be held at a  location  designated  by  Landlord,  and
          Landlord  and/or its agents shall  receive  prior notice of, and shall
          have the right to attend,  all such  meetings,  and,  upon  Landlord's
          request,  certain of Tenant's  Agents shall attend such  meetings.  In
          addition, minutes shall be taken at all such meetings, a copy of which
          minutes shall be promptly delivered to Landlord. One such meeting each
          month shall  include the review of  Contractor's  current  request for
          payment.

                                    EXHIBIT B
                                       5
<PAGE>

4.3  NOTICE OF  COMPLETION;  COPY OF RECORD  SET OF PLANS.  Within ten (10) days
     after completion of construction of the Tenant  Improvements,  Tenant shall
     cause a Notice of  Completion  to be recorded in the office of the Recorder
     of the county in which the Building is located in  accordance  with Section
     3093 of the Civil Code of the State of California or any successor statute,
     and shall  furnish a copy  thereof to Landlord  upon such  recordation.  If
     Tenant fails to do so,  Landlord may execute and file the same on behalf of
     Tenant  as  Tenant's  agent for such  purpose,  at  Tenant's  sole cost and
     expense.  At the  conclusion  of  construction,  (i) Tenant shall cause the
     Architect and  Contractor  (A) to update the Approved  Working  Drawings as
     necessary  to reflect all changes  made to the  Approved  Working  Drawings
     during  the  course of  construction,  (B) to  certify to the best of their
     knowledge that the "record-set" of as-built  drawings are true and correct,
     which  certification  shall survive the  expiration or  termination of this
     Lease, and (C) to deliver to Landlord two (2) sets of copies of such record
     set of drawings within ninety (90) days following issuance of a certificate
     of occupancy for the Premises,  and (ii) Tenant shall deliver to Landlord a
     copy of all warranties,  guaranties,  and operating manuals and information
     relating to the improvements, equipment, and systems in the Premises.

                                   SECTION 5

                                  MISCELLANEOUS

5.1  TENANT'S  REPRESENTATIVE.  Tenant has designated  Robert S. McMillan as its
     sole  representative  with  respect to the matters set forth in this Tenant
     Work Letter,  who shall have full  authority and  responsibility  to act on
     behalf of the Tenant as required in this Tenant Work Letter.

5.2  LANDLORD'S  REPRESENTATIVE.  Landlord has  designated  David Gaulton as its
     sole  representatives  with respect to the matters set forth in this Tenant
     Work Letter, who, until further notice to Tenant, shall have full authority
     and  responsibility  to act on behalf of the  Landlord  as required in this
     Tenant Work Letter.

5.3  TIME OF THE ESSENCE IN THIS TENANT WORK LETTER. Unless otherwise indicated,
     all  references  herein  to a  "number  of days"  shall  mean and  refer to
     calendar  days. If any item  requiring  approval is timely  disapproved  by
     Landlord,  the  procedure  for  preparation  of the  document  and approval
     thereof shall be repeated until the document is approved by Landlord.

5.4  TENANT'S  LEASE  DEFAULT.  Notwithstanding  any  provision  to the contrary
     contained  in this Lease,  if an event of default as described in the Lease
     or this  Tenant  Work  Letter  has  occurred  at any time on or before  the
     Substantial  Completion of the Premises,  then (i) in addition to all other
     rights and remedies  granted to Landlord  pursuant to this Lease,  Landlord
     shall  have the right to  withhold  payment  of all or any  portion  of the
     Tenant Improvement  Allowance and/or Landlord may cause Contractor to cease
     the  construction  of  the  Premises  (in  which  case,   Tenant  shall  be
     responsible  for any delay in the  substantial  completion  of the Premises
     caused by such work stoppage),  and (ii) all other  obligations of Landlord
     under the terms of this  Tenant Work  Letter  shall be forgiven  until such
     time as such default is cured pursuant to the terms of this Lease (in which
     case,  Tenant  shall  be  responsible  for  any  delay  in the  substantial
     completion of the Premises caused by such inaction by Landlord).


                                    EXHIBIT B
                                       6
<PAGE>

                                   SCHEDULE 1

                               BASE SHELL AND CORE


BUILDING

The building shall contain floors 1 through 6 plus an equipment  penthouse above
grade including ground floor lobby with enhanced ceiling volume,  mechanical and
equipment rooms,  elevator override for fire life safety system and building top
architectural details.

FOUNDATION AND STEEL FRAME

The steel  frame of the  building  employs a moment  frame  system  and shall be
professionally   engineered   materially  consistent  with  all  current  codes,
regulations and engineering practices.

The concrete  floors of the Premises  shall be finished in  accordance  with the
Approved Working Drawings for the Building.

Floor flatness  within the Premises shall be consistent  with ACI 117, class BCC
steel trowel finish, with a tolerance of 1/2 of an inch in ten feet.

The floor areas of the  Premises  shall be designed  to  accommodate  a combined
weight load of 80 lbs. per square foot.

