<PAGE>

                                          
                             AMENDED AND RESTATED LEASE
                                          
                                 DATED JUNE 9, 1998
                                          
                                      BETWEEN
                                          
                        EDUCORP PROPERTIES, INC., as Lessor
                                          
                                        and
                                          
                        THE TESSERACT GROUP, INC., as Lessee
                                          

                                          
<PAGE>

                                 TABLE OF CONTENTS
<TABLE>
<S>                                                                          <C>
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
     1.1    Leased Property. . . . . . . . . . . . . . . . . . . . . . . . .   1
            1.1.1   Paradise Valley Montessori Property. . . . . . . . . . .   1
            1.1.2   Paradise Valley Property . . . . . . . . . . . . . . . .   2
            1.1.3   Leased Property; Land; Leased Improvements . . . . . . .   3
     1.2    Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
     1.3    Contingencies. . . . . . . . . . . . . . . . . . . . . . . . . .   3
            1.3.1   Lessor's Acquisition of the Paradise Valley
                    Property . . . . . . . . . . . . . . . . . . . . . . . .   3
            1.3.2   Cross-Default with Related Leases. . . . . . . . . . . .   3
            1.3.3   Security Documents . . . . . . . . . . . . . . . . . . .   4

ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
     2.     Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .   4

ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
     3.1    Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
            3.1.1   Minimum Rent . . . . . . . . . . . . . . . . . . . . . .   9
            3.1.2   Pre-Payment of Minimum Rent. . . . . . . . . . . . . . .   9
     3.2    Annual Escalation of Minimum Rent. . . . . . . . . . . . . . . .  10
     3.3    Additional Charges . . . . . . . . . . . . . . . . . . . . . . .  10
     3.4    Net Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
     3.5    Late Charge. . . . . . . . . . . . . . . . . . . . . . . . . . .  11

ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
     4.1    Payment of Impositions . . . . . . . . . . . . . . . . . . . . .  11
     4.2    Notice of Impositions. . . . . . . . . . . . . . . . . . . . . .  12
     4.3    Utility Charges. . . . . . . . . . . . . . . . . . . . . . . . .  13
     4.4    Insurance Premiums . . . . . . . . . . . . . . . . . . . . . . .  13
     4.5    Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
     4.6    Pre-Payment of Impositions and Insurance Premiums. . . . . . . .  13

ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
     5.1    No Termination, Abatement, etc . . . . . . . . . . . . . . . . .  14
     5.2    Abatement Procedures . . . . . . . . . . . . . . . . . . . . . .  14

ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
     6.1    Ownership of the Leased Property . . . . . . . . . . . . . . . .  15
     6.2    Lessee's Personal Property . . . . . . . . . . . . . . . . . . .  15
     6.3    Consumable Inventory . . . . . . . . . . . . . . . . . . . . . .  15
     6.4    Lessor's Purchase Option . . . . . . . . . . . . . . . . . . . .  16

ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
</TABLE>

                                      i

<PAGE>

<TABLE>
<S>                                                                          <C>
     7.1    Condition of Leased Property . . . . . . . . . . . . . . . . . .  17
     7.2    Use of the Leased Property . . . . . . . . . . . . . . . . . . .  17
     7.3    Radius Restriction . . . . . . . . . . . . . . . . . . . . . . .  18

ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
     8.1    Compliance with Legal and Insurance Requirements,
            Instruments, etc.. . . . . . . . . . . . . . . . . . . . . . . .  19
     8.2    Legal Requirement Covenants. . . . . . . . . . . . . . . . . . .  19

ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
     9.1    Maintenance and Repair . . . . . . . . . . . . . . . . . . . . .  20
     9.2    Expenditures to Comply with Law. . . . . . . . . . . . . . . . .  21
     9.3    Encroachments, Restrictions, etc.. . . . . . . . . . . . . . . .  22

ARTICLE X. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
     10.1   Lessee's Obligations for Hazardous Materials . . . . . . . . . .  22
     10.2   Definition of Hazardous Materials. . . . . . . . . . . . . . . .  23

ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
     11.1   No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23

ARTICLE XII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
     12.    Permitted Contests . . . . . . . . . . . . . . . . . . . . . . .  23

ARTICLE XIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
     13.1   General Insurance Requirements . . . . . . . . . . . . . . . . .  24
     13.2   Replacement Cost . . . . . . . . . . . . . . . . . . . . . . . .  25
     13.3   Additional Insurance . . . . . . . . . . . . . . . . . . . . . .  25
     13.4   Waiver of Subrogation. . . . . . . . . . . . . . . . . . . . . .  26
     13.5   Form Satisfactory, etc.. . . . . . . . . . . . . . . . . . . . .  26
     13.6   Increase in Limits . . . . . . . . . . . . . . . . . . . . . . .  26
     13.7   Blanket Policy . . . . . . . . . . . . . . . . . . . . . . . . .  26
     13.8   No Separate Insurance. . . . . . . . . . . . . . . . . . . . . .  27
     13.9   Continuous Coverage. . . . . . . . . . . . . . . . . . . . . . .  27

ARTICLE XIV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
     14.1   Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . .  27
     14.2   Reconstruction in the Event of Damage or Destruction
            Covered by Insurance Proceeds. . . . . . . . . . . . . . . . . .  27
     14.3   Reconstruction in the Event of Damage or Destruction Not
            Covered by Insurance . . . . . . . . . . . . . . . . . . . . . .  28
     14.4   Lessee's Personal Property . . . . . . . . . . . . . . . . . . .  28
     14.5   Restoration of Lessee's Property . . . . . . . . . . . . . . . .  28
     14.6   No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . .  28
     14.7   Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
</TABLE>

                                      ii

<PAGE>

<TABLE>
<S>                                                                          <C>
ARTICLE XV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
     15.    Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . .  29
     15.1   Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .  29
     15.2   Parties' Rights and Obligations. . . . . . . . . . . . . . . . .  29
     15.3   Total Condemnation . . . . . . . . . . . . . . . . . . . . . . .  29
     15.4   Allocation of Portion of Award . . . . . . . . . . . . . . . . .  29
     15.5   Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . .  30
     15.6   Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . .  30

ARTICLE XVI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
     16.1   Events of Default. . . . . . . . . . . . . . . . . . . . . . . .  31
     16.2   Certain Remedies . . . . . . . . . . . . . . . . . . . . . . . .  33
     16.3   Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
     16.4   Remedies Relating to Operation of the Paradise Valley
            Montessori Property as a Charter School. . . . . . . . . . . . .  35
     16.5   Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
     16.6   Application of Funds . . . . . . . . . . . . . . . . . . . . . .  36

ARTICLE XVII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
     17.    Lessor's Right to Cure Lessee's Default. . . . . . . . . . . . .  36

ARTICLE XVIII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
     18.1   Options to Extend. . . . . . . . . . . . . . . . . . . . . . . .  37
     18.2   Minimum Rent During Extended Terms . . . . . . . . . . . . . . .  37

ARTICLE XIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
     19.    Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . .  39

ARTICLE XX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
     20.    Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . .  39

ARTICLE XXI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
     21.    Indemnification. . . . . . . . . . . . . . . . . . . . . . . . .  40

ARTICLE XXII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
     22.    Subletting and Assignment. . . . . . . . . . . . . . . . . . . .  41
     22.1   Attornment . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
     22.2   Sublease Limitation. . . . . . . . . . . . . . . . . . . . . . .  41

ARTICLE XXIII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
     23.    Officer's Certificates and Financial Statements. . . . . . . . .  42

ARTICLE XXIV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
     24.    Lessor's Right of Entry. . . . . . . . . . . . . . . . . . . . .  42
</TABLE>

                                      iii

<PAGE>

<TABLE>
<S>                                                                          <C>
ARTICLE XXV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
     25.1   Assignment of Intangibles. . . . . . . . . . . . . . . . . . . .  43
     25.2   Adjustments and Prorations . . . . . . . . . . . . . . . . . . .  44
     25.3   Transfer of Operations . . . . . . . . . . . . . . . . . . . . .  45
     25.4   Indemnification. . . . . . . . . . . . . . . . . . . . . . . . .  46
     25.5   No Limitation. . . . . . . . . . . . . . . . . . . . . . . . . .  46

ARTICLE XXVI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
     26.    No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . .  46

ARTICLE XXVII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
     27.    Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . .  47

ARTICLE XXVIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
     28.    Acceptance of Surrender. . . . . . . . . . . . . . . . . . . . .  47

ARTICLE XXIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
     29.    No Merger of Title . . . . . . . . . . . . . . . . . . . . . . .  47

ARTICLE XXX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
     30.    Conveyance by Lessor . . . . . . . . . . . . . . . . . . . . . .  47

ARTICLE XXXI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48
     31.    Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . . . . . .  48

ARTICLE XXXII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48
     32.    Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48

ARTICLE XXXIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  49
     33.1   Lessor May Grant Liens . . . . . . . . . . . . . . . . . . . . .  49
     33.2   Lessee's Right to Cure . . . . . . . . . . . . . . . . . . . . .  49
     33.3   Breach by Lessor . . . . . . . . . . . . . . . . . . . . . . . .  50

ARTICLE XXXIV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  50
     34.    Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . .  50
     34.1   Survival of Obligations. . . . . . . . . . . . . . . . . . . . .  50
     34.2   Late Charges; Interest . . . . . . . . . . . . . . . . . . . . .  50
     34.3   Limits of Lessor's Liability . . . . . . . . . . . . . . . . . .  50
     34.4   Prohibited Transactions. . . . . . . . . . . . . . . . . . . . .  50
     34.5   Addendum, Amendments and Exhibits. . . . . . . . . . . . . . . .  51
     34.6   Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51
     34.7   Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51
     34.8   Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51
     34.9   Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51
     34.10  Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . .  51
</TABLE>

                                      iv

<PAGE>

<TABLE>
<S>                                                                          <C>
     34.11  Successors and Assigns . . . . . . . . . . . . . . . . . . . . .  51
     34.12  Recordation. . . . . . . . . . . . . . . . . . . . . . . . . . .  51
     34.13  Prior and Future Agreements. . . . . . . . . . . . . . . . . . .  51
     34.14  Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . .  52
     34.15  Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . .  52
     34.16  Authority of Lessor and Lessee . . . . . . . . . . . . . . . . .  52
     34.17  Relationship of the Parties. . . . . . . . . . . . . . . . . . .  52
     34.18  Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . .  52
     34.19  Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53
</TABLE>



                                       v
<PAGE>

                                          
                             AMENDED AND RESTATED LEASE


     THIS AMENDED AND RESTATED LEASE (this "Lease"), dated as of June 9, 1998,
by and between EDUCORP PROPERTIES, INC., a Nevada corporation, herein called
"Lessor", and THE TESSERACT GROUP, INC., a Minnesota corporation, herein called
"Lessee", amends and restates in its entirety that certain Lease ("Original
Lease"), dated as of the 29th day of May, 1998, by and between Lessor and
Lessee.  This Lease does not terminate or replace the Original Lease, which
shall remain effective (as amended and restated hereby) until the expiration or
earlier termination of this Lease.  In the event of any conflict or
inconsistency between the terms of this Lease and the terms of the Original
Lease, the terms of this Lease shall prevail.

                                      ARTICLE I

          1.1    LEASED PROPERTY.  

                 1.1.1   PARADISE VALLEY MONTESSORI PROPERTY.  Upon and subject
to the terms and conditions hereinafter set forth, Lessor leases to Lessee, and
Lessee rents and hires from Lessor all of the following (the "Paradise Valley
Montessori Property"):

                 (i)     The real property situated in the City of Phoenix,
County of Maricopa, State of Arizona, and more particularly described in EXHIBIT
"A-1" attached hereto (the "Paradise Valley Montessori Land");

                 (ii)    All buildings, structures, Fixtures (as hereinafter
defined) and other improvements of every kind including, but not limited to,
alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines
(on-site and off-site), parking areas and roadways appurtenant to such buildings
and structures presently situated upon the Paradise Valley Montessori Land,
including without limitation that certain educational facility commonly known as
"Paradise Valley Montessori School" (collectively, the "Paradise Valley
Montessori Improvements");

                 (iii)   All easements, rights and appurtenances relating to the
Paradise Valley Montessori Land and the Paradise Valley Montessori Improvements;

                 (iv)    All permanently affixed equipment, machinery, fixtures,
and other items of real and/or personal property, including all components
thereof, permanently affixed to or incorporated into the Paradise Valley
Montessori Improvements, including, without limitation, all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste disposal,
air-cooling and air conditioning systems and apparatus, sprinkler systems and
fire and theft protection equipment, all of which to the greatest extent
permitted by the law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, 

                                       1
<PAGE>

modifications, alterations and additions thereto, to the extent acquired by 
Lessor pursuant to the Paradise Valley Montessori Purchase Agreement 
(collectively the "Fixtures"); and

                 (v)     All warranties, indemnities, guaranties or other
contract rights or interests relating to the Paradise Valley Montessori
Improvements, to the extent acquired by Lessor pursuant to the Paradise Valley
Montessori Purchase Agreement.  

          Notwithstanding the foregoing, the Paradise Valley Montessori Property
shall not include any property not acquired by Lessor pursuant to the Paradise
Valley Montessori Purchase Agreement.  The Paradise Valley Montessori Property
is demised subject to all covenants, conditions, restrictions, easements, and
other matters of record, and all other matters that affect title, zoning and any
other matters set forth in that certain Title Policy issued by Stewart Title
Company concurrently with Lessor's purchase of the Paradise Valley Montessori
Property and all matters disclosed in the ALTA survey obtained in connection
with such title insurance.

                 1.1.2   PARADISE VALLEY PROPERTY.  Upon and subject to the
terms and conditions hereinafter set forth, Lessor leases to Lessee, and Lessee
rents and hires from Lessor all of the following (the "Paradise Valley
Property"):

                 (i)     The real property situated in the City of Phoenix,
County of Maricopa, State of Arizona, and more particularly described in EXHIBIT
"A-2" attached hereto (the "Paradise Valley Land");

                 (ii)    All buildings, structures, Fixtures (as hereinafter
defined) and other improvements of every kind including, but not limited to,
alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines
(on-site and off-site), parking areas and roadways appurtenant to such buildings
and structures presently situated upon the Paradise Valley Land, including
without limitation that certain educational facility commonly known as "Paradise
Valley School" (collectively, the "Paradise Valley Improvements");

                 (iii)   All easements, rights and appurtenances relating to the
Paradise Valley Land and the Paradise Valley Improvements;

                 (iv)    All permanently affixed equipment, machinery, fixtures,
and other items of real and/or personal property, including all components
thereof, permanently affixed to or incorporated into the Paradise Valley
Improvements, including, without limitation, all furnaces, boilers, heaters,
electrical equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling and
air conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, all of which to the greatest extent permitted by the law,
are hereby deemed by the parties hereto to constitute real estate, together with
all replacements, modifications, alterations and additions thereto, to the
extent acquired by Lessor pursuant to the Paradise Valley Purchase Agreement
(collectively the "Fixtures"); and

                                       2
<PAGE>

                 (v)     All warranties, indemnities, guaranties or other
contract rights or interests relating to the Paradise Valley Improvements, to
the extent acquired by Lessor pursuant to the Paradise Valley Purchase
Agreement.  

          Notwithstanding the foregoing, the Paradise Valley Property shall not
include any property not acquired by Lessor pursuant to the Paradise Valley
Purchase Agreement.  The Paradise Valley Property is demised subject to all
covenants, conditions, restrictions, easements, and other matters of record, and
all other matters that affect title, zoning and any other matters set forth in
that certain Title Policy issued by Chicago Title Company concurrently with
Lessor's purchase of the Paradise Valley Property and all matters disclosed in
the ALTA survey obtained in connection with such title insurance.

                 1.1.3   LEASED PROPERTY; LAND; LEASED IMPROVEMENTS.  The
Paradise Valley Montessori Property and the Paradise Valley Property shall
hereinafter collectively be referred to as the "Leased Property."  The Paradise
Valley Montessori Land and the Paradise Valley Land shall hereinafter
collectively be referred to as the "Land;" and the Paradise Valley Montessori
Improvements and the Paradise Valley Improvements shall collectively be referred
to as the "Leased Improvements."

          1.2    TERM.  The initial term of the Lease (the "Initial Term")
shall be the period commencing on the Commencement Date (as hereinafter defined)
as to each Leased Property and expiring on July 31, 2013.  The "Commencement
Date" is and shall be, (a) as to the Paradise Valley Montessori Property, May
29, 1998; and (b) as to the Paradise Valley Property, June 10, 1998.  Lessee has
the right to extend the term of this Lease, at Lessee's option, as provided in
Article XVIII, below.  (The Initial Term plus all validly exercised options to
extend, if any, shall be referred to herein as the "Term").

          1.3    CONTINGENCIES.  

                 1.3.1   LESSOR'S ACQUISITION OF THE PARADISE VALLEY 
PROPERTY. Lessee acknowledges and agrees that, at the time of executing this 
Lease, Lessor does not own the Paradise Valley Property, but Lessor has a 
right to purchase the Paradise Valley Property pursuant to the Paradise 
Valley Purchase Agreement. This Lease, and all obligations hereunder of 
either party, are contingent upon Lessor's acquisition of the fee simple 
interest in the Paradise Valley Property. Therefore, if Lessor has not 
acquired fee simple title to the Paradise Valley Property on or before June 
30, 1998, this Lease shall be null and void and of no force or effect 
whatsoever, and both Lessor and Lessee shall be relieved of all 
responsibility under this Lease.

                 1.3.2   CROSS-DEFAULT WITH RELATED LEASES.  Lessor and 
Lessee acknowledge and agree that it is a material inducement to Lessor's 
willingness to enter into this Lease that this Lease is cross-defaulted with 
all of the Related Leases (defined below), and that all of the Related Leases 
are cross-defaulted with this Lease.  Further, it is the parties' intention 
that this Lease be, and it hereby is, cross-defaulted with all of the Related 
Leases, and that all of the Related Leases be cross-defaulted with this 
Lease, notwithstanding the fact that certain of the Related Leases may not 
have been entered into as of the date of this Lease.  Accordingly, 

                                       3
<PAGE>

at the request of Lessor, Lessee shall promptly execute any amendments or 
other documents necessary or appropriate to amend this Lease (and/or the 
Related Leases) or otherwise to confirm that this Lease is cross-defaulted 
with all of the Related Leases, and that all of the Related Leases are 
cross-defaulted with this Lease. 

                 1.3.3   SECURITY DOCUMENTS.  Lessee acknowledges and agrees
that Lessor entered into this Lease, and agreed to the amount of Minimum Rent
payable hereunder, subject to the following conditions: (a) that, concurrently
with the execution of this Lease, and as security for Lessee's performance of
its covenants and obligations under this Lease, Lessee will be executing and
delivering to Lessor the Pledge Agreement (defined below) and the Security
Agreements (defined below) (collectively, the "Security Documents"); and (b)
effective upon execution of this Lease, and at all times during the Term hereof,
Lessor will have a valid, perfected and first-priority security interest in all
tangible and intangible collateral pledged or otherwise assigned to Lessor
pursuant to the Security Documents (collectively, the "Collateral"). 
Accordingly, it shall be an "Event of Default" under this Lease if, for any
reason whatsoever, Lessee shall fail to execute and deliver the Security
Documents as and when provided hereunder, Lessor shall fail to have a valid,
perfected and first-priority security interest in the Collateral, and such
failure or default is not cured within three (3) Business Days after Notice
thereof from Lessor, in which event, in addition to all of Lessor's remedies
available under Articles XVI and XVII or otherwise under this Lease, in equity
or by law, Lessor may terminate this Lease by giving Lessee Notice of such
termination in which event the Term shall immediately terminate and, subject to
the provisions of Articles VI and XXV, all rights of Lessee under this Lease
shall cease.

