LEASE AGREEMENT

                             Dated December 16, 1996

                                 By and Between

                               WILLIAM I. ROBERTS,

                                    as Lessor

                                       and

                            BLUE FISH CLOTHING, INC.,

                                    as Lessee

                                       RE:

                              2035 Edgewood Avenue
                Palmer Township, Northampton County, Pennsylvania







                                 LEASE AGREEMENT

         THIS AGREEMENT made this 16th day of December, 1996, between WILLIAM I.
ROBERTS, an individual (with his heirs and assigns, hereinafter called "Lessor),
with offices at 99 South Cameron  Street,  Harrisburg,  PA 17101,  and BLUE FISH
CLOTHING, INC. (hereinafter called "Lessee"),  whose present address is #3 Sixth
Street, Frenchtown, NJ 08825.

         WHEREAS,  Lessor  is the  owner  of that  certain  parcel  of  property
consisting  of  approximately  7.5 acres,  situated  in the  Township of Palmer,
Northampton County, Pennsylvania, known as 2035 Edgewood Avenue, as specifically
depicted on Exhibit A attached  hereto (the  "Land"),  being  improved with four
buildings,  i.e.,  building "1A"  containing  11,440  square feet,  building "2"
containing  33,600 square feet,  building "3" containing 23,042 square feet, and
building "10" containing  27,900 square feet,  together with parking  facilities
for approximately 175 vehicles and related  appurtenances (the  "Improvements"),
which  Land  and  Improvements  collectively  herein  are  referred  to  as  the
"Property"; and

         WHEREAS,  Lessee desires to lease from Lessor a portion of the Property
consisting of building "2",  building "3",  building  "1a",  the fifth floor and
parking facilities for 160 vehicles and related  appurtenances,  as specifically
depicted  on  Exhibit B  attached  hereto and  hereby  made a part  hereof  (the
"Demised Premises"); and

         WHEREAS,  Lessor has agreed, among other things, to lease to Lessee the
Demised  Premises  in  accordance  with the terms and  conditions  of this Lease
Agreement.

         NOW THEREFORE,  in  consideration  of the mutual  covenants  herein set
forth and intending to be legally bound, Lessor and Lessee agree, as follows:

                      ARTICLE 1 - LEASE OF DEMISED PREMISES

         1.1  Lease of  Demised  Premises.  Lessor  hereby  leases  the  Demised
Premises to Lessee,  and Lessee hereby leases the Demised  Premises from Lessor,
for the Term herein  described,  at the rent and upon the mutual  covenants  and
conditions set forth in this Lease Agreement.

                 ARTICLE 2 - TERM; DELIVERY OF DEMISED PREMISES

         2.1  Term; Delivery  of Demised  Premises.  Term:  Fifteen  (15) years,
commencing  on the  earlier  of (i) the date upon which the  renovations  to the
Premises (the  "Renovations")  have been  substantially  completed in accordance
with the plans and specifications (the "Plans and  Specifications") set forth on
Exhibits B & C (other than  responsibility  and work that cannot be completed on
such  date  provided  such  completion  will not  substantially  interfere  with
Tenant's use of the Premises) or (ii) the date on which Tenant takes  possession
of, or  commences  the  operation of its business in, any or all of the Premises
(the  "Commencement  Date") and ending oat 5:00 PM,  EST, on the last day 


                                      -2-





of the calendar  month in which falls the fifteenth  (15th ) anniversary  of the
Commencement  Date,  unless sooner  terminated in accordance with the provisions
hereof. Tenant, however, shall have the right to enter the Premises prior to the
Commencement  date in  order  to  perform  those  items of  Tenant  fit-out  and
completion  of  construction  which are to be completed by Tenant and such entry
and construction  shall not be deemed to be taking of possession of the Premises
by Tenant. Landlord shall notify Tenant in writing as soon as Landlord deems the
Renovations  to be  substantially  completed.  In the event of any dispute as to
when and whether the work  performed or required to be performed by Landlord has
been substantially  completed, the certificate of an A.I.A. registered architect
or a temporary of final  certificate of occupancy  issued by the local governing
authority shall be conclusive evidence of such completion, effective on the date
of the  delivery  of a copy of any such  certificate  to  Tenant.  The taking of
possession  by  Tenant  shall  be  deemed  conclusively  to  establish  that the
Renovations have been completed in accordance with the Plans and  Specifications
and the Premises are in good and  satisfactory  condition as of when  possession
was so taken  (except for such items as Landlord is  permitted  to complete at a
later date,  which items shall be  specified  by Landlord to Tenant in writing).
Upon the  Commencement  Date,  Tenant  shall  execute  and deliver to Landlord a
letter  of  acceptance  of  delivery  of  the  Premises,  such  letter  to be on
Landlord's standard form therefor.  Notwithstanding the foregoing,  however, the
parties agree that the Commencement Date shall be September 1, 1997.

                 ARTICLE 3 - RENT AND COST REIMBURSEMENT PAYMENT

         3.1 Lessee shall pay the Basic Rent in the minimum annual  amounts,  as
follows:

               (a)  Year 1;  the sum of Two  Hundred  Sixty-Seven  Thousand  One
Hundred Twenty Dollars ($267,120.00);

               (b)  Year 2; the sum of Two  Hundred  Seventy-Five  Thousand  One
Hundred Thirty-Three Dollars and Sixty Cents ($275,133.60); and

               (c)  Each year thereafter during the term hereof,  a sum equal to
the minimum annual amount for the immediately  preceding year plus three percent
(3%) of such amount.

Each  minimum   annual  amount  shall  be  payable  in  twelve,   equal  monthly
installments  in  advance,  without  demand,  on or before  the last day of each
calendar  month during the Term. If the  Commencement  Date or  Expiration  Date
falls  on a  day  other  than  the  first  or  last  day  of a  calendar  month,
respectively, then the Basic Rent (as well as the Cost Reimbursement Payment for
such month as described  in Section  3.2,  below) for the fraction of a month at
the  beginning  or the end of the Term shall be prorated  for the number of days
during such calendar month which this Lease Agreement was in effect based on the
actual number of days in such month.

                                      -3-






         3.2  Cost Reimbursement Payment.   Beginning with the Commencement Date
and during the Term of this Lease  Agreement,  Lessee  shall pay to Lessor  with
respect to the Demised Premises, the following:

               (a) All  garbage  and/or  trash  collection  charges  assessed or
imposed on the Demised Premises during the term of this Lease Agreement;

               (b) Any and all other costs reasonably  incurred by Lessor in the
operation and maintenance of the Demised Premises,  including but not limited to
water and sewer rentals,  repairs,  management  fees,  cleaning,  maintenance or
mechanical  systems  and service  contracts,  the costs of heat,  light,  power,
steam,  fuel, labor,  supplies,  tools,  equipment and insurance,  and all items
properly constituting direct operating costs, which items are or may be deducted
(and not  capitalized)  for Federal  income tax purposes,  according to standard
accounting practices as determined by the Lessor's accountant; and

               (c) A common  area  maintenance  charge of Fifteen  Thousand  and
00/100 dollars ($15,000.00) or Five percent (5%) of the Basic Rent, whichever is
greater.

         With respect to operation and maintenance  costs  referenced in Section
3.2(b), on Lessee's  occupancy of the Demised Premises,  and at the commencement
of each lease year  thereafter,  Lessor shall provide Lessee with an estimate of
operation and maintenance costs for such upcoming year. Such amount shall be pro
rated over such upcoming year, with Lessee making equal monthly  installments of
such amount as  Additional  Rent.  Within thirty (30) days after the last day of
each lease year, Lessor shall provide Lessee with an accounting of operation and
maintenance expenses for such just completed lease year. If actual operation and
maintenance  expenses for such year exceeded the projected  amount by up to five
percent (5%),  Lessee shall pay such amount to Lessor within thirty (30) days of
Lessee's  receipt  of such  accounting.  Lessee  shall  not be  required  to pay
operation  and  maintenance  expenses  greater  than five percent (5%) above the
amount  projected for any applicable  year. If actual  operation and maintenance
expenses  for any lease  year are less than the amount  projected  by Lessor for
such year, then the amount by which projected operation and maintenance expenses
that have be paid by  Lessee  during  such year  exceeds  actual  operation  and
maintenance expenses for such year shall be credited against Lessee's payment of
operation  and  maintenance  expenses  for the next lease  year.  The  foregoing
provisions of this Section 3.2 notwithstanding,  in accordance with Section 15.1
hereof, Lessee shall be responsible for the payment of all of its own utilities.