The  building  shall have a finished  ceiling  height of at least 10 feet on the
ground floor and 8 feet and 10 inches above the finished  concrete  floor on the
second through sixth floors.

GLASS

The exterior glass shall be energy efficient as required by code,  tinted and/or
with reflective coating and shall be free  substantially from scratches,  nicks,
cracks and marring and otherwise in now condition.  The interior window mullions
and/or  metal  frames  shall be free  from  punctures,  screw  holes,  dents and
scratches. The metal surfaces shall be in new condition.

PERIMETER DRYWALL

All exterior walls shall be fully  insulated  without drywall with the exception
of the ground floor,  which will be full-height  glass and have no insulation or
drywall. All crib walls, soffits,  columns and intermediate locations throughout
the perimeter of the building and including all intermediate  columns within the
Premises shall be installed by and at Tenant's expense.

BUILDING CORE

Vertical  shaft space shall be provided  and  identified,  for the use of Tenant
within  the  core  to  accommodate  riser   requirements  for  Tenant's  private
telephone, electrical, data and CTV systems. (Refer to Communications Systems).

Typical  office floor  passenger and freight  elevator  lobbies shall have walls
taped.  Elevator  lobbies shall include fire rated doors with magnetic hold open
devices, smoke detectors,  (strobe lighting if required) and general lighting as
required by code and otherwise  designed and  constructed  to comply with "smoke
shaft assembly" requirements.

All core walls  facing  Tenant  areas shall be fire taped  drywall  finished and
ready to accept Tenant's finish.

The building core of the Premises  shall include full height  premium grade wood
or metal  doors,  frames  and  hardware.  Doors,  frames and  hardware  shall be
provided at all  stairwells,  toilet rooms and service  lobbies (all doors which
open to the  exterior  of the  building  core).  All other doors shall be hollow
metal or as designed.

Landlord  shall select an  illuminated  exit sign as required by building  code.
Landlord shall provide exit signs  installed in place as required to accommodate
an unoccupied floor.

Vertical stairwell exit shafts shall be constructed as required by building code
and all  surfaces  shall  be  painted.  Tenant  shall  be  permitted  to use the
stairwells for travel between Tenant's floors.  Any security devices required by
Tenant to allow access to Tenant's floors from the stairwells shall be installed
by and at  Tenant's  expense.  Landlord,  at its sole  cost and  expense,  shall
purchase and install all  equipment  necessary to maintain the  integrity of the
building's security system,  which system shall meet the minimum requirements as
defined  within  this  document  under  Security,  including  but not limited to
security card readers,  and  electrically  controlled  door hardware on selected
doors and meet all code and regulatory requirements. Tenant at its sole cost and
expense shall be responsible for other security requirements within the Premises
unique to its operation.

                                   SCHEDULE 1
                                       1
<PAGE>

TOILET ROOMS

Landlord shall construct women's and men's toilet rooms as necessary to obtain a
temporary  certificate  of occupancy or a  certificate  of  occupancy,  or legal
equivalent,  for the  Building  consistent  with  details  of design  and finish
developed by Landlord's architect  ("Landlord's Required Restroom  Facilities"),
provided, notwithstanding the foregoing, Landlord's Required Restroom Facilities
shall not include more than one (1) men's and one (1) women's toilet room on the
first floor.  Notwithstanding the foregoing,  in addition to Landlord's Required
Restroom  Facilities,  Landlord shall, at Landlord's cost,  install hot and cold
water lines and waste lines in sufficient capacity for one (1) men's toilet room
and one (1) women's  toilet room to be installed by Tenant on the first floor of
the Building, based upon Tenant's non-general office use (the "Additional Toilet
Rooms"),  which  lines  shall be stubbed to the  Additional  Toilet  Rooms,  and
Landlord shall install the partition wall that creates the outside  perimeter of
the Additional  Toilet Rooms,  which perimeter wall shall include only the studs
and one (1)  layer of  drywall  on the  exterior  side of such  partition  wall,
provided  Tenant  shall  within ten (10) days of request by Landlord  deliver to
Landlord  any  information  reasonably  requested  by Landlord  with  respect to
Tenant's desired location of such lines and partition wall.

The  minimum  level of  design  and  finish  for  Landlord's  Required  Restroom
Facilities shall not be less than the following:

     Water (hot and cold) shall be provided for all rest rooms.

     Lavatory  counters  shall have high quality  stone tops and  splashes  with
     recessed lavatories.

     Floors shall be finished with ceramic tile.

     The ceilings shall be painted drywall.

     All fixtures and  accessories  shall be stainless  steel or chrome and meet
     the Americans  with  Disabilities  Act and shall include but not be limited
     to,  recessed seat cover  dispenser,  recessed paper towel  dispenser/waste
     receptacles, recessed feminine napkin vendor, partition mounted roll toilet
     tissue  dispenser,  handicap  grab bar as required by code,  lavatory  soap
     dispensers.