                                  ARTICLE II

     2.   DEFINITIONS.  For all purposes of this Lease, except as otherwise
expressly provided, (i) the terms defined in this Article II have the meanings
assigned to them in this Article II and include the plural as well as the
singular; (ii) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles at the time applicable; and (iii) the words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Lease as a whole and
not to any particular Article, Paragraph or other subdivision:

          ADDITIONAL CHARGES.  As defined in Article III.

          AFFILIATE.  When used with respect to any corporation, the term
"Affiliate" shall mean any person or entity (including any trust) which,
directly or indirectly, controls or is controlled by or is under common control
with such corporation.  For the purposes of this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, through the ownership
of voting securities, partnership interests or other equity interests.  For the
purposes of this definition, "person" shall mean any natural person, trust,
partnership, corporation, joint venture or other legal entity.

                                       4
<PAGE>

          BUSINESS DAY.  Each Monday, Tuesday, Wednesday, Thursday, and 
Friday, which is not a day on which national banks in the State of Arizona 
are authorized or obligated, by law or executive order, to close.

          C.P.I.  As defined in Paragraph 3.2.

          CODE.  The Internal Revenue Code of 1986, as amended.

          ENCUMBRANCE.  As defined in Article XXXIII.

          EVENT OF DEFAULT.  As defined in Article XVI.

          EXTENDED TERM.  As defined in Article XVIII.

          FACILITIES.  Collectively, these certain educational facilities
located on the Paradise Valley Montessori Property, and that certain educational
facility located on the Paradise Valley Property (each, a "Facility").

          FACILITY MORTGAGE.  As defined in Article XIII.

          FACILITY MORTGAGEE.  As defined in Article XIII.

          FISCAL YEAR.  The twelve (12) month period from July 1 through the
following June 30.

          FIXTURES.  As defined in Article I.

          IMPOSITIONS.  Collectively, all taxes (including, without limitation,
all ad valorem, sales and use, single business, gross receipts, transaction,
privilege, rent taxes, school taxes or fees or any other taxes as the same
relate to or are imposed upon Lessee or Lessor or the business conducted upon
the Leased Property), assessments (including, without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Term), water, sewer or other rents and charges, excises, tax levies, fees
(including, without limitation, license, permit, inspection, authorization and
similar fees), and all other governmental charges, in each case whether general
or special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property, Lessor, or the business conducted
thereon by Lessee (including all interest and penalties thereon due to any
failure in payment by Lessee), and all increases in all the above from any cause
whatsoever, including reassessment, which at any time prior to, during or in
respect of the Term may be assessed or imposed on or in respect of or be a lien
upon (a) Lessor's interest in the Leased Property or any part thereof; (b) the
Leased Property or any part thereof, including without limitation any personal
property located thereon or used in connection therewith, or any rent therefrom
or any estate, right, title or interest therein; or (c) any occupancy,
operation, use or possession of, or sales from, or activity conducted on, or in
connection with the Leased Property or the leasing or use of the Leased 

                                       5
<PAGE>

Property or any part thereof by Lessee.  Without limiting the foregoing, the 
term "Imposition" shall include any sales tax on rent paid under this Lease, 
tuition or other amounts received with respect to services provided at or by 
the Facilities, depreciation recapture, any other taxes (except for the 
specific exclusions stated below), fees or charges imposed by the State of 
Arizona and any potential subdivision thereof relating to the Facilities or 
the Leased Property, this Lease, or rents received under this Lease, whether 
relating to any period prior to or after the Commencement Date.  Nothing 
contained in this Lease shall be construed to require Lessee to pay (1) any 
federal, state or local income tax of Lessor, taxes based on outstanding 
corporate shares of Lessor or Lessor's equity or capitalization, regardless 
of whether denominated as an income tax, franchise tax, capital tax or 
otherwise; (2) any income or capital gain tax imposed with respect to the 
sale, exchange or other disposition, or operation, by Lessor of any Leased 
Property or the proceeds thereof; or (3) estate, inheritance or gift taxes.  

          INSURANCE REQUIREMENTS.  All terms of any insurance policy required by
this Lease and all requirements of the issuer of any such policy.

          LAND.  As defined in Paragraph 1.1.3.

          LEASE.  As defined in the Preamble.

          LEASE YEAR.  The twelve (12) month period from September 1 to August
31 in each calendar year.  In the case of the beginning of the Initial Term, the
provision "Lease Year" shall mean the period from the Commencement Date (defined
in Paragraph 1.2, above) to August 31, 1999; in the case of the end of the Term,
the provision "Lease Year" shall mean the period from the last September 1 to
occur in the Term to the date of expiration of the Lease.  The Lease Year 1998
shall mean the Commencement Date through August 31, 1999; the Lease Year 1999
shall mean September 1, 1999 through August 31, 2000, and so on.  

          LEASED IMPROVEMENTS; LEASED PROPERTY.  Each as defined in Paragraph
1.1.3.

          LEGAL REQUIREMENTS.  All federal, state, county, municipal, and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees, and injunctions affecting either the Leased Property or the
construction, use or alteration thereof whether now or hereafter enacted and in
force, including any which may (i) require repairs, modifications or alterations
in or to the Leased Property; or (ii) in any way adversely affect the use and
enjoyment thereof, and all permits, licenses and authorizations and regulations
thereto, and all covenants, agreements, restrictions, and encumbrances contained
in any instruments, either of record or known to Lessee, at any time in force
affecting the Leased Property.

          LESSEE.  The Tesseract Group, Inc., a Minnesota corporation (and any
assignee permitted subject to the terms and conditions in this Lease).

          LESSEE'S PERSONAL PROPERTY.  All machinery, equipment, furniture,
furnishings, movable walls or partitions, computers, or trade fixtures or other
personal property, and consumable inventory and supplies, owned by Lessee and
used or useful in Lessee's business 

                                       6
<PAGE>

on the Leased Property, including without limitation, all items of furniture, 
furnishings, equipment, supplies and inventory, all computer software, 
databases or other intellectual property, and any and all replacements, 
substitutions, additions or improvements thereto, whether now existing or 
hereafter acquired, save and except those items included in the Leased 
Property.

          LESSOR.  EduCorp Properties, Inc., a Nevada corporation, and its
successors and assigns.  Unless Lessee is notified by Lessor otherwise, Lessor's
address is:  300 Esplanade Drive, Suite 1860, Oxnard, California 93030,
Attention:  Pamela J. Privett, Esq.

          MINIMUM RENT.  As defined in Article III.

          NOTICE.  A notice given pursuant to Article XXXI hereof.

          OFFICER'S CERTIFICATE.  A certificate of Lessee signed by (i) Lessee's
Chief Executive Officer; AND (ii) Lessee's Chief Financial Officer.  Any
signature required above may be substituted with a signature of another person
whose power and authority to act has been authorized by an appropriate corporate
resolution, subject to Lessor's approval in its sole discretion.

          OTHER LEASES.  Any lease now existing or hereafter entered into
between Lessor (or any of its Affiliates) and Lessee (or any of its Affiliates)
relating to any educational facility in any state of the United States,
irrespective of the terms and conditions of such lease, irrespective of the date
such lease is (or was) entered into, irrespective of the total number of leases
of educational facilities by and between Lessor and Lessee, and irrespective of
the location of any such educational facilities.

          OVERDUE RATE.  On any date, a rate equal to the Prime Rate (defined
below), plus two percent (2%); provided, however, that it is the intent of
Lessor and Lessee that the Overdue Rate (and all other interest rates provided
for hereunder) be in strict compliance with applicable usury laws of the State
of Arizona, and that in the event the Overdue Rate (or other interest rate
provided for hereunder) shall be deemed to exceed that permitted to be charged
by the laws of the State of Arizona, any and all excess sums collected by Lessor
shall be credited against the Rent payable under this Lease or if there is no
Rent due, promptly refunded to Lessee.

          PARADISE VALLEY MONTESSORI PURCHASE AGREEMENT.  That certain Agreement
of Purchase and Sale and Joint Escrow Instructions, dated as of May 29, 1998,
between Lessee as "Seller" and Lessor as "Buyer" providing for Lessor's
acquisition of all of Lessee's interest in and to the Paradise Valley Montessori
Property.

          PARADISE VALLEY PURCHASE AGREEMENT.  That certain Agreement of
Purchase and Sale and Joint Escrow Instructions, dated as of even date herewith,
between Lessee as "Seller" and Lessor as "Buyer" providing for Lessor's
acquisition of all of Lessee's interest in and to the Paradise Valley Property.

                                       7
<PAGE>

          PAYMENT DATE.  Any due date for the payment of the installments of
Minimum Rent or any other payments required under this Lease.

          PLEDGE AGREEMENT.  As defined in Paragraph 3.1.2, and in the form
attached hereto as Exhibit "C."

          PRIMARY INTENDED USE.  As defined in Article VII.

          PRIME RATE.  On any date, a rate equal to the annual rate on such date
announced by Citibank, N.A. to be its prime rate for 90-day unsecured loans to
its corporate borrowers of the highest credit standing or, if not available,
such other rate as may be published by The Wall Street Journal as the prime rate
in its listing of "Money Rates."

          RELATED LEASES.  Those certain leases now existing or hereafter
entered into between Lessor (or any of its Affiliates) and Lessee (or any of its
Affiliates) relating to educational facilities with the following names in the
following locations:  (i) "The Eagan School" located at 3800 Tesseract Place, in
the City of Eagan, Minnesota; (ii) "Ahwatukee TesseracT School" located at 4515
E. Muirwood Drive, in the City of Phoenix, Arizona; and (iii) "North Scottsdale
Tesseract School" located at 9701 East Bell Road, in the City of Scottsdale,
Arizona.

          RENT.  Any and all monetary obligations of Lessee owing under this
Lease.

          SECURITY AGREEMENTS.  As defined in Paragraph 6.4, and in the form
attached hereto as Exhibit "D."

          SECURITY DOCUMENTS.  As defined in Paragraph 1.3.2.

          SUBSIDIARIES.  Corporations, of which either Lessee or Lessor owns,
directly or indirectly, more than 50% of the voting stock (individually, a
"Subsidiary").

          TERM.  Collectively, the Initial Term plus any Extended Terms, as the
context may require, unless earlier terminated pursuant to the provisions
hereof.

          UNSUITABLE FOR ITS PRIMARY INTENDED USE.  A state of condition of any
one or more of the Facilities such that by reason of damage or destruction, or a
partial taking by Condemnation, the number of students that can be accommodated
at such Facility is reduced by fifty percent (50%) or more.

          UNAVOIDABLE DELAYS.  Delays due to strikes, lock-outs, inability to
procure materials, power failure, acts of God, governmental restrictions, enemy
action, civil commotion, fire, unavoidable casualty or other causes beyond the
control of the party responsible for performing an obligation hereunder;
provided that lack of funds shall not be deemed a cause beyond the control of
either party hereto unless such lack of funds available to Lessor results from
Lessee's failure to perform any of its obligations under this Lease.

                                       8
<PAGE>

          The above does not include all the definitions to be used in this
Lease.  Various definitions of other terms are included in the other Articles of
this Lease.

                                 ARTICLE III

          3.1    RENT.  

                 3.1.1   MINIMUM RENT.  Lessee will pay to Lessor in lawful
money of the United States of America which shall be legal tender for the
payment of public and private debts, at Lessor's address set forth above or at
such other place or to such other person, firms or corporations as Lessor from
time-to-time may designate in a Notice, Minimum Rent (as defined below), during
the Term, as follows:

                         (a)    INITIAL TERM.  The annual "Minimum Rent" is the
sum of the following: (i) as to the Paradise Valley Montessori Property,
$193,450.00 (the "Paradise Valley Montessori Component of Minimum Rent"); and
(ii) as to the Paradise Valley Property, $282,800.00 (the "Paradise Valley
Component of Minimum Rent").  The Minimum Rent shall be subject to increase as
and when provided below in this Article III.  The Minimum Rent shall be paid in
advance in equal, consecutive monthly installments on the first (1st) day of
each calendar month of the Term (each, a "Minimum Rent Payment Date"); provided,
however, that if the Commencement Date occurs on a day which is not the first
(1st) day of a calendar month, then the first Minimum Rent Payment Date shall be
the Commencement Date, in which event a prorated amount of Minimum Rent shall be
payable on the Commencement Date based on the number of days from and including
the Commencement Date to the first Minimum Rent Payment Date following the
Commencement Date.  Minimum Rent shall be prorated for any partial month at the
beginning or end of the Term; and

                         (b)    EXTENDED TERMS.  The Minimum Rent during the
Extended Terms shall be as stated in Article XVIII, below.

                 3.1.2   PRE-PAYMENT OF MINIMUM RENT.  Notwithstanding the
provisions of Paragraph 3.1.1, or any other provision of this Lease to the
contrary, Lessee agrees that as additional security for Lessee's performance
under this Article III, on or prior to the commencement of each Lease Year
during the Term (the Initial Term as well as any Extended Terms) Lessee shall
deposit into an interest-bearing deposit account ("Deposit Account") with a
depository institution entirely acceptable to Lessor ("Depository Institution")
an amount equal to all Minimum Rent payable up to the first day of the
succeeding Lease Year; provided, however, that if the Commencement Date of this
Lease is on a day prior to September 1, 1998, Lessee shall make the following
deposits for the Lease Year 1998: (a) on or prior to the Commencement Date, an
amount equal to the annual Minimum Rent payable under this Lease (to wit, twelve
(12) months' of Minimum Rent); and (b) on or prior to September 1, 1998, an
amount sufficient to pay all Minimum Rent up to the first day of Lease Year 1999
(to wit, September 1, 1999).  Concurrently with each such deposit into the
Deposit Account, Lessee shall give Lessor written Notice thereof, specifying the
amount of such deposit and including a reasonably detailed breakdown of such
amount.  Pursuant to that certain Collateral Pledge 

                                       9
<PAGE>

Agreement ("Pledge Agreement"), dated as of even date herewith, by Lessee for 
the benefit of Lessor, in the form attached hereto as Exhibit "C," Lessee 
shall grant to Lessor a security interest in, among other things, all funds 
now or hereafter deposited in the Deposit Account pursuant to this Paragraph 
3.1.2, and such funds shall be pledged by Lessee to Lessor for the purpose of 
securing Lessee's payment of Minimum Rent and other amounts payable by Lessee 
under this Article III.  The Pledge Agreement shall provide that Lessor shall 
be entitled to disbursements from the Deposit Account on each Minimum Rent 
Payment Date in an amount equal to one-twelfth of the annual Minimum Rent 
owing under this Lease, without the need for further written authorization 
from Lessee, and without demand, abatement, setoff or notice, and otherwise 
upon and subject to the terms and conditions set forth under the Pledge 
Agreement.  If at any time the funds deposited in the Deposit Account are or 
will be insufficient to pay the Minimum Rent payable by Lessee for the then 
applicable Lease Year, Lessor may notify Lessee and Lessee shall immediately 
deposit an amount equal to the deficiency in the Deposit Account.  Upon the 
expiration of the Term of this Lease, and provided that Lessee is not in 
default under this Lease, and that no Rent or other payments are due to 
Lessor hereunder, Lessor shall cause all funds held in the Deposit Account to 
be refunded to Lessee.  Failure to make any deposits required hereunder as 
and when due shall be a default under this Lease.

          3.2    ANNUAL ESCALATION OF MINIMUM RENT.  Commencing on the first
day of Lease Year 1999 (to wit, September 1, 1999), and continuing on the first
day of each subsequent Lease Year during the Term (the Initial Term as well as
any Extended Terms) (each, an "Escalation Date"), the Minimum Rent (irrespective
of any prorations made pursuant to Paragraph 3.1(a) of this Lease) shall
increase by an amount equal to the Minimum Rent for the immediately preceding
twelve (12) month period multiplied by an amount ("Annual Multiplier") equal to
one hundred fifty percent (150%) of the following fraction:  (i) the numerator
of which shall be the C.P.I. (defined below) for the second month preceding the
month in which such Escalation Date occurs (for example, if the Escalation Date
is September 1, 1999, then the C.P.I. from July 1999 shall be used); and (ii)
the denominator of which shall be the C.P.I. for the second month preceding the
month in which the prior year's Escalation Date occurred (or, in the case of the
first Escalation Date, the C.P.I. for the month of July, 1998); PROVIDED,
HOWEVER, that the Annual Multiplier shall not ever exceed two percent (2%) per
year, nor shall it ever result in a decrease in the Minimum Rent payable
hereunder.  "C.P.I." shall mean and refer to the Consumer Price Index published
as the "CPI-U" index by the Bureau of Labor Statistics of the Department of
Labor, U.S. Cities Average, All Items (1982-84 = 100) in the manner calculated
as of the date of this Lease; provided that if compilation of the C.P.I. is
discontinued or transferred to any other governmental department or bureau, then
the index most nearly the same as the C.P.I. shall be used.

          3.3    ADDITIONAL CHARGES.  In addition to the Minimum Rent, (1)
Lessee will also pay and discharge as and when due and payable all other
amounts, liabilities, obligations and Impositions which Lessee assumes or agrees
to pay under this Lease, and (2) in the event of any failure on the part of
Lessee to pay any of those items referred to in the immediately preceding clause
(1) above, Lessee will also promptly pay and discharge every fine, penalty,
interest and cost which may be added for non-payment or late payment of such
items (the items referred to in clauses (1) and (2) above being referred to
herein collectively as the "Additional 

                                       10
<PAGE>

Charges"), and Lessor shall have all legal, equitable and contractual rights, 
powers and remedies provided either in this Lease or by statute or otherwise 
in the case of non-payment of the Additional Charges.  If any elements of 
Additional Charges shall not be paid within seven (7) Business Days after its 
due date and Lessor pays any such amount (which Lessor shall have the right, 
but not the obligation, to do), then, in addition to Lessor's other rights 
and remedies, Lessee will pay Lessor on demand, as Additional Charges, 
interest on such unpaid Additional Charges computed at the Overdue Rate from 
the due date of such installment to the date of Lessee's payment thereof.  

          3.4    NET LEASE.  Subject to the provisions of Article V, below,
without limiting any provision of this Lease, the Rent shall be paid absolutely
net to Lessor, so that this Lease shall yield to Lessor the full amount of the
installments of Minimum Rent throughout the Term, all as more fully set forth in
Articles IV, VIII, IX and XIII, and other provisions of this Lease, so that,
accordingly, Lessee shall pay all Additional Charges and any other expenses of
any kind associated with this Lease and the Leased Property to insure that
Lessor receives the Minimum Rent, net of all expenses.  Further, Lessee shall be
responsible for all Additional Charges and all other amounts due under this
Lease for any period prior to the Term. 

          3.5    LATE CHARGE.  LESSEE HEREBY ACKNOWLEDGES THAT LATE PAYMENT BY
LESSEE TO LESSOR OF RENT (INCLUDING WITHOUT LIMITATION MINIMUM RENT AND
ADDITIONAL CHARGES) WILL CAUSE LESSOR TO INCUR COSTS NOT CONTEMPLATED BY THIS
LEASE, THE EXACT AMOUNT OF WHICH WILL BE EXTREMELY DIFFICULT TO ASCERTAIN.  SUCH
COSTS INCLUDE, BUT ARE NOT LIMITED TO, PROCESSING AND ACCOUNTING CHARGES. 
ACCORDINGLY, IF ANY INSTALLMENT OF MINIMUM RENT OR ANY OTHER SUM DUE FROM LESSEE
SHALL NOT BE RECEIVED BY LESSOR WITHIN FIVE (5) BUSINESS DAYS AFTER SUCH AMOUNT
SHALL BE DUE, THEN WITHOUT ANY REQUIREMENT FOR NOTICE TO LESSEE, LESSEE SHALL
PAY TO LESSOR A LATE CHARGE EQUAL TO FIVE PERCENT (5%) OF SUCH OVERDUE AMOUNT. 
THE PARTIES HEREBY AGREE THAT SUCH LATE CHARGE REPRESENTS A FAIR AND REASONABLE
ESTIMATE OF THE COSTS LESSOR WILL INCUR BY REASON OF LATE PAYMENT BY LESSEE. 
ACCEPTANCE OF SUCH LATE CHARGE BY LESSOR SHALL IN NO EVENT CONSTITUTE A WAIVER
OF LESSEE'S DEFAULT OR BREACH WITH RESPECT TO ANY UNPAID OVERDUE AMOUNTS, NOR
PREVENT LESSOR FROM EXERCISING ANY OF THE OTHER RIGHTS AND REMEDIES GRANTED
UNDER THIS LEASE WITH RESPECT TO ANY SUCH UNPAID OVERDUE AMOUNTS.

