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Exhibit 10.18

                                 BUILDING LEASE
                                 --------------

     THIS LEASE, made and entered into this 1st day of October, 1999, by and
between TENNEY PLACE DEVELOPMENT, LLC ("Landlord") and SONIC FOUNDRY, INC.
("Tenant").


                                  WITNESSETH:

     Paragraph 1.  Premises.  Landlord for and in consideration of the rents
herein reserved and of the covenants and agreements herein contained on the part
of Tenant to be kept observed and performed does by these presence lease to
Tenant and Tenant leases from Landlord, the improved real estate located at 1617
Sherman Avenue, City of Madison, Dane County, Wisconsin which is more
particularly described on Exhibit A, which is attached hereto and incorporated
herein by reference, together with all improvements now or in the future located
thereon, including a building which is to be renovated prior to the Beginning
Date (defined below) at Landlord's sole expense, except as provided herein
below, substantially in accordance with the preliminary plans and specifications
which have been approved by Tenant (the "Building") which plans, specifications,
and Work Letter are set forth, in part, in Exhibit B which is attached hereto
and incorporated herein by reference and subject to the covenants, conditions,
agreements, easements, encumbrances and restrictions of record affecting the
real estate and improvements (such real estate and improvements as described
hereinabove shall be referred to herein collectively hereinafter as the
"Premises"). After the renovation of the Building, the Landlord and Tenant
hereby agree that the Building will contain approximately 45,000 square feet.
All renovations to the Building to be completed by Landlord shall be completed
in a good and workman like manner and comply with all applicable laws,
ordinances, rules and regulations of government authorities. Landlord and Tenant
hereby acknowledge that the plans, specifications, and Work Letter set forth at
Exhibit B are preliminary and the parties agree to work in good faith with their
respective architects and engineers to agree upon final plans and specifications
for the renovations of the Building as quickly as practicable. Such final plans
and specifications will set forth a time line for commencement of construction
by the Landlord. Notwithstanding anything to the contrary herein contained, if
the cost of any Tenant allowance item of work relative to the renovations, as
finally agreed upon by Landlord and Tenant, exceeds the Tenant allowance for
such item of work, Tenant shall pay Landlord the amount by which the actual cost
of such item of work exceeds the Tenant allowance for such item of work.

     Paragraph 2.  Initial Term.  The Initial Term of this Lease shall commence
on the later of the following dates (the "Beginning Date"):

     (a)  The first day of June, 2000; or

     (b)  The date the Premises are "Ready for Occupancy" as set forth in this

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section.

     The Initial Term hereof shall commence on the Beginning Date and shall
expire 120 months after the Beginning Date. Within 30 days after the Beginning
Date, the Landlord and Tenant shall confirm the Beginning Date and the date the
Initial Term expires in writing.

     The word "Term" as used in this Lease shall mean the Initial Term and the
Extended Terms to the extent the Extended Terms are exercised.

     Tenant acknowledges that the renovations to the Building are not complete.
The term "Ready for Occupancy" for purposes of this section shall mean the date
on which the renovations to the Building are substantially complete in
accordance with the plans and specifications as finally agreed upon by Landlord
and Tenant. Under no circumstances shall the Landlord be liable to Tenant for
damages or otherwise for delay in delivering the Premises to Tenant occasioned
by delays in constructing the Premises. Landlord shall have no obligations for
any repairs or additional construction or installations on the Premises except
as called for in this Lease, after the Premises have been deemed "Ready for
Occupancy." For purposes of this paragraph, substantially complete means:

     (a)  Completing the renovations as provided herein so that (i) Tenant can
use the Premises for Tenant's intended purposes without material interference to
Tenant's conducting its ordinary business activities and (ii) the only
incomplete items are minor or insubstantial details of construction, mechanical
adjustments or finishing touches such as touch up paint, plastering and
painting;

     (b)  Landlord's securing a certificate of occupancy from the City of
Madison, if necessary;

     (c)  Tenant, its employees, agents and invitees having reasonable access to
the Building and Premises;

     (d)  The decoration fixtures and equipment to be installed by Landlord
pursuant to the plans and specifications set forth at Exhibit B are installed
and in good working order;

     (e)  The Building is broom clean.

     Any partial occupancy of the Premises by the Tenant prior to the Beginning
Date shall be agreed to in writing by Landlord and Tenant prior to such
occupancy of the Premises by Tenant and prior to Tenant's installing any
furniture and fixtures on or to the Premises.

     Paragraph 3.  Rent.  Commencing on the Beginning Date, Tenant agrees to pay
to Landlord, without offset or deduction, except as set forth herein or as may
be

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permitted by law, the Base Rent. The monthly Base Rent for each year of the Term
shall be as follows:

            Year                                         Monthly Rent
            ----                                         ------------
            One                                           $38,437.50
            Two                                           $40,312.50
            Three                                         $42,187.50
            Four and Five                                 $44,062.50
            Six and Seven                                 $45,937.50
            Eight through Ten                             $47,812.50
            First 5-year Extended Term, if exercised      $49,125.00
            Second 5-year Extended Term, if exercised     $53,625.00

     Monthly Base Rent shall be paid in advance in equal monthly installments.

     In the event Tenant leases the Premises during any month of the Term for
less than a whole calendar month as a result of the Scheduled commencement or
termination date, Tenant shall pay Base Rent on a prorated basis for such month.

     In addition to Base Rent, Tenant shall pay as rent the charges described
herein as additional rent ("Additional Rent"). Any installment of Base Rent or
Additional Rent owed by Tenant to Landlord which is not paid to Landlord when
due, shall bear interest at the Lease Interest Rate (as herein defined) from the
date when due hereunder until the date paid. Notwithstanding the above, no
interest shall begin to accrue on overdue Base Rent or Additional Rent until it
is overdue for more than ten (10) days. Any late payments by Tenant shall be
first applied to interest that has accrued after such ten (10) day period and
then to Base Rent or Additional Rent owed by Tenant to Landlord.

     Paragraph 4.  Taxes and Assessments, etc.  As Additional Rent for the
Premises, Tenant further agrees to pay prior to the same becoming due, all
general real estate taxes and currently due installments of special assessments,
general and special water rates, utilities (including electric, water, sewer,
gas and telephone charges) and all other impositions ordinary and extraordinary,
which may be levied, assessed or imposed upon the Premises or any part thereof
or upon the Building or improvements at any time situated thereon, accruing or
becoming due and payable during the Term of this Lease and any extension
thereof. The general real estate taxes levied against the Premises shall be
prorated between Landlord and Tenant as of the date of termination for the last
year of the Term of the Lease ending on other than December 31 (regardless of
whether the last year is in the Initial Term or any of the Extended Terms.)
Benefit may be taken by Tenant of the provisions of any statute or ordinance
permitting any assessment to be paid over a period of years; provided, however
Tenant shall pay all installments due during the Term. The Tenant is not liable
for installment payments of special assessments falling due after the Initial
Term or after any Extended Term. In

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addition to the foregoing, Tenant shall pay any tax of a nature not presently in
effect but which may hereafter be levied assessed or imposed upon Landlord or
upon the Premises, if such tax shall be based upon or arise out of the
ownership, use or operation of the Premises; provided, however, that for the
purpose of computing Tenant's liability for such new tax, Tenant shall only be
responsible for taxes assessed against the Premises and Tenant shall not be
responsible for any taxes on other property of Landlord. Nothing contained
herein shall be construed or require Tenant to pay any franchise, inheritance,
estate, succession, transfer, income or other similar tax of Landlord,
chargeable to or required to be paid by Landlord, unless such tax shall be
specifically levied against the rental income of Landlord derived hereunder, as
a substitute for real estate taxes, in whole or in part, upon the Premises, the
Building or the improvements situated thereon.

     In the event that Tenant at any time institutes suit to recover any real
estate tax, assessment, tax lien or other imposition or charge paid by Tenant
under protest in Landlord's name, Tenant shall have the rights, at Tenant's sole
expenses to institute and prosecute such suit or suits in Landlord's name, in
which event Tenant covenants and agrees to indemnify and save Landlord harmless
from and against all costs, charges or liabilities in connection with any such
suit including reasonable attorney's fees. All funds recovered or received as a
result of any such suit shall belong to Tenant, except to the extent such
recovery relates to a period of time which is not part of the Term of this
Lease, in which event such portion of the recovered funds shall be paid to
Landlord.