TENANT PLUMBING SYSTEMS

Two points of access to  domestic  cold,  sanitary  waste and vent for  Tenant's
distribution shall be provided on each floor.

HVAC

     1.   The primary HVAC distribution loop.
     2.   One (1) air handling unit to be dedicated to New Horizons' premises.

LIGHTING SYSTEM

Lighting  for all areas  within  the  Premises  shall be  provided  by  lighting
fixtures at Tenant's  cost.  Common areas,  mechanical,  electrical  and freight
elevator rooms are lighted as specified and installed by Landlord.

ELECTRICAL AND POWER SYSTEMS

Landlord  shall  provide  emergency  power to  operate  all  essential  building
services  during an  emergency  that  includes  but is not limited to  emergency
elevator service, emergency lighting, smoke evacuation, and fire and life safety
systems.  Landlord provided emergency power is from a separate generator located
in the project and is fueled from a separate supply.

FIRE AND LIFE SAFETY SYSTEMS

Base  building  fire and life  safety  systems  shall  meet all local  codes and
regulations  and all  requirements  of California  State Title 24, the Americans
with Disabilities Act. Fire alarm pull stations and fire extinguishers  shall be
at each stairwell entry along with fire alarm pulls,  strobes, exit signs, smoke
shaft door assemblies at each elevator lobby.

The shell and core building  improvements  include a fire sprinkler system, main
loop and branch distribution piping,  including mains, laterals, drops and heads
as required by local code for unoccupied space with the heads turned up.

SECURITY SYSTEMS

The building  shall have a fully  operable  security  system with  stairwell and
selected  perimeter  door  monitoring and alarm  annunciation  at the main lobby
console.  Closed  circuit  television  cameras  shall be  provided  at  selected
building entrances and exits.

COMMUNICATION SYSTEM

A main  telephone  terminal  room shall be provided at the base of the  building
with multiple  feeder ducts and service from the telephone  companies.  Conduits
are provided by Landlord  from this terminal  room to the main  telephone  riser
that services Tenant's premises.

ELEVATORS

Selected  elevator  cabs shall be  equipped  with  security  card  readers.  All
elevator cabs shall be in compliance  with all codes and  regulations  including
the Americans with Disabilities Act.

A freight elevator shall be provided with adequate size and weight capability to
accommodate  the  efficient  loading and  unloading  of building  materials  and
standard office equipment.  This elevator shall also be a passenger elevator and
provides access to all floors of Tenant's Premises and the building.

                                    EXHIBIT B
                                       2
<PAGE>


                                    EXHIBIT C


                                 STADIUM GATEWAY

                           NOTICE OF LEASE TERM DATES



To:      _______________________
         _______________________
         _______________________
         _______________________



     Re:  Office Lease dated ____________, 19__ between ____________________,  a
          _____________________  ("Landlord"),  and  _______________________,  a
          _______________________ ("Tenant") concerning Suite ______ on floor(s)
          __________     of     the     office      building      located     at
          ____________________________, _____________, California.

Gentlemen:

In accordance with the Office Lease (the "Lease"),  we wish to advise you and/or
confirm as follows:

1.   The Lease Term shall commence on or has commenced on  ______________  for a
     term of __________________ ending on __________________.

2.   Rent  commenced  to  accrue  on   __________________,   in  the  amount  of
     ________________.

3.   If the Lease  Commencement  Date is other  than the first day of the month,
     the  first  billing  will  contain  a pro  rata  adjustment.  Each  billing
     thereafter,  with the exception of the final billing, shall be for the full
     amount of the monthly installment as provided for in the Lease.

4.   Your  rent  checks  should  be  made  payable  to   __________________   at
     ___________________.

5.   The exact  number of  rentable/usable  square feet  within the  Premises is
     ____________ square feet.

6.   Tenant's Share as adjusted  based upon the exact number of rentable  square
     feet within the Premises is ________%.

                                    "Landlord":

                                    __________________________ ,
                                    a

                                    By:  _____________________
                                         Its:  _______________



Agreed to and Accepted
as of ____________, 20___.

"Tenant":

___________________________ ,
a _________________________

By:  ______________________
     Its: _________________


                                   EXHIBIT C
                                       1
<PAGE>

                                    EXHIBIT D


                                 STADIUM GATEWAY

                              RULES AND REGULATIONS

     Tenant shall  faithfully  observe and comply with the  following  Rules and
Regulations.  Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project.  In the event of any
conflict  between the Rules and  Regulations  and the other  provisions  of this
Lease, the latter shall control.

