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                                     LEASE

                               DATED JUNE 9, 1998

                                    BETWEEN

                      EDUCORP PROPERTIES, INC., as Lessor

                                      and

                      THE TESSERACT GROUP, INC., as Lessee

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                               TABLE OF CONTENTS


ARTICLE I  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
     1.1   Leased Property . . . . . . . . . . . . . . . . . . . . . . . . .   1
     1.2   Term  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
     1.3   Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . .   2
           1.3.1  Lessor's Acquisition of the Leased Property  . . . . . . .   2
           1.3.2  Cross-Default with Related Leases  . . . . . . . . . . . .   2
           1.3.3  Security Documents . . . . . . . . . . . . . . . . . . . .   2

ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
     2.    Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . .   3

ARTICLE III  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
     3.1   Rent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
           3.1.1  Minimum Rent . . . . . . . . . . . . . . . . . . . . . . .   7
           3.1.2  Pre-Payment of Minimum Rent  . . . . . . . . . . . . . . .   8
     3.2   Annual Escalation of Minimum Rent . . . . . . . . . . . . . . . .   8
     3.3   Additional Charges  . . . . . . . . . . . . . . . . . . . . . . .   9
     3.4   Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
     3.5   Late Charge . . . . . . . . . . . . . . . . . . . . . . . . . . .   9

ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
     4.1   Payment of Impositions  . . . . . . . . . . . . . . . . . . . . .  10
     4.2   Notice of Impositions . . . . . . . . . . . . . . . . . . . . . .  11
     4.3   Utility Charges . . . . . . . . . . . . . . . . . . . . . . . . .  11
     4.4   Insurance Premiums  . . . . . . . . . . . . . . . . . . . . . . .  11
     4.5   Payables  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
     4.6   Pre-Payment of Impositions and Insurance Premiums . . . . . . . .  11

ARTICLE V  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
     5.1   No Termination, Abatement, etc  . . . . . . . . . . . . . . . . .  12
     5.2   Abatement Procedures  . . . . . . . . . . . . . . . . . . . . . .  13

ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
     6.1   Ownership of the Leased Property  . . . . . . . . . . . . . . . .  13
     6.2   Lessee's Personal Property  . . . . . . . . . . . . . . . . . . .  13
     6.3   Consumable Inventory  . . . . . . . . . . . . . . . . . . . . . .  13
     6.4   Lessor's Purchase Option  . . . . . . . . . . . . . . . . . . . .  14

ARTICLE VII  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
     7.1   Condition of Leased Property  . . . . . . . . . . . . . . . . . .  15
     7.2   Use of the Leased Property  . . . . . . . . . . . . . . . . . . .  15
     7.3   Radius Restriction  . . . . . . . . . . . . . . . . . . . . . . .  16


                                      i

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ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
     8.1   Compliance with Legal and Insurance Requirements,
           Instruments, etc. . . . . . . . . . . . . . . . . . . . . . . . .  17
     8.2   Legal Requirement Covenants . . . . . . . . . . . . . . . . . . .  17

ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
     9.1   Maintenance and Repair  . . . . . . . . . . . . . . . . . . . . .  18
     9.2   Expenditures to Comply with Law . . . . . . . . . . . . . . . . .  19
     9.3   Encroachments, Restrictions, etc. . . . . . . . . . . . . . . . .  19

ARTICLE X  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
     10.1  Lessee's Obligations for Hazardous Materials  . . . . . . . . . .  20
     10.2  Definition of Hazardous Materials . . . . . . . . . . . . . . . .  20

ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
     11.1  No Liens  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21

ARTICLE XII  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
     12.   Permitted Contests  . . . . . . . . . . . . . . . . . . . . . . .  21