     Paragraph 5.  Use: Permits and Licenses.  The Premises shall be used for
office space, research and development, packaging and shipping, or as general
office space, as well as for any lawful uses related or incidental thereto.
Tenant shall not use or occupy the Premises or knowingly permit the Premises to
be used or occupied contrary to any statute, rule, order, ordinance, regulation
or restrictive covenant applicable thereto, or in any manner in which: (i) would
violate any certificate of occupancy affecting the same, (ii) would render the
hazard insurance thereon void, (iii) is inconsistent with the permitted uses
hereunder, (iv) would cause structural injury to the Building or improvements,
(v) would constitute a public or private nuisance or waste. Tenant agrees to
promptly upon discovery of any such use, take all necessary steps to compel the
discontinuance of such use. Landlord shall, at Landlord's sole cost and expense,
maintain each and every permit, license, certificate, and other authorization,
and procure all renewals, extensions, and continuances of the same required in
connection with the lawful construction and occupancy of the Premises by
Landlord, while Tenant shall, at Tenant's sole cost and expense, maintain each
and every permit, license, certificate, and other authorization, and procure all
renewals, extensions, and continuances of the same required in connection with
the use of the Premises by Tenant.

     Paragraph 6.  Maintenance of Premises.  Except as set forth in the last
paragraph of this Paragraph 6, Tenant shall be responsible for maintaining all
interior

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and exterior portions of the Premises, including without limitation, all
mechanical systems i.e. plumbing, electrical, lighting or other mechanical
systems, components, or leasehold improvements under this Lease, in good
condition and repair, except for reasonable wear and tear. Tenant shall also be
responsible for maintaining all landscaping on the Premises (including, but not
limited to mowing all lawns on the Premises), for all snow removal, and for all
repairs for broken glass, painting, decorating, clean up and light bulbs. Tenant
shall, upon the expiration of the Term of this Lease or any extension thereof,
deliver the Building and Premises, in as good condition as received, except for
reasonable wear and tear, and damage by fire or other casualty. Tenant shall not
be liable for damage to the Premises and Building which shall be caused by the
negligent or willful acts or omissions of Landlord, or Landlord's contractors,
employees or agents, or which shall be caused by fire or other hazard covered by
Landlord's insurance. Tenant shall maintain the fixtures and equipment which
constitutes the plumbing, electrical, heating and ventilating, and air-
conditioning systems of the Premises in such manner as to comply with all
applicable federal, state and municipal ordinances and regulations.
Notwithstanding the above, Tenant shall pay for all repairs, maintenance and
replacements to the extent caused by the willful or negligent acts or omissions
of the Tenant, or Tenant's agents or employees in, on or about the Premises.

     Tenant shall not create any openings in the roof or exterior walls, nor
shall Tenant make any alterations, additions or improvements to the Premises,
except as permitted by Paragraph 11 hereof, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed. Except as otherwise provided herein, Tenant, at Tenant's sole cost and
expense, will make all additions, improvements and alterations on the Premises
and to the improvements, appurtenances and equipment thereon which may be
necessary by the act or negligence of the Tenant or Tenant's agents, invitees,
or employees. No additions, improvements or alterations shall be commenced until
Tenant has first satisfied the requirements set forth in Paragraph 11 hereof.

     Notwithstanding anything to the contrary, Landlord will be responsible for
the structural elements of the roof, foundation and all other mechanical
equipment within the building including but not limited to, the boilers, all
heating, ventilation and air conditioning equipment. Said responsibility of
Landlord is subject to Tenant properly maintaining the mechanical elements in
accordance with recommended maintenance schedule and procedures provided by the
equipment manufacturers. All warranties obtained by Landlord shall be assigned
to Tenant. In addition, Landlord shall repair and maintain, at Landlord's sole
cost and expense, the asphalt surface of the parking lot for a period of two (2)
years from the Beginning Date (this shall not affect Tenant's responsibility for
snow removal from such parking lots).

     Paragraph 7.  Liability Insurance.  Tenant further agrees that Tenant will
at all times during the Term hereof, at Tenant's sole cost and expense, carry
and maintain comprehensive general public liability insurance naming Landlord
and Tenant as

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insured parties against claims for personal injury, including death and property
damage, in, on or about the Premises, in the amount of One Million and no/100
Dollar ($1,000,000.00) in respect to any one occurrence causing bodily injury,
death or property damage, and will also carry, if any is required by applicable
law, steam boiler insurance on all steam boilers, pressure vessels and other
such apparatus, including piping. All such policies shall provide that the same
may not be canceled or altered except upon thirty (30) days prior written notice
to Landlord and shall specifically name Landlord as an insured party.

     Paragraph 8.  Hazard Insurance.  Tenant shall, at all times during the Term
of this Lease, at Tenant's expense, maintain insurance on all buildings and
improvements on the Premises against loss by fire and lightning, the risks
covered by what is commonly known as extended coverage, malicious mischief and
vandalism, and all other risks or direct physical loss in an amount equal to the
full replacement value on a replacement form basis, of such buildings and
improvements. The policy or policies evidencing such insurance shall be written
by a company or companies authorized to do business in the State of Wisconsin
(i) shall name Landlord and Tenant as insureds thereunder to the extent of the
interest in the Premises; (ii) shall contain effective waivers of subrogation;
and (iii) shall provide that losses shall be paid as their respective interests
may appear. At the request of Landlord, a mortgagee clause may be included in
the policies covering Landlord's mortgagee, if any. The policies shall provide
that the same may not be canceled or altered except upon thirty (30) days prior
written notice to Landlord and to Landlord's mortgagees, if any. Tenant shall
furnish insurance against loss of rents due to the occurrence of any casualty or
hazard in the amount of all rent payments, taxes, assessments and insurance
premiums required hereunder for a twelve (12) month period, and shall provide
separate contents insurance for all of Tenant's personal property, removable or
trade fixtures, furnishings, and equipment and insurance against breakage of all
plate glass used in the Building and improvements located in the Premises. At
Tenant's sole option, Tenant may self insure Tenant's personal property,
removable trade fixtures, furnishings, and equipment.

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     Tenant shall furnish Landlord with a certificate or certificates of all
insurance policies required to be carried and maintained by Tenant within sixty
(60) days after Landlord's demand therefore. Tenant shall procure renewals
thereof at least thirty (30) days prior to the expiration dates of the
respective policies. All such insurance shall be procured from a responsible
insurance company or companies authorized to do business in the State of
Wisconsin. Any insurance required of Tenant under this Lease shall further
provide that Landlord's interest under the policy will not be invalidated by any
act or omission of, or any breach of warranty or covenant in the policy by
Tenant, or by the use of the Premises for purposes more hazardous than is
permitted by the policy.

     In the event Tenant shall at any time fail, neglect or refuse to procure or
renew insurance and keep the same in full force as provided for in this Lease,
then Landlord may, at Landlord's election, procure or renew such insurance, and
any amounts thereof by Landlord shall constitute a part of Additional Rent due
at the next rent day after any such payment, together with interest at the Lease
Interest Rate as provided herein.

     Landlord and Tenant hereby waive all claims for recovery from the other
party for any loss or damage (whether or not such loss or damage is caused by
the negligence of the other party and, notwithstanding any provision or
provisions obtained in the Lease to the contract) to any person or property
insured under valid and collectible insurance policies to the extent of any
recovery collectible under such insurance, subject to the limitation that this
waiver shall apply only when it is permitted by the applicable policy of
insurance.

     Paragraph 9.  Damage or Destruction of Leased Premises.  If the Building on
the Premises is damaged or partially destroyed by fire or other casualty to the
extent of less than forty percent (40%) of the then cost of replacement thereof
above foundation, the same shall be repaired as quickly as is practicable, by
Landlord except that the obligation of Landlord to rebuild shall be limited to
repairing or rebuilding of Landlord's property. If the Building or the leased
premises are so destroyed or damaged to the extent that forty percent (40%) or
more of the then replacement cost thereof above foundation, then Landlord may
elect not to repair or rebuild by giving notice in writing terminating this
Lease, in which event this Lease shall be terminated as of the date of such
notice. If Landlord shall undertake to restore or repair the Leased Premises, it
shall: (i) pursue all necessary work with all reasonable dispatch in a manner
consistent with some construction practices, (ii) in the event insurance
proceeds are insufficient to replace or restore the Premises to substantially
the same condition the Premises were in immediately prior to its damage or
destruction, Tenant shall be responsible for and shall pay Landlord an amount
equal to the amount of such insufficiency within thirty (30) days of written
demand therefore by Landlord, (iii) neither Base Rent nor Additional Rent shall
abate while the Premises are being restored or repaired.