         3.3 Additional Rent. All sums of money due to Lessor hereunder that are
not specifically  characterized as Basic Rent,  including the Cost Reimbursement
Payment,  shall constitute Additional Rent, and if any such sum is not paid when
due it shall  nevertheless  be  collectible  as  Additional  Rent  with the next
installment of Basic Rent thereafter due, but nothing  contained herein shall be
deemed to  suspend  or delay the  payment  of any amount of money at the time it
becomes due and payable hereunder, or to limit any other remedy of Lessor.

                                      -4-






         3.4 Late Charges and Interest.

               (a) Lessee hereby  acknowledges  that late payment of Rent (after
the expiration of any applicable  grace period) will cause Lessor to incur costs
not  contemplated  by this Lease  Agreement,  the exact  amount of which will be
difficult to ascertain.  Such costs include,  but are not limited to, processing
and  accounting  charges and late charges  which may be imposed on Lessor by the
terms of any mortgage or trust deed covering the Demised Premises.  Accordingly,
if any payment of Rent is not made when due, at Lessor's  election  Lessee shall
pay to Lessor a late  charge  equal to 5% of such  overdue  amount.  The parties
hereby agree that such late charge represents a fair and reasonable  estimate of
the costs Lessor will incur by reason of late payment by Lessee.  Acceptance  of
such late  charge by Lessor  shall in no event  constitute  a waiver of Lessee's
default with respect to an overdue amount or prevent Lessor from  exercising any
of its other rights and remedies provided for herein.

               (b) If Rent  payment due  hereunder is not paid in full when due,
the amount due shall bear  interest from the due date until paid at a rate equal
to the greater of fifteen (15%) per annum or the rate of interest announced from
time to time in the Wall Street  Journal as the "prime  rate" plus 2% per annum;
provided, however, that interest shall not be payable on late charges payable by
Lessee pursuant to subsection (a), above;  and further provided that in no event
shall interest  and/or late charges  payable  hereunder be payable to the extent
that such payments  would exceed the maximum  amounts  payable under  applicable
law.  Payment of  interest  shall not excuse or cure any  default  hereunder  by
Lessee.  The  calculation  of interest  charges  shall be made on an actual days
elapsed basis with a 365 or 366 day year, whichever may be applicable.

         3.5 Manner of Payment.  All payments due from Lessee to Lessor shall be
paid to Lessor,  absolutely  net,  without  deduction or offset  whatsoever,  in
lawful money of the United States of America at the Lessor's offices, or to such
other person or at such other place as Lessor may from time to time designate in
writing  to  Lessee.  If more than one  check  given in  payment  of any sum due
hereunder is dishonored by the bank on which it is written, at Lessor's election
Lessee shall thereafter pay any sums due hereunder by cashier's check.

                        ARTICLE 4 - TAXES AND ASSESSMENTS

         4.1  Impositions.  Lessee shall pay as additional  rent for the Demised
Premises, all taxes and assessments,  general and special, water and sewer rates
and all other impositions (herein "Impositions"), ordinary and extraordinary, of
every kind and nature whatsoever, which may be levied, assessed, or imposed upon
the Demised Premises,  or any part thereof, or upon any improvements at any time
situated  thereon,  accruing or becoming due and payable during the term hereof;
provided,  however,  that the general taxes levied against the Demised  Premises
shall be prorated between Lessor and Lessee as of the Commencement  Date for the
first  year of the term and as of the  Expiration  Date for the last year of the
term, all on the basis of the then most recently  ascertainable  real estate tax
bills. Lessee may take the benefit of the provisions of any statute or ordinance

                                      -5-






permitting any assessment to be paid over a period of years, and Lessee shall be
obligated to pay only those installments falling due during the term hereof.

         4.2 Alternative Taxes. If at any time during the term hereof the method
of taxation prevailing at the Commencement Date shall be altered so that any new
tax,  assessment,  levy,  imposition,  or charge, or any part thereof,  shall be
measured by or be based in whole or in part upon the Lease  Agreement or Demised
Premises,  or the rent,  additional rent or other income  therefrom and shall be
imposed upon Lessor, then all such taxes, assessments,  levies,  impositions, or
charges,  or the part thereof,  to the extent that they are so measured or base,
shall be deemed to be included  within the term  "Impositions"  for the purposes
hereof,  to the extent  that such  impositions  would be payable if the  Demised
Premises  were the only  property  of Lessor  subject to such  Impositions,  and
Lessee  shall pay and  discharge  the same as herein  provided in respect of the
payment of  Impositions.  There shall be excluded from  Impositions  all federal
income taxes, federal excess profit taxes, franchise, capital stock, and federal
estate or state inheritance taxes of Lessor.

         4.3 Lessee's Payment of Impositions. In the month prior to the month in
which Impositions described in Sections 4.1 and 4.2 hereof are due, Lessor shall
provide notice to Lessee of nature of such  Impositions and of the amount due by
Lessee in accordance with Sections 4.1 and 4.2 hereof. Lessee shall make payment
of all such Impositions prior to the due date for payment thereof.

         4.4  Evidence  of Payment.  Lessee  shall  deliver to Lessor  duplicate
receipts or photostatic  copies  thereof  showing the payment of all said taxes,
assessments,  and all other  Impositions,  within  thirty  (30)  days  after the
respective payments evidenced thereby.

         4.5  Right To  Contest.  Lessee  shall  have the right to  contest  the
validity and amount of any taxes and assessments, provided title to the Property
shall not be endangered or the Lessor penalized. Lessor agrees to cooperate with
Lessee in any action, at no cost or expense to Lessor.

                         ARTICLE 5 - USE OF THE PREMISES

         5.1   General.   The  Demised   Premises   shall  be  used  solely  for
manufacturing  and related office and other uses normally  incident  thereto and
for no other purpose; provided, however, that, on Lessor's prior written consent
(which consent shall not be unreasonably withheld),  the Demised Premises may by
used for other related purposes and activities as may be permitted by applicable
zoning ordinances.

         5.2  Standards of Operation. Lessee covenants and agrees as follows:

              (a) Lessee  will not do or permit to be done in,  on, or about the
Property, nor bring, or keep, or permit to be brought or kept therein,  anything
which (i) is  prohibited  by or will in any way  violate  or  conflict  with any
applicable law,  statute,  







ordinance or governmental rule or regulation now in force or which may hereafter
be enacted or  promulgated,  (ii) is prohibited  by, or will in any way increase
the existing rate of, otherwise adversely affect, or cause a cancellation of any
fire or other insurance  policy covering the Property or any part thereof or any
of its contents, or (iii) will in any way injure, obstruct or interfere with the
rights of other occupants of the Property.

               (b)  Lessee  will not  store or place any  materials  of any kind
whatsoever outside the boundaries of the Demised Premises.

               (c) Lessee shall provide to Lessor,  at least ten (10) days prior
to Commencement  Date, a comprehensive  listing of all materials  proposed to be
used or stored by Lessee at the  Demised  Premises  that are  explosive,  highly
flammable,  noxious in odor,  or that may be  otherwise  dangerous in order that
Lessor can insure that such materials are properly stored and/or used by Lessee;
Lessor retains the right to require Lessee to move,  remove,  or otherwise alter
the storage of such  materials  due to concerns  regarding  safety and health of
other occupants of the Property and the surrounding neighborhood.

               (d) With the exception of ornamental fish, no animals,  including
without limitation, dogs, cats, monkeys, rats and mice, shall be brought into or
kept in or about the Demised Premises.

         5.3 Lessor's  Rules and  Regulations.  Lessee and  Lessee's  employees,
agents,  customers,  invitees and  licensees  shall  observe and comply with all
reasonable  rules and  regulations  established  by Lessor  with  respect to the
manner  of  conducting  business  in the  Premises  and the  upkeep  and the use
thereof,  including  reasonable  changes  and  additions  to, and  modifications
thereof  which may be announced by Lessor from time to time.  Any such rules and
regulations shall be deemed a part of this Lease Agreement, as conditions,  with
the same effect as though  written  herein,  and Lessee also covenants that said
rules and regulation will be faithfully observed by Lessee,  Lessee's employees,
and all persons visiting the Demised Premises or claiming under Lessee.