ARTICLE XIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
     13.1  General Insurance Requirements  . . . . . . . . . . . . . . . . .  22
     13.2  Replacement Cost  . . . . . . . . . . . . . . . . . . . . . . . .  23
     13.3  Additional Insurance  . . . . . . . . . . . . . . . . . . . . . .  23
     13.4  Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . .  23
     13.5  Form Satisfactory, etc. . . . . . . . . . . . . . . . . . . . . .  23
     13.6  Increase in Limits  . . . . . . . . . . . . . . . . . . . . . . .  24
     13.7  Blanket Policy  . . . . . . . . . . . . . . . . . . . . . . . . .  24
     13.8  No Separate Insurance . . . . . . . . . . . . . . . . . . . . . .  24
     13.9  Continuous Coverage . . . . . . . . . . . . . . . . . . . . . . .  24

ARTICLE XIV  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
     14.1  Insurance Proceeds  . . . . . . . . . . . . . . . . . . . . . . .  24
     14.2  Reconstruction in the Event of Damage or Destruction Covered
           by Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . .  25
     14.3  Reconstruction in the Event of Damage or Destruction Not
           Covered by Insurance  . . . . . . . . . . . . . . . . . . . . . .  25
     14.4  Lessee's Personal Property  . . . . . . . . . . . . . . . . . . .  25
     14.5  Restoration of Lessee's Property  . . . . . . . . . . . . . . . .  26
     14.6  No Abatement of Rent  . . . . . . . . . . . . . . . . . . . . . .  26
     14.7  Waiver  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26

ARTICLE XV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
     15.   Condemnation  . . . . . . . . . . . . . . . . . . . . . . . . . .  26
     15.1  Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
     15.2  Parties' Rights and Obligations . . . . . . . . . . . . . . . . .  26
     15.3  Total Condemnation  . . . . . . . . . . . . . . . . . . . . . . .  26


                                      ii

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     15.4  Allocation of Portion of Award  . . . . . . . . . . . . . . . . .  27
     15.5  Partial Taking  . . . . . . . . . . . . . . . . . . . . . . . . .  27
     15.6  Temporary Taking  . . . . . . . . . . . . . . . . . . . . . . . .  27

ARTICLE XVI  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
     16.1  Events of Default . . . . . . . . . . . . . . . . . . . . . . . .  28
     16.2  Certain Remedies  . . . . . . . . . . . . . . . . . . . . . . . .  30
     16.3  Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
     16.4  Waiver  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
     16.5  Application of Funds  . . . . . . . . . . . . . . . . . . . . . .  32

ARTICLE XVII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
     17.   Lessor's Right to Cure Lessee's Default . . . . . . . . . . . . .  32

ARTICLE XVIII  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
     18.1  Options to Extend . . . . . . . . . . . . . . . . . . . . . . . .  32
     18.2  Minimum Rent During Extended Terms  . . . . . . . . . . . . . . .  33

ARTICLE XIX  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
     19.   Holding Over  . . . . . . . . . . . . . . . . . . . . . . . . . .  34

ARTICLE XX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
     20.   Risk of Loss  . . . . . . . . . . . . . . . . . . . . . . . . . .  35

ARTICLE XXI  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
     21.   Indemnification . . . . . . . . . . . . . . . . . . . . . . . . .  35

ARTICLE XXII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
     22.   Subletting and Assignment . . . . . . . . . . . . . . . . . . . .  36
     22.1  Attornment  . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
     22.2  Sublease Limitation . . . . . . . . . . . . . . . . . . . . . . .  37

ARTICLE XXIII  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
     23.   Officer's Certificates and Financial Statements . . . . . . . . .  37

ARTICLE XXIV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
     24.   Lessor's Right of Entry . . . . . . . . . . . . . . . . . . . . .  38

ARTICLE XXV  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
     25.1  Assignment of Intangibles . . . . . . . . . . . . . . . . . . . .  38
     25.2  Adjustments and Prorations  . . . . . . . . . . . . . . . . . . .  39
     25.3  Transfer of Operations  . . . . . . . . . . . . . . . . . . . . .  40
     25.4  Indemnification . . . . . . . . . . . . . . . . . . . . . . . . .  41
     25.5  No Limitation . . . . . . . . . . . . . . . . . . . . . . . . . .  41

ARTICLE XXVI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42


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     26.   No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42