     Paragraph 10.  Liens.  Tenant shall not do any act which shall in any way
encumber the title of Landlord in and to the Premises, nor shall any interest or
estate of Landlord in the Premises be in any way subject to any claim by way of
lien or

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encumbrance, whether by operation of law or virtue of any express or implied
contract by Tenant. Any claim to or lien upon the Premises arising from any act
or omission of Tenant shall accrue only against the leasehold estate of Tenant
and shall in all respects be subject and subordinate to the paramount title and
rights of Landlord in and to the Premises. Tenant will not permit the Premises
to become subject to any mechanics', laborers' or materialman's lien on account
of labor or material furnished to Tenant or claimed to have been furnished to
Tenant in connection with work of any character performed or claimed to have
been performed on the Premises by or at the discretion of Tenant; provided,
however, that Tenant shall have the right to contest in good faith and with
reasonable diligence, the validity of any such lien or claimed lien. Tenant may
provide, at Tenant's expense, a bond for the same, which bond satisfies all
statutory requirements, from a bonding company licensed in Wisconsin and
reasonably acceptable to Landlord. On any final determination of the lien or
claim for lien, Tenant will immediately pay any judgment rendered, with all
property costs and charges, and will, at Tenant's expense, have the lien
released any judgment satisfied.

     If Tenant shall then fail to contest the validity of any lien or claimed
lien within thirty (30) days of the filing of the same, or provide a bond for
the same within thirty (30) days of Landlord's request for the same; shall fail
to prosecute such contest with diligence; or shall fail to release all liens
within ninety (90) days (or such longer period as is necessary provided that
Tenant proceeds with diligence) of their filing; or satisfy any judgment
rendered thereon within thirty (30) days of the date rendered, then Tenant shall
be in default thereunder and Landlord may, at Landlord's election (but not at
Landlord's obligation), remove or discharge such lien or claim for lien (with
the right in Landlord's discretion, to settle or compromise the same), and any
amounts advanced by Landlord for such purposes, including reasonable attorney's
fees shall constitute a part of the Additions Rent due from Tenant to Landlord
at the next rent date after any such payment, with interest at the Lease
Interest Rate as provided herein Landlord's payment.

     Paragraph 11.  Alterations and Improvements.  Tenant shall not at any time
during the Term of this Lease, or any extension thereof, make any alteration,
addition or improvement to the Premises or any improvements located thereon
without, in each instance obtaining the prior written consent of Landlord, which
consent (i) shall not be unreasonably withheld, conditioned or delayed, and (ii)
shall specify whether Landlord will require Tenant to remove the alterations,
additions or improvements at the end of the Term (and if removal is so
specified, Tenant shall remove such alterations, additions or improvements).
Tenant shall not need Landlord's consent to interior, non-structural
alterations, additions, and improvements made by Tenant, provided the costs of
such alterations, additions or improvements shall not exceed Twenty Thousand
00/100 ($20,000.00) per calendar year or in the aggregate One Hundred Fifty
Thousand and 00/100 ($150,000.00) over the Term hereof. No alteration, addition
or improvement to the Premises for which Landlord's consent is required
hereunder shall be commenced by Tenant until Tenant has furnished Landlord with
a satisfactory certificate of certificates from, an insurance company evidencing
workmen's compensation coverage

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and insurance coverage protecting Landlord against public liability and property
damage to any person or property, on the Premises, arising out of and during the
making of such alterations, additions, or improvements. Any alteration, addition
or improvement made by Tenant hereunder shall be done in a good and workmanlike
manner in compliance with all applicable governmental laws, statutes,
ordinances, rules and regulations. The parties further agree that Tenant may
also make interior non-structural alterations, additions, or improvements to the
Premises so long as such alterations, additions or improvements do not detract
from the marketability of the Premises. In addition to any signage specified in
the plans and specifications for the renovation of the Building as finally
agreed upon by Landlord and Tenant, the Tenant may erect or display any signage
without Landlord's Consent, provided that all signage shall comply with all
applicable governmental laws, ordinances or regulations.

     Paragraph 12.  Condemnation.  In the event the whole of the Premises of the
Building shall be taken as a result of the exercise of the power of eminent
domain or condemned for a public or quasi-public use by any competent authority,
or sold to the condemning authority under threat of condemnation, or if a
portion of the Premises shall be taken or sold as a result of such event, and as
a result thereof either party, in its reasonable discretion, determines that as
a result of the taking it is not economically feasible to use the balance of the
Premises or the Building either party, in its reasonable discretion, determines
that it is not economically feasible to use for the same purpose as before such
taking, sale or condemnation then the Term of this Lease shall be terminated as
of the date of vesting of title pursuant to such proceeding or sale. If no
portion of the Building is so taken and, after giving effect to such taking, the
parking area of the Premises has not been reduced by greater than twenty-five
percent (25%) meets municipal code requirements applicable to Tenant's use of
the Building, notwithstanding any provision of this Lease to the contrary, (i)
this Lease shall not be affected thereby (except that thereafter "Premises"
shall mean the Premise as so reduced); (ii) Base Rent shall not be reduced or
otherwise affected; (iii) the total award, compensation and damages received for
such taking shall be paid to Landlord. The total award, compensation or damages
received from such proceedings or sale shall be allocated and paid to Landlord
provided that Tenant may apply for and receive a separate award as more
specifically described below.

     In the event only a part of the Premises, or the Building, shall be taken
as a result of the exercise of the power of eminent domain or condemned for a
public or quasi-public use by any competent authority, or sold to the condemning
authority, or sold to the condemning authority under threat of condemnation, and
it is economically feasible to use the balance of the Premises or the Building
can be used for the same purpose as before such taking, sale or condemnation,
then this Lease shall not terminate and Tenant, at Tenant's expense, shall
promptly repair and restore the Premises and all improvements thereon so that
the Premises can be so used. The awards paid as a consequence of such taking,
sale or condemnation shall be placed in escrow in accordance with the procedures
set forth in Paragraph 9 hereof, shall be used for such repair and restoration
or shall be disbursed in accordance with the procedures of

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Paragraph 9 hereof. In the event Tenant shall not promptly commence the repair
or restoration required hereby, and diligently pursue the completion of same,
the Tenant shall be deemed in default under this Lease and, in addition to any
remedy of Landlord provided for under this Lease, at law or in equity, Landlord
may retain the award, or the balance thereof remaining in the hands of the
Tenant. Notwithstanding anything contained in this Lease to the contrary, Tenant
shall also have the right to pursue, apply for and receive a separate award for
damages suffered solely by Tenant in the event of an eminent domain or
condemnation proceeding, including but not by way of limitation, (i) the cost of
moving, or of realigning, removing, and relocating Tenant's trade fixtures,
equipment, and personal property, and (ii) Tenant's lost or diminished value of
Tenant's lease-hold interest, or any other matters which are separately
compensable to Tenant (but with respect to the items set forth in this
subparagraph).

     Paragraph 13.  Assignment and Subletting by Tenant.  Tenant shall not,
without prior written consent of Landlord, which consent shall not be
unreasonably withheld, conditioned or delayed, (i) sublease over fifty percent
(50%) of the Premises; or (ii) assign or otherwise transfer or permit the
transfer of this Lease or all or any part of the interest of Tenant in this
Lease. If Tenant desires to enter into a sublease of over fifty percent (50%) of
the Premises of such an assignment, Tenant shall deliver written notice thereof
to Landlord, together with a copy of the proposed sublease or assignment at
least thirty (30) days prior to the commencement day of the term of the proposed
sublease or assignment. In making Landlord's determination as to whether to
consent to any proposed sublease (or to any proposes assignment of this Lease),
it shall be reasonable for Landlord to take into consideration, without
limitation by enumeration, the following factors: the business reputation and
credit worthiness of the proposed subtenant; the estimated increased pedestrian
and vehicular traffic on the Premises and to the Building which would be
generated by the proposed subtenant or assignee; and the proposed use to be made
of the Premises; provided that any proposed sublease or assignment of the Lease
if Tenant is then in default under this Lease.

     If Tenant enters into an approved sublease, and if such sublease provides
or permits any rent or other consideration in excess of the rent due hereunder,
all such excess rent shall, at Landlord's option, as evidenced by written notice
to Tenant, be paid to Landlord on the first date of each month during the term
of the sublease less any brokerage commission. Any subletting or assignment
hereunder (including without limitation, an assignment hereunder the last
subparagraph of this Paragraph 13) shall not release or discharge Tenant of or
from any liability whether past, present or future under this Lease and Tenant
shall continue full liability hereunder, provided that if Landlord shall cancel
this Lease or enter into a direct lease with the new tenant, the tenant's future
liability under this Lease (to the extent and for that portion of the rent for
which Landlord has a direct lease) shall be terminated.