1.   Tenant shall not alter any lock or install any new or  additional  locks or
     bolts on any doors or windows of the Premises without obtaining  Landlord's
     prior  written  consent.  Tenant shall bear the cost of any lock changes or
     repairs required by Tenant.  Two keys will be furnished by Landlord for the
     Premises,  and any additional keys required by Tenant must be obtained from
     Landlord at a  reasonable  cost to be  established  by  Landlord.  Upon the
     termination  of this Lease,  Tenant  shall  restore to Landlord all keys of
     stores,  offices,  and toilet  rooms,  either  furnished  to, or  otherwise
     procured  by,  Tenant  and in the  event of the loss of keys so  furnished,
     Tenant shall pay to Landlord the cost of replacing  same or of changing the
     lock or locks  opened by such lost key if Landlord  shall deem it necessary
     to make such  changes.  Tenant  shall  have the  right to change  any locks
     within the premises without Landlord's written permission, provided, Tenant
     shall utilize the building master key system or provide Landlord with a set
     of keys for any changed locks.

2.   All doors  opening to public  corridors  shall be kept  closed at all times
     except for normal ingress and egress to the Premises.

3.   Landlord  reserves the right to close and keep locked all entrance and exit
     doors of the Building  during such hours as are  customary  for  comparable
     buildings in the Anaheim, California area. Tenant, its employees and agents
     must be sure that the doors to the Building are securely  closed and locked
     when  leaving the  Premises if it is after the normal hours of business for
     the  Building.  Any  tenant,  its  employees,  agents or any other  persons
     entering or leaving the  Building at any time when it is so locked,  or any
     time  when it is  considered  to be after  normal  business  hours  for the
     Building,  may be required  to sign the  Building  register.  Access to the
     Building  may be  refused  unless  the  person  seeking  access  has proper
     identification  or  has a  previously  arranged  pass  for  access  to  the
     Building.  Landlord will furnish passes to persons for whom Tenant requests
     same in  writing.  Tenant  shall be  responsible  for all  persons for whom
     Tenant requests passes and shall be liable to Landlord for all acts of such
     persons. The Landlord and his agents shall in no case be liable for damages
     for any  error  with  regard  to the  admission  to or  exclusion  from the
     Building of any person. In case of invasion,  mob, riot, public excitement,
     or other  commotion,  Landlord  reserves the right to prevent access to the
     Building  or the  Project  during the  continuance  thereof by any means it
     deems appropriate for the safety and protection of life and property.

4.   No  furniture,  freight or  equipment of any kind shall be brought into the
     Building without prior notice to Landlord.  All moving activity into or out
     of the Building shall be scheduled with Landlord and done only at such time
     and in such manner as Landlord designates. Landlord shall have the right to
     prescribe  the  weight,  size and  position  of all safes  and other  heavy
     property  brought into the Building and also the times and manner of moving
     the same in and out of the Building.  Safes and other heavy objects  shall,
     if considered necessary by Landlord, stand on supports of such thickness as
     is  necessary  to  properly  distribute  the weight.  Landlord  will not be
     responsible for loss of or damage to any such safe or property in any case.
     Any damage to any part of the Building, its contents, occupants or visitors
     by moving or maintaining  any such safe or other property shall be the sole
     responsibility and expense of Tenant.

5.   No furniture, packages, supplies, equipment or merchandise will be received
     in the  Building  except in areas and in such  manner as may be  reasonably
     designated by Landlord.

6.   The requirements of Tenant will be attended to only upon application at the
     management office for the Project or at such office location  designated by
     Landlord.  Employees of Landlord  shall not perform any work or do anything
     outside  their  regular  duties  unless  under  special  instructions  from
     Landlord.

7.   No sign, advertisement, notice or handbill shall be exhibited, distributed,
     painted or affixed by Tenant on any part of the  Premises  or the  Building
     without  the  prior  written  consent  of the  Landlord.  Tenant  shall not
     disturb,  solicit, peddle, or canvass any occupant of the Project and shall
     cooperate with Landlord and its agents of Landlord to prevent same.

8.   The toilet rooms, urinals, wash bowls and other apparatus shall not be used
     for any  purpose  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  servants,  employees,
     agents, visitors or licensees shall have caused same.

9.   Tenant shall not overload the floor of the Premises,  nor mark, drive nails
     or screws, or drill into the partitions,  woodwork or drywall or in any way
     deface the Premises or any part thereof  without  Landlord's  prior written
     consent.  Tenant  shall not  purchase  spring  water,  ice,  towel,  linen,
     maintenance  or other like services from any person or persons not approved
     by Landlord.

                                   EXHIBIT D
                                       1
<PAGE>

10.  Except for vending machines intended for the sole use of Tenant's employees
     and  invitees,  no  vending  machine  or  machines  other  than  fractional
     horsepower office machines shall be installed,  maintained or operated upon
     the Premises without the written consent of Landlord.

11.  Tenant shall not use or keep in or on the Premises,  the  Building,  or the
     Project any kerosene,  gasoline,  explosive  material,  corrosive material,
     material  capable  of  emitting  toxic  fumes,  or  other   inflammable  or
     combustible  fluid chemical,  substitute or material.  Tenant shall provide
     material safety data sheets for any Hazardous  Material used or kept on the
     Premises.

12.  Tenant  shall not without  the prior  written  consent of Landlord  use any
     method of heating or air conditioning other than that supplied by Landlord.