ARTICLE XXVII  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
     27.   Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . .  42

ARTICLE XXVIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
     28.   Acceptance of Surrender . . . . . . . . . . . . . . . . . . . . .  42

ARTICLE XXIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
     29.   No Merger of Title  . . . . . . . . . . . . . . . . . . . . . . .  42

ARTICLE XXX  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
     30.   Conveyance by Lessor  . . . . . . . . . . . . . . . . . . . . . .  42

ARTICLE XXXI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
     31.   Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . .  43

ARTICLE XXXII  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
     32.   Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43

ARTICLE XXXIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
     33.1  Lessor May Grant Liens  . . . . . . . . . . . . . . . . . . . . .  44
     33.2  Lessee's Right to Cure  . . . . . . . . . . . . . . . . . . . . .  44
     33.3  Breach by Lessor  . . . . . . . . . . . . . . . . . . . . . . . .  45

ARTICLE XXXIV  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
     34.   Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . .  45
     34.1  Survival of Obligations . . . . . . . . . . . . . . . . . . . . .  45
     34.2  Late Charges; Interest  . . . . . . . . . . . . . . . . . . . . .  45
     34.3  Limits of Lessor's Liability  . . . . . . . . . . . . . . . . . .  45
     34.4  Prohibited Transactions . . . . . . . . . . . . . . . . . . . . .  45
     34.5  Addendum, Amendments and Exhibits . . . . . . . . . . . . . . . .  46
     34.6  Headings  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
     34.7  Time  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
     34.8  Days  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
     34.9  Rent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
     34.10 Applicable Law  . . . . . . . . . . . . . . . . . . . . . . . . .  46
     34.11 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . .  46
     34.12 Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
     34.13 Prior and Future Agreements . . . . . . . . . . . . . . . . . . .  46
     34.14 Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . .  46
     34.15 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . .  47
     34.16 Authority of Lessor and Lessee. . . . . . . . . . . . . . . . . .  47
     34.17 Relationship of the Parties . . . . . . . . . . . . . . . . . . .  47
     34.18 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . .  47
     34.19 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48


                                      iv

<PAGE>


                                       LEASE



     THIS LEASE (this "Lease") is made as of the 9th day of June, 1998, by and
between EDUCORP PROPERTIES, INC., a Nevada corporation, herein called "Lessor",
and THE TESSERACT GROUP, INC., a Minnesota corporation, herein called "Lessee",
subject to the terms, conditions and contingencies set forth below.

                                     ARTICLE I

          1.1    LEASED 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 "Leased Property"):

                 (i)     The real property situated in the City of Eagan, County
of Dakota, State of Minnesota and more particularly described in EXHIBIT "A"
attached hereto (the "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 Land (collectively, the "Leased
Improvements");

                 (iii)   All easements, rights and appurtenances relating to the
Land and the Leased 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 Leased 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 Purchase Agreement (collectively the
"Fixtures"); and

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

          The Leased Property includes that certain educational facility
commonly known as "The Eagan School" situated on the Land.  Notwithstanding the
foregoing, the Leased Property shall not include any property not acquired by
Lessor pursuant to the Purchase 

                                      1

<PAGE>

Agreement.  The Leased 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 Leased Property and all matters disclosed in the 
ALTA survey obtained in connection with such title insurance (collectively 
the "Permitted Title Matters").

          1.2    TERM.  The initial term of the Lease (the "Initial Term")
shall be the period commencing on the closing (the "Closing") under the Purchase
Agreement (the "Commencement Date") and expiring on July 31, 2013.  Promptly
after the Closing, Lessor and Lessee shall execute a memorandum setting forth
the Commencement Date.  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 LEASED PROPERTY.  Lessee
acknowledges and agrees that, at the time of executing this Lease, Lessor does
not own the Leased Property, but Lessor has a right to purchase the Leased
Property pursuant to the Purchase Agreement.  This Lease, and all obligations
hereunder of either party, are contingent upon Lessor's acquisition of the fee
simple interest in the Leased Property.  Therefore, if Lessor has not acquired
fee simple title to the Leased 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, 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
Agreement (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"). 