     Notwithstanding anything to the contrary contained in this Lease, Tenant
may, without Landlord's consent, assign this Lease to any corporation,
partnership or other legal entity that is controlled by or under common control
with Tenant, or any

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corporation resulting from the merger or consolidation with Tenant, or to any
entity that acquires all of Tenant's assets as a going concern of the business
that is being conducted on the Premises, provided that: (i) Tenant is not at
such time in default hereunder, and (ii) such successor shall execute an
instrument in writing fully assuming all of the obligation and liabilities
imposed upon Tenant hereunder and deliver the same to Landlord. Notwithstanding
the foregoing, any corporate merger, consolidation, asset purchase or other
transaction that results in the employees of the Tenant owning more than 25% of
the voting stock of the Tenant shall require the Landlord's consent to the
transaction which consent will not be unreasonably withheld.

     For purposes of this paragraph, the change in beneficial ownership of more
than fifty percent (50%) of the voting stock of Tenant or any corporate
reorganization, consolidation or merger of Tenant shall be deemed to be an
assignment of this Lease. Tenant shall remain primarily liable on this Lease
despite any assignment of this Lease or any subletting of the Premises.

     Paragraph 14.  Indemnity for Litigation.  Landlord and Tenant agree that in
any litigation to which they may be parties, the non-prevailing party shall pay
all costs and expenses, including reasonable attorney's fees, which may be
incurred by or imposed on the prevailing party, either in enforcing this Lease
or in any litigation to which the prevailing party, without fault on its part,
may be a party.

     Paragraph 15.  Estoppel Certificates.  Tenant agrees that at any time and
from time to time, upon not less than ten (10) days' prior written request by
Landlord, Tenant will execute, acknowledge and deliver to Landlord or Landlord's
mortgagee, a statement in writing certifying that this Lease is unmodified and
in full force and effect (or if there have been modifications, that the same is
in full force and effect as modified and stating the modifications), that
Landlord is not in default under any term or condition of this Lease (or if any
default exists Tenant will specify such default), the date to which the rent and
other charges have been paid in advance, if any, and such other matters as
Landlord's mortgagee may reasonably request, or being intended that any such
statement delivered pursuant to this Paragraph 15 may be relied upon by any
prospective purchase of the fee of the Premises, or any mortgagee or assignee of
any mortgagee upon the fee of the Premises.

     Paragraph 16.  Inspection of Premises.  Tenant agrees to permit Landlord
and any authorized representatives of Landlord, to enter the Premises at all
reasonable times during business hours, without notice in the event of an
emergency and upon twenty-four (24) hours' advance written notice for the
purpose of inspecting the Premises for other purposes. Tenant agrees to permit
Landlord and any authorized representative of Landlord to enter the Premises at
all reasonable times during business hours and upon forty-eight (48) hours'
advance written notice to exhibit the same for the purpose of sale or mortgage.
During the final year of the Initial Term and Extended Term, Landlord may
display on the Premises usual "For Sale" or "For Rent" signs. In no event shall
the entry by Landlord or any representative of Landlord unreasonably hinder

<PAGE>

or interrupt Tenant's use and possession of the Premises.

     Paragraph 17.  Fixtures.  Except as otherwise provided herein, the Building
and improvements and all plumbing, heating, lighting, electrical and air
conditioning fixtures attached to the Premises and used in the operation of the
Premises shall be and remain a part of the Premises and shall constitute the
property of Landlord. Tenant's personal property, machinery, removable trade
fixtures, and equipment now or hereafter located upon the Premises, shall be and
remain the personal property of Tenant, and may be removed from the Premises by
Tenant at any time. All refrigeration equipment is part of the Premises.

     Paragraph 18.  Default by Tenant.  Tenant agrees that any one or more of
the following events shall be considered an event of default (an "Event of
Default"):

     (a)  If an order, judgment or decree shall be entered by any court
adjudicating Tenant bankrupt or insolvent, or approving a Petition seeking
reorganization of Tenant or appointing a receiver, trustee or liquidator of
Tenant, or of all or a substantial part of Tenant's assets, and such order,
judgment or decree shall continue unstayed and in effect for any period of sixty
(60) days;

<PAGE>

     (b)  Tenant shall file an answer admitting all of the allegations of a
petition filed against Tenant in any bankruptcy, reorganization or insolvency
proceeding or under any laws relating to the relief of debtors, readjustment of
indebtedness, reorganization, arrangement, composition or extension;

     (c)  Tenant shall make a general assignment for the benefit of creditors or
shall apply for or consent to the appointment of a receiver, trustee or
liquidator of Tenant, or any of the assets of Tenant;

     (d)  Tenant shall file a voluntary petition in bankruptcy, or shall admit
in writing Tenant's inability to pay Tenant's debts as they come due, or shall
file a petition or an answer seeking reorganization or arrangement with
creditors or shall take advantage of any insolvency law;

     (e)  A decree or order appointing a receiver of the property of Tenant
shall be made and such decree or order shall not have been vacated within sixty
(60) days from the date of entry or granting thereof;

     (f)  Tenant shall default for a period of fifteen (15) days after written
notice from Landlord of nonpayment of rent or other payment required to be made
by Tenant hereunder when due as herein provided; or

     (g)  Tenant shall be in default in the performance of or compliance with
any of the agreements, terms, covenants or conditions of this Lease other than
those referred to in the foregoing subparagraphs (a) through (f) of this
Paragraph for a period of thirty (30) days after notice from Landlord to Tenant
specifying the default, or in the case of a default which cannot, with due
diligence, be cured within thirty (30) days, Tenant fails to proceed within
thirty (30) days to cure such default and thereafter to prosecute the curing of
such default with due diligence (it being intended in connection with a default
not susceptible of being cured with due diligence within thirty (30) days that
the time period for Tenant to cure the same shall be extended to ninety (90)
days).

     Upon the occurrence of an Event of Default and the expiration of any
applicable grace period, Landlord shall have the option to pursue any one or
more of the following remedies (or any other remedy available to it) without
notice or demand whatsoever:

     (a)  Give Tenant written notice of intent to terminate this Lease on the
date of such notice or on any later date as may be specified therein, whereupon
Tenant's right to possession of the Premises shall cease and this Lease, except
as to Tenant's liability, shall be terminated. In the event this Lease is
terminated in accordance with the provisions of this Paragraph, Tenant shall
remain liable to Landlord for damages in an amount equal to the rent and other
sums which would have been owing by Tenant hereunder for the balance of the Term
had this Lease not been terminated, less the net proceeds, if any, of any
reletting of the Premises by Landlord subsequent to such termination, after
deducting all of Landlord's reasonable expenses including, without

<PAGE>

limitation, all actual and reasonable repossession costs, brokerage commissions,
legal expenses, reasonable attorney's fees, expenses of employees, alteration
and repair costs and expenses of preparation for such reletting. Landlord shall
be entitled to collect such damages from Tenant monthly on the days on which the
rent and other charges would have been payable hereunder if this Lease had not
been terminated. Alternatively, to the extent permitted by law, at the option of
Landlord, in the event this Lease is so terminated, Landlord shall be entitled
to recover forthwith against Tenant as damages and not as a penalty an aggregate
sum, which at the time of such termination of this Lease, represents the excess,
if any, of the aggregate of the rent and all other charges payable by Tenant
hereunder that would have accrued for the balance of the Term over the aggregate
rental value of the Premises (such rental value to be computed on the basis of
Tenant paying not only rent to Landlord for the use and occupation of the
Premises, but also such other charges as are required to be paid by Tenant under
the terms of this Lease) for the balance of such term, both discounted to
present worth at the rate of six percent (6%) per annum.