13.  Tenant  shall  not use,  keep or  permit  to be used or  kept,  any foul or
     noxious  gas or  substance  in or on the  Premises,  or permit or allow the
     Premises to be occupied or used in a manner  offensive or  objectionable to
     Landlord or other  occupants of the Project by reason of noise,  odors,  or
     vibrations,  or  interfere  with  other  tenants or those  having  business
     therein,  whether by the use of any musical instrument,  radio, phonograph,
     or in any other way. Tenant shall not throw anything out of doors,  windows
     or skylights or down passageways.

14.  Tenant shall not bring into or keep within the Project, the Building or the
     Premises any animals, birds,  aquariums,  or, except in areas designated by
     Landlord, bicycles or other vehicles.

15.  No  cooking  shall be done or  permitted  on the  Premises,  nor  shall the
     Premises  be used for the  storage of  merchandise,  for lodging or for any
     improper, objectionable or immoral purposes. Notwithstanding the foregoing,
     Underwriters' laboratory-approved equipment and microwave ovens may be used
     in the Premises for heating food and brewing coffee, tea, hot chocolate and
     similar beverages for employees and visitors,  provided that such use is in
     accordance with all applicable federal, state, county and city laws, codes,
     ordinances, rules and regulations.

16.  The  Premises  shall not be used for  manufacturing  or for the  storage of
     merchandise  except as such  storage  may be  incidental  to the use of the
     Premises provided for in the Summary. Tenant shall not occupy or permit any
     portion of the  Premises to be  occupied as an office for a  messenger-type
     operation or dispatch  office,  public  stenographer or typist,  or for the
     manufacture or sale of liquor,  narcotics,  or tobacco in any form, or as a
     medical office, or as a barber or manicure shop, or as an employment bureau
     without the express  prior  written  consent of Landlord.  Tenant shall not
     engage or pay any employees on the Premises  except those actually  working
     for such  tenant on the  Premises  nor  advertise  for  laborers  giving an
     address at the Premises.

17.  Landlord reserves the right to exclude or expel from the Project any person
     who, in the judgment of Landlord,  is intoxicated or under the influence of
     liquor or drugs,  or who shall in any manner do any act in violation of any
     of these Rules and Regulations.

18.  Tenant,  its employees and agents shall not loiter in or on the  entrances,
     corridors,   sidewalks,  lobbies,  courts,  halls,  stairways,   elevators,
     vestibules or any Common Areas for the purpose of smoking tobacco  products
     or for any other purpose, nor in any way obstruct such areas, and shall use
     them only as a means of ingress and egress for the Premises.

19.  Tenant shall not waste electricity, water or air conditioning and agrees to
     cooperate fully with Landlord to ensure the most effective operation of the
     Building's  heating and air  conditioning  system,  and shall  refrain from
     attempting to adjust any controls.  Tenant shall  participate  in recycling
     programs undertaken by Landlord.

20.  Tenant  shall  store all its trash and garbage  within the  interior of the
     Premises.  No material shall be placed in the trash boxes or receptacles if
     such  material  is of such  nature  that it may not be  disposed  of in the
     ordinary  and  customary  manner of  removing  and  disposing  of trash and
     garbage in Anaheim,  California  without  violation of any law or ordinance
     governing such disposal.  All trash,  garbage and refuse  disposal shall be
     made only through  entry-ways  and elevators  provided for such purposes at
     such times as  Landlord  shall  designate.  If the  Premises  is or becomes
     infested with vermin as a result of the use or any misuse or neglect of the
     Premises by Tenant, its agents, servants, employees,  contractors, visitors
     or  licensees,  Tenant  shall  forthwith,  at Tenant's  expense,  cause the
     Premises  to be  exterminated  from  time to time  to the  satisfaction  of
     Landlord and shall employ such licensed  exterminators as shall be approved
     in writing in advance by Landlord.

21.  Tenant  shall  comply  with all  safety,  fire  protection  and  evacuation
     procedures  and  regulations  established  by Landlord or any  governmental
     agency.

22.  Any persons  employed by Tenant to do  janitorial  work shall be subject to
     the prior  written  approval of  Landlord,  and while in the  Building  and
     outside of the  Premises,  shall be subject  to and under the  control  and
     direction of the  Building  manager (but not as an agent or servant of such
     manager or of Landlord),  and Tenant shall be  responsible  for all acts of
     such persons.