                                     ARTICLE IV

          4.1    PAYMENT OF IMPOSITIONS.  Subject to the provisions of
Paragraph 4.6, Lessee will pay, or cause to be paid, all Impositions coming due
prior to or during the Term, or which relate to any period within the Term or
prior to the Term, before any fine, penalty, interest or cost may be added for
non-payment (or earlier if required by any taxing authority), such payments to
be made directly to the taxing authorities where feasible, and will promptly

                                       11
<PAGE>

furnish to Lessor copies of official receipts or other satisfactory proof 
evidencing such payments.  Lessee's obligation to pay Impositions shall be 
deemed absolutely fixed upon the date such Impositions become a lien upon the 
Leased Property or any part thereof.  Lessee, at its expense, shall, to the 
extent required or permitted by Legal Requirements, prepare and file all tax 
returns and reports in respect of any Imposition as may be required by 
governmental authorities.  If any refund shall be due from any taxing 
authority in respect of any Imposition, the same shall be paid over to or 
retained by Lessee if no Event of Default shall have occurred hereunder and 
be continuing, but if such Event of Default has occurred and is continuing 
(I.E., it has not been cured), such refund shall be paid to Lessor and 
utilized to cure any such continuing Event of Default.  After fully curing 
such Event of Default, any excess funds from such refund shall be paid by 
Lessor to Lessee.  Any such funds retained by Lessor, as provided above, 
shall be applied as provided in Article XVI.  Lessor and Lessee shall, upon 
request of the other, provide such data as is maintained by the party to whom 
the request is made with respect to the Leased Property as may be necessary 
to prepare any required returns and reports. In the event governmental 
authorities classify any property covered by this Lease as personal property, 
Lessee shall file all personal property tax returns in such jurisdictions 
where it must legally so file.  Lessor, to the extent it possesses the same, 
and Lessee, to the extent it possesses the same, will provide the other 
party, upon request, with cost and depreciation records necessary for filing 
returns for any property so classified as personal property.  Where Lessor is 
legally required to file personal property tax returns, Lessee will provide 
to Lessor copies of assessment notices indicating a value in excess of the 
reported value in sufficient time for Lessor to file a protest.  Lessee may, 
upon notice to Lessor, at Lessee's option and at Lessee's sole cost and 
expense, protest, appeal or institute such proceedings as Lessee may deem 
appropriate to effect a reduction of real estate or personal property 
assessments and Lessor, at Lessee's sole cost and expense as aforesaid, shall 
fully cooperate with Lessee in such protest, appeal, or other action, 
provided that Lessee may not withhold payments pending such challenges except 
under the conditions set forth in Article XII.  Billings for reimbursement by 
Lessee to Lessor of personal property taxes shall be accompanied by copies of 
a bill therefor and payments thereof which identify the personal property 
with respect to which such payments are made.  Unless Lessee is notified by 
Lessor otherwise, Lessee shall pay all Impositions directly to the 
appropriate taxing or other authorities to which payments are due, and Lessee 
shall provide Lessor written evidence and notice that all such payments have 
been made.  Without limiting any of the other indemnities set forth in this 
Lease, Lessee hereby agrees to defend, indemnify, protect and hold harmless 
Lessor in connection with any Impositions that relate to any time prior to or 
during the Term, and Lessee acknowledges and agrees that it will not make 
claims against, or otherwise look to, Lessor to reimburse Lessee for payments 
made relating to any period prior to the Commencement Date.  

          4.2    NOTICE OF IMPOSITIONS.  Lessor shall give prompt Notice to
Lessee for all Impositions payable by Lessee hereunder of which Lessor has
knowledge, but Lessor's failure to give any such Notice shall in no way diminish
Lessee's obligations hereunder to pay such Impositions, but such failure shall
obviate any default hereunder for a reasonable time after Lessee receives notice
(from any source) of any Imposition which it is obligated to pay.  However,
notwithstanding the foregoing, it shall be Lessee's sole duty to inquire and
determine 

                                       12
<PAGE>

all of the Impositions for which it is liable as provided herein and shall 
promptly pay such Impositions when due, and Lessor shall have no duty of 
inquiry concerning Impositions.

          4.3    UTILITY CHARGES.  Lessee will pay or cause to be paid all
charges for electricity, power, gas, oil, water, sewer connection and all other
utilities used in or for the Leased Property during the Term.

          4.4    INSURANCE PREMIUMS.  Subject to the provisions of Paragraph
4.6, Lessee will pay or cause to be paid all premiums for the insurance coverage
required to be maintained pursuant to Article XIII during the Term.

          4.5    PAYABLES.  Lessee acknowledges and agrees that prior to the
Commencement Date, certain liabilities and other obligations were incurred
arising from the development, construction and operation of the Facilities for
which Lessee is and shall remain responsible and liable and Lessor shall have no
responsibility, liability or obligation whatsoever with respect to the same. 
Therefore, Lessee agrees as part of this Lease to pay all liabilities and
obligations concerning the Facilities, whether arising before or after the
Commencement Date.

          4.6    PRE-PAYMENT OF IMPOSITIONS AND INSURANCE PREMIUMS. 
Notwithstanding the provisions of Paragraph 4.1 or 4.4, or any other provision
of this Lease to the contrary, Lessee agrees that as additional security for
Lessee's performance under this Article IV, on or prior to the commencement of
each Lease Year during the Term (the Initial Term as well as any Extended
Terms), Lessee shall pay all Impositions payable by Lessee under Paragraph 4.1
and all insurance premiums payable by Lessee under Paragraph 4.4 up to the first
day of the succeeding Lease Year, and shall furnish Lessor with evidence
satisfactory to Lessor that the same have been paid; provided, however, that (a)
to the extent that such Impositions payable by Lessee under Paragraph 4.1 cannot
be paid in full for any Lease Year for any reason outside of the control of
Lessee, then on or prior to the first day of such Lease Year, Lessee shall
deposit into the Deposit Account an amount sufficient, as estimated by Lessor in
its reasonable discretion, to pay all such Impositions payable up to the first
day of the succeeding Lease Year, and (b) Lessee may elect not to pay in full
all insurance premiums payable by Lessee under Paragraph 4.4 through the first
day of the succeeding Lease Year, in which event Lessee shall deposit into the
Deposit Account an amount sufficient, as estimated by Lessor in its reasonable
discretion, to pay for all additional amounts necessary to pay all such
insurance premiums up to the first day of the succeeding Lease Year. 
Concurrently with each such deposit into the Deposit Account, Lessee shall give
Lessor written Notice thereof, specifying the amount of such deposit and
including a reasonably detailed breakdown of such amount.  Pursuant to the
Pledge Agreement, Lessee shall grant to Lessor a security interest in, among
other things, all funds now or hereafter deposited in the Deposit Account
pursuant to this Paragraph 4.6, and such funds shall be pledged by Lessee to
Lessor as security for the payment of the Impositions payable under Paragraph
4.1 and the insurance premiums payable under Paragraph 4.4, and as otherwise
provided thereunder.  The Pledge Agreement shall provide that Lessee shall be
entitled to withdraw and use funds in the Pledge Account for payment of
Impositions payable by Lessee under Paragraph 4.1 and for payment of insurance
premiums payable by Lessee under Paragraph 4.4, upon and subject to the terms
and conditions set forth under the Pledge Agreement.  If at 

                                       13
<PAGE>

any time the funds deposited in the Deposit Account are or will be 
insufficient to pay the Impositions payable by Lessee under Paragraph 4.1 for 
the then applicable Lease Year, or to pay all insurance premiums payable by 
Lessee under Paragraph 4.4 for the then applicable Lease Year, Lessor may 
notify Lessee and Lessee shall immediately deposit an amount equal to the 
deficiency in the Deposit Account. Upon the expiration of the Term of this 
Lease, and provided that Lessee is not in default under this Lease, and that 
no Rent or other payments are due to Lessor hereunder, Lessor shall cause all 
funds held in the Deposit Account to be refunded to Lessee.  Failure to make 
any deposits required hereunder as and when due shall be a default under this 
Lease.

                                  ARTICLE V

          5.1    NO TERMINATION, ABATEMENT, ETC.  Subject to the provisions of
Paragraph 5.2, Lessee shall not be entitled to any abatement, deduction,
deferment or reduction of Rent, or set-off against the Rent, nor shall the
respective obligations of Lessor and Lessee be otherwise affected by reasons of
(a) any damage to, or destruction of, any Leased Property or any portion
thereof; (b) the lawful or unlawful prohibition of, or restriction upon,
Lessee's use of the Leased Property, or any portion thereof, the interference
with such use by any person, corporation, partnership or other entity, or by
reason of eviction by paramount title; (c) any claim which Lessee has or might
have against Lessor or by reason of any default or breach of any warranty by
Lessor under this Lease or any other agreement between Lessor and Lessee, or to
which Lessor and Lessee are parties; (d) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding-up
or other proceedings affecting Lessor or any assignee or transferee of Lessor;
or (e) for any other cause whether similar or dissimilar to any of the foregoing
other than a discharge of Lessee from any such obligations as a matter of law. 
Lessee hereby specifically waives all rights, arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law to (i)
modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof; or (ii) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent payable under this Lease.  The
obligations of Lessor and Lessee hereunder shall be separate and independent
covenants and agreements and the Rent due under this Lease shall continue to be
payable in all events, irrespective of Lessor's performance or non-performance
under this Lease, unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.

          5.2    ABATEMENT PROCEDURES.  In the event Lessee is entitled to an
abatement of Minimum Rent under Article XV (by reason of any Condemnation as
provided thereunder), the Lease shall not terminate (except as provided in
Article XV) but the Minimum Rent shall be abated in proportion to the reduced
capacity of the Leased Property for the use made of the same by Lessee at the
time of the Condemnation (I.E., the reduction in the number of students the
Leased Property can accommodate under standards existing immediately prior to
the Condemnation).  If Lessor and Lessee are unable to agree upon the amount of
such abatement within thirty (30) days after any partial taking as provided
under Article XV, the matter shall be submitted by either party to a court of
competent jurisdiction for resolution, but Lessee 

                                       14
<PAGE>

during such resolution shall continue to perform its obligations hereunder, 
including, but not limited to, payment of that portion of the Minimum Rent 
which is not then in dispute.

                              ARTICLE VI

          6.1    OWNERSHIP OF THE LEASED PROPERTY.  Lessee acknowledges and
agrees that the Leased Property is the property of Lessor and that Lessee has
only the right to the exclusive possession and use of the Leased Property upon
the terms and conditions of this Lease.

          6.2    LESSEE'S PERSONAL PROPERTY.  Lessee may (and shall as provided
hereinbelow), at its expense, install, assemble or place on any parcels of the
Land or in any of the Leased Improvements, any items of Lessee's Personal
Property.  Lessee shall provide and maintain during the entire Term all such
Lessee's Personal Property as shall be necessary in order to operate each of the
Facilities, (a) in a manner consistent with the standard of operation for such
Facility as of the Commencement Date of this Lease with respect to each such
Facility, (b) in compliance with accreditation requirements (if such Facility
has obtained accreditation), (c) as to the elementary school (that is,
kindergarten through grade four) located on the Paradise Valley Montessori
Property, in compliance with all requirements of the charter school legislation
for the State of Arizona and the requirements of the particular charter
applicable to such Facility, (d) in compliance with all other applicable Legal
Requirements and Insurance Requirements, and (e) otherwise in accordance with
customary practice in the industry for the Primary Intended Use.  On or prior to
the commencement of each Lease Year during the Term, Lessee shall provide Lessor
with an updated list identifying in reasonable detail all of Lessee's Personal
Property located at, or used in connection with, the Leased Property listed by
the Facility or other location at which such Lessee's Personal Property is
located.  Notwithstanding the foregoing, the parties acknowledge and agree that,
pursuant to those certain Security Agreements ("Security Agreements"), executed
by Lessee for the benefit of Lessor, in the form attached hereto as Exhibit "D"
(one of which relates to the Paradise Valley Montessori Property and the other
of which relates to the Paradise Valley Property), Lessee has granted to Lessor
a security interest in, among other things, all of Lessee's Personal Property
and all Consumable Inventory (defined in Paragraph 6.3 below).  To the extent
that Lessor elects not to purchase Lessee's Personal Property pursuant to its
Purchase Option contained in Paragraph 6.4 below, Lessee shall remove the same
upon the expiration of the Term, and Lessee shall, within twenty (20) days
following the expiration of this Lease, at its sole cost and expense, repair any
damage to the Land or the Leased Improvements occasioned by the installation,
maintenance or removal thereof, and restore the Land or Leased Improvements to
its condition immediately prior to any such installation.

          6.3    CONSUMABLE INVENTORY.  Lessor and Lessee acknowledge that
certain inventory, including consumables, located at each of the Facilities as
of the Commencement Date ("Consumable Inventory") will be completely consumed or
otherwise disposed of during the course of Lessee's operation of each such
Facility.  Lessee agrees that, at all times during the Term, Lessee shall
replace and restore the Consumable Inventory in accordance with normal business
practices, so that at all times during the Term there is sufficient Consumable
Inventory 

                                       15
<PAGE>

to fully equip such Facility for its operation and maintenance as may be 
customary for educational facilities comparable to such Facility.

          6.4    LESSOR'S PURCHASE OPTION.  Without limiting Lessor's rights
and remedies under the Security Agreement or otherwise under this Lease, and as
a material consideration to Lessor's agreement to enter into this Lease, Lessee
hereby grants to Lessor the option ("Purchase Option") to purchase Lessee's
Personal Property and Consumable Inventory, in whole or in part, which Purchase
Option may be exercised by Lessor effective as of the expiration of the Term (or
the Extended Term, as the case may be), for a purchase price ("Option Purchase
Price") equal to the lower of (a) the book value thereof, as determined in
accordance with GAAP and based upon audited financial statements, as of the time
of Lessor's exercise of its Purchase Option; and (b) the fair market value
thereof, as of the time of Lessor's exercise of its Purchase Option.  In the
event Lessor desires to exercise its Purchase Option granted under this
Paragraph 6.4, Lessor shall give Lessee written Notice ("Notice of Exercise")
not less than thirty (30) days prior to the expiration of the Term, which Notice
of Exercise shall identify with reasonable specificity all items of Lessee's
Personal Property and Consumable Inventory which Lessor desires to purchase
(collectively, the "Purchase Option Property") and Lessor's estimation of the
Option Purchase Price applicable thereto.  Upon the termination of this Lease,
Lessee shall transfer and convey to Lessor all Purchase Option Property, by
execution and delivery of a bill of sale or other instrument acceptable to
Lessor, and, subject to the conditions set forth below, Lessor shall pay to
Lessee the Option Purchase Price.  Lessor shall have the right to inspect the
Lessee's Personal Property and Consumable Inventory, and Lessee's books and
records concerning the same, for any purpose in connection with preparation of
the Notice of Exercise or otherwise in connection with Lessee's Purchase Option
granted hereunder, on at least one Business Day's prior notice during usual
business hours, and Lessee shall cooperate with Lessor in connection therewith. 
Lessee shall have five (5) days after receipt of Lessor's Notice of Exercise
within which to give Lessor written notice of its objection to any items or
information, including without limitation Lessor's estimate of the Option
Purchase Price, contained on Lessor's Notice of Exercise.  In the event that
Lessee notifies Lessor of any objection within such five (5) day period, and the
parties fail to resolve any disagreement regarding the Notice of Exercise by the
date of termination of this Lease, the conveyance of the Purchase Option
Property shall occur upon expiration of the Term as contemplated hereunder for a
purchase price equal to the book value thereof, as determined in accordance with
GAAP and based upon audited financial statements, and the parties shall
thereafter submit any disputes to an auctioneer or state certified party with at
least five years experience appraising personal property for resolution.  Any
overpayment or deficiency between the book value and the Option Purchase Price
shall be paid to the party to whom the same is owing within thirty (30) days
after determination thereof.  Without limiting the foregoing, Lessee agrees to
perform such other acts, and to execute, acknowledge and/or deliver subsequent
to the expiration or earlier termination of the Term, all such instruments,
documents and materials, as Lessor may reasonably request in order to effectuate
Lessor's exercise of the Purchase Option contemplated hereunder.

                                       16
<PAGE>


                                     ARTICLE VII

     7.1    CONDITION OF LEASED PROPERTY.  Lessee acknowledges receipt and
delivery of possession of the Leased Property and further acknowledges that
Lessee has examined and otherwise has knowledge of the condition of the Leased
Property prior to the execution and delivery of this Lease and has found the
same to be in good order and repair and satisfactory for it purposes hereunder. 
Lessee represents and warrants that the Lessee's Personal Property includes all
equipment and property required under applicable federal and state law to
operate each of the Facilities.  Lessee is leasing the Leased Property "AS-IS"
in its present condition.  Lessee waives any claim or action against Lessor in
respect of the condition of the Leased Property.  LESSOR MAKES NO WARRANTY OR
REPRESENTATIONS, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY
PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR THE
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH
RISKS ARE TO BE BORNE BY LESSEE.  LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY
HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT.  WITHOUT LIMITING THE
FOREGOING, IT SHALL BE LESSEE'S RESPONSIBILITY TO DETERMINE THE AMOUNT OF
REIMBURSEMENT AND OTHER PAYMENTS THAT IT MAY BE ENTITLED RECEIVE FROM THE
FEDERAL, STATE OR LOCAL GOVERNMENTS AND LESSEE'S OBLIGATIONS UNDER THIS LEASE
SHALL NOT BE MODIFIED, CHANGED OR OTHERWISE BE REDUCED IN THE EVENT THAT LESSEE
HAS INCORRECTLY ANALYZED THE AMOUNTS TO BE PAID TO LESSEE BY ANY GOVERNMENT OR
AGENCY THEREOF.

     7.2     USE OF THE LEASED PROPERTY.

                 7.2.1   Lessee covenants that it will obtain and, at all times
during the Term, maintain all charters (as to the elementary/middle school
Facility located on the Paradise Valley Montessori Property only), licenses,
permits and approvals necessary or desirable for the use and operation of the
Leased Property and each of the Facilities located thereon under applicable
federal, state and local law, and to use reasonable best efforts to obtain and
thereafter maintain the full accreditation of the Facilities.  Lessee shall
provide to Lessor, at Lessor's request a copy of any report or survey conducted
by any federal, state or local government entity regarding any of the
Facilities, and any other such information or documents concerning the operation
of the Facilities.