     (b)  With process of law, reenter and take possession of the Premises or
any part thereof, and repossess the same as of Landlord's former estate and
expel Tenant and those claiming through or under Tenant, and remove the effects
of both or either, using such force for such purposes as may be necessary,
without being liable for prosecution thereof, without being deemed guilty of any
manner of trespass, and without prejudice to any remedies for arrears of rent or
preceding breach of covenants or conditions. Should Landlord elect to reenter
the Premises as provided in this subparagraph, or should Landlord take
possession pursuant to legal proceedings or pursuant to any notice provided for
by law, Landlord may, from time to time, without terminating this Lease, relet
the Premises or any part thereof in Landlord's name, but for the account of
Tenant, for such term or terms (which may be greater or less than the period
which would otherwise have constituted the balance of the term of this Lease)
and on such conditions and other terms (which may include concessions of free
rent and alteration and repair of the Premises) as Landlord, in Landlord's
reasonable discretion, may determine, and Landlord may collect an receive the
rents therefor. Landlord shall in no way be responsible or liable for any
failure to relet the Premises, or any part thereof, or for any failure to
collect any rent due upon such reletting; provided, however, that Landlord shall
use good faith efforts to relet the Premises and mitigate Landlord's damages. No
such reentry or taking possession of the Premises by Landlord shall be construed
as an election on Landlord's part to terminate this Lease unless a written
notice of such intention be given to Tenant. No notice from Landlord hereunder
or under a forcible entry and detainer statute or similar law shall constitute
an election by Landlord to terminate this Lease unless such notice specifically
so states. Landlord reserves the right following any such reentry and/or
reletting to exercise Landlord's reasonable right to terminate this Lease by
giving Tenant such written notice, in which event the Lease will terminate as
specified in said notice. In the event that Landlord does not elect to terminate
this Lease but takes possession as provided for in this subparagraph, Tenant
shall pay to Landlord (i) the rent and other charges as herein provided which
would be payable hereunder if such repossession had not occurred,

<PAGE>

less (ii) the net proceeds, if any, of the reletting of the Premises after
deducting all Landlord's reasonable expenses including, without limitation, all
actual and reasonable repossession costs, brokerage commissions, legal expenses,
reasonable attorney's fees, expenses of employees, alteration and repair costs
and expenses of preparation for such reletting. Tenant shall pay such rent and
other sums to Landlord monthly on the days on which the rent would have been
payable hereunder if possession had not been retaken.

     Paragraph 19.  Landlord's Performance of Tenant's Covenants.  Should Tenant
at any time fail to do any act or make any payment required to be done or made
by Tenant under the provisions of this Lease, subsequent to notice and the
expiration of any applicable grace period set forth in Paragraph 18 hereof,
Landlord, at Landlord's option, may (but shall not be required to) do the same
or cause the same to be done, and all reasonable amounts paid by Landlord in
connection therewith shall constitute a part of the Additions Rent due on the
next rent date after such payment, together with interest at the Lease Interest
Rate as provided herein.

     Paragraph 20.  Exercise of Remedies.  No remedy contained herein or
otherwise conferred upon or reserved to Landlord or Tenant, shall be considered
exclusive of any other remedy, but the same shall be cumulative and shall be in
addition to every other remedy given herein, or now or hereafter existing at law
or in equity. Every power and remedy given by this Lease to Landlord or Tenant
may be exercised from time to time and as often as occasion may arise or as may
be deemed expedient. No delay or omission of Landlord or Tenant to exercise any
right or power arising form any default shall impair any such right or power or
shall be construed to be a waiver of any such default or an acquiescence
therein. No waiver of any breach of any of the covenants of this Lease shall be
construed, taken or held to be a waiver of any other breach, or a waiver,
acquiescence in or consent to any further or succeeding breach of the same
covenant. The acceptance by Landlord of any payment of rent or other sums
payable hereunder after the termination by Landlord of this Lease or of Tenant's
right to possession hereunder shall not, in the absence of an agreement in
writing to the contrary by Landlord, be deemed to restore this Lease or Tenant's
right to possession hereunder, as the case may be, but shall be construed as a
payment on account and not in satisfaction of damages due Landlord from Tenant.

<PAGE>

     In the event of any Event of Default by Tenant or a default by Landlord of
any of the agreements, terms, covenants or conditions contained in this Lease
the other party shall be entitled to enjoin the same and shall have the right to
invoke any right and remedy allowed at law or in equity or by statue or
otherwise as though re-entry, summary proceedings, and other remedies were not
provided for in this Lease.

     Paragraph 21.  Subordination to Mortgages.  At the option of Landlord's
mortgagee, this Lease shall be subject and subordinate to any mortgage now or
hereafter placed upon the Premises; provided, however, that the mortgagee agrees
in writing with Tenant or adequate provision is made in the mortgage, so that
regardless of any default or breach under such mortgage or of any possession or
sale of the whole or part of the Premises under or through the mortgage, this
Lease and Tenant's possession shall not be disturbed by the mortgagee or any
other party claiming by, under or through the mortgagee; provided further,
however, that Tenant shall continue to observe and perform Tenant's obligations
under this Lease and pay rent to whomsoever may be lawfully entitled to the same
from time to time.   Tenant hereby agrees to execute, if the same is required,
any and all instruments in writing which may be requested by Landlord to
subordinate Tenant's rights under this Lease to the lien of any such mortgage.

     Paragraph 22.  Indemnity.  Tenant and Landlord each shall hold the other
harmless and indemnified at all time against any loss, liability, damage, cost
or expense including reasonable attorney's fees, by reason of any accident, loss
or damage resulting to persons or property from any use which may be made of the
Premises, or of any improvements or equipment at any time situated thereon, or
by reason of or growing out of any act or thing done or omitted to be done under
this Lease upon the Building, the Premises or to any improvement or equipment at
any time situated thereon to the extent caused by the indemnifying party.

     Notwithstanding anything set forth above in this Paragraph 22 to the
contrary, Landlord shall not be liable to Tenant, and Tenant hereby waives all
claims against Landlord, for any injury or damage to any person or property in
or about the Premises, including, without limiting the generality of the
foregoing, the following: (a) those caused by snow, ice or water leakage of any
character from the roof, walls, basement or other portion of the Premises or the
Building; or (b) those caused by gas, fire, oil, electricity or any cause
whatsoever in, on or about the Premises or the Building (except for any injury
or damage described in subparagraphs (a) or (b) above which are caused by the
negligent acts or omissions of Landlord or Landlord's agents, employees or
contractors).

     Paragraph 23.  Surrender.  Upon the termination of this Lease whether by
forfeiture, lapse of time or otherwise, or upon the termination of Tenant's
right to possession of the Premises, Tenant will at once surrender and deliver
up the Building and the Premises, together with all improvements thereon, to
Landlord, broom clean, in good order, condition and repair, reasonable wear and
tear excepted.  "Broom clean"

<PAGE>

means free from all debris, dirt, rubbish, equipment, and personal property of
Tenant, both inside the Building and on the grounds comprising the Premises. Any
damage caused by the removal of Tenant from the Premises, including any damages
caused by removal of Tenant's equipment, shall be repaired and paid for by
Tenant prior to the expiration of the Term of this Lease. In the event any
improvements, fixtures, or equipment which Tenant is required to remove
hereunder are not removed by Tenant at the time of the expiration of the Term of
this Lease, Tenant shall pay an allocated rent which is based on the area of the
Premise which is unavailable to Landlord as a result of such improvements,
fixtures, and equipment until such improvements, fixtures or equipment are
removed.

     Any holding over by Tenant of the Premises after the expiration of the Term
of this Lease shall operate and be construed to be a tenancy from month-to-month
only, at double the monthly rate of rent and other charges payable hereunder for
the Lease Term.  Nothing contained in this Paragraph 23 shall be construed to
give Tenant the right to hold over at any time, and Landlord may exercise any
and all remedies at law or in equity to recover possession of the Premises as
well as any damages incurred by Landlord due to Tenant's failure to vacate the
Premises and deliver possession to Landlord as herein provided.  In the event
Landlord consents to Tenant's holdover in writing prior to the commencement of
such holdover, Tenant shall be considered to be a month-to-month Tenant and all
of the terms, covenants, and conditions of this Lease including the rent to be
paid by Tenant shall remain unchanged for such tenancy.

     Paragraph 24.  Condition of Premises. Landlord has no notice or knowledge
of any condition or defects in the Premises (including but not limited to the
Building) which will impair the use or occupancy thereof by Tenant or give rise
to a notice from any governmental authority; and the Premises and the Building,
respectively, are to Landlord's knowledge in compliance with all building,
zoning, environmental and other laws, rules, regulations and ordinances of any
governmental authority having jurisdiction over the same. Any and all present or
future warranties, express or implied, of any manufacturer, installer, builder,
contractor, supplier, or any other entity with respect to the parking lot, roof
and other structural components and mechanical systems of the Premises
(including but not limited to the Building) including but not limited to the
electrical, plumbing, heating, ventilating and air-conditioning systems, shall
be assigned to and shall inure to the benefit of Tenant, except to the extent of
any repair obligations of Landlord. Landlord warrants that on the Beginning Date
the Building will comply with all local and state building codes including ADA
and environmental laws applicable to similar projects.