         5.4  Security.   Lessee  shall,  at  its  sole  cost  and  expense,  be
responsible  for providing  security  services for the Premises and Lessee shall
take such steps as may reasonably be necessary to control its employees, agents,
customers and others in the Premises so as not to present  security  problems to
other areas of the Property. Lessee, Lessee's employees, agents and others shall
be subject to security  policies and procedures and rules and regulations as may
be established by the Lessor,  but Lessor shall not be, in any way,  responsible
for providing any security services to the Premises or for the benefit of Lessee
or Lessee's agents, employees or customers.

         5.5  Signs.  Lessee  shall not place any signs in  windows or any other
areas visible from the exterior of the Premises unless approved by Lessor, which
approval  may be granted or withheld by Lessor at its sole option for any reason
or for no reason.  All exterior signage is subject to the prior written approval
of  Lessor.  Any sign or related 

                                      -7-





item must be in conformance with existing ordinances of Palmer Township or other
ordinances or regulations, as applicable.

                              ARTICLE 6 - INSURANCE

         6.1 Kinds of Insurance.  As additional  rent for the Demised  Premises,
Lessee shall procure (unless otherwise provided herein) and maintain policies of
insurance, at Lessee's own cost and expense, insuring the following:

               (a) The  improvements  situated upon the Demised Premises against
loss or damage by fire, lightning,  wind storm, hail storm, aircraft,  vehicles,
smoke, explosion,  riot, or civil commotion as provided by the standard fire and
extended  coverage policy and all other risks of direct physical loss as insured
against under special extended coverage  endorsement,  which insurance  coverage
shall be  obtained  by Lessor and shall be for not less than 100  percent of the
full  replacement  cost of such  improvements  with all  proceeds  of  insurance
payable to Lessor,  Lessee shall be responsible  for the payment,  as additional
rent, of all premiums attributable to such insurance coverage of improvements at
the Demised Premises;

               (b) Lessor and Lessee  from all claims,  demands,  or actions for
injury to or death of any  person in an amount of not less than  $1,000,000  for
injury to or death of more than one person in any one occurrence to the limit of
$3,000,000,  and for damage to  property  in amount of not less than  $1,000,000
made by or on behalf of, any person or persons,  firm,  or  corporation  arising
from,  related to or connected with the Demised  Premises,  including any period
during  which  Lessee is  engaged in making any  repairs or  alterations  to the
premises and including all damage to or from signs, glass, awnings, fixtures, or
other  appurtenances  now or  thereafter  erected  by, on or about the  Property
during the term hereof.  Such insurance  shall  comprehend  full coverage of the
indemnity set forth in Article 17 hereof;

               (c)  Lessor  and  Lessee  with the same  limits  of  coverage  as
provided  in  subsection  (b) of this  Section  for loss or  damage by boiler or
internal explosion or breakdown of boilers;

               (d) Lessee from all workers' compensation claims;

               (e)  Lessor  and  Lessee  against  breakage  of all  plate  glass
utilized in the improvements on the Demised Premises; and

               (f) Lessor from loss of rents during the period while the Demised
Premises are  untenantable due to fire or other casualty (for the maximum period
for which such insurance is available),  but the purchase of such rent insurance
shall not relieve Lessee from the primary obligation to pay rent during any such
period of untenantability.

         6.2  Form. The aforesaid  insurance  shall be by companies and in form,
substance  and amount (where not stated  above)  satisfactory  to Lessor and any
mortgagee of Lessor, and shall contain standard mortgage clauses satisfactory to
Lessor's mortgagee. The aforesaid insurance shall not be subject to cancellation
except  after at least  thirty  days'  prior  written  notice to Lessor  and any
mortgagee of Lessor. The original  insurance  policies (or certificates  thereof
satisfactory to Lessor)  together with  satisfactory  evidence of payment of the
premiums thereon shall be deposited with Lessor at the Commencement Date and not
less than thirty days prior to the end of the term of each such coverage. Lessee
shall make  monthly  deposits  to apply  toward  insurance  premiums in the same
manner as made and  provided in the case of real  estate  taxes in Article 4. If
Lessor is a trust, the insurance referred to in subsections 6.1(b),  6.1(c), and
6.1(e) hereof shall also insure the beneficiary or beneficiaries thereof.

         6.3 Mutual waiver of subrogation  rights.  Whenever (1) any loss, cost,
damage,  or expense  resulting  from fire,  explosion,  or any other casualty or
occurrence  is  incurred  by either of the  parties to this Lease  Agreement  in
connection with the Demised Premises and (2) such party is then covered in whole
or in part by insurance  with respect to such loss,  cost,  damage,  or expense,
then the party so insured hereby  releases the other party from any liability it
may have on account of such loss, cost,  damage, or expense to the extent of any
amount recovered by reason of such insurance and waives any right of subrogation
that  might  otherwise  exist in or accrue to any  person  on  account  thereof,
provided that such release of liability  and waiver of the right of  subrogation
shall not be  operative  in any case where the effect  thereof is to  invalidate
such insurance  coverage or increase the cost thereof (provided that in the case
of  increased  cost the other  party  shall have the right,  within  twenty days
following  written notice,  to pay such increased cost,  thereupon  keeping such
release and waiver in full force and effect).

                      ARTICLE 7 - ASSIGNMENT AND SUBLETTING

         7.1 Consent Required.  Lessee shall not, without Lessor's prior written
consent, or mortgagee's consent

               (a) Assign,  convey,  or  mortgage  this Lease  Agreement  or any
interest under it;

               (b) Allow any transfer thereof or any lien upon Lessee's interest
by operation of law;

               (c) Sublet the Demised Premises or any part thereof; or

               (d) Permit the use or  occupancy  of the Demised  Premises or any
part thereof by anyone other than Lessee.

Lessor  agrees  that  he will  not  unreasonably  withhold  his  consent  to any
assignment or sublease,  provided that if Lessee requests  Lessor's consent to a
sublease of the entire  Demised  Premises,  Lessor may, in lieu of granting such
consent or reasonably  

                                      -9-





withholding  the  same,  terminate  this  Lease  Agreement,   effective  on  the
commencement  date  specified  in the  sublease  to which  Lessor's  consent was
requested.  No  permitted  assignment  or  subletting  shall  relieve  Lessee of
Lessee's  covenants and  agreements  hereunder  and Lessee shall  continue to be
liable as a principal  and not as a guarantor  or surety,  to the same extent as
though no assignment of subletting had been made.

         7.2 Merger or  Consolidation.  Lessee may,  without  Lessor's  consent,
assign  this  Lease  Agreement  to any  corporation  resulting  from a merger or
consolidation of Lessee upon the following conditions:

               (a) That the total  assets and net worth of such  assignee  after
such  consolidation  or  merger  shall be equal to or more  than  that of Lessee
immediately prior to such consolidation or merger;

               (b) That Lessee is not at such time in default hereunder; and

               (c) That such  successor  shall  execute an instrument in writing
fully  assuming  all of the  obligations  and  liabilities  imposed  upon Lessee
hereunder and deliver the same to Lessor.

If the aforesaid  conditions are satisfied,  Lessee shall be discharged from any
further liability hereunder.

         7.3 Other  transfer  of  lease.  Lessee  shall not allow or permit  any
transfer of this Lease  Agreement,  or any interest  hereunder,  by operation of
law, or convey,  mortgage,  pledge,  or  encumber  this Lease  Agreement  or any
interest herein.

                             ARTICLE 8 - ALTERATIONS

         8.1 Lessor Approval.  No alterations,  additions or improvements to the
Demised Premises shall be made without first  submitting a detailed  description
thereof to Lessor and obtaining Lessor's written approval,  such approval not to
be unreasonably  withheld.  All alterations,  additions or improvements  made by
Lessee and all  fixtures  attached  to the  Demised  Premises  shall  become the
property of Lessor and remain at the Demised Premises unless otherwise agreed in
writing.  Any item under  this  section  must be in  conformance  with  existing
ordinances of Palmer Township or other ordinances or regulations, as applicable.