                 7.2.2   After the Commencement Date and during the entire Term,
Lessee shall use or cause to be used the Leased Property as follows: (a) as to
the Paradise Valley Montessori Property, as a pre-school having all licenses,
permits and approvals necessary to operate a pre-school in the State of Arizona
and as an educational facility having all charters, licenses, permits and
approvals necessary to operate a charter school under the charter school
legislation for the State of Arizona and uses incidental to each of the
foregoing; and (b) as to the Paradise Valley Property, as an educational
facility having all licenses, permits and approvals necessary to operate a
private pre-school and elementary/middle school (serving kindergarten 

                                      17
<PAGE>

and certain higher grades) in the State of Arizona and uses incidental to the 
foregoing (the particular such use to which the Leased Property is put at any 
particular time is herein referred to as the "Primary Intended Use").  Lessee 
shall not use the Leased Property or any portion thereof for any other use 
without the prior written consent of Lessor, which consent may be withheld in 
Lessor's sole and absolute discretion.  No use shall be made of the Leased 
Property, and no acts shall be done, which will cause the cancellation of any 
insurance policy, or permit to be kept, used or sold in or about the Leased 
Property any article which may be prohibited by law or by the standard form 
of fire insurance policies, or any other insurance policies required to be 
carried hereunder, or fire underwriter's regulations.  Lessee shall, at its 
sole cost, comply with all of the requirements pertaining to the Leased 
Property or other improvements of any insurance board, association, 
organization, or company necessary for the maintenance of insurance, as 
herein provided, covering the Leased Property and Lessee's Personal Property.

                 7.2.3   Lessee covenants and agrees that during the Term (a) it
will operate continuously the Leased Property in accordance with its Primary
Intended Use and all applicable permits, licenses and approvals; (b) as to the
elementary/middle school located on the Paradise Valley Montessori Property, it
will obtain and maintain its charter to operate said school as a charter school;
and (c) it will apply for, use reasonable best efforts to obtain, and thereafter
maintain its accreditation as to the elementary/middle schools located on each
of the Leased properties.

                 7.2.4   Lessee covenants and agrees that all so-called
"classroom" teachers for all elementary school grades, commencing with
kindergarten and continuing through any higher grade served by the Facilities,
are, and at all times during the Term will be, certified under applicable state
law.

                 7.2.5   Lessee shall not commit or suffer to be committed any
waste on the Leased Property, or in the Facilities nor shall Lessee cause or
permit any nuisance thereon.

                 7.2.6   Lessee shall neither suffer nor permit the Leased
Property or any portion thereof, including Lessee's Personal Property, to be
used in such a manner as (i) might reasonably tend to impair Lessor's (or
Lessee's, as the case may be), title thereto or to any portion thereof; or (ii)
may reasonably make possible a claim or claims of adverse usage or adverse
possession by the public, as such, or of implied dedication of the Leased
Property or any portion thereof.

          7.3    RADIUS RESTRICTION; RIGHT OF FIRST REFUSAL.  Lessee
acknowledges that a fair return to Lessor on its investment in the Leased
Property is dependent, in part, on the concentration on the Leased Property
during the Term of the educational services and facilities provided by Lessee
and its Affiliates in the geographical area of the Leased Property. 
Accordingly, as a material inducement to Lessor's agreement to enter into this
Lease, Lessee agrees as follows:

                 7.3.1   During the Term, neither Lessee nor any of its
Affiliates, directly or indirectly, shall operate, own, manage or have any
interest in or otherwise participate in or receive revenues from any other
facility or institution providing services similar to those 

                                       18
<PAGE>

provided in connection with the Facilities and the Primary Intended Use, 
within a ten (10) mile radius outward from the outside boundary of the Leased 
Property, without the prior consent of Lessor, which consent may be given or 
withheld in Lessor's sole discretion; provided, however, that the foregoing 
restriction shall not apply to those facilities owned by Lessee and listed on 
Exhibit "E" attached hereto and incorporated herein.  All distances shall be 
measured on a straight line rather than on a driving distance basis.  In the 
event that any portion of such other facility or institution is located 
within such restricted area the entire facility or institution shall be 
deemed located within such restricted area.

                 7.3.2   Without limiting the provisions set forth in
subparagraph 7.3.1 above, Lessee agrees that concurrently with any request for
Lessor's consent to Lessee's (or any of its Affiliates') operation or investment
in any facility or institution as required under subparagraph 7.3.1, Lessee
shall notify Lessor of any financing that Lessee may desire in connection with
such facility.  Prior to Lessee's committing to financing with any other lender
or investor, Lessee shall notify Lessor of the proposed terms of such financing,
and provide Lessor with a copy of any nonbinding term sheet or any other
information as may be reasonably requested by Lessor, and Lessor (or any of its
Affiliates) shall have the right (to be exercised not later than ten (10)
Business Days following the receipt by Lessor of the requested information) to
provide financing for the facility on the same terms and conditions as proposed
by such lender.  In the event Lessor fails to timely exercise its right of first
refusal to provide financing on such terms and conditions, Lessor shall be
deemed to have waived such right, except that if the proposed transaction does
not occur within thirty (30) days after the date set forth in the information
provided to Lessor, or if the terms and conditions of such financing are
materially changed from those set forth on the information provided to Lessor,
this right of first refusal shall be deemed applicable to said transaction.  It
is further understood that, in the event Lessor (or any of its Affiliates) does
not exercise its right of first refusal, this provision shall nevertheless be
applicable to any further or future transfer which is subject to subparagraph
7.3.1.
   
                                     ARTICLE VIII

          8.1    COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS,
ETC.  Subject to Article XII relating to permitted contests, Lessee, at its sole
cost and expense, will promptly (a) comply with all applicable Legal
Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair, and restoration of the Leased Property, whether or not
compliance therewith shall require structural changes in any of the Leased
Improvements or interfere with the use and enjoyment of the Leased Property; and
(b) procure, maintain and comply with all charters, licenses, permits and other
approvals, if any, required for any use of the Leased Property and Lessee's
Personal Property then being made, and for the proper erection, installation,
operation, and maintenance of the Leased Property or any part thereof.

          8.2    LEGAL REQUIREMENT COVENANTS.  Lessee covenants and agrees that
the Leased Property and Lessee's Personal Property shall not be used for any
unlawful purpose.  Lessee further warrants and represents that Lessee has
obtained all necessary governmental 

                                     19
<PAGE>

approvals and has given all necessary notices to allow Lessee to operate the 
Leased Property for its Primary Intended Use.  Lessee shall acquire and 
maintain all charters, licenses, permits and approvals necessary or desirable 
for the use and operation of the Leased Property in its customary manner for 
the Primary Intended Use, and any other use conducted on the Leased Property 
as may be permitted by Lessor from time-to-time hereunder.  Lessee further 
covenants and agrees that Lessee's use of the Leased Property and 
maintenance, alteration and operation of the same, and all parts thereof, 
shall at all times conform to all applicable federal, state and local laws, 
ordinances, rules, and regulations unless the same are held by a court of 
competent jurisdiction to be unlawful.  Lessee, may, however, upon prior 
written notice to Lessor, contest the legality or applicability of any such 
law, ordinance, rule, or regulation, or any licensure or certification 
decision if Lessee maintains such action in good faith, with due diligence, 
without prejudice to Lessor's rights hereunder, and at Lessee's own expense.  
If by the terms of any such law, ordinance, rule or regulation, compliance 
therewith pending the prosecution of any such proceeding may legally be 
delayed without the incurrence of any fine, charge or liability of any kind 
against the Leased Property, including the Facilities, or Lessee's leasehold 
interest therein and without subjecting Lessor to any liability, civil or 
criminal, for failure so to comply therewith, Lessee may delay compliance 
therewith until the final determination of such proceeding.  If any lien, 
charge or civil or criminal liability would be incurred by reason of any such 
delay, Lessee, on the prior written consent of Lessor, may nonetheless 
contest as aforesaid and delay as aforesaid provided that such delay would 
not subject Lessor to criminal liability and Lessee both (a) furnishes to 
Lessor security reasonably satisfactory to Lessor against any loss or injury 
by reason of such contest or delay; and (b) prosecutes the contest 
continuously, with due diligence and in good faith.

                                     ARTICLE IX

          9.1    MAINTENANCE AND REPAIR.

                 9.1.1   Lessee, at its sole cost and expense, will keep the
Leased Property and Lessee's Personal Property and all private roadways,
sidewalks and curbs appurtenant thereto and which are under Lessee's control in
good order and repair (whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of the Leased
Property, or any portion thereof), and, except as otherwise provided in Article
XIV, with reasonable promptness, make all necessary and appropriate repairs
thereto of every kind and nature, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition existing prior to the Commencement Date (concealed or
otherwise).  All repairs shall, to the extent reasonably achievable, be at least
equivalent in quality to the original work.  Lessee will not take or omit to
take any action the taking or omission of which may materially or adversely
impair the value or the usefulness of the Leased Property or any part thereof
for its Primary Intended Use.  Any repair work performed by Lessee shall be paid
for so that no lien (I.E., mechanics', materialmen's or other liens) shall
attach to the Leased Property, subject to the provisions of Article XII.

                 9.1.2   Lessor shall not under any circumstances be required in
connection with this Lease to build or rebuild any improvements on the Leased
Property, or to make any 

                                       20
<PAGE>

repairs, replacements, alterations, restorations, or renewals of any nature 
or description to the Leased Property, whether ordinary or extraordinary, 
structural or non-structural, foreseen or unforeseen, or to make any 
expenditure whatsoever with respect thereto, or to maintain the Leased 
Property in any way.  Lessee hereby waives, to the extent permitted by law, 
the right to make repairs at the expense of Lessor pursuant to any law in 
effect at the time of the execution of this Lease or hereafter enacted.  
Lessor shall have the right to give, record and post, as appropriate, notices 
of non-responsibility (or similar notices) under any mechanics' or 
materialmen's lien laws now or hereafter existing.

                 9.1.3   Lessee shall not make any modifications, alterations 
or improvements to the Leased Improvements or any portion thereof, whether by 
addition or deletion, without Lessor's prior written consent, which consent 
may be given or withheld in Lessor's sole and absolute discretion; provided 
that Lessor shall not unreasonably withhold its consent to any non-structural 
modifications, alterations or improvements that do not constitute capital 
improvements and that are otherwise made in compliance with this Lease, so 
long as the total cost thereof does not exceed $50,000 and the total cost in 
any twelve (12) month period does not exceed $100,000.  Nothing contained in 
this Lease and no action or inaction by Lessor shall be construed as (i) 
constituting the consent or request of Lessor, express or implied, to any 
contractor, sub-contractor, laborer, materialman, or vendor to or for the 
performance of any labor or services or the furnishing of any materials or 
other property for the construction, alteration, addition, repair, or 
demolition of, or to the Leased Property or any part thereof; or (ii) giving 
Lessee any right, power or permission to contract for or permit the 
performance of any labor or services or the furnishing of any materials or 
other property in such fashion as would permit the making of any claim 
against Lessor in respect thereof or to make any agreement that may create, 
or in any way be the basis for any right, title, interest, lien, claim, or 
other encumbrance upon the estate of Lessor in the Leased Property, or any 
portion thereof.  Lessor shall have the right to give, record and post, as 
appropriate, notices of non-responsibility (or similar notices) under any 
mechanics' or materialmen's lien laws now or hereafter existing.

                 9.1.4   Lessee will, upon the expiration or prior termination
of the Term, vacate and surrender the Leased Property in the condition in which
the Leased Property was originally received from Lessor, except as repaired,
rebuilt, restored, altered or added to as permitted or required under this Lease
and except for ordinary wear and tear (subject to the obligation of Lessee to
maintain the Leased Property in good order and repair during the entire Term).

          9.2    EXPENDITURES TO COMPLY WITH LAW.  Without limiting Lessee's 
other obligations, during the Term of this Lease, Lessee will, at its 
expense, make whatever expenditures (including, but not limited to capital 
and non-capital expenditures) that are required to conform the Leased 
Property to such standards as may from time-to-time be required by federal, 
state or local law or regulation, whether in connection with state 
accreditation requirements, charter school legislation (if applicable) or any 
other applicable programs or legislation, or capital improvements required by 
any other governmental agency having jurisdiction over the Leased Property as 
a condition of the continued operation of the Leased Property during the Term 
(as extended) as an educational facility pursuant to present or future 

                                     21
<PAGE>

laws or governmental regulation.  Lessor shall not unreasonably withhold its 
consent to any expenditures or capital improvements made by Lessee pursuant 
to this Paragraph 9.2 and otherwise made in compliance with this Lease.

          9.3    ENCROACHMENTS, RESTRICTIONS, ETC.  If any of the Leased 
Improvements shall, at any time, encroach upon any property, street or 
right-of-way adjacent to the Leased Property, or shall violate the agreements 
or conditions contained in any lawful restrictive covenant or other agreement 
affecting the Leased Property, or any part thereof, or shall impair the 
rights of others under any easement or right-of-way to which the Leased 
Property is subject, then promptly upon the request of Lessor at the behest 
of any person affected by any such encroachment, violation or impairment, 
Lessee shall, at its sole cost and expense, (and after Lessor's prior 
approval) subject to Lessee's right to sue Lessor's predecessors in title 
with respect thereto or to contest the existence of any such encroachment, 
violation or impairment and, in such case, in the event of an adverse final 
determination, either (i) obtain valid and effective waivers or settlements 
of all claims, liabilities and damages resulting from each such encroachment, 
violation or impairment, whether the same shall affect Lessor or the Leased 
Property; or (ii) make such changes in the Leased Improvements, and take such 
other actions, as Lessee in the good faith exercise of its judgment deems 
reasonably practicable, to remove such encroachment, and to end such 
violation or impairment, including, if necessary, the alteration of any of 
the Leased Improvements, and in any event take all such actions as may be 
necessary in order to be able to continue the operation of the Leased 
Improvements for the Primary Intended Use substantially in the manner and to 
the extent the Leased Improvements were operated prior to the assertion of 
such violation, impairment or encroachment.  Any such alteration shall be 
made in conformity with the applicable requirements of Paragraph 6.2 and this 
Article IX.  Lessee's obligations under this Paragraph 9.3 shall be in 
addition to and shall in no way discharge or diminish any obligation of any 
insurer under any policy of title or other insurance.

                                      ARTICLE X

          10.1   LESSEE'S OBLIGATIONS FOR HAZARDOUS MATERIALS.  Lessee shall, 
at its sole cost  and expense, take all actions as required to cause the 
Leased Property including, but not limited to, the Land and all Leased 
Improvements, to be free and clear of the presence of all Hazardous Materials 
during the Term. In this connection, Lessee shall, upon its discovery, belief 
or suspicion of the presence of Hazardous Materials on, in or under any part 
of the Leased Property, including, but not limited to, the Land and all 
Leased Improvements, immediately notify Lessor and, at no expense to Lessor, 
cause any such Hazardous Materials to be removed immediately, in compliance 
with all applicable laws and in a manner causing the least disruption of or 
interference with the operation of Lessee's business.  Lessee hereby agrees 
to fully indemnify, protect, defend and hold harmless Lessor from any costs, 
damages, claims, liability or loss of any kind or nature arising out of or in 
any way in connection with the presence, suspected presence, removal or 
remediation of Hazardous Materials in, on, or about the Leased Property, or 
any part thereof.  Lessee acknowledges that it has received and reviewed the 
following environmental reports: (a) as to the Paradise Valley Montessori 
Property, that certain environmental report, dated May 6, 1998, and prepared 
by Asset Environmental Services, Inc. 

                                       22
<PAGE>

as Project No. A98-023, together with the reliance letter dated May 21, 1998 
from Asset Environmental Services, Inc. to Lessor and the review thereof 
performed by SECOR International Incorporated; and (b) as to the Paradise 
Valley Property, that certain environmental report, dated May 8, 1998, and 
prepared by Asset Environmental Services, Inc. as Project No. A98-027, 
together with the reliance letter dated May 26, 1998 from Asset Environmental 
Services, Inc. to Lessor and the review thereof performed by SECOR 
International Incorporated (the "Environmental Reports").  Without limiting 
Lessee's other obligations under this Lease, Lessee agrees, at Lessee's sole 
cost, to fully comply with all recommendations set forth in the Environmental 
Reports, as updated, promptly after the Commencement Date hereunder.  
Lessee's obligations hereunder shall apply to all Hazardous Materials, 
irrespective of whether the existence of such Hazardous Materials is known by 
Lessor and no matter when they arose or were discovered and therefore will 
include any Hazardous Materials that existed prior to, at, or after the 
Commencement Date and during the Term.

          10.2   DEFINITION OF HAZARDOUS MATERIALS.  For purposes of this
Lease, "Hazardous Materials" shall include, but not be limited to, any
substance, material, waste, pollutant or contaminant, now or hereafter defined,
listed or regulated by the "Environmental Laws" (defined below) or any other
federal state or local law, regulation or order or by common law decision. 
"Environmental Laws" means and includes any law, ordinance, regulation or
requirement now or hereinafter in effect relating to land use, air, soil,
surface water, groundwater (including the protection, cleanup, removal,
remediation or damage thereof), human health and safety or any other
environmental matter, including, without limitation, the following laws as the
same may be amended from time to time:  Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section  9601, et
seq.; Federal Resource Conservation and Recovery Act, 42 U.S.C. Section  6901,
et seq.; Clean Water Act, 33 U.S.C. Section  1251, et seq.; Toxic Substances
Control Act, 15 U.S.C. Section  2601, et seq.; Refuse Act, 33 U.S.C. Section
407; Occupational Safety and Health Act, 29 U.S.C. Section  651, et seq.; Clean
Air Act, 42 U.S.C. Section  7401, et seq.; and any and all similar state and
local laws and ordinances and the regulations now or hereafter adopted,
published and/or promulgated pursuant thereto.

                                      ARTICLE XI

          11.1   NO LIENS.  Subject to the provisions of Article XII relating
to permitted contests, Lessee will not directly or indirectly, voluntarily or by
operation of law, create or allow to remain and will promptly discharge at its
expense any lien, mortgage, encumbrance, attachment, title retention agreement,
or claim upon the Leased Property.

                                     ARTICLE XII

     12.  PERMITTED CONTESTS.  Lessee shall have the right to contest the amount
or validity of any Imposition or any Legal Requirement or Insurance Requirement
or any lien, attachment, levy, encumbrance, charge or claim ("Claims") not
otherwise permitted by Article XI, by appropriate legal proceedings in good
faith and with due diligence, and to delay payment if legally permitted;
provided this shall not be deemed or construed in any way as relieving Lessee's
covenants to pay or its covenants to cause to be paid any such charges in the
manner 

                                     23
<PAGE>

as in this Lease provided and further provided that, such legal proceedings 
(and delay in payment) shall not cause the sale of the Leased Property, or 
any part thereof, to satisfy the same or cause Lessor or Lessee to be in 
default under any mortgage or deed of trust encumbering the Leased Property 
or any interest therein or otherwise threaten to cause loss or damage to 
Lessor or the Leased Property.  Upon the request of Lessor, Lessee shall 
provide to Lessor reasonable security satisfactory to Lessor to assure the 
payment of all Claims which may be assessed against the Leased Property, 
together with interest and penalties, if any, thereon.  Lessor agrees to join 
in any such proceedings if the same be required to legally prosecute such 
contest of the validity of such Claims; provided, however, that Lessor shall 
not thereby be subjected to any liability for the payment of any costs or 
expenses in connection with any proceedings brought by Lessee; and Lessee 
covenants to indemnify and save harmless Lessor from any such costs or 
expenses.  In the event that Lessee fails to pay any Claims when due or, upon 
Lessor's request, to provide the security therefor as provided in this 
Article XII and to diligently prosecute any contest of the same or in the 
event the same threatens to cause loss or damage to Lessor or the Leased 
Property, Lessor may, upon thirty (30) days advance written Notice to Lessee, 
pay such charges together with any interest and penalties and the same shall 
be repayable by Lessee to Lessor at the next Payment Date provided for in 
this Lease.  Provided, however, that should Lessor reasonably determine that 
the giving of such Notice would risk loss to the Leased Property or otherwise 
threaten to cause loss or damage to Lessor, then Lessor shall give such 
written Notice as is practical under the circumstances.  Lessee shall be 
entitled to any refund of any Claims and such charges and penalties or 
interest thereon which have been paid by Lessee or paid by Lessor and for 
which Lessor has been fully reimbursed. 