<PAGE>

     Paragraph 25. Default of Landlord. If any default by Landlord continues for
thirty (30) days after written notice thereof by Tenant to Landlord (or in the
case of a default which cannot reasonably be cured within thirty (30) days) if
Landlord fails to proceed within thirty (30) days to cure such default with due
diligence (it being intended in connection with a default not susceptible of
being cured with due diligence within thirty (30) days that the time period for
Landlord to cure the same shall be extended to ninety (90) days), Tenant may
effect such cure on behalf of and for the account of Landlord, and Landlord
shall promptly reimburse Tenant for all costs and expenses thereof, including
reasonable attorney's fees, court costs and expenses.

     If Landlord shall fail to perform any covenant or condition of this Lease
upon Landlord's part to be performed and, as a consequence of such default,
Tenant shall recover a money judgment against Landlord, such judgment shall be
satisfied only out of the proceeds of sale received upon execution of such
judgment and levy thereon against the right, title and interest of Landlord in
the Building and Common Areas and out of rents or other income from such
property receivable by Landlord and Landlord shall not be liable for any
deficiency.

     Paragraph 26.  Covenant of Quiet Enjoyment.  Landlord agrees that at all
times when Tenant is not in default beyond the expiration of any applicable
grace period, under the terms, covenants and conditions of this Lease, Tenant's
quiet and peaceable enjoyment of the Premises shall not be disturbed or
interfered with by Landlord or by any other persons claiming by, through or
under Landlord.

     Paragraph 27.  Short Form Lease.  This Lease shall not be recorded, but
either party at the request of the other shall execute in duplicate a short form
of lease for the purpose of recording the non-economic terms of this Lease.

     Paragraph 28.  Notices.  All notices, consents, approvals, or demands upon,
by Landlord or Tenant desired or required to be given under the provisions
hereof, shall be in writing.  Any notices or demands from Landlord to Tenant
shall be deemed to have been duly and sufficiently given if a copy thereof has
been personally delivered or mailed by United States registered or certified
mail to Tenant at 1617 Sherman Avenue, Madison, Wisconsin 53704 or any such
other address as Tenant may therefore have furnished by written notice, and to
Landlord at 1100 W. Northwest Highway, Suite 216, Mt. Prospect, Illinois 60056
or at such other address as Landlord may therefore have furnished by written
notice to Tenant.  The effective date of any notice shall be the date of
personal delivery or three (3) days after delivery of the same to the United
States Post Office for mailing as the case may be.

     Paragraph 29.  Covenant Run with Land.  All of the terms, covenants, and
conditions of this Lease shall extend and inure to and be binding upon the
heirs, executors, administrators, successors and assigns of the respective
parties hereto, the same as if they were in every case specifically named, and
shall be construed as covenants running with the land. Wherever in this Lease
reference is made to either of

<PAGE>

the parties hereto, it shall be held to include and apply to, wherever
applicable, the heirs, executors, administrators, successors and assigns of such
party. Nothing herein contained shall be construed to grant or confer upon any
person, firm, corporation or governmental authority, other than the parties
hereto, their heirs, executors, administrators, successors and assigns, any
right, claim or privilege by virtue of any covenant, agreement, condition or
undertaking in this Lease contained.

     The term "Landlord" as used in the Lease, so far as the covenants or
obligations on the part of Landlord are concerned, shall be limited to mean and
include only the owner or owners at the time in question of the fee of the
Premises, and in the event of any transfer or transfers of the title to such
fee, the Landlord herein named (and in the case of any subsequent transfers of
conveyances, the then grantor) shall be automatically freed and relieved, from
and after the date of such transfer or conveyance, of all personal liability as
respects to the performance of any covenants or obligations on the part of
Landlord contained in this Lease thereafter to be performed; provided that the
Landlord shall not be released for any breach or default which has occurred
prior to the transfer or conveyance; and provided further that any funds in the
hands of such Landlord or the then grantor at the time of such transfer or
conveyance, in which Tenant has an interest shall be turned over to the grantee,
and any amount then due and payable to Tenant by Landlord or the then grantor
under any provisions of this Lease shall be paid Tenant.

     Paragraph 30.  Time and Essence.  Time is of the essence of this Lease and
all provisions herein relating thereto shall be strictly construed.

     Paragraph 31.  Miscellaneous.

     (a)  The captions of this Lease are for convenience only and are not to be
construed as part of this Lease or as defining or limiting in any way the scope
or intent of the provisions hereof.

     (b)  If any covenant, agreement or condition of this Lease or the
application thereof to any person, firm or corporation or to any circumstances,
shall to any extent be invalid or unenforceable, the remainder of this Lease, or
the application of such covenant, agreement or condition to persons, firms or
corporations or to circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby.  Each covenant, agreement or
condition of this Lease shall be valid and enforceable to the fullest extent
permitted by law.

<PAGE>

     (c)  This Lease shall be construed and enforced in accordance with the
internal laws of the State of Wisconsin.

     (d)  None of the covenants, terms or conditions of this Lease, to be kept
and performed by either party, shall in any manner be altered, waived, modified
changed or abandoned, except by a written instrument, duly signed, acknowledged
and delivered by both parties to this Lease.

     (e)  Nothing contained herein shall be deemed or construed by the parties
hereto, nor by any third party, as creating the relationship of principal and
agent or of partnership, or of joint venture by the parties hereto.  The parties
agree that no provision contained in this Lease nor any acts of the parties
hereto shall be deemed to create any relationship other than that of Landlord
and Tenant.

     (f)  Landlord and Tenant hereby represent and warrant to each other that
they have not dealt with or had any contact with any real estate agent, broker
or finder in connection with this Lease.  Landlord and Tenant agree to indemnify
and hold each other harmless from and against any and all obligations,
liabilities, losses, costs, and expenses (including, but not limited to,
reasonable attorney's fees) incurred in connection with any breach of this
subparagraph.

     (g)  No payment by Tenant or receipt by Landlord of an amount not equal to
the Base Rent or Additional Rent shall be deemed to be other than on account of
the earliest stipulated rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy provided in this Lease.

     (h)  The term "Lease Interest Rate" when used herein, shall be defined as
being an annual interest rate equal to two percent (2%) per annum over and above
the prime rate of interest published from time to time by the Wall Street
Journal.

     Paragraph 32.  Governmental Consent.  Notwithstanding anything contained in
this Lease to the contrary, Tenant's obligations under this Lease shall not
commence until Landlord has obtained each and every permit, license, certificate
or other authorization required to be obtained by Landlord as provided in
Paragraph 5, above, except any such permit, license, certificate or
authorization which may be obtained only after Tenant completes any work with
respect to the Building and Premises to be completed by Tenant.

     Paragraph 33.  Mortgage.  Tenant agrees to execute any modification of this
Lease which may be required by Landlord's mortgagee as a condition to making a
mortgage loan on the Building; provided that no such modification shall alter
the rent, the size of the Premises, or any of the material rights of Tenant
provided herein nor

<PAGE>

materially reduce the economic value hereof to Tenant or diminish Tenant's right
of non-disturbance by a mortgagee or any party claiming by, under or through a
mortgagee as set forth in Paragraph 21 hereof. Tenant agrees to complete and
promptly return any estoppel certificates that may be required in connection
with any mortgage loan on the Building.

     Paragraph 34. Environmental Indemnity.

     Paragraph 34.1  Compliance with Law.  Tenant, at Tenant's expense, shall
comply with all laws, rules, orders, ordinances, directions, regulations and
requirements of federal, state, county, and municipal authorities pertaining to
Tenant's use or occupancy of the Premises and with the recorded covenants,
conditions and restrictions, regardless of when they become effective,
including, without limitation, all applicable federal, state and local laws,
regulations or ordinances pertaining to air and water quality, Hazardous
Material (as hereinafter defined), waste disposal, air emissions, and other
environmental matters, all zoning and other land use matters, and utility
availability, and with any direction of any public officer or officers, pursuant
to law, which shall impose any duty upon Landlord or Tenant with respect to the
use or occupancy of the Premises.

     Paragraph 34.2  Use of Hazardous Material.