         8.2 Weight  Limitation.  Lessee  shall not place items  anywhere on the
Demised  Premises  having  weight in excess of the safe bearing  capacity of the
improvements.

         8.3 Removal of Fixtures.  The fixtures and other  alterations which are
made on the Demised  Premises  on behalf of Lessee  which are capable of removal
must be removed at the  option of the  Lessor at the  termination  of this Lease
Agreement.  Lessee  shall  remove  the  fixtures  and  repair  the damage to the
premises,  if any,  caused by such  

                                      -10-





removal at Lessee's expense.  Lessor shall notify Lessee of its desire regarding
removal within sixty (60) days from the expiration of the then current term.

         8.4  Initial  Lessor  Renovations.  Renovations  undertaken  for and on
behalf of the Lessee by the Lessor shall be undertaken,  at Lessor's expense, in
accordance with the approved plans and specifications attached hereto as Exhibit
C.

                 ARTICLE 9 - DAMAGE FROM FIRE OR OTHER CASUALTY

         9.1 Termination.  If, during the term of this Lease  Agreement,  or any
renewal  or  extension  thereof,  any  building  is so  damaged by fire or other
casualty that the Demised Premises cannot be used for the purposes for which the
premises  were  leased,  as  described  in Article 5 (whether or not the Demised
Premises  are  damaged),  then,  at  Lessor's  option,  the  term of this  Lease
Agreement  upon written  notice from Lessor,  given within thirty days after the
occurrence of such damage,  shall  terminate as of the date of the occurrence of
such damage;  provided,  however,  that if, on the  occurrence of such damage or
destruction,  Lessor  does not  provide  notice of  termination  as  hereinabove
provided, but elects to repair the damaged building,  either party may terminate
this Lease Agreement,  effective as of the date of such damage,  if such repairs
and restoration cannot be completed within 270 days after the date of occurrence
of such damage so as to reasonably  restore the Demised  Premises to the use for
which they were leased hereunder. In either such case, Lessee shall pay the rent
to the time of such  termination  and Lessor may enter  upon and  repossess  the
Demised  Premises without further notice and with the right to break in forcibly
to take possession.

         9.2  Suspension of Rent. If Lessor does not elect to terminate the term
of this Lease Agreement,  Lessor may repair the damaged building, and Lessor may
enter and possess the Demised  Premises for that purpose,  and the rent shall be
apportioned  and  suspended  if and  when  Lessee  is  deprived  of the  Demised
Premises; provided, however, that if Lessee is only deprived of a portion of the
Demised Premises only an equitable portion of the rent shall be suspended.

         9.3  Continued  Use by Lessee.  If the Demised  Premises  shall be only
slightly damaged so that such damage or the damage to any building a part of the
Demised Premises does not render the Demised Premises unfit for the purposes for
which the  premises  were leased as  described  in Article 5, Lessor will repair
whatever  portion,  if any, of the Demised  Premises which may have been damaged
and Lessee  will  continue  in  possession  and no rent will be  apportioned  or
suspended.

         9.4 Disputed Rent Payment. If a dispute arises as to the amount of rent
due under  this  Article  9,  Lessee  agrees to pay the full  amount  claimed by
Lessor.  Lessee shall,  however, have the right to proceed by law to recover the
excess payment, if any.

         9.5  No Obligation to Restore. In no event shall Lessor be obligated to
repair,  restore or replace any  fixtures,  improvements,  alterations  or other
property  for or on 

                                      -11-






which Lessee carries or should have carried appropriate insurance, regardless of
whether or not Lessee  receives any insurance  settlement on its claim or claims
thereunder.

                ARTICLE 10 - LESSOR'S RIGHT TO ENTER; INSPECTION

         10.1  Permitted  Entry.  Lessee will permit  Lessor,  Lessor's agent or
employees or any other person or persons  authorized by Lessor,  in writing,  to
inspect the Demised  Premises at any time, and to enter the Demised  Premises if
Lessor shall so elect,  for the purpose of making  alterations,  improvements or
repairs to any building or for any purpose in  connection  with the operation or
maintenance of any building,  without depriving Lessee of the use of the Demised
Premises  unreasonably,  and,  also,  for the  purpose  of showing  the  Demised
Premises to persons wishing to purchase the same, or at any time within one year
prior to the  expiration  of the Lease  term,  to  persons  wishing  to rent the
Demised Premises.  Lessee shall,  within one year prior to the expiration of the
term  hereof,  permit the usual notice of "To Let" or "For Sale" to be placed on
the Demised Premises and to remain thereon without molestation.

             ARTICLE 11 - CONDITION OF DEMISED PREMISES; MAINTENANCE

         11.1  Condition  of  Demised  Premises.  At  the  expiration  or  other
termination of this Lease  Agreement,  Lessee shall leave the Demised  Premises,
and  during the term  hereof  will keep the same,  in good order and  condition,
ordinary wear and tear and damage by fire or other casualty alone excepted;  and
for that purpose and except as stated,  Lessee will make all  necessary  repairs
and replacements.  All fixtures at the Demised  Premises,  including any and all
fixtures that are part of improvements made to the Demised Premises,  shall be a
part of the  Demised  Premises  and shall not be removed by Lessee.  On Lessee's
removal of improvements other than fixtures, Lessee shall be responsible for the
repair  of any  and all  damages  to the  Demised  Premises  occasioned  by such
removal.  Lessee will use every reasonable precaution against fire and will give
Lessor  prompt  notice of any damage to or accident  upon the Demised  Premises.
Lessee will also at all times  remove all dirt,  rubbish,  waste and refuse from
the  Demised  Premises  and at the  termination  of the term  will also have had
removed all its  property  therefrom,  to the end that Lessor may again have and
repossess the Demised  Premises.  Lessee  acknowledges that the Demised Premises
are now in good order and condition.  Except as expressly  otherwise provided in
this Lease  Agreement,  Lessor  shall have no  obligation  to make any  repairs,
improvements or alterations to the Demised Premises at any time.

         11.2  Lessor's   Responsibility.   Lessor  shall  keep  the  structural
supports,  exterior surfaces,  and structural elements of the exterior walls and
roof of the buildings that are a part of the Demised  Premises in good order and
repair at Lessor's expense.  Lessor shall not, however,  be under any obligation
to maintain windows, doors, or glass wherever located. Lessor shall also operate
and maintain the common areas and facilities as hereafter provided. Lessor shall
have no  responsibility  to make any repairs  hereunder  until a reasonable time
after receipt of written notice of the need for such repairs.

         11.3  Lessor's Responsibility.  Lessee  shall,  at all times during the
term hereof and upon  surrender  or  termination,  keep and maintain in good and
substantial  order  and  repair  and  make  all  necessary  repairs,   renewals,
replacements,  and decorations upon or in connection with all other parts of the
Demised Premises,  not explicitly the responsibility of Lessor, at Lessee's sole
cost and  expense.  These parts of the  Demised  Premises  include,  but are not
limited to, all doors,  windows,  window wall  assembly and door frames,  glass,
walls and wall coverings, floors and floor coverings,  electrical installations,
plumbing installations and fixtures, heating,  ventilating, and air-conditioning
equipment and systems,  pipes,  wiring, gas, steam, and electrical equipment and
fixtures, dock bumpers, seals, and dock equipment and facilities,  and all other
installations, equipment, fixtures, and appurtenances.

                            ARTICLE 12 - COMMON AREAS

         12.1  Definition. The term "common areas and facilities" shall mean all
parking  areas,  access roads,  drives,  and sidewalks,  lawns and  landscaping,
including lawn sprinkler systems, if any, exterior lighting,  building sprinkler
systems,  if any, and all other space and facilities used in common or available
for use in common by all tenants of the Property, their employees, customers, or
invitees.