                                      2

<PAGE>

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.

          BUSINESS DAY.  Each Monday, Tuesday, Wednesday, Thursday, and Friday,
which is not a day on which national banks in the State of Minnesota 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.

                                      3

<PAGE>

          FACILITY.  That certain educational facility which is part of the
Leased Property, as defined in Article I, above.

          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 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
Facility, depreciation recapture, any other taxes (except for the specific
exclusions stated below), fees or charges imposed by the State of Minnesota and
any potential subdivision thereof relating to the Facility 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.

                                      4

<PAGE>

          LAND.  As defined in Article I.

          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 Article I.

          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 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 

                                      5

<PAGE>

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 Minnesota, 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 Minnesota, 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.

          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."

          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 Leased Property.

          RELATED LEASES.  One or more 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) "Paradise Valley Montessori School" located at 16210
N. 40th Street and 3916 E. Paradise Lane, in the City of Phoenix, Arizona; (ii)
"Paradise Valley School," located at 4800 East Doubletree Ranch Road, Paradise
Valley, Arizona 85253; (iii) "Ahwatukee TesseracT School" located at 4515 E.
Muirwood Drive, in the City of Phoenix, Arizona; and (iv) "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.

                                      6

<PAGE>

          SECURITY AGREEMENT.  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 the
Facility such that by reason of damage or destruction, or a partial taking by
Condemnation, the number of students that can be accommodated at the 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.

          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 "Minimum Rent" is the annual
sum of $378,750.00.  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

                                      7

<PAGE>

                         (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 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 

                                      8

<PAGE>

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 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. 

                                      9

<PAGE>

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 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 

                                      10

<PAGE>

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 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 Facility 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 Facility, 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

                                      11

<PAGE>

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 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 

                                      12

<PAGE>

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 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 the Facility in a manner consistent with its standard of 
operation as of the commencement of this Lease, in compliance with 
accreditation requirements (if the Facility has obtained accreditation), in 
compliance with all other applicable Legal Requirements and Insurance 
Requirements, and 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.  
Notwithstanding the foregoing, the parties acknowledge and agree that, 
pursuant to that certain Security Agreement ("Security Agreement") dated as 
of even date herewith, by Lessee for the benefit of Lessor, in the form 
attached hereto as Exhibit "D," Lessee shall grant 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 the Facility as of the
Commencement Date ("Consumable Inventory") will be completely consumed or
otherwise disposed of during the 

                                      13

<PAGE>

course of Lessee's operation of the 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 to fully equip the 
Facility for its operation and maintenance as may be customary for 
educational facilities comparable to the Leased Property.

          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.

                                       14
<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 the Facility.  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 licenses, permits and approvals necessary 
or desirable for the use and operation of the Leased Property and the 
Facility under applicable federal, state and local law, and to use reasonable 
best efforts to obtain and thereafter maintain the full accreditation of the 
Facility.  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 the Facility, and any other such information or documents 
concerning the operation of the Facility.

                 7.2.2   After the Commencement Date and during the entire 
Term, Lessee shall use or cause to be used the Leased Property as an 
educational facility having all licenses, permits and approvals necessary to 
operate a private pre-school and elementary/middle school (serving 
kindergarten and certain higher grades) in the State of Minnesota 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 

                                       15
<PAGE>

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; and 
(b) it will apply for, use reasonable best efforts to obtain, and thereafter 
maintain its accreditation.

                 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 Facility, 
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 Facility 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 provided in 
connection with the Facility 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.

                                       16
<PAGE>

                 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 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 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 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 

                                       17
<PAGE>

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 Facility, 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 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 

                                       18
<PAGE>

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 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 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 

                                       19
<PAGE>

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 that 
certain environmental report, dated March 12, 1997, and prepared by Nova 
Environmental Services as Project No. M97-239 (Client No. M-2557), together 
with the reliance letter dated May 26, 1998 from Nova Environmental Services 
to Lessor and the review thereof performed by SECOR International 
Incorporated (the "Environmental Report").  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 Report, 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, 

                                       20
<PAGE>

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 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 

                                       21
<PAGE>

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 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 
Facility, 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 

                                       22
<PAGE>

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 $3,200,000.00.