23.  No awnings or other  projection  shall be attached to the outside  walls of
     the  Building  without  the  prior  written  consent  of  Landlord,  and no
     curtains,  blinds,  shades or screens  shall be  attached to or hung in, or
     used in  connection  with,  any window or door of the  Premises  other than
     Landlord  standard  drapes.  All  electrical  ceiling  fixtures hung in the
     Premises or spaces along the perimeter of the Building must be  fluorescent
     and/or of a quality,  type,  design and a warm white bulb color approved in
     advance in writing by  Landlord.  Neither the  interior nor exterior of any
     windows shall be coated or otherwise  sunscreened without the prior written
     consent of  Landlord.  Tenant  shall be  responsible  for any damage to the
     window film on the  exterior  windows of the  Premises  and shall  promptly
     repair any such damage at Tenant's sole cost and expense. Tenant shall keep
     its window  coverings  closed  during any period of the day when the sun is
     shining  directly  on the  windows of the  Premises.  Prior to leaving  the
     Premises  for the day,  Tenant  shall draw or lower  window  coverings  and
     extinguish  all  lights.  Tenant  shall  abide  by  Landlord's  regulations
     concerning the opening and closing of window  coverings  which are attached
     to the windows in the Premises,  if any,  which have a view of any interior
     portion of the Building or Building Common Areas.



                                   EXHIBIT D
                                       2
<PAGE>

24.  The sashes, sash doors, skylights, windows, and doors that reflect or admit
     light and air into the halls,  passageways  or other  public  places in the
     Building  shall not be  covered  or  obstructed  by  Tenant,  nor shall any
     bottles, parcels or other articles be placed on the windowsills.

25.  Tenant must comply with requests by the Landlord  concerning  the informing
     of their employees of items of importance to the Landlord.

26.  Tenant must comply with all applicable "NO-SMOKING" or similar governmental
     or quasi government rules, regulations and ordinances.

27.  Tenant  hereby  acknowledges  that  Landlord  shall have no  obligation  to
     provide  guard  service or other  security  measures for the benefit of the
     Premises,   the  Building  or  the  Project.   Tenant  hereby  assumes  all
     responsibility  for the  protection  of Tenant and its  agents,  employees,
     contractors,  invitees and guests,  and the property thereof,  from acts of
     third parties,  including  keeping doors locked and other means of entry to
     the Premises  closed,  whether or not  Landlord,  at its option,  elects to
     provide security protection for the Project or any portion thereof.  Tenant
     further assumes the risk that any safety and security devices, services and
     programs which Landlord elects, in its sole discretion,  to provide may not
     be effective,  or may  malfunction or be  circumvented  by an  unauthorized
     third  party,  and  Tenant  shall,  in  addition  to  its  other  insurance
     obligations  under this  Lease,  obtain its own  insurance  coverage to the
     extent  Tenant   desires   protection   against   losses  related  to  such
     occurrences.  Tenant shall  cooperate in any reasonable  safety or security
     program developed by Landlord or required by law.

28.  All office equipment of any electrical or mechanical nature shall be placed
     by Tenant in the Premises in settings  approved by  Landlord,  to absorb or
     prevent any vibration, noise and annoyance.

29.  Tenant shall not use in any space or in the public  halls of the  Building,
     any hand trucks  except  those  equipped  with rubber tires and rubber side
     guards.

30.  No auction,  liquidation,  fire sale,  going-out-of-business  or bankruptcy
     sale shall be conducted in the Premises  without the prior written  consent
     of Landlord.

31.  No tenant  shall use or permit the use of any portion of the  Premises  for
     living quarters, sleeping apartments or lodging rooms.

32.  Tenant shall not purchase spring water,  towels,  janitorial or maintenance
     or other  similar  services  from any  company or persons  not  approved by
     Landlord.  Landlord  shall  approve a sufficient  number of sources of such
     services to provide  Tenant with a reasonable  selection,  but only in such
     instances  and to such extent as Landlord in its  judgment  shall  consider
     consistent with the security and proper operation of the Building.

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

     Landlord  reserves  the right at any time to change or  rescind  any one or
more  of  these  Rules  and  Regulations,  or to make  such  other  and  further
reasonable Rules and Regulations as in Landlord's judgment may from time to time
be necessary for the management,  safety,  care and cleanliness of the Premises,
Building,  the Common Areas and the Project,  and for the  preservation  of good
order therein,  as well as for the  convenience  of other  occupants and tenants
therein.  Landlord may waive any one or more of these Rules and  Regulations for
the benefit of any particular  tenants,  but no such waiver by Landlord shall be
construed  as a waiver  of such  Rules  and  Regulations  in favor of any  other
tenant,  nor  prevent  Landlord  from  thereafter  enforcing  any such  Rules or
Regulations against any or all tenants of the Project. Tenant shall be deemed to
have read these Rules and  Regulations  and to have agreed to abide by them as a
condition of its occupancy of the Premises.

                                   EXHIBIT D
                                       3
<PAGE>


                                    EXHIBIT E


                                 STADIUM GATEWAY

                      FORM OF TENANT'S ESTOPPEL CERTIFICATE



     The  undersigned  as Tenant under that certain  Office Lease (the  "Lease")
made and entered into as of ___________,  199 by and between  _______________ as
Landlord,  and the  undersigned  as Tenant,  for Premises on the  ______________
floor(s)  of the  office  building  located at  ______________,  ______________,
California ____________, certifies as follows:

1.   Attached  hereto as Exhibit A is a true and  correct  copy of the Lease and
     all  amendments  and  modifications  thereto.  The  documents  contained in
     Exhibit A  represent  the entire  agreement  between  the parties as to the
     Premises.