         12.2  Operation and Maintenance. Lessor shall operate and maintain, and
may impose  reasonable  rules for the use of the common areas and  facilities of
the Property of which the Demised Premises are a part. Operating and maintaining
the  common  areas  and   facilities   shall  include   operating,   furnishing,
maintaining, repairing, and replacing parking, access, and drive areas, exterior
building and parking area lighting, cleaning, painting, and striping, snow, ice,
and debris removal,  landscaping areas, utility services to the Demised Premises
not  separately  metered  and common area  utility  services,  if any,  building
sprinkler  systems,  if any, and such other  services and  facilities for use or
benefit of all tenants of the  Property.  This  provision  shall not require the
Lessor to furnish any common area or facility  not in place at the  execution of
this Lease Agreement nor shall it impede or restrict the alteration, removal, or
conversion of use of any existing common areas or facilities.

               ARTICLE 13 - HOLDING OVER BEYOND END OF LEASE TERM

         13.1  Termination  or  Continuation;  Notice.  Either  party hereto may
terminate  this Lease  Agreement at the end of the term set forth in Section 2.1
by giving to the other party written  notice of termination at least ninety (90)
days prior to the end of said term.  But, in default of such notice,  this Lease
Agreement shall continue at the same rate of rent,  without any allowances,  and
upon  the same  covenants  and  conditions  in  force  immediately  prior to the
expiration  of said term for a further  term of one (1) year and so on from year
to year unless or until terminated by either party hereto by giving to the other
at least ninety (90) days written notice of termination  prior to the expiration
of the then current term; provided,  however, that if Lessor, on or prior to the
last day permitted as aforesaid for giving notice of  termination  at the end of
the then current term, shall have given Lessee, instead of a termination notice,
a written notice  setting forth proposed  

                                      -13-






changes to the covenants or conditions  of this Lease  Agreement,  and if Lessee
shall not within ten (10) days from the giving of Lessor's notice, notify Lessor
of  Lessee's  intention  to vacate the  Demised  Premises at the end of the then
current term,  Lessee shall be considered as having  accepted the changes and as
electing  to  continue  as Lessee  under the terms of this  Lease  Agreement  as
modified by the terms and conditions mentioned in such notice from Lessor, for a
further  term as above  provided  or for such  other  term as may be  stated  in
Lessor's notice. Upon receipt of notice of termination as provided above, Lessee
agrees to vacate the Demised  Premises no later than the end of the then current
term and expressly waives the benefits of all laws, statutes or ordinances,  now
or hereafter enforced,  providing for additional notice.  Lessee expressly shall
pay to Lessor as  liquidated  damages an the amount  equal to two times the then
applicable  monthly  installment  of Basic Rent,  for each month or portion of a
month Lessee retains  possession of the Demised Premises beyond the term of this
Lease Agreement.

                        ARTICLE 14 - COMPLIANCE WITH LAW

         14.1 Lessee Compliance.  Lessee agrees to comply promptly with all laws
and  ordinances  and  other  notices,  requirements,   orders,  regulations  and
recommendations (whatever the nature thereof may be) of any and all the Federal,
State, County or Municipal  authorities or the Board of Fire Underwriters or any
insurance organizations,  association or companies,  with respect to the Demised
Premises and any property appurtenant thereto.

                              ARTICLE 15 - SERVICES

         15.1  Utilities.  Lessor shall not be required to furnish to Lessee any
utilities  or  services  of any  kind.  Lessee  shall pay all  charges  for gas,
electricity,  water,  sewer,  light, heat, power, and telephone used or supplied
upon or in connection the Demised  Premises and shall  indemnify  Lessor against
any liability on account thereof.  Lessee shall also pay to Lessor, upon demand,
as additional rent hereunder,  the cost of any excessive use of utility services
upon  the  Demised  Premises  that are not  separately  metered  to the  Demised
Premises.  Excessive use shall mean the use of utility services from such common
utility  service in an amount  greater than the average use of the other tenants
of the Property of which the Demised Premises are a part.

                      ARTICLE 16 - NOTICE OF ACCIDENT, ETC.

         16.1 Required Notice. Lessee shall give Lessor prompt written notice of
any accident or breakage or defects in the wires, plumbing or heating, elevators
or other apparatus.

                 ARTICLE 17 - INDEMNIFICATION; RELEASE OF LESSOR

         17.1 Indemnification. Lessee will protect, indemnify, and save harmless
Lessor and Lessor's agents (and Lessor's  beneficiary or beneficiaries if Lessor
is a trustee) from and against all liabilities,  obligations,  claims,  damages,
penalties, causes of action, costs, 

                                      -14-





and  expenses  (including,  without  limitation,  reasonable  attorney  fees and
expenses)  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 the Demised Premises;

               (b) Any  failure on the part of Lessee to perform or comply  with
any of the terms of this Lease; or

               (c) Performance of any labor or services or the furnishing of any
materials  or other  property  in respect of the  Demised  Premises  or any part
thereof.

In case any action, suit or proceeding is brought against Lessor and/or Lessor's
agents (and/or Lessor's  beneficiary or beneficiaries if Lessor is a trustee) by
reason of any such  occurrence,  Lessee will,  at Lessee's  expense,  resist and
defend such action,  suit, or  proceeding,  or cause the same to be resisted and
defended by counsel approved by Lessor.

         17.2 Liability of Lessor. Lessor shall not be held responsible for, and
is  hereby  expressly  relieved  from,  any and all  liability  by reason of any
injury,  loss or damage to any person or property in the Demised Premises or the
building whether the same be due to fire, breakage,  leakage, water flow, steam,
gas, use,  misuse,  abuse of elevators or defects  therein,  hatches,  openings,
defective  construction or condition anywhere in the building,  failure of water
supply,  or  light  or power  defects  in  electric  wiring,  plumbing  or other
equipment or mechanism, wind, lighting storm or any other cause whatever whether
the loss,  injury or damage be to the person or  property of Lessee or any other
person,  and  whether  or not due to any  oversight,  neglect or  negligence  of
Lessor,  occurring  before  or after  the  execution  of this  Lease  Agreement,
provided  that the same is not  occasioned  by the gross  negligence  of willful
misconduct of Lessor. Lessee further agrees to indemnify, defend and save Lessor
harmless  from and against all claims by any  employee or invitee of Lessee made
on  account  of such  injury,  loss or  damage,  including  but not  limited  to
reasonable attorney's fees and other legal expenses.

                          ARTICLE 18 - REMEDIES LESSOR

         18.1 Defaults;  Remedies.  If Lessee does any of the  following,  which
shall constitute an event of default under this Lease Agreement:

               (a) Shall be in default in the payment of any installment of rent
for a  period  of ten  (10)  days and the  Lessor  has  provided  to  Lessee  by
telephone,  with written  confirmation  thereof, at least forty-eight (48) hours
notice  that its  payment  has not been  received,  and if Lessee  does not make
prompt and complete payments as are required, upon receipt of such notice; or

               (b)  Defaults  in any  of  the  covenants  or  conditions  herein
contained  for ten (10)  days  following  written  notice  to the  Lessee of the
default/  and if Lessee does not 

                                      -15-






remedy the default  within thirty (30) days of  notification  of such default or
diligently pursue remedy of the default; or

               (c)  Abandons  the  Demised  Premises  or removes or  attempts to
remove Lessee's goods or property therefrom other than in the ordinary course of
business  without  having first paid to Lessor in full all rent and charges that
may have become due as well as all which will become due thereafter; or

               (d) Becomes insolvent in any sense or makes an assignment for the
benefit of creditors or offers a composition or settlement to creditors or calls
a meeting of creditors for any such  purpose,  or if a petition in bankruptcy or
for  reorganization  or for an arrangement  with creditors  under any Federal or
State  act is  filed  by or  against  Lessee,  or if a bill in  equity  or other
proceeding  is filed by any court for the  appointment  of a receiver,  trustee,
liquidator,  custodian,  conservator  or similar  official  for any of  Lessee's
assets,  or if any of the real or personal  property  of Lessee  shall be levied
upon by any sheriff,  marshal,  or constable,  provided that any such proceeding
shall not have been dismissed  within sixty days (60) after the  commencement of
any such actions;

then, and in any such event, at the sole option of Lessor;

         (1) The whole  balance of rent and  charges,  whether or not payable as
rent,  for the entire  balance of the term  herein  reserved  and any renewal or
extension  thereof,  or any part of such rent and  charges,  and also all or any
costs and sheriff's,  marshall's or constable's commissions,  whether chargeable
to Lessor or Lessee,  including  watchman's wages,  shall be taken to be due and
payable and in arrears as if by the terms of this Lease  Agreement  said balance
of rent and such other charges and expenses were on that day payable in advance;
and/or