          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 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 Facility, 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 

                                       23
<PAGE>

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.

          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 Facility 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 

                                       24
<PAGE>

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 is totally 
or partially destroyed by a risk covered by the insurance described in 
Article XIII and whether or not the Facility thereby 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 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 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 

                                       25
<PAGE>

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 the Leased Property 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 which Lessor is obligated to restore or may restore under any 
of the provisions of this Lease.

                                   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
Leased Property shall be taken or condemned by any Condemnor, this Lease shall
cease and terminate 

                                       26
<PAGE>

as of the Date of Condemnation by said Condemnor.  If title to the fee of 
less than the whole of the Leased Property shall be so taken or condemned, 
which nevertheless renders the Leased Property 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 of the 
date of the occurrence of such first event.  If such Notice has timely been 
given, this Lease shall thereupon cease and terminate.  Upon the termination 
of the Lease, all Minimum Rent, and Additional Charges paid or payable by 
Lessee hereunder shall be apportioned as of the date the Lease terminates.

          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 
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 Leased Property shall be so taken or condemned, and the Leased 
Property 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 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 

                                       27
<PAGE>

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 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 occupancy as set forth in this Paragraph 15.6, it will, at 
its sole cost and expense, restore the Leased Property 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, 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, if Lessee commits an 
"Event of Default" under this 

                                       28
<PAGE>

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 does any of the following:

                         (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

                 (g)  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 the Facility, 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

                 (h)  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

                 (i)  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

                 (j)  if Lessee voluntarily ceases operations on the Leased 
Property 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

                                       29
<PAGE>

                 (k)  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 

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

                 (m)  subject to the provisions of Article XII hereof, if 
Lessee ceases to maintain in effect any license, permit, certificate or 
approval necessary or otherwise required to operate the Facility in 
accordance with its Primary Intended Use.

          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 Minnesota 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 Minnesota.  Without limiting the foregoing, 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, 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

                                       30
<PAGE>

costs of re-leasing, including, but not limited to, broker's commissions and 
attorneys' fees, except as limited by Paragraph 16.3 below.

          16.3   DAMAGES.  Neither (i) the termination of this Lease pursuant 
to Section 16.1, (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 Minnesota (or the 
Overdue Rate, whichever is lower), from the date when due until paid, and 

                                       31
<PAGE>

Lessor may enforce, by action or otherwise, any other term or covenant of 
this Lease.  If Lessor 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   WAIVER.  If this Lease is terminated pursuant to Paragraph 
16.1, 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.

          16.5   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 Minnesota.

                                  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 
Facility.  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 

                                       32
<PAGE>

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:

                 (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 

                                       33
<PAGE>

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 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 

                                       34
<PAGE>

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 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 
Facility 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 

                                       35
<PAGE>

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 Facility 
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 Facility, or any patent or latent defects in the physical 
plant of the Facility, 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.  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 

                                       36
<PAGE>

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 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 Facility 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.

                                       37

<PAGE>

                                   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 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 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;


                                     38

<PAGE>

                 (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.

          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 


                                      39

<PAGE>

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.

          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 


                                      40

<PAGE>

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 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. 


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<PAGE>

                                    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 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.  


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<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


                                      43

<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 


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<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 late charge or 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; 


                                      45

<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 Minnesota, 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 Minnesota, 
including parties solely domiciled in the State of Minnesota.

          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 Dakota 
County, 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.

          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 


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<PAGE>

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.


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<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.

     "LESSEE"                   THE TESSERACT GROUP, INC., 
                                A MINNESOTA CORPORATION


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

                                Name: /s/ Tony Verbeten
                                     -------------------------------------

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


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


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

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

                                Its:
                                    --------------------------------------


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