2.   The undersigned currently occupies the Premises described in the Lease, the
     Lease  Term  commenced  on  __________,  and  the  Lease  Term  expires  on
     ___________,  and the  undersigned has no option to terminate or cancel the
     Lease or to purchase all or any part of the Premises,  the Building  and/or
     the Project.

3.   Base Rent became payable on ____________.

4.   The  Lease  is in  full  force  and  effect  and  has  not  been  modified,
     supplemented or amended in any way except as provided in Exhibit A.

5.   Tenant has not transferred, assigned, or sublet any portion of the Premises
     nor entered into any license or concession  agreements with respect thereto
     except as follows:






6.   Tenant  shall not modify the  documents  contained in Exhibit A without the
     prior written consent of Landlord's mortgagee.

7.   All monthly  installments of Base Rent, all Additional Rent and all monthly
     installments  of estimated  Additional Rent have been paid when due through
     ___________.   The   current   monthly   installment   of   Base   Rent  is
     $_____________________.

8.   All  conditions  of the Lease to be performed by Landlord  necessary to the
     enforceability  of the Lease have been  satisfied  and  Landlord  is not in
     default  thereunder.  In addition,  the  undersigned  has not delivered any
     notice to Landlord regarding a default by Landlord thereunder.

9.   No  rental  has been  paid more than  thirty  (30) days in  advance  and no
     security has been deposited with Landlord except as provided in the Lease.

10.  As of the date hereof,  there are no existing  defenses or offsets,  or, to
     the  undersigned's  knowledge,  claims or any  basis for a claim,  that the
     undersigned has against Landlord.

11.  If Tenant is a corporation or partnership,  each individual  executing this
     Estoppel  Certificate  on behalf of Tenant hereby  represents  and warrants
     that Tenant is a duly formed and existing  entity  qualified to do business
     in  California  and that Tenant has full right and authority to execute and
     deliver this Estoppel Certificate and that each person signing on behalf of
     Tenant is authorized to do so.

12.  There are no actions pending  against the undersigned  under the bankruptcy
     or similar laws of the United States or any state.

13.  Other than in compliance  with all  applicable  laws and  incidental to the
     ordinary course of the use of the Premises, the undersigned has not used or
     stored any hazardous substances in the Premises.

14.  To the undersigned's knowledge, all tenant improvement work to be performed
     by Landlord under the Lease has been completed in accordance with the Lease
     and  has  been  accepted  by the  undersigned  and all  reimbursements  and
     allowances due to the  undersigned  under the Lease in connection  with any
     tenant improvement work have been paid in full.

     The  undersigned   acknowledges  that  this  Estoppel  Certificate  may  be
delivered to Landlord or to a prospective  mortgagee or  prospective  purchaser,
and acknowledges that said prospective  mortgagee or prospective  purchaser will
be relying upon the statements  contained herein in making the loan or acquiring
the  property of which the  Premises  are a part and that  receipt by it of this
certificate is a condition of making such loan or acquiring such property.

Executed at ______________ on the ____ day of ___________, 19  .


                    "Tenant":

                    __________________________________ ,
                    a ________________________________

                    By:   ____________________________
                          Its:  ______________________

                    By:   ____________________________
                          Its:  ______________________

                                   EXHIBIT E
                                       1
<PAGE>

                                    EXHIBIT F


                                 STADIUM GATEWAY

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

ALLEN, MATKINS, LECK, GAMBLE
         & MALLORY LLP
1999 Avenue of the Stars
18th Floor
Los Angeles, California 90067
Attention:  Anton N. Natsis, Esq.


                            RECOGNITION OF COVENANTS,
                          CONDITIONS, AND RESTRICTIONS

     This  Recognition  of  Covenants,   Conditions,   and  Restrictions   (this
"Agreement") is entered into as of the __ day of ________, 199__, by and between
__________________ ("Landlord"), and ________________ ("Tenant"), with reference
to the following facts:

A.   Landlord and Tenant entered into that certain Office Lease  Agreement dated
     _____,  199__ (the  "Lease").  Pursuant  to the Lease,  Landlord  leased to
     Tenant and Tenant leased from Landlord space (the "Premises") located in an
     office building on certain real property  described in Exhibit "A" attached
     hereto and incorporated herein by this reference (the "Property").

B.   The Premises  are located in an office  building  located on real  property
     which is part of an area owned by Landlord containing approximately ___(__)
     acres of real property located in the City of ____________, California (the
     "Project"),  as more particularly  described in Exhibit "B" attached hereto
     and incorporated herein by this reference.

C.   Landlord,  as declarant,  has  previously  recorded,  or proposes to record
     concurrently  with the  recordation  of this  Agreement,  a Declaration  of
     Covenants,   Conditions,   and  Restrictions  (the  "Declaration"),   dated
     ________________, 19__, in connection with the Project.