     (a)  Tenant shall (i) not cause or knowingly permit any Hazardous Material
to be brought upon, kept or used in or about the Premises by Tenant, its agents,
employees, contractors or invitees without notifying Landlord as set forth in
subparagraph (c), below.  If Tenant breaches the obligations stated in the
preceding sentence, or if the presence of Hazardous Material on the Premises
caused or knowingly permitted by Tenant results in contamination of the
Premises, then Tenant shall indemnify, defend and hold Landlord harmless from
any and all claims, judgments, damages, penalties, fines, costs, liabilities or
losses (including reasonable sums paid in settlement of claims, attorney fees,
consultant fees, and expert fees) which arise as a direct result of such
contamination caused by the acts or negligence of Tenant, its agents, employees,
or invitees. This indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work required by
any federal, state or local government agency or political subdivision because
of Hazardous Material present in the soil or ground water on or under the
Premises which results from the presence of Hazardous Material on the property
caused or knowingly permitted by Tenant.  Without limiting the foregoing, if the
presence of any Hazardous Material on the Premises caused or knowingly permitted
by Tenant results in any contamination of the Premises, Tenant shall promptly
take all actions at its sole expense as are necessary to return the Premises to
the condition existing prior to the introduction of such Hazardous Material to
the Premises: provided that Landlord's approval of such actions shall first be
obtained, which  approval shall not be unreasonably withheld, conditioned or
delayed.  The foregoing indemnity shall survive the expiration or earlier
termination of this Lease.
<PAGE>

Notwithstanding the foregoing, Tenant shall not be liable for and shall have no
duty to indemnify Landlord for any contamination to the soil or groundwater
which results through the leakage of Hazardous Material from the surrounding
properties and if any contamination is caused by a direct result of the acts or
negligence of Landlord, its agents, employees or invitees. Premises; provided
that obtained, which approval delayed. The foregoing termination of this Lease.

     (b)  As used herein, the term "Hazardous Material" means any hazardous or
toxic substance, material or waste, defined by a governmental law, including,
but not limited to, those substances, material, and wastes listed in the United
States Department of Transportation Hazardous materials Table (49 CFR 172.101)
or by the Environmental Protection Agency as hazardous substances (40 CFR Part
302) and amendments thereto, and shall also include, asbestos, polychlorinated
biphenyls ("PCBs"), petroleum, and petroleum based derivatives and/or compounds,
and urea formaldehyde.

     (c)  Disclosure.  At the commencement of this Lease, and on January 1, of
each year thereafter (each such date being hereafter called "Disclosure Dates"),
including January 1 of the year after the termination of this Lease, Tenant
shall disclose to Landlord the names of all Hazardous Material, or any
combination thereof, which were stored, used or disposed of on the Premises.

     (d)  Inspection. Landlord and its Agents shall have the right, but not the
duty, to inspect the Premises at any time to determine whether Tenant is
complying with the terms of this Lease.  If Tenant is not in compliance with
this Lease, Landlord shall promptly notify Tenant of the reasons for such
noncompliance.  In the event Tenant fails to take action to begin to remedy such
noncompliance within ten (10) business days of the receipt of such notification
Landlord shall have the right to immediately enter upon the Premises to remedy
any contamination caused by Tenant's failure to comply notwithstanding any other
provision of this Lease.  If Landlord takes such action under this Paragraph to
remedy Tenant's noncompliance, Landlord shall use best efforts to minimize
interference caused thereby, and shall use best efforts to minimize the cost of
such remediation.

     Paragraph 34.3.  Limitation of Indemnity.  Tenant's obligations under this
Paragraph shall extend only to conditions created on or after the date Tenant
takes possession of the Premises. Tenant shall not be liable for remediation of
contamination or conditions that exist prior to the date Tenant takes possession
of the Premises, even if federal, state or local regulations or laws require new
or additional remediation after the date Tenant takes possession of the
Premises.  Further, Landlord shall not hold Tenant liable for damages caused by
hazardous material which Landlord, its members, agents, employees, or
contractors caused to be placed on the property after the Beginning Date or for
hazardous material that migrates, flows, percolates, defuses or in any way moves
on to the Premises after the Beginning Date of this Lease, except to the extent
Tenant, its officers, employees, agents, assigns, contractors or subtenants
cause

<PAGE>

such hazardous material to migrate, flow, percolate, defuse or in any way move
unto or under the Premises.

     Paragraph 35.  Net Lease.  Except for the Landlord's maintenance and repair
obligations set forth in Paragraph 6, this Lease is intended to be and shall be
an absolute "net, net, net" Lease, and the rent and all other sums payable
hereunder by Tenant (all of which shall be deemed to be Additional Rent) shall
be paid without notice or demand and without setoff, counterclaim, abatement,
suspension, deduction, or defense except as expressly permitted herein or by
law. As more particularly set forth herein, Tenant shall pay all taxes,
insurance premiums, maintenance, repair and non-structural replacement costs and
expenses, utility charges and expenses, and all other costs and expenses,
relating to the Premises and/or the operation thereof during the Term of this
Lease.  In addition, except as set forth in Paragraph 9, this Lease shall
continue in full force and effect and the obligations of Tenant hereunder shall
not be released, discharged, diminished, or otherwise affected by reason of any
damage to or destruction of the Premises, or any part or parts thereof; any
partial taking; any restriction on or prevention of or interference with any use
of the Premises, or any part or parts thereof; or any Permit Encumbrance.
Except as set forth in Paragraph 6, it is expressly understood and agreed that
Landlord shall have no responsibility or obligation, whatsoever, with respect to
the Premises or the condition or use thereof during the term of this Lease and
shall be absolutely, without limitation, exculpated from any and all such
responsibilities and/or obligations, all such responsibilities and obligations
being those of Tenant.  Notwithstanding the foregoing, Tenant shall not be
required to pay the cost of compensation or fringe benefits for Landlord's
employees, depreciation on any building and/or improvements, interest and
principal payments on debt incurred by Landlord relating to the Premises, any
cost or expenditure for which Landlord is reimbursed by insurance proceeds or
otherwise, or Landlord's own costs of managing Landlord's interest under the
Lease.  It is understood that Landlord shall not be required to perform any
management services for the Premises or Tenant.  In addition, notwithstanding
the foregoing, this Paragraph shall not supersede any of the other sections of
this Lease, and if a conflict of interpretation shall arise, the other
Paragraphs shall take precedence.

     Paragraph 36.  Expansion Option. Provided Tenant is not in default under
this Lease, and provided that Tenant's financial condition is equal to or better
than its financial condition at the time of the execution of this Lease, Tenant
may request that Landlord construct additional space at the premises to
accommodate the Tenant's growth. At any time after occupancy, Tenant may request
Landlord to construct space adjacent to the Tenant's leased premises. The area
originally leased under this Lease shall be referred to as the "Base Premises".

     Tenant shall give Landlord written notice that it desires Landlord to
construct additional space and said request shall contain a detailed description
of the additional space and shall conform to all the existing applicable
building and zoning laws, rules, and regulations.  Such description shall also
include Tenant's preliminary plans and
<PAGE>

specifications for such addition.

     For the additional space so requested by Tenant, the monthly rental shall
be increased for the Term of the Lease as extended by an amount equal to one
hundred fifteen percent (115%) of the monthly installments of, principal and
interest necessary to amortize the "Total Project Cost" over 120 months using
the Annual Interest Rate.  For purposes hereof, the Total Project Cost shall
mean all costs incurred by Landlord incident to constructing the additional
space requested by Tenant, including but not limited to, all construction costs
for such additional space, engineer and architect's fees, building permits,
interest paid on any and all construction financing loans, all costs incurred by
the Landlord for securing construction and permanent financing (including the
cost of refinancing any existing mortgage on the premises if such is required as
a condition of obtaining permanent financing). The Interest Rate shall mean the
greater of: (i) the initial rate of interest charged to the Landlord to obtain
permanent financing to finance the cost of expanding the Building as requested
by Tenant, or (ii) the prime rate of interest plus two percentage points.  For
example, if the total project cost is $1,000,000.00 and the Annual Interest Rate
is ten percent (10%), the monthly rent for the additional space shall be equal
to $15,197.34 (1.15 X (1,000.000.00 + 75.671163)).