         (2) The term created by this Lease Agreement shall terminate and become
absolutely  void,  without notice and without any right on the part of Lessee to
save the  forfeiture  by payment of any sum due or by other  performance  of any
condition, term or covenant broken, and upon such termination, or, also if there
be no  termination,  Lessor  may,  without  notice or demand,  enter the Demised
Premises breaking open locked doors, if necessary,  to effect entrance,  without
liability for damages for such entry or for the manner thereof,  for the purpose
of  distraint  or execution  or to take  possession  of the Demised  Premises to
minimize the loss by reason of Lessee's  default,  and to take possession of and
sell under  distraint the goods or chattels  found upon said  premises  (subject
only to any written  waiver  executed by Lessor in accordance  with Section 27.6
hereof).  Whether  or not any rent be due or unpaid,  should  Lessee at any time
remove,  or attempt or indicate an  intention  to remove,  the goods or chattels
from  the  premises  other  than in the  ordinary  course  of  business,  Lessee
authorizes  Lessor to follow  the same for a period of ninety  days  after  such
removal or attempted or intended  removal and to take possession of and cause to
be sold  sufficient  of such goods and  chattels to meet the rent and charges in
arrears,  as well as payable for the balance of the full term then  remaining or
any part  thereof;  and in  addition  to the  above  remedies  or in  connection
therewith,

                                      -16-






         18.2 Mitigation. After reentry or retaking or recovering of the Demised
Premises,  whether by way of termination of this Lease  Agreement or not, Lessor
may lease the Demised  Premises  or any part or parts  thereof to such person or
persons  upon  such  terms as may in  Lessor's  discretion  seem best for a term
within or beyond the term of this Lease  Agreement,  and Lessee  shall be liable
for any loss of rent for the balance of the term plus the costs and  expenses of
reletting  and balance of the term plus the costs and expenses of reletting  and
of making repairs and alterations to the Demised Premises.  Further, Lessee, for
itself and its  successors  and  assigns,  hereby  irrevocably  constitutes  and
appoints  Lessor as  Lessee's  agent to collect  the rents due and to become due
from all subleases  and apply the same to the rent due hereunder  without in any
way affecting  Lessee's  obligation to pay any unpaid  balance of rent due or to
become due hereunder.

                        ARTICLE 19 - REMEDIES CUMULATIVE

         19.1 Remedies  Cumulative  and  Concurrent.  All remedies  available to
Lessor hereunder and at law and in equity shall be cumulative and concurrent. No
determination of this Lease Agreement nor taking or recovering possession of the
Demised  Premises shall deprive Lessor of any remedies or actions against Lessee
for rent, for charges or for damages for the breach of any covenant or condition
herein contained, nor shall the bringing of any such action for rent, charges or
breach of covenant or condition, nor the resort to any other remedy or right for
the  recovery  of rent,  charges or demands for such  breach be  construed  as a
waiver  of  release  of the right to insist  upon the  forfeiture  and to obtain
possession.  No reentering  or taking  possession  of the Demised  Premises,  or
making of repairs,  alterations or improvements  thereto,  or reletting thereof,
shall be construed as an election on the part of Lessor to terminate  this Lease
Agreement  unless written notice of such intention be given by Lessor to Lessee.
The failure of Lessor to insist upon strict  and/or  prompt  performance  of the
term,  agreements,  covenants and  conditions of this Lease  Agreement or any of
them, and/or the acceptance of such performance  thereafter shall not constitute
or be construed  as a waiver of Lessor's  right to  thereafter  enforce the same
strictly  according  to the  tenor  thereof  in the  event  of a  continuing  or
subsequent default.

             ARTICLE 20 - INABILITY OF LESSOR TO DELIVER POSSESSION

         20.1 Lessor  Liability.  Lessor  shall not under any  circumstances  be
liable to Lessee for its inability to deliver possession of the Demised Premises
to Lessee as of the  Commencement  Date by  reason of (a) the  retention  of the
Demised Premises or any part thereof by any other person;  (b) the fact that the
renovation of any buildings included in the Demised Premises is not complete and
ready for occupancy; or (c) any cause beyond Lessor's immediate control.

                         ARTICLE 21 - LEASE SUBORDINATED

         21.1 Mortgage or Deed of Trust. The rights and interest of Lessee under
this Lease shall be subject and  subordinate  to any mortgage or trust deed that
may be placed 

                                      -17-






upon the Demised Premises and to any and all advances to be made thereunder, and
to the interest thereon, and all renewals, replacements, and extensions thereof,
if the mortgagee or trustee  named in said  mortgages or trust deeds shall elect
to subject and  subordinate  the rights and  interest of Lessee under this Lease
Agreement  to the lien of his  mortgage  or deed of  trust  and  shall  agree to
recognize  this Lease  Agreement of Lessee in the event of foreclosure if Lessee
is not in  default.  Any  mortgagee  or trustee may elect to give the rights and
interest of Lessee  under this Lease  priority  over the lien of its mortgage or
deed of trust.  In the event of either such  election and upon  notification  by
such  mortgagee or trustee to Lessee to that effect,  the rights and interest of
Lessee  under  this  Lease  shall be  deemed  to be  subordinate  to, or to have
priority  over,  as the case may be,  the lien of the  mortgage  or trust  deed,
whether this Lease  Agreement is dated prior to or subsequent to the date of the
mortgage or trust deed.  Lessee shall execute and deliver  whatever  instruments
may be required for such purposes, and in the event Lessee fails so to do within
ten (10) days after demand in writing,  Lessee does hereby make,  constitute and
irrevocably  appoint Lessor as his attorney in fact and in his name,  place, and
stead so to do.  Provided  that the same  shall not  adversely  affect  Lessor's
ability  to  obtain  financing  from a lender  of its  choice  under  terms  and
conditions  acceptable  to Lessor,  Lessor shall  request any lender  becoming a
mortgagee  of the  Property  to  enter  into a  non-disturbance  and  attornment
agreement containing substantially the terms and conditions set forth in Exhibit
_____ hereto.

                       ARTICLE 22 - LIENS AND ENCUMBRANCES

         22.1 Encumbering  Title.  Lessee shall not do any act that shall in any
way encumber the title of Lessor in and to the Demised  Premises,  nor shall the
interest  or estate of Lessor in the  Demised  Premises be in any way subject to
any  claim by way of lien or  encumbrance,  whether  by  operation  of law or by
virtue of any express or implied contract by Lessee. Any claim to, or lien upon,
the,  Demised  Premises  arising from any act or omission of Lessee shall accrue
only  against  the  leasehold  estate of  Lessee  and  shall be  subject  to and
subordinate  to the  paramount  title and rights of Lessor in and to the Demised
Premises.

         22.2 Liens and Rights to Contest.  Lessee  shall not permit the Demised
Premises to become subject to any mechanic's,  laborer's,  or materialman's lien
on  account  of labor or  material  furnished  to Lessee or claimed to have been
furnished  to  Lessee in  connection  with work of any  character  performed  or
claimed to have been  performed on the Demised  Premises by, or at the direction
or sufferance of,  Lessee,  provided that Lessee shall have the right to contest
in good faith and with  reasonable  diligence  the  validity of any such lien or
claimed  lien if Lessee  shall  give to Lessor  such  security  as may be deemed
satisfactory  to Lessor to  insure  payment  thereof  and to  prevent  any sale,
foreclosure,  or  forfeiture  of the Demised  Premises b,( reason of  nonpayment
thereof,  and provided further that, on final determination of the lien or claim
for lien,  Lessee shall immediately pay any judgment  rendered,  with all proper
costs and charges, and shall have the lien released and any judgment satisfied.

                                      -18-





                            ARTICLE 23 - CONDEMNATION

         23.1 Whole or Partial  Taking.  In the event that any of the  buildings
included in the Demised Premises or any part thereof is taken or condemned for a
public or quasi-public  use, this Lease Agreement shall terminate as of the date
when possession is surrendered to the condemnor, and the rent reserved hereunder
shall abate and cease proportionately for the balance of the term hereof. In any
such event,  Lessee waives all claims for leasehold  damages  against Lessor and
against the  condemning  authority  or party and  assigns  the same,  if any, to
Lessor.