                                     ARTICLE XIII

          13.1   GENERAL INSURANCE REQUIREMENTS.  Subject to the provisions of
Paragraph 13.8, during the Term, Lessee shall at all times keep the Leased
Property, and all property located in or on the Leased Property, including
Lessee's Personal Property, insured with the kinds and amounts of insurance
described below.  This insurance shall be written by companies authorized to do
insurance business in the state in which the Leased Property is located, having
an A.M. Best rating of A X or higher or otherwise approved by Lessor in its sole
discretion.  The policies must name Lessor as loss payee and additional named
insured, shall contain a provision that such insurance may not be canceled or
amended without at least thirty (30) days' notice to Lessor and shall be payable
to Lessor as provided in Article XIV.  In addition, upon Lessor's written
request, the policies shall name as mortgagee, loss payee and additional insured
the holder ("Facility Mortgagee") of any mortgage, deed of trust or other
security agreement and any other Encumbrance placed on the Leased Property in
accordance with the provisions of Article XXXIII, as well as any other entity
interested in the Leased Property ("Facility Mortgage") by way of a standard
form of mortgagee's loss payable endorsement.  Evidence of insurance shall be
deposited with Lessor and, if requested, with any Facility Mortgagee(s).  If any
provision of any Facility Mortgage requires deposits of premiums for insurance
to be made with such Facility Mortgagee, or, pursuant to written direction by
Lessor upon the occurrence of any Event of Default hereunder (and irrespective
of whether such Event of Default is continuing or has been cured), Lessee shall
make such deposits directly with such Facility Mortgagee or with Lessor, as
required.  The policies on the Leased Property, including the 

                                       24
<PAGE>

Leased Improvements, Fixtures and Lessee's Personal Property, shall insure 
against the following risks:

                 13.1.1  Loss or damage by fire, vandalism and malicious
mischief, extended coverage perils commonly known as "All Risk," and all
physical loss perils normally included in such All Risk insurance, including,
but not limited to, sprinkler leakage, in an amount not less than one hundred
percent (100%) of the then full replacement cost thereof (as defined below in
Paragraph 13.2);

                 13.1.2  Loss or damage by explosion of steam boilers, pressure
vessels or similar apparatus, now or hereafter installed in the any of the
Facilities, if any, in such amounts with respect to any one accident as may be
reasonably requested by Lessor from time-to-time;

                 13.1.3  Loss of rental under a rental value insurance policy 
covering risk of loss during the first twelve (12) months of reconstruction 
necessitated by the occurrence of any of the hazards described in Paragraph 
13.1.1 or 13.1.2 in an amount sufficient to prevent Lessor from becoming a 
co-insurer.

                 13.1.4  Claims for personal injury or property damage under a
policy of comprehensive general public liability insurance with amounts not less
than One Million Dollars ($1,000,000.00) per occurrence, and with an annual
aggregate of Three Million Dollars ($3,000,000.00);

                 13.1.5  Flood (if the Leased Property is located in whole or in
part within a flood plain area, as designated by any governmental or other
responsible agency and if such insurance is available pursuant to applicable
law) and such other hazards and in such amounts as may be customary for
comparable properties in the area; and

                 13.1.6  Any other kinds of insurance, and in such amounts, as
Lessor may reasonably require from time to time to the extent available in the
state where the Leased Property is located.

          13.2   REPLACEMENT COST.  The term "full replacement cost" as used
herein, shall mean the full actual replacement cost of the Leased Property as
determined from time-to-time upon the request of Lessor, including an increased
cost of construction endorsement, less exclusions provided in the standard form
of fire insurance policy in the state where the Leased Property is located. 
Lessor and Lessee agree that as of the Commencement Date the full replacement
cost shall be deemed to be $1,200,000.00 as to the Paradise Valley Montessori
Property, and $2,000,000.00 as to the Paradise Valley Property.

          13.3   ADDITIONAL INSURANCE.  In addition to the insurance described
above, Lessee shall maintain such additional insurance as may be reasonably
required from time-to-time by Lessor or any Facility Mortgagee (to the extent
available in the state where the Leased Property is located) and shall further
at all times maintain adequate worker's compensation 

                                     25
<PAGE>

insurance coverage for all persons employed by Lessee on the Leased Property. 
 Such worker's compensation insurance shall be in accordance with the 
requirements of applicable federal, state and local law.

          13.4   WAIVER OF SUBROGATION.  All insurance policies carried by
either party covering the Leased Property, the Fixtures, the Facilities, or
Lessee's Personal Property including without limitations, contents, fire and
casualty insurance, shall expressly waive any right of subrogation on the part
of the insurer against the other party.  The parties hereto agree that their
policies will include such waiver clause or endorsement so long as the same are
obtainable without extra cost, and in the event of such an extra charge the
other party, at its election, may pay the same, but shall not be obligated to do
so.  Upon written request, each party shall provide the other party with a copy
of each insurance policy with the waiver clause or endorsement attached.

          13.5   FORM SATISFACTORY, ETC.  All of the policies of insurance
referred to in this Article XIII shall be written in a form reasonably
satisfactory to Lessor and by insurance companies having an A.M. Best rating of
A X or higher or otherwise approved by Lessor in its sole discretion.  Subject
to the foregoing, Lessor agrees that it will not unreasonably withhold its
approval as to the form of the policies of insurance or as to the insurance
companies selected by Lessee.  Lessee shall pay all of the premiums therefor,
and deliver such policies or certificates thereof to Lessor prior to their
effective date (and, with respect to any renewal policy, prior to the expiration
of the existing policy), and in the event of the failure of Lessee either to
effect such insurance as herein called for or to pay the premiums therefor, or
to deliver such policies or certificates thereof to Lessor at the times
required, Lessor shall be entitled, but shall have no obligation, to effect such
insurance and pay the premiums therefor, which premiums shall be repayable by
Lessee to Lessor upon written demand therefor, and failure to repay the same
shall constitute an Event of Default within the meaning of Paragraph 16.1(c). 
Each insurer mentioned in this Article XIII shall agree, by endorsement on the
policy or policies issued by it, or by independent instrument furnished to
Lessor, that will give to Lessor (and to any Facility Mortgagee, if required by
the same) thirty (30) days written notice before the policy or policies in
questions shall be altered, allowed to expire or cancel.

          13.6   INCREASE IN LIMITS.  In the event that Lessor or a Facility
Mortgagee shall at any reasonable time deem, in the reasonable exercise of its
discretion, the limits of the personal injury or property damage public
liability insurance then carried to be insufficient, Lessee shall thereafter
carry the insurance with increased limits until further change pursuant to the
provisions of this Paragraph.  

          13.7   BLANKET POLICY.  Notwithstanding anything to the contrary
contained in this Article XIII, Lessee's obligations to carry the insurance
provided for herein may be brought within the coverage of a so-called blanket
policy or policies of insurance carried and maintained by Lessee; provided,
however, that the coverage afforded Lessor will not be reduced or diminished or
otherwise be different from that which would exist under a separate policy
meeting all other requirements of this Lease by reason of the use of such
blanket policy of insurance, and provided further that the requirements of this
Article XIII are otherwise satisfied.

                                       26
<PAGE>

          13.8   NO SEPARATE INSURANCE.  Lessee shall not on Lessee's own
initiative or pursuant to the request or requirement of any third party take out
separate insurance concurrent in form or contributing in the event of loss with
that required in this Article, to be furnished or which may reasonably be
required to be furnished, by Lessee or increase the amount of any then existing
insurance by securing any additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including in all cases Lessor and all Facility Mortgagees, are included therein
as additional insureds, and the loss is payable under said insurance in the same
manner as losses are payable under the Lease.  Lessee shall immediately notify
Lessor of the taking out of any such separate insurance or of the increasing of
any of the amount of the then existing insurance.

          13.9   CONTINUOUS COVERAGE.  Lessee shall assure that there is no gap
in the insurance coverage provided in connection with the Facilities at or after
the Commencement Date, and therefore, the insurance provided by Lessee shall be
continuous, with the types and amounts of coverage, described herein to be
applicable on the Commencement Date.  To the extent there is not full, complete
and continuous coverage for all issues, no matter when arising, claimed or
occurring, Lessee shall, at its sole cost, obtain such insurance.

                                     ARTICLE XIV

          14.1   INSURANCE PROCEEDS.  All proceeds payable by reason of any
loss of or damage to the Leased Property, or any portion thereof, which is
insured under any policy of insurance required by Article XIII of the Lease,
where the total proceeds paid by the insurer are less than $150,000.00, shall be
paid to Lessee and applied to the reconstruction or repair, as the case may be,
of any damage to or destruction of the Leased Property, or any portion thereof. 
All proceeds payable by reason of any loss of or damage to the Leased Property,
or any portion thereof, which is insured under any policy of insurance required
by Article XIII of this Lease where the total proceeds paid by the insurer are
equal to or in excess of $150,000.00 shall be paid to Lessor and held by Lessor
in trust (subject to the provisions of Paragraph 14.7) and shall be made
available for reconstruction or repair, as the case may be, of any damage to or
destruction of the Leased Property, or any portion thereof, and shall be paid
out by Lessor from time-to-time for the reasonable costs of such reconstruction
or repair.  Any excess proceeds of insurance remaining after the completion of
the restoration or reconstruction of the Leased Property shall go to Lessee,
provided the Lease is in force and there exists no uncured Event of Default;
otherwise such excess shall be paid to Lessor for application as set forth in
Article XVI hereof.  In the event neither Lessor nor Lessee is required or
elects to repair and restore, and the Lease is terminated pursuant to Article
XVI, all such insurance proceeds shall be retained by Lessor.  All salvage
resulting from any risk covered by insurance shall belong to Lessor except that
any salvage relating to Lessee's Personal Property shall belong to Lessee.

          14.2   RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED
BY INSURANCE PROCEEDS.

                 14.2.1  If during the Term, the Leased Property, or any portion
thereof, is totally or partially destroyed by a risk covered by the insurance
described in Article 

                                       27
<PAGE>

XIII and whether or not the Facility located thereon is rendered Unsuitable 
for Its Primary Intended Use, Lessee shall restore the Leased Property to 
substantially the same condition as existed immediately before the damage or 
destruction.

                 14.2.2  If the cost of the repair or restoration exceeds the
amount of proceeds received by Lessee or Lessor from the insurance required
under Article XIII, Lessee shall be obligated to restore the Leased Property and
pay the extra cost therefor, provided that, prior to commencing the repair and
restoration, Lessee shall either (i) contribute any excess amount needed to
restore the Leased Property, or (ii) provide Lessor with satisfactory evidence
that such funds are, and throughout the entire period of reconstruction will be,
available.  If Lessee contributes such excess in cash, such excess shall be paid
by Lessee to Lessor to be held in trust, together with any insurance proceeds,
for application to the cost of repair and restoration.

          14.3   RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT
COVERED BY INSURANCE.  If during the Term, the Leased Property, or any portion
thereof, is damaged or destroyed irrespective of the extent of the damage from a
risk not covered by the insurance described in Article XIII, whether or not such
damage or renders the Facility located thereon Unsuitable for Its Primary
Intended Use, Lessee shall restore the Leased Property to substantially the same
condition it was in immediately before such damage or destruction and such
damage or destruction shall not terminate this Lease.

          14.4   LESSEE'S PERSONAL PROPERTY.  Subject to Lessor's rights
pursuant to the Security Agreement, all insurance proceeds payable by reason of
any loss of or damage to any of Lessee's Personal Property shall be paid to
Lessee, and Lessee shall hold such insurance proceeds in trust to pay the cost
of repairing or replacing damaged Lessee's Personal Property.  Any proceeds in
excess of the cost of repairing or replacing any such Lessee's Personal Property
shall belong to Lessee.

          14.5   RESTORATION OF LESSEE'S PROPERTY.  Without limiting Lessee's
obligation to restore the Leased Property as provided in Paragraphs 14.2 and
14.3, Lessee shall also pay the cost to restore all Alterations and other
improvements made by Lessee which Lessee elects to restore, including Lessee's
Personal Property to the extent that Lessee's Personal Property is necessary to
the operation of either of the Facilities for its Primary Intended Use in
accordance with applicable Legal Requirements.

          14.6   NO ABATEMENT OF RENT.  This Lease shall remain in full force
and effect and Lessee's obligation to make rental payments and to pay all other
charges required by this Lease shall remain unabated during any period required
for repair and restoration. 

          14.7   WAIVER.  Lessee hereby waives any statutory rights of
termination which may arise by reason of any damage to or destruction of the
Leased Property, or any portion thereof, which Lessor is obligated to restore or
may restore under any of the provisions of this Lease.

                                       28
<PAGE>

                                      ARTICLE XV

     15.  CONDEMNATION.

          15.1   DEFINITIONS.

                 15.1.1  "Condemnation" means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a Condemnor;
(b) a voluntary sale or transfer by Lessor to any Condemnor, either under threat
of Condemnation or while legal proceedings for Condemnation are pending.

                 15.1.2  "Date of Taking" means the date the Condemnor has the
right to possession of the property being condemned.

                 15.1.3  "Award" means all compensation, sums or anything of
value awarded, paid or received on a total or partial Condemnation.

                 15.1.4  "Condemnor" means any public or quasi-public authority,
or private corporation or individual, having the power of Condemnation.

          15.2   PARTIES' RIGHTS AND OBLIGATIONS.  If during the Term there is
any taking of all or any part of the Leased Property or any interest in this
Lease by Condemnation, the rights and obligations of the parties shall be
determined by this Article XV.

          15.3   TOTAL CONDEMNATION.  If title to the fee of the whole of the
Paradise Valley Montessori Property or the Paradise Valley Property shall be
taken or condemned by any Condemnor, this Lease shall cease and terminate as to
the Paradise Valley Montessori Property or the Paradise Valley Property, as
applicable, as of the Date of Condemnation by said Condemnor.  If title to the
fee of less than the whole of the Paradise Valley Montessori Property or the
Paradise Valley Property shall be so taken or condemned, which nevertheless
renders the Facility located thereon Unsuitable for Its Primary Intended Use, as
reasonably determined by Lessor and Lessee, Lessee and Lessor shall each have
the option by written Notice to the other, at any time at or prior to the taking
of possession by, or the date of vesting of title in, such Condemnor, whichever
first occurs, to terminate this Lease as to the Paradise Valley Montessori
Property or the Paradise Valley Property, as applicable, as of the date of the
occurrence of such first event.  If such Notice has timely been given, this
Lease shall thereupon cease and terminate as to the Leased Property affected
thereby.  Upon the termination of the Lease as to all or any portion of the
Leased Property, all Minimum Rent, and Additional Charges paid or payable by
Lessee hereunder shall be apportioned as of the date the Lease terminates as to
such portion of the Leased Property.

          15.4   ALLOCATION OF PORTION OF AWARD.  The total Award made with
respect to all or any portion of the Leased Property or for loss of rent, or for
loss of business, whether or not beyond the Term of this Lease, or for the loss
of value of the leasehold (including the bonus value of the Lease) shall be
solely the property of and payable to Lessor and Lessee hereby 

                                      29

<PAGE>

assigns to Lessor any and all rights in such Award; provided, however, that 
Lessee shall be entitled to make a separate claim for the taking of Lessee's 
Personal Property and relocation expense, subject to Lessor's rights pursuant 
to the Security Agreement, and as long as any such claim will not in any way 
diminish Lessor's Award, or for any other loss that can be awarded to Lessee 
separately from Lessor's claim and which will not in any respect whatsoever 
diminish or threaten to diminish the total amounts to be awarded to Lessor, 
as set forth above or otherwise.  To the extent Lessee's claim may thereafter 
reduce Lessor's claim, Lessee shall, and hereby does, assign its claim to 
Lessor.  In any Condemnation proceedings, each of the Lessor and Lessee shall 
seek its own claim in conformity herewith, at its own expense.

          15.5   PARTIAL TAKING.  If title to the fee of less than the whole of
the Paradise Valley Montessori Property or the Paradise Valley Property shall be
so taken or condemned, and the Facility located thereon is still suitable for
its Primary Intended Use, as reasonably determined by Lessor and Lessee, or if
Lessee or Lessor shall be so entitled, but shall not elect to terminate this
Lease as provided in Paragraph 15.3 hereof, Lessee, at its own cost and expense
(subject to Lessor's contribution described below), shall with all reasonable
dispatch restore the untaken portion of any Leased Improvements on the Leased
Property affected by such Condemnation so that such Leased Improvements shall
constitute a complete architectural unit of the same general character and
condition (as nearly as may be possible under the circumstances) as the Leased
Improvements existed immediately prior to such Condemnation.  Lessor shall
contribute to the cost of restoration that part of its Award specifically
allocated to such restoration, provided, however, the amount of such
contribution shall not exceed the cost of restoration.  The Minimum Rent shall
be reduced as set forth in Paragraph 5.2.

          15.6   TEMPORARY TAKING.  Lessee agrees that if, at any time after
the date hereof, the whole or any part of the Leased Property or of Lessee's
interest under this Lease, shall be Condemned by any Condemnor for its temporary
use or occupancy, this Lease shall not terminate by reason thereof, and Lessee
shall continue to pay, in the manner and at the times herein specified, the full
amounts of Minimum Rent and Additional Charges.  Except only to the extent that
Lessee may be prevented from doing so pursuant to the terms of the order of the
Condemnor, Lessee shall also continue to perform and observe all of the other
terms, covenants, conditions and obligations hereof, on the part of the Lessee
to be performed and observed, as though such Condemnation had not occurred.  In
the event of any such Condemnation as in this Paragraph 15.6 described, the
entire amount of any such Award made for such temporary use, whether paid by way
of damages, rent or otherwise, shall be paid to Lessee to the extent
attributable to any period within the Initial Term (as extended by any already
exercised options to extend) and except as otherwise provided hereunder. 
Notwithstanding the foregoing, in the event that any temporary use or occupancy
covered under this Paragraph 15.6 renders any portion of either of the
Facilities located on the Leased Property Unsuitable for its Primary Intended
Use for a period in excess of twelve (12) calendar months, Lessee shall have the
right to elect a reduction in Minimum Rent as set forth in Paragraph 5.2
commencing on the twelve (12) month anniversary of any such use or occupancy and
continuing so long as such temporary use or occupancy continues, in which event
any Award made for such temporary use or occupancy shall be paid to Lessor to
the extent attributable to the period that Minimum Rent is so abated.  Lessee
covenants that upon the termination of any such period of temporary use or

                                  30
<PAGE>

occupancy as set forth in this Paragraph 15.6, it will, at its sole cost and
expense, restore the Leased Property affected by such taking or condemnation as
nearly as may be reasonably possible, to the condition in which the same was
immediately prior to the Condemnation, unless such period of temporary use or
occupancy shall extend beyond the expiration of the Term, in which case Lessee
shall not be required to make such restoration, and in such case, Lessee shall
contribute to the cost of such restoration that portion of its entire Award
which is specifically allocated to such restoration in the judgment or order of
the court, if any.