D.   Tenant  is  agreeing  to  recognize  and  be  bound  by  the  terms  of the
     Declaration,  and the parties  hereto desire to set forth their  agreements
     concerning the same.

     NOW,  THEREFORE,  in  consideration  of (a) the foregoing  recitals and the
mutual  agreements  hereinafter  set forth,  and (b) for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows,

1.   TENANT'S  RECOGNITION OF  DECLARATION.  Notwithstanding  that the Lease has
     been executed prior to the recordation of the Declaration, Tenant agrees to
     recognize  and  by  bound  by  all  of  the  terms  and  conditions  of the
     Declaration.

2.   MISCELLANEOUS.

     2.1  This  Agreement  shall be binding upon and inure to the benefit of the
          parties  hereto  and  their  respective   heirs,   estates,   personal
          representatives, successors, and assigns.

     2.2  This  Agreement  is made in,  and  shall  be  governed,  enforced  and
          construed under the laws of, the State of California.

     2.3  This Agreement  constitutes the entire understanding and agreements of
          the parties  with  respect to the  subject  matter  hereof,  and shall
          supersede and replace all prior understandings and agreements, whether
          verbal or in writing.  The parties confirm and acknowledge  that there
          are  no  other  promises,   covenants,   understandings,   agreements,
          representations,  or warranties  with respect to the subject matter of
          this Agreement except as expressly set forth herein.

     2.4  This  Agreement is not to be modified,  terminated,  or amended in any
          respect, except pursuant to any instrument in writing duly executed by
          both of the parties hereto.

     2.5  In the event that either  party hereto shall bring any legal action or
          other  proceeding  with  respect  to the  breach,  interpretation,  or
          enforcement of this Agreement, or with respect to any dispute relating
          to any transaction covered by this Agreement, the losing party in such
          action or proceeding  shall reimburse the prevailing party therein for
          all reasonable costs of litigation,  including  reasonable  attorneys'
          fees,  in such  amount  as may be  determined  by the  court  or other
          tribunal having jurisdiction, including matters on appeal.

     2.6  All  captions  and  heading  herein  are for  convenience  and ease of
          reference  only,  and shall not be used or  referred  to in any way in
          connection with the interpretation or enforcement of this Agreement.

                                   EXHIBIT F
                                       1
<PAGE>

     2.7  If any provision of this Agreement,  as applied to any party or to any
          circumstance,  shall be adjudged by a court of competent jurisdictions
          to be void or unenforceable for any reason,  the same shall not affect
          any  other  provision  of  this  Agreement,  the  application  of such
          provision  under  circumstances  different  form those adjudged by the
          court, or the validity or enforceability of this Agreement as a whole.

     2.8  Time is of the essence of this Agreement.

     2.9  The  Parties  agree to execute  any  further  documents,  and take any
          further  actions,  as may be reasonable  and  appropriate  in order to
          carry out the purpose and intent of this Agreement.

     2.10 As used herein,  the  masculine,  feminine or neuter  gender,  and the
          singular  and plural  numbers,  shall  each be deemed to  include  the
          others whenever and whatever the context so indicates.

                                   EXHIBIT F
                                       2
<PAGE>


                        SIGNATURE PAGE OF RECOGNITION OF

                     COVENANTS, CONDITIONS AND RESTRICTIONS

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first
above written.

                                                     "Landlord":

                                                     _________________________,
                                                     a ________________________

                                                     By:  _____________________
                                                          Its:  _______________



                                                     "Tenant":

                                                     __________________________
                                                     a ________________________

                                                     By:  _____________________
                                                          Its:  _______________

                                                     By:  _____________________
                                                        Its:  _________________


                                   EXHIBIT F
                                       3
<PAGE>

Exhibit 21.1


                          New Horizons Worldwide, Inc.

                                  Subsidiaries:

                       New Horizons Education Corporation

                  New Horizons Computer Learning Centers, Inc.

               New Horizons Computer Learning Centers APAC, L.L.C.

               New Horizons Computer Learning Centers EMEA, L.L.C.

             New Horizons Computer Learning Center of Chicago, Inc.

      New Horizons Computer Learning Center of Metropolitan New York, Inc.

            New Horizons Computer Learning Center of Santa Ana, Inc.

        New Horizons Computer Learning Center of Cleveland, Ltd., L.L.C.

             New Horizons Computer Learning Center of Memphis, Inc.

            New Horizons Computer Learning Center of Nashville, Inc.

             New Horizons Computer Learning Center of Hartford, Inc.

           New Horizons Computer Learning Center of Albuquerque, Inc.

                               Nova Vista, L.L.C.

            New Horizons Computer Learning Center of Charlotte, Inc.

            New Horizons Computer Learning Center of Sacramento, Inc.

                           NHCLC of San Antonio, Inc.

              New Horizons Computer Learning Center of Denver, Inc.