                ARTICLE 24 - LESSEE'S OPTION TO PURCHASE PROPERTY

         24.1 Option  Period;  Purchase  Price.  Lessee shall have the right and
option,  during the period beginning January 1, 2003 and ending January 5, 2004,
to purchase the Property for the purchase price calculated, as follows:

Purchase price = $4,000,000 x [Index for December, 2002 / Base Year Index].

For purposes of this Option, for any given calendar year, the term "Index" shall
mean the All Items Figure of the Consumer  Price Index for All Urban  Consumers,
as published by the Bureau of Labor  Statistics of the United States  Department
of  Labor;  provided,  however,  that,  in the  event  that the  Bureau of Labor
Statistics  or its  successor  discontinues  publication  of such index,  then a
comparable  index  shall be selected by Lessor  exercising  reasonable  business
judgment.  And, the term "Base Year Index" shall mean the Index for the calendar
month in which the Commencement Date occurs. Real estate taxes,  insurance,  and
any other prepaid or accrued charges  customarily  prorated shall be prorated as
of the date of transfer according to the applicable fiscal year.

         24.2 Notice Period;  required deposit.  Lessee may exercise this option
by giving  written  notice to Lessor at any time  during  the  period  beginning
January 1, 2003 and ending February 28, 2003.

         23.3   Settlement;   Title.  If  Lessee  shall  exercise  this  option,
settlement  shall occur no later than January 5, 2004 at which time  Lessor,  as
against receipt of said purchase  price,  shall give Lessee a good,  clear,  and
marketable  title to the  Property,  free and clear of all liens,  encumbrances,
encroachments,  restrictions, reservations, conditions of record, and easements,
except then  existing  leases,  usual and  customary  easements  such as utility
services, taxes due but not yet payable, and zoning ordinances, if any. Transfer
of the Property shall be made by special  warranty deed conveying  title therein
to Lessee,  in fee simple. If there is any lien or encumbrance of record against
the Property,  Lessee may elect to take the Property subject to any such lien or
encumbrance.

         24.4  Change in  Commencement  Date.  If for any reason  Lessor  cannot
deliver  possession  of  the  Demised  Premises  to  Lessee  on  or  before  the
Commencement  Date,  the dates set forth in this Article  shall be reset so that
each date is moved  forward in time by 

                                      -19-






the number of days which passed between the Commencement  Date and the date upon
which Lessor delivered possession to Lessee.
 
                      ARTICLE 25 - ENVIRONMENTAL COMPLIANCE

         25.1 Definitions.

               (a) As used herein, the term  "Environmental  Laws" means any and
all federal,  state or local laws,  statutes,  rules,  regulations,  ordinances,
interstate compacts, or judicial or administrative decrees, orders, decisions or
permits relating to emissions,  discharges,  releases or threatened  releases of
pollutants, contaminants or Hazardous Substances into the environment (including
ambient air,  surface water,  ground water or subsurface  strata),  or otherwise
relating  to  the  use,   storage,   treatment,   transportation,   manufacture,
refinement, handling, production or disposal of such pollutants, contaminants or
any  Hazardous  Substances,  including the  following  statutes,  as amended and
judicially and  administratively  interpreted,  and all regulations  promulgated
thereunder,  including all comparable statutes,  regulations and interpretations
by the  Commonwealth  of  Pennsylvania:  Comprehensive  Environmental  Response,
Compensation and Liability Act of 1980, as amended,  42 U.S.C ss.ss.9601 et seq.
("CERCLA");  Federal Water Pollution  Control Act, 42 U.S.C ss.ss. 1251 et seq.;
Clean Air Act, 42 U.S.C ss.ss. 7401 et seq.; Resource  Conservation and Recovery
Act, 42 U.S.C ss.ss. 4901 et seq.; Safe Drinking Water Act, 42 U.S.C ss.ss. 300f
et seq.; Toxic Substance  Control Act, 15 U.S.C ss.ss. 2601 et seq.; Clean Water
Act, 33 U.S.C. ss. 1251 et seq.; National Environmental Policy Act 42 U.S.C. ss.
4321 et seq.;  Hazardous  Substances  Cleanup Act, 35 Pa. C.S.A. ss. 6020.101 et
seq.  ("HSCA");  Clean Streams Law, 35 Pa. C.S.A.  ss.691.1 et seq.; Solid Waste
Management Act, 35 Pa. C.S.A.  ss. 6018.101 et seq.;  Pennsylvania  Storage Tank
and Spill  Prevention Act, Pa. Act No. 1989-32;  and  Pennsylvania Air Pollution
Control Act, 35 Pa. C.S.A. ss.ss. 4001 et seq.

               (b) As used herein, the term "Hazardous Substances" means any and
all elements,  compounds, chemical mixtures,  contaminants,  pollutants or other
substances  identified  as  "hazardous  substances"  under CERCLA or HSCA or any
comparable statutes and regulations of the Commonwealth of Pennsylvania,  or any
petroleum or petroleum products, or asbestos.

               (c) As used  herein,  the  term  "release"  means  any  spilling,
leaking,  pumping,  emitting,  emptying,   discharging,   injecting,   escaping,
leaching,  dumping,  discarding,  burying,  abandoning  or  disposing  into  the
environment  at or  about  the  Property  on or  prior  to  the  termination  or
expiration of this Lease.

         25.2  Lessee's Obligations. Lessee shall:

               (a) not cause or permit any  Hazardous  Substances  to be placed,
held, located,  released,  spilled,  transported or disposed of on, under, at or
from  the  Demised  Premises,   or  any  real  estate  contiguous   thereto,  in
contravention of any Environmental Law;

                                      -20-






               (b) if Lessee  violates  clause  (a) of this  paragraph  (2),  at
Lessee's  sole cost and  expense,  contain  at or remove  from the  Property  or
perform any other remedial action regarding any Hazardous Substance, at Lessee's
sole  cost and  expense,  whether  or not  such  containment,  removal  or other
remedial  action is  required  under any  Environmental  Law (such  containment,
removal or other remedial action to occur as and when required by  Environmental
Law or upon  termination  or expiration of this Lease,  whichever  first occurs)
and, whether or not so required, perform any containment, removal or remediation
of any kind of any Hazardous  Substance in compliance  with all  requirements of
law;

               (c) not permit any subtenant or occupant of the Demised  Premises
to engage in any activity that could result in any liability, cost or expense to
any such subtenant or occupant,  or to Lessee,  Lessor or any other owner of the
Property or any portion  thereof or the creation of a lien on the Property under
any Environmental Law or under any similar applicable law or regulation;

               (d)  provide  Lessor  with  written  notice (and a copy as may be
applicable)  of any of the  following  within  10  days  thereof:  (i)  Lessee's
obtaining  knowledge  or notice of any kind of the  presence,  or any  actual or
threatened  release,  of any  Hazardous  Substance  on,  under,  at or from  the
Property not authorized or permitted  under  Environmental  Laws;  (ii) Lessee's
receipt or submission, or Lessee's obtaining knowledge or notice of any kind, of
any report,  citation,  notice or other  communication  from or to any  federal,
state  or local  governmental  or  quasi-governmental  authority  regarding  any
Hazardous Substance in any way materially  adversely affecting the Property;  or
(iii)  Lessee's  obtaining  knowledge or notice of any kind of the incurrence of
any  cost  or   expense  by  any   federal,   state  or  local   government   or
quasi-governmental  authority  or any  private  party  in  connection  with  the
assessment,  monitoring,  containment,  removal or  mediation of any kind of any
Hazardous  Substance on, under, at or from the Property,  or of the recording of
any  lien on the  Property  in  connection  with any such  action  or  Hazardous
Substance on, under or at the Property; and

               (e) defend all actions  arising out of Lessee's  occupancy of the
Demised Premises during the Term against Lessor and pay, protect,  indemnify and
save harmless Lessor from and against any and all liabilities,  losses, damages,
costs, expenses (including  reasonable attorneys' fees and expenses),  causes of
action, suits, claims,  demands or judgments of any nature arising from Lessee's
failure to comply with this  section.  The  indemnity  contained in this section
shall survive the  expiration or earlier  termination of this Lease with respect
to the obligations and  liabilities of Lessee  hereunder,  actual or contingent,
which have arisen on or prior to such expiration or earlier termination.