                                     ARTICLE XVI

          16.1   EVENTS OF DEFAULT.  In addition to any other "Event of
Default" provided for under Paragraphs 1.3.3 or otherwise under this Lease or
any other documents executed concurrently herewith, any one or more of the
following events shall be an "Event of Default":

                 (a)  if any payment of the Rent payable by Lessee under this
Lease is not paid as and when the same becomes due and payable, and such failure
shall continue for more than five (5) Business Days; or

                 (b)  if Lessee fails to observe or perform any term, covenant
or condition of this Lease other than those described under Paragraphs 1.3.3,
16.1(a) and 16.1(c) through and including 16.1(n) of this Lease, and such
failure is not cured by Lessee within a period of thirty (30) days after Notice
thereof from Lessor, unless such failure cannot with due diligence be cured
within a period of thirty (30) days, in which case such failure shall not be
deemed an Event of Default if Lessee proceeds promptly, continuously and with
due diligence to cure the failure and diligently completes the curing thereof
within ninety (90) days; or 

                 (c)  if Lessee commits an "Event of Default" under any of the
Other Leases.  Without limiting the foregoing, and subject to the provisions of
Paragraph 16.4, if Lessee commits an "Event of Default" under this Lease, Lessee
shall thereby be in default (and shall therefore have committed an "Event of
Default") under all of the Other Leases; or

                 (d)  if Lessee commits an "Event of Default" under any of the
Related Leases.  Without limiting the foregoing, and subject to the provisions
of Paragraph 16.4, if Lessee commits an "Event of Default" under this Lease,
Lessee shall thereby be in default (and shall therefore have committed an "Event
of Default") under all of the Related Leases; or

                 (e)  if Lessee commits an "Event of Default" under any of the
Security Documents; or

                 (f)  if Lessee defaults under its obligations under Paragraph
7 of the Paradise Valley Montessori Purchase Agreement; or

                 (g)  if Lessee does any of the following:

                                       31
<PAGE>

                         (i)    admit in writing its inability to pay its debts
generally as they become due;

                         (ii)   file a petition in bankruptcy or a petition to
take advantage of any insolvency law;

                         (iii)  make an assignment for the benefit of
creditors;

                         (iv)   consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property; or

                         (v)    file a petition or answer seeking
reorganization or arrangement under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state thereof;
or

                 (h)  if Lessee, on a petition in bankruptcy filed against it,
is adjudicated a bankrupt or an order for relief thereunder is entered against
it or a court of competent jurisdiction shall enter an order or decree
appointing, without the consent of Lessee, a receiver for Lessee or of the whole
or substantially all of its property or any one or more of the Facilities, or
approving a petition filed against Lessee seeking reorganization or arrangement
of Lessee under the Federal bankruptcy laws or other applicable law or statute
of the United States of America or any state thereof, and such judgment, order
or decree shall not be vacated or set aside within sixty (60) days from the date
of the entry thereof; or

                 (i)  if Lessee shall be liquidated or dissolved, or shall
begin proceedings toward such liquidation or dissolution, or shall, in any
manner, permit the sale or divestiture of substantially all of its assets; or

                 (j)  subject to the provisions of Article XII hereof, if the
estate or interest of Lessee in the Leased Property or any part thereof be
levied upon or attached in a proceeding and the same shall not be vacated or
discharged within the later of ninety (90) days after commencement thereof or
thirty (30) days after Notice thereof from Lessor, or a mechanic's or similar
lien is filed with respect to the Leased Property and is not released or bonded
around for a period exceeding sixty (60) days after Lessee first has knowledge
of the same; or

                 (k)  if Lessee voluntarily ceases operations at any one or
more of the Facilities for a period in excess of two (2) days, other than by
reason of regularly-scheduled school holidays, school vacations or breaks
between sessions; or

                 (l)  if any of Lessee's representations or warranties
expressly set forth in this Lease (or financial statements provided to Lessor)
proves to have been untrue when made; or

                 (m)  if Lessee attempts to assign or sublease, in violation of
the provisions of this Lease; or

                                       32
<PAGE>

                 (n)  if Lessee ceases to operate any of the Facilities in
accordance with its Primary Intended Use, or ceases to maintain in effect any
charter (if applicable), license, permit, certificate or approval necessary or
otherwise required to operate each Facility in accordance with its Primary
Intended Use.

          Subject to the provisions of Paragraph 16.4 below, upon the occurrence
of an Event of Default, in addition to all of Lessor's other remedies, Lessor
may terminate this Lease by giving Lessee not less than ten (10) Business Days
Notice of such termination and upon the expiration of the time fixed in such
Notice, the Term shall terminate and all rights of Lessee under this Lease shall
cease.

          In the event litigation is commenced with respect to any alleged
default under this Lease, the prevailing party in such litigation shall receive,
in addition to its damages incurred, such sum as the court shall determine as
its reasonable attorneys' fees, and all costs and expenses incurred in
connection therewith, including reasonable attorneys' fees and costs incurred on
appeal.

          16.2   CERTAIN REMEDIES.  Lessor shall have all remedies and rights 
provided under this Lease and/or otherwise available in law and equity as a 
result of an Event of Default or Lessee's other breach under this Lease, 
including, to the extent permitted by Arizona law, the right to appoint a 
receiver as a matter of strict right without regard to the solvency of 
Lessee, for the purpose of procuring the Leased Property, preventing waste, 
protecting and otherwise enforcing the provisions of this Lease and for any 
and all other purposes for which a receiver is allowed under the laws of the 
State of Arizona. Without limiting the foregoing, and subject to the 
provisions of Paragraph 16.4, if an Event of Default occurs (and the event 
giving rise to such Event of Default has not been cured within the curative 
period, if any, relating thereto as set forth in this Lease) whether or not 
this Lease has been terminated pursuant to Paragraph 16.1, Lessee shall, to 
the extent permitted by law, and if required by Lessor to so do, immediately 
surrender to Lessor the Leased Property pursuant to the provisions of 
Paragraph 16.1 and quit the same and Lessor may enter upon and repossess the 
Leased Property, in person, by agent or by a court-appointed receiver, by 
reasonable force, summary proceedings, ejectment or otherwise, and may remove 
Lessee and all other persons and any and all personal property from the 
Leased Property subject to rights of any residents (and their property) and 
to any requirements of law.  Without limiting all other rights and remedies 
of Lessor under this Lease and under law, and subject to the provisions of 
Paragraph 16.4, Lessor shall have the right to accelerate all Rent (including 
Minimum Rent) and therefore, upon Lessee's default, at Lessor's option, all 
such Rent shall become immediately due and payable in accordance with 
Paragraph 16.3, below.  Further, without limiting all other rights and 
remedies of Lessor under this Lease and under law, Lessor shall be entitled 
to recover from Lessee, and Lessee shall therefore be liable for, all costs 
of recovering possession (including without limitation all costs associated 
with any receiver) and renovating the Leased Property for a new lessee and 
all other costs of re-leasing, including, but not limited to, broker's 
commissions and attorneys' fees, except as limited by Paragraph 16.3 below.

                                       33
<PAGE>

          16.3   DAMAGES.  Neither (i) the termination of this Lease pursuant 
to Paragraphs 16.1 or 16.4, (ii) the repossession of the Leased Property; 
(iii) the failure of Lessor to relet the Leased Property; nor (iv) the 
reletting of all or any portion thereof, shall relieve Lessee of its 
liability and obligations hereunder, all of which shall survive any such 
termination, repossession or reletting (except for proceeds received on 
subletting).  In the event of any such termination, Lessee shall forthwith 
pay to Lessor all Rent due and payable with respect to the Leased Property to 
and including the date of such termination.

                 (a)     Lessor shall not be deemed to have terminated this
Lease unless Lessor delivers written Notice to Lessee of such election.  If
Lessor voluntarily elects to terminate this Lease upon an Event of Default, then
in addition to all remedies available to Lessor, Lessor may recover the sum of:

                         (i)    the worth at the time of award of the unpaid
Rent which had been earned at the time of termination;

                         (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 Lessee proves could
have been reasonably avoided;

                         (iii)  the worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that Lessee proves could be reasonably
avoided; and

                         (iv)   any other amount necessary to compensate Lessor
for all the detriment proximately caused by Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom.

                         The "worth at the time of award" of the amounts
referred to in subparagraphs (i) and (ii) above is computed by allowing interest
at the Overdue Rate.  The worth at the time of award of the amount referred to
in subparagraph (iii) is 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%).

                 (b)     Without limiting Lessor's other remedies provided
herein and provided by law, Lessor may continue the Lease in effect after
Lessee's breach and abandonment and recover Rent as it becomes due, provided
that, in such event, Lessee has the right to sublet or assign subject only to
reasonable conditions imposed by Lessor.  Accordingly, without termination of
Lessee's right to possession of the Leased Property, Lessor may demand and
recover each installment of Minimum Rent and other sums payable by Lessee to
Lessor under the Lease as the same becomes due and payable, which Minimum Rent
and other sums shall bear interest at the maximum interest rate permitted in
accordance with the laws of the State of Arizona (or the Overdue Rate, whichever
is lower), from the date when due until paid, and Lessor may enforce, by action
or otherwise, any other term or covenant of this Lease.  If Lessor 

                                       34
<PAGE>

elects to recover each installment of Rent as it becomes due, then Lessor may 
file any number of lawsuits for the recovery of the amounts due hereunder.

          16.4   REMEDIES RELATING TO OPERATION OF THE PARADISE VALLEY
MONTESSORI PROPERTY AS A CHARTER SCHOOL.  Notwithstanding any other provision of
this Lease to the contrary, if an Event of Default occurs hereunder as a result
of Lessee having ceased to operate the elementary/middle school located on the
Paradise Valley Montessori Property as a charter school, and IF AND ONLY IF
Lessee ceased to operate such Facility as a charter school solely and
exclusively because (i) the State of Arizona has enacted new legislation or
regulations, or has modified or revoked the existing legislation or regulations,
governing charter schools in the State of Arizona, in such a way which would
render it impossible for Lessee to then operate the Facility located on the
Paradise Valley Montessori Property as a charter school, or (ii) the Arizona
State Board of Charter Schools or other governmental agency having jurisdiction
has revoked Lessee's Charter of the Facility located on the Paradise Valley
Montessori Property for reasons entirely unrelated to any acts or omissions of
Lessee, then ONLY upon the occurrence of such event, and so long as Lessee is
not otherwise in default of its obligations under this Lease in any respect, nor
has any event occurred which, but for the passage of time or the giving of
notice or both, would constitute a default under this Lease by Lessee, Lessor's
sole remedies under this Lease in connection with an Event of Default
specifically described above in this Section 16.4 only shall be as follows:

                 (a)     Lessor shall not be entitled to declare an Event of
Default under the Related Leases and the Other Leases, or any of them, solely on
the basis of the Event of Default hereunder arising from such cessation; and

                 (b)     Lessee shall have twenty (20) days after the occurrence
of such Event of Default to present to Lessor a written proposal setting forth
with reasonable specificity a plan for one or more new uses for the Paradise
Valley Montessori Property.  Lessor shall have twenty (20) days following
receipt of any such proposal from Lessee in which to give or withhold its
consent to any proposed new use for the Paradise Valley Montessori Property.  If
and only if Lessor consents in writing to a new use for the Paradise Valley
Montessori Property shall Lessee be entitled to change the use of the Paradise
Valley Montessori Property to a use other than that set forth in Section 7.2
hereof; provided, however, that the parties hereby specifically acknowledge
their agreement that Lessor shall be under no obligation to agree to any
proposed new use and that Lessor may give or withhold its consent to any
proposed new use in Lessor's sole and absolute discretion, it being understood
that Lessee's use of the Paradise Valley Montessori Property as a pre-school and
a charter elementary/middle school is of material importance to Lessor's
willingness to purchase the Paradise Valley Montessori Property and enter into
this Lease of the Paradise Valley Montessori Property with Lessee.  Lessor's
failure to respond to a proposal for a new use by Lessee within the twenty (20)
day period shall be construed as a denial of consent.

                 (c)     In the event that Lessor does not consent to Lessee's
proposed new use for the Paradise Valley Montessori Property within the twenty
(20) day period, for any reason whatsoever, then Lessor may terminate this Lease
as to the Paradise Valley Montessori 

                                       35
<PAGE>

Property only, by giving Lessee not less than ten (10) Business Days Notice 
of such termination.  Upon expiration of the time fixed in such Notice, the 
Term shall terminate as to the Paradise Valley Montessori Property only, 
Lessee shall vacate the Paradise Valley Montessori Property immediately and 
all rights of Lessee in and to the Paradise Valley Montessori Property shall 
cease.  In connection with any such termination of this Lease as to the 
Paradise Valley Montessori Property only, Lessor shall have all rights and 
remedies otherwise afforded to Lessor under Sections 16.2, 16.3 and otherwise 
under this Lease, at law or in equity.  Lessee hereby agrees to execute an 
amendment to this Lease and any other documents reasonably required by Lessor 
to evidence and memorialize the termination of this Lease as to the Paradise 
Valley Montessori Property only.

          Notwithstanding any provision in this Lease or any of the Related
Leases to the contrary, neither the occurrence of an Event of Default under the
circumstances set forth in this Section 16.4, nor the termination of this Lease
as to the Paradise Valley Montessori Property as provided for in this Section
16.4, shall affect the right or ability of Lessee to exercise the option to
extend this Lease and any of the Related Leases.

          Lessor and Lessee specifically agree that the foregoing provisions of
this Paragraph 16.4 shall not impair, restrict or limit in any way Lessor's
right to declare an Event of Default under this Lease as to all the Leased
Property demised hereunder, or to declare an Event of Default under the Related
Leases and the Other Leases, or any of them, in the event that an Event of
Default under this Lease shall have been declared by Lessor for any reason other
than the specific Event of Default described above in this Paragraph 16.4 (i)
and (ii).

          LESSOR AND LESSEE SPECIFICALLY ACKNOWLEDGE AND AGREE THAT LESSOR HAS
ACQUIRED THE PARADISE VALLEY MONTESSORI PROPERTY AND AGREED TO ENTER INTO THIS
LEASE UPON AND SUBJECT TO THE CONDITION THAT THE PARADISE VALLEY MONTESSORI
PROPERTY BE OPERATED AS AN EDUCATIONAL FACILITY HAVING ALL CHARTERS, LICENSES,
PERMITS AND APPROVALS NECESSARY TO OPERATE A CHARTER SCHOOL UNDER THE CHARTER
SCHOOL LEGISLATION FOR THE STATE OF ARIZONA, AND THAT THIS CONDITION IS A
MATERIAL INDUCEMENT TO LESSOR ENTERING INTO THIS LEASE.  LESSOR AND LESSEE
FURTHER ACKNOWLEDGE AND AGREE THAT THE REMEDIES OF LESSOR SET FORTH IN THIS
PARAGRAPH 16.4 HAVE BEEN SPECIFICALLY NEGOTIATED AND BARGAINED FOR AND ARE A
MATERIAL INDUCEMENT TO LESSOR IN ENTERING INTO THIS LEASE.

          16.5   WAIVER.  If this Lease is terminated pursuant to Paragraphs
16.1 or 16.4, Lessee waives, to the extent permitted by applicable law, the
benefit of any laws now or hereafter in force exempting property from liability
for rent or for debt.

          16.6   APPLICATION OF FUNDS.  Any payments received by Lessor under
any of the provisions of this Lease during the existence or continuance of any
Event of Default shall be applied to Lessee's obligations in the order which
Lessor may determine or as may be prescribed by the laws of the State of
Arizona.

                                       36
<PAGE>

                                    ARTICLE XVII

     17.  LESSOR'S RIGHT TO CURE LESSEE'S DEFAULT.  If Lessee fails to make any
payment or to perform any act required to be made or performed under this Lease,
and to cure the same within the relevant time periods, if any, provided under
this Lease, Lessor, after fifteen (15) days' Notice to and demand upon Lessee,
and without waiving or releasing any obligation of Lessee or default, may (but
shall be under no obligation to) at any time thereafter make such payment or
perform such act for the account and at the expense of Lessee, and may, to the
extent permitted by law, enter upon the Leased Property, in person, by agent or
by court-appointed receiver, for such purpose and take all such action thereon
as, in Lessor's opinion, may be necessary or appropriate therefor.  Provided,
however, that should Lessor reasonably determine that the giving of such Notice
would risk loss to the Leased Property, or cause damage to Lessor, then Lessor
shall give such written Notice as is practical under the circumstances.  No such
entry shall be deemed an eviction of Lessee.  In exercising any remedy under
this Article XVII, Lessor shall use its good faith efforts not to violate any
rights of students, teachers or administrators who may be on the premises at the
Facilities.  All sums so paid by Lessor and all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses, in each case) so
incurred, together with a late charge thereon (to the extent permitted by law)
at the Overdue Rate from the date on which sums or expenses are paid or incurred
by Lessor, shall be paid by Lessee to Lessor on demand.  The obligations of
Lessee and rights of Lessor contained in this Article shall survive the
expiration or earlier termination of this Lease.

                                    ARTICLE XVIII

          18.1   OPTIONS TO EXTEND.  Provided there exists no uncured Event of
Default under this Lease, or any of the Related Leases at the time Lessee
exercises any option to extend (in accordance with this Article XVIII), Lessee
will have the right to extend this Lease for two (2) periods of ten (10) years
each (each such additional term shall be referred to herein as an "Extended
Term"), commencing immediately following the end of the Initial Term or the
immediately preceding Extended Term, as the case may be.  Notwithstanding
anything stated in this Paragraph 18.1 or elsewhere in this Lease, Lessee shall
not be entitled to exercise its option to extend this Lease for any Extended
Term (and any such option to extend shall automatically expire and terminate)
unless Lessee concurrently exercises its option to extend each of the Related
Leases for the same period, as provided in each of the Related Leases; and any
attempt to exercise Lessee's option to extend this Lease without Lessee
exercising its options under all of the Related Leases shall be null and void. 
The Lease during any Extended Term shall be on the same terms and conditions as
during the Initial Term, except that the Minimum Rent shall be determined as set
forth in Paragraph 18.2 below.  In the event Lessee desires to exercise any
option to extend granted in this Article XVIII, Lessee shall give Landlord
written notice ("Notice to Extend") not less than two hundred ten (210) days
prior to the expiration of the Initial Term or the immediately preceding
Extended Term, as the case may be.  If Lessee fails to give Landlord any such
notice, then such option to extend and all future options to extend granted in
this Article XVIII shall be null and void and of no further force or effect.

          18.2   MINIMUM RENT DURING EXTENDED TERMS.  The Minimum Rent at the
commencement of each Extended Term shall be determined as set forth below:

                                       37
<PAGE>

                 (a)     The Minimum Rent at the commencement of the first
Extended Term shall be the higher of: (i) the annual Minimum Rent at the rate
paid during the twelve (12) month period immediately preceding the first
Extended Term, increased by two percent (2%); (ii) the annual Minimum Rent at
the rate that was payable as of the Commencement Date of this Lease, multiplied
by a fraction, the numerator of which shall be the C.P.I. for the first calendar
month of the first Extended Term and the denominator of which shall be the
C.P.I. for the calendar month in which the Commencement Date of the Initial Term
occurs; and (iii) the Fair Market Rent, as determined below.

                 (b)     The Minimum Rent at the commencement of the second
Extended Term shall be the higher of: (i) the annual Minimum Rent at the rate
paid during the twelve (12) month period immediately preceding the second
Extended Term, increased by two percent (2%); (ii) the annual Minimum Rent at
the rate paid during the first twelve (12) months of the first Extended Term
multiplied by a fraction, the numerator of which shall be the C.P.I. for the
first calendar month of the second Extended Term and the denominator of which
shall be C.P.I. for the first calendar month of the first Extended Term; and
(iii) the Fair Market Rent, as determined below.

                 (c)     If Lessor and Lessee cannot agree on the Fair Market
Rent within thirty (30) days after the date of any Notice to Extend, each party
shall, by notice to the other, appoint a disinterested and licensed M.A.I. Real
Estate Appraiser with at least five years of experience appraising educational
facilities to determine the Fair Market Rent.  If any party should fail to
appoint an appraiser within ten (10) days after notice, the appraiser selected
by the other party shall determine the Fair Market Rent.  In determining the
Fair Market Rent, each appraiser shall give appropriate consideration to, among
other things, generally applicable minimum rent for tenancies of property
comparable to the Leased Property in the area in which the Leased Property is
located.

                 (d)     If the two appraisers selected pursuant to Paragraph
18.2(c) above, cannot agree upon the Fair Market Rent within forty-five (45)
days, they shall immediately give written notice of such inability ("Notice of
Disagreement") to both Lessor and Lessee setting forth the Fair Market Rent
determinations of each of the appraisers.  If the determinations of each of the
two appraisers of the Fair Market Rent at the commencement of such Extended Term
differ by less than ten percent (10%) of the lower determination, the Fair
Market Rent shall be fixed at an amount equal to the average of the two
determinations.

                 (e)     If the determinations of each of the two appraisers
selected pursuant to Paragraph 18.2(c), above, differ by ten percent (10%) or
more of the lower determination with respect to the Fair Market Rent to be paid
at the commencement of such Extended Term, then within thirty (30) days after
the giving of the Notice of Disagreement, the two appraisers shall appoint a
third disinterested and licensed M.A.I. Real Estate Appraiser with at least 5
years of experience appraising educational facilities.  If the parties cannot
then agree on the Fair Market Rent, the third appraiser shall determine the Fair
Market Rent, and in so doing, shall give appropriate consideration to those
items described in Paragraph 18.2(c).  The third appraiser shall not select a
Fair Market Rent either (i) higher than the highest of the two 

                                       38
<PAGE>

appraisals made pursuant to Paragraph 18.2(c); or (ii) lower than the lowest 
of the two appraisals made pursuant to Paragraph 18.2(c), above.  If the 
first two appraisers cannot agree on the selection of a third appraiser 
within such thirty (30) days, or if the first two appraisers fail to provide 
a Notice of Disagreement (as stated above in Paragraph 18.2(d), above, then 
the Fair Market Rent shall be determined by a third appraiser selected by the 
American Arbitration Association (or such other organization at Lessor's 
election) upon application by Lessor.

                 (f)     During the time before the determination of the Fair
Market Rent, Lessee shall pay Minimum Rent at the rate paid immediately
preceding such Extended Term, increased by two percent (2%); provided, however,
that, if the Fair Market Rent is determined to be higher than such amount, the
Minimum Rent owed by Lessee at the Fair Market Rent shall be effective
retroactively as of the first day of such Extended Term.  If, after the Minimum
Rent for an Extended Term is adjusted and applied retroactively as of the first
day of such Extended Term, it is determined that additional Minimum Rent is due
Lessor, the aggregate amount of any such additional Minimum Rent shall be paid
to Lessor within thirty (30) days of the determination of the Fair Market Rent
for such Extended Term.

                 (g)     Each of the parties shall pay the fees of the appraiser
that it selects pursuant to Paragraph 18.2(c), above, and shall equally share
the cost of the third appraiser, if necessary, and shall equally share the cost
of arbitration (excluding attorneys' fees), if necessary.

                                     ARTICLE XIX

     19.  HOLDING OVER.  If Lessee shall for any reason remain in possession of
the Leased Property after the expiration of the Term or earlier termination of
the Term hereof, such possession shall be as a month-to-month tenant during
which time Lessee shall pay as rental each month, one and one-half times the
aggregate of (i) one-twelfth of the aggregate Minimum Rent payable with respect
to the last Lease Year of the Term; (ii) all Additional Charges accruing during
the month; and (iii) all other sums payable by Lessee pursuant to the provisions
of this Lease.  During such period of month-to-month tenancy, Lessee shall be
obligated to perform and observe all of the terms, covenants and conditions of
this Lease, but shall have no rights hereunder other than the right, to the
extent given by law to month-to-month tenancies, to continue its occupancy and
use of the Leased Property.  Nothing contained herein shall constitute the
consent, express or implied, of Lessor to the holding over of Lessee after the
expiration or earlier termination of this Lease.

                                     ARTICLE XX

     20.  RISK OF LOSS.  During the Term of this Lease, the risk of loss or of
decrease in the enjoyment and beneficial use of the Leased Property in
consequence of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures
(to the extent caused by or through Lessee), attachments, levies or executions
(other than those caused by or through Lessor) is assumed by Lessee, and Lessor
shall in no event be answerable or accountable therefor, nor shall any of the
events mentioned in this Paragraph entitle Lessee to any abatement of Rent
except as specifically provided in this 

                                       39
<PAGE>

Lease, or any right to terminate this Lease, except as provided in Articles 
XIV or XV, above.  Without limiting the foregoing, Lessor shall not be liable 
for injury or damage to the person or goods, wares, merchandise or other 
property of Lessee, Lessee's employees, contractors, invitees, customers, or 
any other person in or about the Leased Property, whether such damage or 
injury is caused by or results from fire, steam, electricity, gas, water or 
rain, or from the breakage, leakage, obstruction or other defects of pipes, 
fire sprinklers, wires, appliances, plumbing, air conditioning, or lighting 
fixtures, or from any other cause, whether the said injury or damage results 
from conditions arising upon the Leased Property, or upon other portions of 
the Land, or any part thereof, or from other sources or places, and 
regardless of whether the cause of such damage or injury or the means of 
repairing the same is accessible or not.  Lessor shall not be liable for any 
damages arising from any act or neglect of Lessee, or any other party named 
above.  Lessor shall, however, remain liable for any damages arising from 
Lessor's own willful misconduct.

                                     ARTICLE XXI

     21.  INDEMNIFICATION.  Notwithstanding the existence of any insurance
provided for in Article XIII, and without regard to the policy limits of any
such insurance, Lessee will protect, indemnify, hold harmless and defend Lessor
from and against all liabilities, obligations, claims, demands, damages,
penalties, causes of action, costs, and expenses (including, without limitation,
actual reasonable attorneys' fees and expenses), to the extent permitted by law,
imposed upon or incurred by or asserted against Lessor by reason of any of the
following: (a) any accident, injury to or death of persons or loss of or damage
to property occurring on or about the Leased Property or adjoining sidewalks,
including without limitation any claims of malpractice, whether occurring prior
to or after the Commencement Date; (b) any third party claims of any kind
relating to the Leased Property, the Facilities or the operation thereof,
whether sounding in contract or tort, and whether arising directly or indirectly
from the acts or omissions of Lessor, Lessee, or any of Lessee's teachers,
administrators, students, employees, agents, invitees, guests, permittees or
trespassers; (c) any occupancy, use, misuse, non-use, condition, maintenance, or
repair by Lessee of the Leased Property; (d) any Impositions (which are the
obligations of Lessee to pay pursuant to the applicable provisions of this
Lease, which include any Impositions arising prior to the Commencement Date);
(e) any failure on the part of Lessee to perform or comply with any of the terms
of this Lease; (f) the non-performance of any of the terms and provisions of any
and all existing and future subleases of the Leased Property to be performed by
the landlord (Lessee) thereunder; (g) any Hazardous Materials, as defined in
Paragraph 10.2, above that now or hereafter during the Term may be located in,
on or around, or may potentially affect, any part of the Land or Leased
Improvements; (h) any and all other matters pertaining to the Leased Property or
the operation of the Facilities after the date of this Lease or otherwise during
the Term, including without limitation compliance with or failure to comply with
the provisions of the Fair Housing Amendments Act of 1988, as amended from time
to time, to the extent applicable; and (i) any liability relating to the
construction or development of the Facilities, or any patent or latent defects
in the physical plant of the Facilities, whether arising in connection with
events occurring prior to or after the Commencement Date, including without
limitation compliance with or failure to comply with the provisions of the
federal Americans with Disabilities Act, as amended from time to time.  

                                       40
<PAGE>

Any amounts which become payable by Lessee under this Paragraph shall be paid 
within ten (10) days of the date the same becomes due and if not timely paid, 
shall bear a late charge (to the extent permitted by law) at the Overdue Rate 
from the date of such determination to the date of payment.  Lessee, at its 
expense, shall contest, resist and defend any such claim, action or 
proceeding asserted or instituted against Lessor or may compromise or 
otherwise dispose of the same as Lessee sees fit, at Lessee's sole cost, but 
after consultation with and approval by Lessor.  Nothing herein shall be 
construed as indemnifying Lessor against its willful misconduct.  Lessee's 
liability for a breach of the provisions of this article arising during the 
Term hereof shall survive any termination of this Lease.

                                   ARTICLE XXII

     22.  SUBLETTING AND ASSIGNMENT.  Lessee may not assign, sublease or 
sublet, encumber, appropriate, pledge or otherwise transfer, the Lease or the 
leasehold or other interest in the Leased Property without the prior written 
consent of Lessor, which consent may be given or withheld in Lessor's sole 
discretion. Upon Lessor's consent, (a) in the case of any subletting, the 
sublessee shall comply with the provisions of Paragraph 22.2, and (b) in the 
case of any assignment, any such assignee shall assume in writing and agree 
to keep and perform all of the terms of this Lease on the part of Lessee to 
be kept and performed and shall be, and become, jointly and severally liable 
with Lessee for the performance thereof.  In the case of either an assignment 
or a subletting, (i) an original counterpart of each sublease and assignment 
and assumption, duly executed by Lessee and such sublessee or assignee, as 
the case may be, in form and substance satisfactory to Lessor, shall be 
delivered promptly to Lessor, and (ii) Lessee shall remain primarily liable, 
as principal rather than as surety, for the prompt payment of the Rent and 
for the performance and observance of all of the covenants and conditions to 
be performed by Lessee hereunder.

          22.1   ATTORNMENT.  Lessee shall insert in each sublease permitted 
under Paragraph 22 provisions to that effect that (i) such sublease is 
subject and subordinate to all of the terms and provisions of this Lease and 
the rights of Lessor hereunder; (ii) in the event this Lease shall terminate 
before the expiration of such sublease, the sublessee thereunder will, at 
Lessor's option, attorn to Lessor and waive any right the sublessee may have 
to terminate the sublease or to surrender possession thereunder, as a result 
of the termination of this Lease; and (iii) in the event the sublessee 
receives a written Notice from Lessor or Lessor's assignees, if any, stating 
that Lessee is in default under this Lease, the sublessee shall thereafter be 
obligated to pay all rentals accruing under said sublease directly to the 
party giving such Notice, or as such party may direct.  All rents received 
from the sublessee by Lessor or Lessor's assignees, if any, as the case may 
be, shall be credited against amounts owing by Lessee under this Lease.

          22.2   SUBLEASE LIMITATION.  Anything contained in this Lease to 
the contrary notwithstanding, Lessee shall not sublet the Leased Property on 
any basis such that the rental to be paid by the sublessee thereunder would 
be based, in whole or in part, on either (i) the income or profits derived by 
the business activities of the sublessee; or (ii) any other formula such that 
any portion of the sublease rental received by Lessor would fail to qualify 
as "rents 

                                       41
<PAGE>

from real property" within the meaning of Paragraph 856(d) of the Code, or 
any similar or successor provision thereto.

                                  ARTICLE XXIII

     23.  OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS.

                 (a)     At any time from time-to-time upon not less than 
twenty (20) days Notice by Lessor, Lessee will furnish to Lessor an Officer's 
Certificate certifying that this Lease is unmodified and in full force and 
effect (or that this Lease is in full force and effect as modified and 
setting forth the modifications), the date to which the Rent has been paid 
and such other information concerning this Lease as may be reasonably 
requested by Lessor.  Any such certificate furnished pursuant to this 
Paragraph may be relied upon by Lessor and any prospective purchaser or 
lender of the Leased Property.

                 (b)     Within one hundred twenty (120) days after the end 
of each Fiscal Year, Lessee agrees to provide to Lessor consolidating 
financials for the Facilities for such Fiscal Year, together with an 
Officer's Certificate certifying that all information thereon is true and 
correct.

                 (c)     Within one hundred twenty (120) days after the end 
of each Fiscal Year, Lessee agrees to provide to Lessor audited annual 
financial statements and the Annual Report Form 10-K of Lessee.

                 (d)     In addition to all other obligations to provide 
financial information contained in the Lease, Lessee will furnish the 
following statements to Lessor:

                         (i)  within one hundred twenty (120) days after the 
end of each Lease Year, an Officer's Certificate stating that to the best of 
the signer's knowledge and belief after making reasonable inquiry, Lessee is 
not in default in the performance or observance of any of the terms of this 
Lease, or if Lessee shall be in default to its knowledge, specifying all such 
defaults, the nature thereof, and the steps being taken to remedy the same, 
and

                         (ii)  with reasonable promptness, such other 
information respecting the financial condition and affairs of Lessee as 
Lessor may reasonably request from time-to-time.

                                   ARTICLE XXIV

     24.  LESSOR'S RIGHT OF ENTRY.  Lessee shall allow Lessor and its 
authorized representatives access to the Leased Property on at least one 
Business Day's prior notice during usual business hours, (i) to inspect the 
Leased Property; or (ii) in the event that Lessee does not give Lessor Notice 
to Extend as and when provided under Paragraph 18.1 above, or in any case 
during the last six (6) months of the Term, to show the Leased Property to 
prospective mortgagees or lessees, and otherwise to prepare the Leased 
Property for the change of operation 

                                       42
<PAGE>

as of the expiration of the Term.  Lessor shall not unreasonably interfere 
with Lessee's operation of the Leased Property.  

                                   ARTICLE XXV

          25.1   ASSIGNMENT OF INTANGIBLES.  The date on which this Lease 
either terminates pursuant to its terms or is terminated by either party 
whether pursuant to a right granted to it hereunder or otherwise shall be 
referred to as the "Closing Date" in this Article XXV.  On the Closing Date, 
this Lease shall be deemed and construed as an absolute assignment for 
purposes of vesting in Lessor (or its designee) all of Lessee's right, title 
and interest in and to the following intangible property which is now or 
hereafter used in connection with the operation of the Leased Property (the 
"Intangibles") and an assumption by Lessor (or its designee) of Lessee's 
obligations under the Intangibles:

                 (a)     service contracts for the benefit of the Leased 
Property to which Lessee is a party, and which can be terminated without 
penalty by Lessee or within thirty (30) or fewer days' notice;

                 (b)     any state, federal or other third-party payor 
programs (excluding the right to any reimbursement for periods on or prior to 
the Closing Date) entered in connection with the Leased Property to the 
extent assignable by Lessee;

                 (c)     all licenses, permits, accreditations, charters and 
certificates of occupancy issued by any federal, state, municipal or 
quasi-governmental authority for the use, maintenance or operation of the 
Leased Property, running to or in favor of Lessee;

                 (d)     all documents, charts, personnel records, property 
manuals, records and lists maintained with respect to the Leased Property, 
books, records, files and other business records attributable to the business 
or operations of the Leased Property;

                 (e)     all existing agreements with or relating to students 
at the Leased Property (excluding the right to any payments for periods prior 
to the Closing Date, as hereinafter defined);

                 (f)     all assignable indemnities, guaranties and 
warranties in favor of Lessee with respect to the Leased Property, the 
Lessee's Personal Property and/or the Consumable Inventory;

                 (g)     all other assignable intangible property not 
enumerated herein which is now or hereafter used in connection with the 
operation of the Leased Property as an educational facility; and

                 (h)     The business of the Lessee as conducted at the 
Leased Property as a going concern, including but not limited to the name of 
the school and any other tradenames associated therewith, and all telephone 
numbers presently in use therein.

                                       43
<PAGE>

          25.2   ADJUSTMENTS AND PRORATIONS.  Lessor shall be responsible for 
and pay all accrued expenses with respect to the Leased Property accruing on 
or after 12:01 a.m. on the day after the Closing Date (the "Adjustment Date") 
and shall be entitled to receive and retain all revenues from the Leased 
Property accruing on or after the Adjustment Date.  Within fifteen (15) 
business days after the Closing Date, the following adjustments and 
prorations shall be determined as of the Adjustment Date:

                 (a)     All Impositions.  To the extent the actual amount of 
such Impositions is not available on the Closing Date for the tax year in 
which the Adjustment Date occurs, the proration of such taxes shall be 
estimated at the Closing Date based upon reasonable information available to 
the parties, including information disclosed by the local tax office or other 
public information, and an adjustment shall be made when actual figures are 
published or otherwise become available.

                 (b)     Lessee will terminate the employment of all 
employees on the Closing Date.  The obligation for wages and the obligation, 
if any, to pay to employees of the Leased Property accrued vacation and sick 
leave pay or employer severance pay or other accrued benefits which may be 
payable as the result of any termination of any employee on or prior to the 
Closing Date for the period prior to the Closing Date shall remain the 
Lessee's obligation and shall be satisfied by Lessee as of the Closing Date.

                 (c)     Lessor shall receive a credit equal to any tuition 
or other payments received with respect to students at the Leased Property to 
the extent attributable to periods following the Closing Date.

                 (d)     The present insurance coverage on the Leased 
Property shall be terminated as of the Closing Date and there shall be no 
proration of insurance premiums.

                 (e)     All other income from, and expenses of, the Leased 
Property (other than mortgage interest, principal and trustee fees), 
including but not limited to public utility charges and deposits, maintenance 
charges and service charges shall be prorated between Lessee and Lessor as of 
the Adjustment Date.  Lessee shall, if possible, obtain final utility meter 
readings as of the Closing Date.  To the extent that information for any such 
proration is not available on the Closing Date, Lessee and Lessor shall 
effect such proration within thirty (30) days after the Closing Date.

                 (f)     Lessee shall receive a credit equal to (i) any 
pre-paid Rent, Impositions, insurance premiums or other amounts; (ii) any 
sums held in the Deposit Account for Impositions, Rent or other amounts; and 
(iii) any other sums being held by Lessor or any Facility Mortgagee for the 
benefit of Lessee, which sums shall continue to be held in accordance with 
the applicable provisions of this Lease, which provisions shall remain in 
effect solely for the purposes of determining the disposition of such funds 
being held in escrow.

                                       44
<PAGE>

          25.3   TRANSFER OF OPERATIONS.

                 25.3.1  All necessary arrangements shall be made to provide 
possession of the Leased Property to Lessor on the Closing Date, at which 
time of possession Lessee shall deliver to Lessor all records and other 
personal information concerning all students enrolled at the Leased Property 
at any time prior to or during the Term and other relevant records used or 
developed in connection with the business conducted at the Leased Property.  
Such transfer and delivery shall be in accordance with all applicable laws, 
rules and regulations concerning the transfer of student records.

                 25.3.2  Lessee shall provide Lessor with an accounting of 
all funds belonging to students or employees at the Leased Property which are 
held by Lessee in a custodial capacity.  Such accounting shall set forth the 
names of the parties for whom such funds are held, the amounts held on behalf 
of each such party and the Lessee's warranty that, to the actual current 
knowledge of Lessee, the accounting is true, correct and complete.  
Additionally, Lessee in accordance with all applicable rules and regulations, 
shall make all necessary arrangements to transfer such funds to a bank 
account designated by Lessor, and Lessor shall in writing acknowledge receipt 
of and expressly assume all the Lessee's financial and custodial obligations 
with respect thereto. Notwithstanding the foregoing, Lessee will indemnify, 
defend and hold Lessor harmless from all liabilities, claims and demands, 
including reasonable attorney's fees, in the event the amount of funds, if 
any, transferred to Lessor's bank account as provided above, did not 
represent the full amount of the funds then or thereafter shown to have been 
delivered to Lessee as custodian that remain undisbursed for the benefit of 
the parties for whom such funds were deposited, or with respect to any 
matters relating to any such funds which accrue during the Term of this Lease.