                       ARTICLE 26 - CONFESSION OF JUDGMENT

         26.1  Money  Judgment. For value received and upon the occurrence of an
event of default hereunder, lessee does hereby empower any attorney of any court
of record within the  commonwealth  of  Pennsylvania,  to appear for lessee and,
with or without complaint filed, confess judgment against lessee and in favor of
lessor, its successors or 

                                      -21-






assigns, in the commonwealth of Pennsylvania,  for the sum due by reason of said
default in the payment of rent and other sums,  including  accelerated rent, and
for the sum due by  reason of any  breach of  covenant  or  condition  broken by
lessee,  with  costs  of  suit  and  attorney's  commission  of 10  percent  for
collection,  and  forthwith  issue a writ or writs  of  execution  thereon  with
release of all errors and without stay of execution. Such authority shall not be
exhausted by one exercise  thereof,  but judgment may be confessed  from time to
time as often as any rent in arrears or rent treated as if in arrears or charges
fall due and are not paid. Such powers may be exercised  during as well as after
the  expiration or  termination  of the original term and during and at any time
after any extension or renewal of the term.

         26.2  Judgment in Ejectment. For value received and upon the occurrence
of an event of default hereunder,  or upon expiration or earlier  termination of
the term of this  lease  and the  failure  of lessee to  deliver  possession  to
lessor,  lessee  further  authorizes  and empowers any such attorney  (either in
addition to or without such  judgment for the amount due  according to the terms
of this lease) to appear for lessee and any other person  claiming  under, by or
through lessee,  and confess  judgment  forthwith  against lessee and such other
persons  and in favor of  lessor in an  amicable  action  of  ejectment  for the
premises filed in the Commonwealth of Pennsylvania,  with release of all errors.
Lessor may forthwith  issue a writ or writs of execution  for  possession of the
premises and at lessor's option, for the amount of any judgment,  and all costs,
without lease of court, and lessor may, by legal process, without notice reenter
and expel lessee from the premises, and also any persons holding under lessee.

                           ARTICLE 27 - MISCELLANEOUS

         27.1 Zoning. Anything herein contained to the contrary notwithstanding,
this Lease Agreement and all the terms,  covenants and conditions  hereof are in
all respects subject and subordinate to all zoning laws and ordinances affecting
the Demised  Premises  and/or the building and Lessee  agrees to be bound by the
game.  Further,  Lessee does not agree or represent that any licenses or permits
which may be required for the business to be carried on by Lessee in the Demised
Premises will be granted,  or if granted will be continued in effect or renewed.
Any failure to obtain such licenses or permits,  or any revocation  thereof,  or
failure  to  continue  or renew the  same,  shall not  release  Lessee  from any
obligations  of this Lease  Agreement  or reduce  the save,  and  nothing  shall
obligate Lessor to assist in obtaining any such permit or license.

         27.2  Brokers.  The  parties  represent  and  warrant  that this  Lease
Agreement  was  negotiated  directly and not through or with any broker or other
intermediary  purporting  to act either for either  party.  The parties agree to
indemnify, protect, defend and save each other harmless from and against any and
all claims,  costs,  damages or expenses to which each may be  subjected  as the
result of any  broker  or other  intermediary  claiming  to have  negotiated  or
brought about this Lease Agreement.

         27.3  Conveyance by Lessor.  Lessee agrees that on the occasion of each
sale or exchange of Lessor's  estate in the  building,  Lessee will look to each
respective succeeding 

                                      -22-






grantee or assignee for the performance of the obligations of Lessor  hereunder.
Lessee  further agrees that each  respective  grantor and assignor so selling or
exchanging  shall be and is  hereby  released  and  discharged  from any and all
liability  and  obligation  under this Lease  Agreement as Lessor or  otherwise,
except  liabilities  in  respect  to the  period  up to the date of such sale or
exchange.  Lessee  further  agrees  that  Lessor's  liability  under  this Lease
Agreement  shall be limited to and include  only the  interests of Lessor in the
building of which the Demised Premises are a part.

         27.4  Notices.  All  notices  required  to be given  under  this  Lease
Agreement shall be given by registered mail, sent to the place specified below.

LESSOR:

William I. Roberts
99 South Cameron Street
Harrisburg, PA 17101

LESSEE:

Blue Fish Clothing, Inc.
No. 3 Sixth Street
Frenchtown, NJ 08825

As against Lessor the only admissible  evidence that notice has been given shall
be a registered return receipt signed by Lessor.

         27.5 Successors and Assigns.  All rights and  liabilities  herein given
to, or imposed upon, the respective  parties hereto shall extend to and bind the
several and respective heirs, executors, administrators,  successors and assigns
of said parties; and if there shall be more than one Lessee, they shall be bound
jointly and severally by the terms,  covenants and  agreements  herein,  and the
word  "Lessee"  shall be deemed and taken to mean each and every person or party
mentioned  as a Lessee  herein,  be the same one or more;  and if there shall be
more than one  Lessee,  any notice  required or  permitted  by the terms of this
Lease  Agreement may be given by or to any one thereof,  and shall have the same
force and effect as if given by or to all  thereof.  No rights,  however,  shall
inure to the benefit of any  assignee of Lessee  unless the  assignment  to such
assignee has been approved by Lessor in writing as aforesaid.

         27.6 Lessor's Waiver.  Lessor shall,  upon written request from Lessee,
execute a waiver  of its right to  distrain  upon or secure a lien  against  any
equipment, machinery or other personal property acquired or leased by Lessee, if
such property  becomes subject to a perfected  security  interest by any lending
institution or equipment  lessor.  Lessee shall, in its written request for this
waiver,  specifically  enumerate  the  equipment,  machinery  or other  personal
property  for which the  waiver is  requested  as well as the length of time for
which the perfected security interest shall be in full force and effect.

                                      -23-






         27.7  Estoppel  Certificate.  Lessee  shall,  upon demand from  Lessor,
execute and deliver to Lessor an Estoppel  Certificate  in such form and content
as requested by Lessor,  attesting to the  compliance to date of Lessor with the
terms and conditions of this Lease Agreement and such other matters as requested
by Lessor concerning the tenancy of Lessee  hereunder.  In the event that Lessee
asserts any default by Lessor that would prevent Lessee from attesting to such a
certificate,  Lessee  shall set forth such  alleged  default or  defaults in the
certificate in detail and attest to the fact that those listed  defaults are the
only defaults by Lessor hereunder.

         27.8  Headings.  The  headings  appearing  in  connection  with various
sections herein are for convenience  only. They are not intended to indicate all
of the  subject  matter in the text and they are not to be used in  interpreting
this Lease Agreement nor for any other purpose in the event of any controversy.

         27.9  Whole  Agreement. It is  expressly  understood  and agreed by and
between all the parties hereto that this Lease Agreement and the riders attached
hereto  and  forming  a part  hereof  set forth  all the  promises,  agreements,
conditions,  warranties,  representations and understandings  between Lessor and
Lessee relative to the Demised  Premises and this leasehold,  and that there are
no   promises,   agreements,   conditions,   warranties,    representations   on
understandings,  either oral or written,  between  them other than as herein set
forth.  It is further  understood  and agreed that,  except as herein  otherwise
provided, no subsequent alteration, amendment, understanding or addition to this
Lease Agreement shall be binding upon Lessor or Lessee unless reduced to writing
and signed by them.

         IN  WITNESS  WHEREOF,  the  parties  hereto  have  executed  this Lease
Agreement the day and year aforesaid.

LESSOR:                                              LESSEE:

William I. Roberts                                   Blue Fish Clothing, Inc.

By:                                                  By:
   ---------------------                                ---------------------
     (Name/Title)                                        (Name/Title)

By:                                                  By:
   ---------------------                                ---------------------
     (Name/Title)                                        (Name/Title)

WITNESS                                              ATTEST

------------------------                                ---------------------
(Name/title)                                             (Name/Title)



                                      -24-