                 25.3.3  All cash, check and cash equivalent at the Leased 
Property and deposits in bank accounts (other than the trust accounts 
referenced in subparagraph 25.3.2 above) relating to the Leased Property on 
the Closing Date shall remain Lessee's property after the Closing Date.  All 
accounts receivable, loans receivable and other receivables of Lessee, 
whether derived from operation of the Leased Property or otherwise, shall 
remain the property of Lessee after the Closing Date.  Lessee shall retain 
full responsibility for the collection thereof.  Lessor shall assume 
responsibility for the billing and collection of payment on account of 
services rendered by it on and after the Closing Date.  In order to 
facilitate Lessee's collection efforts, Lessee agrees to deliver to Lessor, 
within a reasonable time after the Closing Date, a schedule identifying all 
outstanding balances owing for the month prior to the Closing Date and Lessor 
agrees to apply any payments received which are specifically designated as 
being applicable to services rendered prior to the Closing Date to reduce 
such pre-Closing balances by promptly remitting said payments to Lessee.  In 
the event payments specifically indicate that they relate to services 
rendered post-Closing, such payments shall be retained by Lessor.  In the 
event no designation is made, such payments shall be applied one-half to 
Lessee's accounts receivable and one-half to Lessor's accounts receivable.  
Lessor shall cooperate with Lessee in Lessee's collection of its preclosing 
accounts receivable.  Lessor shall have no liability for uncollectible 
receivables and shall not be obligated to bear any expense as a result of 
such activities on behalf of Lessee.  Lessor shall remit to Lessee or its 
assignee those portions of any 

                                       45
<PAGE>

payments received by Lessor arising out of any federal, state or local 
government payment or reimbursement programs to the extent the same relate to 
any period ending on or prior to the Closing Date.

                 25.3.4  If, following the Closing Date, Lessor receives 
payment from any state or federal agency or third-party provider which 
represents reimbursement with respect to services provided at the Leased 
Property prior to the Adjustment Date, Lessor agrees that it shall remit such 
payments to Lessee.  Payments by Lessor to Lessee shall be accompanied by a 
copy of the appropriate remittance.

                 25.3.5  In addition to the obligations required to be 
performed hereunder by Lessee and Lessor at the Closing Date, Lessee and 
Lessor agree to perform such other acts, and to execute, acknowledge, and/or 
deliver subsequent to the Closing Date such other instruments, documents and 
materials, as the other may reasonably request in order to effectuate the 
consummation of the transaction contemplated herein.

                 25.3.6  Lessor shall have the right to offset against any 
monies due Lessee pursuant to the terms of this Article XXV, any amounts due 
by Lessee to Lessor pursuant to this Lease or due by Lessee to any third 
party for taxes, utilities, unemployment insurance premiums, payroll 
obligations or any service for which a comparable service and provider is not 
reasonably available in the applicable geographical area.

                 25.3.7  If the termination of this Lease is a result of an 
Event of Default, then to the extent any monies are due to Lessee pursuant to 
this Article XXV, such sums shall be applied by Lessor to any damages 
suffered by Lessor as a result of Lessee's Event of Default.

          25.4   INDEMNIFICATION.  Lessee for itself, its successors and 
assigns hereby indemnifies and agrees to defend and hold Lessor and its 
successors and assigns harmless from any and all claims, demands, 
obligations, losses, liabilities, damages, recoveries and deficiencies 
(including interest, penalties and reasonable attorney's fees, costs and 
expenses) which any of them may suffer as a result of the breach by Lessee in 
the performance of any of its commitments, covenants, or obligations under 
this Article XXV, or with respect to any suits, arbitration proceedings, 
administrative actions or investigations which relate to the use by Lessee of 
the Leased Property during the Term of this Lease or any liability which may 
arise from operation of the Leased Property as an educational facility during 
the Term of this Lease.  The rights of Lessor under this paragraph are 
without prejudice to any other remedies not inconsistent herewith which 
Lessor may have against Lessee pursuant to the terms of this Lease.

          25.5   NO LIMITATION.  The provisions of this Article XXV shall not 
limit in any way Lessor's rights and remedies under the Security Agreement or 
otherwise under this Lease. 

                                   ARTICLE XXVI

     26.  NO WAIVER.  The waiver by Lessor or Lessee of any term, covenant or 
condition in this Lease shall not be deemed to be a waiver of any other term, 
covenant or condition or any 

                                       46
<PAGE>

subsequent waiver of the same or any other term, covenant or condition 
contained in this Lease.  The subsequent acceptance of rent hereunder by 
Lessor or any payment by Lessee shall not be deemed to be a waiver of any 
preceding default of any term, covenant or condition of this Lease, other 
than the failure to pay the particular amount so received and accepted, 
regardless of the knowledge of any preceding default at the time of the 
receipt or acceptance. 

                                  ARTICLE XXVII

     27.  REMEDIES CUMULATIVE.  To the extent permitted by law, each legal, 
equitable or contractual right, power and remedy of each party now or 
hereafter provided either in this Lease or by statute or otherwise shall be 
cumulative and concurrent and shall be in addition to every other right, 
power and remedy and the exercise or beginning of the exercise by each party 
of any one or more of such rights, powers and remedies shall not preclude the 
simultaneous or subsequent exercise by such party of any or all of such other 
rights, powers and remedies.

                                  ARTICLE XXVIII

     28.  ACCEPTANCE OF SURRENDER.  No surrender to Lessor of this Lease or 
of the Leased Property or any part thereof, or of any interest therein, shall 
be valid or effective unless agreed to and accepted in writing by Lessor and 
no act by Lessor or any representative or agent of Lessor, other than such a 
written acceptance by Lessor, shall constitute an acceptance of any such 
surrender. 

                                   ARTICLE XXIX

     29.  NO MERGER OF TITLE.  There shall be no merger of this Lease or of 
the leasehold estate created hereby by reason of the fact that the same 
person, firm, corporation, or other entity may acquire, own or hold, directly 
or indirectly, (a) this Lease or the leasehold estate created hereby or any 
interest in this Lease or such leasehold estate; and (b) the fee estate in 
the Leased Property. 

                                   ARTICLE XXX

     30.  CONVEYANCE BY LESSOR.  If Lessor or any successor owner of the 
Leased Property shall transfer or assign Lessor's title or interest in the 
Leased Property or this Lease other than as security for a debt, then, 
subject to the provisions of this Article XXX and provided the new owner has 
agreed in writing for the benefit of Lessee to recognize this Lease and be 
bound by all of the terms and conditions hereof, Lessor shall thereupon be 
released from all future liabilities and obligations of Lessor under this 
Lease arising or accruing from and after the date of such transfer or 
assignment and all such future liabilities and obligations shall thereupon be 
binding upon the new owner.  

                                       47
<PAGE>

                                   ARTICLE XXXI

     31.  QUIET ENJOYMENT.  So long as Lessee shall pay all Rent as the same 
becomes due and shall comply with all of the terms of this Lease and perform 
its obligations hereunder, and except for any claims, actions, liens or 
encumbrances arising from the acts or omissions of Lessee or otherwise from 
events occurring prior to the Commencement Date hereunder, Lessee shall 
peaceably and quietly have, hold and enjoy the Leased Property for the Term 
hereof, free of any claim or other action by Lessor or anyone claiming by, 
through or under Lessor, but subject to all liens and encumbrances of record 
as of the date hereof or hereafter consented to by Lessee.  Except as 
otherwise provided in this Lease, no failure by Lessor to comply with the 
foregoing covenant or any covenant of this Lease shall give Lessee any right 
to cancel or terminate this Lease or abate, reduce or made a deduction from 
or offset against the Rent or any other sum payable under this Lease, or to 
fail to perform any other obligation of Lessee hereunder. 

                                  ARTICLE XXXII

     32.  NOTICES.  All notices, demands, requests, consents, approvals, and 
other communications ("Notice" or "Notices") hereunder shall be in writing 
and shall be either (a) personally served; (b) sent by facsimile transmittal; 
or (c) sent by overnight courier (such as Federal Express, DHL, etc.).  If 
sent by facsimile, receipt shall be deemed effective upon confirmation of 
transmittal thereof; and if sent via overnight courier, receipt shall be 
deemed effective twenty-four (24) hours after the sending thereof.  All 
notices to be given pursuant to this Lease shall be given to the parties at 
the following respective addresses.

          (a)    If to Lessee:          The Tesseract Group, Inc.
                                        3800 West 80th Street, Suite 1400
                                        Minneapolis, Minnesota 55431
                                        Attention: Mr. John T. Golle

                 with a copy to:        Faegre & Benson
                                        2500 Republic Plaza
                                        370 Seventeenth Street
                                        Denver, Colorado 80202-4004
                                        Attention: Diane B. Davies, Esq.

          (b)    If to Lessor:          EduCorp Properties, Inc.
                                        c/o LTC Properties, Inc.
                                        300 Esplanade Drive, Suite 1860
                                        Oxnard, California 93030
                                        Attention:  Mr. Christopher T. Ishikawa

                                       48
<PAGE>

                 with a copy to:        EduCorp Properties, Inc.
                                        c/o LTC Properties, Inc.
                                        300 Esplanade Drive, Suite 1860
                                        Oxnard, California 93030
                                        Attention:  Pamela J. Privett, Esq.

                              and:      Stern, Neubauer, Greenwald & Pauly
                                        1299 Ocean Avenue, Tenth Floor
                                        Santa Monica, CA  90401-1007
                                        Attention:  Dennis L. Greenwald, Esq.

                                  ARTICLE XXXIII

          33.1   LESSOR MAY GRANT LIENS.  Lessor may, subject to the terms 
and conditions set forth below in this Paragraph 33.1, from time-to-time, 
directly or indirectly, create or otherwise cause to exist any lien or 
encumbrance or any other change of title ("Encumbrance") upon the Leased 
Property, or any portion thereof or interest therein, whether to secure any 
borrowing or other means of financing or refinancing.  Any such Encumbrance 
shall contain the right to prepay (whether or not subject to a prepayment 
penalty) and shall provide that it is subject to the rights of Lessee under 
this Lease, provided that any holder of an Encumbrance shall (a) give Lessee 
the same notice, if any, given to Lessor of any default or acceleration of 
any obligation underlying any such mortgage or any sale in foreclosure under 
such mortgage; (b) permit Lessee to cure any such default on Lessor's behalf 
within any applicable cure period, and Lessee shall be reimbursed by Lessor 
or shall be entitled to offset against Minimum Rent payments next accruing or 
coming due for any and all costs incurred in effecting such cure, including, 
without limitation, out-of-pocket costs incurred to effect any such cure 
(including reasonable attorneys' fees); (c) permit Lessee to appear and to 
bid at any sale in foreclosure made with respect to, and/or any sale by 
virtue of the exercise of the power of sale contained in, any such mortgage, 
and (d) provide that in the event of foreclosure or other possession of the 
Leased Property by the Mortgagee, that the Mortgagee (or other purchaser) 
shall be bound by the terms and provisions of this Lease.  Upon the 
reasonable request of Lessor, Lessee shall execute an agreement to the effect 
that this Lease shall be subject and subordinate to the lien of a new 
mortgage on the Leased Property, and that in the event of any default or 
foreclosure under such mortgage, Lessee shall attorn to the new mortgagee, 
and as otherwise requested by Lessor on the condition that the mortgagee 
execute a non-disturbance agreement recognizing this Lease and agreeing, for 
itself and its successor and assigns, to comply with the provisions of this 
Article XXXIII. 

          33.2   LESSEE'S RIGHT TO CURE.  Subject to the provisions of 
Paragraph 33.3, if Lessor breaches any covenant to be performed by it under 
this Lease, Lessee, after Notice to and demand upon Lessor, without waiving 
or releasing any obligation hereunder, and in addition to any other remedies 
available to Lessee, may (but shall be under no obligation at any time 
thereafter to) make such payment or perform such act for the account and at 
the expense of Lessor.  All sums so paid by Lessee and all costs and expenses 
(including, without limitation, reasonable attorneys' fees) so incurred, 
together with interest thereon from the date on which 

                                       49
<PAGE>

such sums or expenses are paid or incurred by Lessee, shall be paid by Lessor 
to Lessee on demand, but may not be offset by Lessee against payments of Rent 
hereunder.  

          33.3   BREACH BY LESSOR.  It shall be a breach of this Lease if 
Lessor fails to observe or perform any term, covenant or condition of this 
Lease on its part to be performed, and such failure shall continue for a 
period of thirty (30) days after Notice thereof from Lessee unless such 
failure cannot with due diligence be cured within a period of thirty (30) 
days, in which case such failure shall not be deemed to continue if Lessor, 
within said thirty (30) day period, proceeds promptly, continuously and with 
due diligence to cure the failure and diligently completes the curing 
thereof.  The time within which Lessor shall be obligated to cure any such 
failure shall also be subject to extension of time due to the occurrence of 
any Unavoidable Delay.

                                  ARTICLE XXXIV

     34.  MISCELLANEOUS.

          34.1   SURVIVAL OF OBLIGATIONS.  Anything contained in this Lease 
to the contrary notwithstanding, all claims against, and liabilities of, 
Lessee or Lessor arising prior to, or in connection with any event occurring 
prior to, the date of any expiration or termination of this Lease or the date 
of Lessee's surrender of possession, whichever is later, shall survive such 
termination or surrender of possession.

          34.2   LATE CHARGES; INTEREST.  If any interest rate provided for 
in any provision of this Lease is based upon a rate in excess of the maximum 
rate permitted by applicable law, the parties agree that such charges shall 
be fixed at the maximum permissible rate.

          34.3   LIMITS OF LESSOR'S LIABILITY.  Lessee specifically agrees to 
look solely to the assets of Lessor for recovery of any judgment against 
Lessor, it being specifically agreed that no constituent shareholder, officer 
or director of Lessor shall ever be personally liable for any such judgment 
or the payment of any monetary obligation to Lessee.  The provision contained 
in the foregoing sentence is not intended to, and shall not, limit any right 
that Lessee might otherwise have to obtain injunctive relief against Lessor 
or Lessor's successors in interest, or any action not involving the personal 
liability of Lessor (original or successor).  Additionally, Lessor shall be 
exonerated from any further liability under this Lease upon Lessor's transfer 
or other divestiture of its ownership of the Leased Property, provided that 
the assignee or grantee shall expressly assume in writing the obligations of 
Lessor hereunder.  Furthermore, in no event shall Lessor (original or 
successor) ever be liable to Lessee for any indirect or consequential damages 
suffered by Lessee from whatever cause.

          34.4   PROHIBITED TRANSACTIONS.  At all times during the Term of 
this Lease, Lessee shall be prohibited from directly or indirectly engaging 
in any of the following transactions (collectively, "Prohibited 
Transactions"): (a) buying back any shares of corporate stock; (b) declaring 
a dividend to shareholders of Lessee; and (c) repaying any loan or other 
indebtedness to any current or former directors, officers, shareholders or 
affiliates of Lessee; 

                                       50
<PAGE>

provided, however, that Lessee may engage in Prohibited Transactions during 
any period that, and so long as, Lessee's debt to adjusted equity (measured 
as total shareholders' equity determined in accordance with GAAP, less 
goodwill) ratio is less than twenty-five percent (25%).

          34.5   ADDENDUM, AMENDMENTS AND EXHIBITS.  Any addendum, amendments 
and exhibits attached to this Lease are hereby incorporated in this Lease and 
made a part of this Lease.

          34.6   HEADINGS.  The headings and paragraph titles in this Lease 
are not a part of this Lease and shall have no effect upon the construction 
or interpretation of any part of this Lease.

          34.7   TIME.  Time is of the essence of this Lease and each and all 
of its provisions.

          34.8   DAYS.  Unless otherwise expressly indicated herein, any 
reference to "days" in this Lease shall be deemed to refer to calendar days.

          34.9   RENT.  Each and every monetary obligation under this Lease 
shall be deemed to be "Rent" under this Lease and for all other purposes 
under law.

          34.10  APPLICABLE LAW.  This Lease shall be governed by and 
construed in accordance with the laws of the State of Arizona, but not 
including its conflicts of laws rules; thus the law that will apply is the 
law applicable to a transaction solely within the State of Arizona, including 
parties solely domiciled in the State of Arizona.

          34.11  SUCCESSORS AND ASSIGNS.  The covenants and conditions 
contained in this Lease shall, subject to the provisions regarding assignment 
(Article XXII), apply to and bind the heirs, successors, executors, 
administrators, and assigns of Lessor and Lessee.

          34.12  RECORDATION.  Lessor and Lessee shall execute with 
appropriate acknowledgments and record in the Official Records of the county 
where the Leased Property is located, that certain Short Form Lease in the 
form and content of EXHIBIT "B" attached hereto.  Lessor and Lessee shall 
equally share the cost of recording the Memorandum of Lease.

          34.13  PRIOR AND FUTURE AGREEMENTS.  This Lease contains all of the 
agreements of Lessor and Lessee with respect to any matter covered or 
mentioned in this Lease, and no prior agreements or understanding pertaining 
to any such matters shall be effective for any purpose.  No provision of this 
Lease may be amended or supplemented except by an agreement in writing signed 
by both Lessor and Lessee or their respective successors in interest.  This 
Lease shall not be effective or binding on any party until fully executed by 
both Lessor and Lessee.

                                       51
<PAGE>

          34.14  PARTIAL INVALIDITY.  Any provision of this Lease which shall 
be held by a court of competent jurisdiction to be invalid, void or illegal 
shall in no way affect, impair or invalidate any other provision or term of 
this Lease, and such other provision or terms shall remain in full force and 
effect.

          34.15  ATTORNEYS' FEES.  In the event of any action or proceeding 
brought by one party against the other under this Lease, the prevailing party 
shall be entitled to recover its attorneys' fees in such action or proceeding 
from the other party, including all attorneys' fees incurred in connection 
with any appeals, and any post-judgment attorneys' fees incurred in efforts 
to collect on any judgment.

          34.16  AUTHORITY OF LESSOR AND LESSEE.  Lessor and Lessee each 
hereby represent and warrant that the individuals signing on its behalf are 
duly authorized to execute and deliver this Lease on behalf of the 
corporation, in accordance with the bylaws of the corporation, and that this 
Lease is binding upon the corporation.

          34.17  RELATIONSHIP OF THE PARTIES.  Nothing contained in this 
Lease shall be deemed or construed by Lessor or Lessee, nor by any third 
party, as creating the relationship of principal and agent or a partnership, 
or a joint venture by Lessor or Lessee, it being understood and agreed that 
no provision contained in this Lease nor any acts of Lessor and Lessee shall 
be deemed to create any relationship other than the relationship of landlord 
and tenant.

          34.18  COUNTERPARTS.  This Lease may be executed in one or more 
separate counterparts, each of which, once they are executed, shall be deemed 
to be an original.  Such counterparts shall be and constitute one and the 
same instrument.

                                       52
<PAGE>

          34.19  BROKERS.  Lessor warrants to Lessee that, other than Sperry 
Van Ness, it has had no dealings with any real estate broker or agent in 
connection with the negotiation of this Lease and it knows of no real estate 
broker or agent who is entitled to a commission in connection with this 
Lease. Lessee warrants to Lessor that, other than Stanford M. Baratz or 
Baratz Financial, it has had no dealings with any real estate broker or agent 
in connection with the negotiation of this Lease and it knows of no real 
estate broker or agent who is entitled to a commission in connection with 
this Lease. Lessor and Lessee hereby agree to indemnify the other and to hold 
the other harmless from and against any and all costs, expenses, claims, 
damages, suits, including attorneys' fees, in any way resulting from claims 
or demands for commissions or other compensation from any real estate brokers 
claiming through such party with respect to this Lease.

     WHEREFORE, each of the parties has accepted and agreed by affixing their 
respective authorized signatures below as of the date first above written.

<TABLE>
<CAPTION>
<S>                             <C>
     "LESSEE"                   THE TESSERACT GROUP, INC., 
                                A MINNESOTA CORPORATION


                                By: /s/ Tony Verbeten
                                   ----------------------------------------

                                Name: Tony Verbeten
                                     --------------------------------------

                                Its: Chief Financial Officer
                                    ---------------------------------------

     "LESSOR"                   EDUCORP PROPERTIES, INC., 
                                A NEVADA CORPORATION


                                By:
                                   ----------------------------------------

                                Name:
                                     --------------------------------------

                                Its:
                                    ---------------------------------------
</TABLE>

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