     Paragraph 37.  Replacement Space.  If during the Term of this Lease, Tenant
determines that Tenant needs additional space, and it is not feasible for
Landlord to provide such additional space by renovating the Building, or by
building an addition to the Building, Landlord shall have the exclusive right
for 365 days from the date that it is determined that the Building cannot be
renovated or added to to meet the Tenant's needs to acquire or build replacement
space for the Tenant (such replacement space shall be referred to hereinafter as
the "Replacement Space").  Within seventy-five (75) days of Tenant and Landlord
making such determination, the parties hereby agree to work in good faith to
agree in writing on (a) location of the Replacement Space, (b) a reasonable
detailed description of the Replacement Space, (c) a good faith estimate of the
moving date, (d) the architectural plan specifications site plan and work letter
for the Replacement Space, and (e) a new prospective ten (10) year written lease
for the Replacement Space (such new lease shall be referred to hereinafter as
the "Replacement Lease"). Failure to reach a written agreement as provided in
this paragraph for the Replacement Space within such seventy-five (75) day
period, will render the terms and conditions of this paragraph 37 null and void.
If Landlord and Tenant are able to agree in writing as set forth above on the
Replacement Lease, then upon Tenant's occupying the Replacement Space pursuant
to the Replacement Lease, this Lease shall terminate.

     Paragraph 38.  Option to Extend.  Provided Tenant is not then in default
under this Lease, Tenant shall have the right and option to extend the Initial
Term of this Lease for two (2) successive periods of five (5) years ("Extended
Terms"), the Extended Terms to commence upon the expiration of the Initial Term
hereof.  During the Extended Terms, all of the terms, covenants and conditions
(other than the rental which shall be as set forth in Paragraph 3 above) of this
Lease shall remain in full force and effect.
<PAGE>

Such option shall be exercised by delivery of written notice by Tenant to
Landlord not less than one hundred twenty (120) days and no more than two
hundred forty (240) days prior to the expiration of the Initial Term and, if
applicable, the first Extended Term.

     Paragraph 39. Brokerage Commissions. Landlord and Tenant mutually warrant
to the other that they will be responsible for the payment of their respective
representatives in this transaction.

     IN WITNESS WHEREOF, the parties hereto have caused these presents to be
duly signed as of the day, month and year first above written.

                LANDLORD:

                TENNEY PLACE DEVELOPMENT, LLC

                BY: /s/ R. Michael Campbell
                    ----------------------------------------
                    R. Michael Campbell, as President & Member

                ATTEST: /s/ John R. Schaefer
                        -----------------------------------
                        John R. Schaefer, Member


                TENANT:

                SONIC FOUNDRY, INC.


                BY: /s/ Rimas Buinevicius
                    ------------------------------------------
                    Rimas Buinevicius,
                    Chairman & Chief Executive Officer

                ATTEST: /s/ Kenneth A. Minor
                        --------------------------------------
                        Kenneth A. Minor, Assistant Secretary
<PAGE>

                                   EXHIBIT A


Part of the Southeast Quarter (SE /1/A) of Section Twelve (12) Town Seven (7)
North, Range Nine (9) East, lying West of and adjacent to Certified Survey Map
No. 3728, located in the City of Madison, Dane County, Wisconsin, to-wit:
Beginning at the southwesterly corner of Lot 4 of said Certified Survey Map No.
3728; thence North 53(degrees) 17' 17" West, 392.91 feet; thence North
53(degrees) 27' 14" West, 38.08 feet; thence North 47(degrees) 28' 03" West,
280.98 feet to the easterly line of Sherman Avenue; thence along said easterly
line, North 39(degrees) 38' 45" East, 128.70 feet; thence North 36(degrees) 16'
34" East, 63.50 feet; thence North 25(degrees) 57' 25" East, 111.78 feet; thence
North 18(degrees) 48' 54" East, 80.02 feet; thence South 71(degrees) 09' 21"
East, 715.85 feet to the westerly line of said Lot 4 of said CSM No. 3728;
thence along said westerly line South 18(degrees) 45' 08" West, 275.60 feet;
thence South 39(degrees) 18' 00" West, 364.22 feet to the point of beginning.
<PAGE>

                                   EXHIBIT B

                    The Building's Plans and Specifications

                                 [Not Attached]


<PAGE>

October 1, 1999

Sonic Foundry, Inc.
754 Williamson St.
Madison, WI 53703

Re:  Lease Agreement (the "Lease") dated of even date herewith relating to
     Tenney Place

Gentlemen:

Sonic Foundry, Inc. ("Tenant") and the undersigned ("Landlord") are executing,
simultaneously with this letter agreement, the Lease and the Premises described
in the Lease.

To induce Landlord and Tenant to enter into the Lease (which is hereby
incorporated by reference to the extent that the provisions of this letter
agreement may apply thereto, including the definitions of any capitalized terms
used but not defined herein) and in consideration of the mutual covenants
hereinafter contained, Landlord and Tenant mutually agree:

1.  Landlord agrees to provide, by Landlord's designated architect and/or
engineer, and at Landlord's sole cost and expense, the following Building
Standard architectural and mechanical drawings and specifications (the "Initial
Plans"), to be drawn for the

Premises:

a.  Completed, finished and detailed architectural drawings for the Premises,
reflected ceiling, telephone and electrical outlets, and for the work to be done
by Landlord under Paragraph 2 hereof; and

b.  Completed Building Standard plans where necessary for installation of air-
conditioning grilles and registers, heating and electrical facilities for the
work to be done by Landlord under Paragraph 2 hereof.

Any redrawing occasioned by Tenant after Tenant's prior approval of the Initial
Plans and any changes in the Initial Plans requested thereafter shall be at
Tenant's sole cost and expense. All such plans are expressly subject to
Landlord's prior written approval, which Landlord covenants it will not
unreasonably withhold or delay.

Tenant covenants and agrees to furnish to Landlord all information necessary for
the preparation of the Initial Plans on or before October 31, 1999, who will,
within twenty-one (21) days therefrom, complete said plans and submit to Tenant
for final approval or disapproval. Tenant will inform Landlord of this approval
or any corrections of said plans within ten (10) days after receipt thereof by
Tenant.
<PAGE>

October 1, 1999
Page 2

Landlord, at its sole cost and expense, will cause said plans to be filed with
the appropriate governmental agencies in such form (building notice, alteration
or other form) as may be required. If Tenant shall desire any additional or non-
standard work, over and above that specified in Paragraph 2 hereof, to be
performed in the Premises by Landlord or by Tenant, Tenant shall cause similar
plans and specifications for such work to be drawn at Tenant's sole expense,
either by arranging therefor with Landlord's architect and/or engineer, or by
consultants of its own selection. All such plans and specifications for
additional or non-standard work shall be submitted to Landlord with Tenant's
approved and/or corrected Initial Plans (hereinafter referred to as the "Final
Plans") for Landlord's review and approval. Landlord reserves the right to give
directives to Tenant's architect or engineer, at Tenant's expense, for the
purpose of insuring that such additional or non-standard work conforms to the
Building Standards.  Landlord covenants it will not unreasonably withhold or
delay such review.

2.  Landlord agrees to perform, at its sole cost and expense, the following work
in the Premises, to be commenced after Tenant has approved the Initial Plans:

a.  Partitioning - Furnish and install Landlord's Building Standard partitioning
in place per the Final Plans. The partitions will be 3-3/4" nominal thickness,
consisting of two (2) 5/8" thick, full-height gypsum boards, attached to each
side of 2-1/2" metal studs. Demising partitions will include batt-type
insulation for sound insulation purposes.

b.  Painting - Paint the non-glazed portion of the exterior walls and all
Building Standard demising and interior partitions in Landlord's Building
Standard grade of enamel latex paint with one (1) primer and one (1) finish
coat. Tenant will select the color.

c.  Doors, Frames, and Hardware - Furnish and install Landlord's Building
Standard full height solid core wooden doors and door frames as per the Final
Plans, including corridor doors required by City of Madison Building or Fire
Codes. Interior doors to have Building Standard passage set hardware and
corridor doors to have Building Standard locksets. Door stops provided for all
doors.

d.  Electrical Outlets - Furnish and install Landlord's Building Standard wall-
mounted duplex 110 volt receptacles as per the Final Plans.

e.  Telephone/Communication Outlets - Per Tenant's allowance and Final Plans.

f.  Light Fixtures - Furnish and install Landlord's Building Standard 2' x 4'
recessed fluorescent fixture, with acrylic prismatic lens, or as per the Final
Plans.

g.  Light Switches - Furnish and install Landlord's Building Standard wall
switches, as per the Final Plans.
<PAGE>

October 1, 1999
Page 3

h.  Ceiling - Furnish and install Landlord's Building Standard acoustical hung
ceiling throughout, except as provided for in the Final Plans.

i.  Carpet and Cove Base - Furnish and install Landlord's Building Standard
carpeting and cove base, as selected by Tenant from Landlord's color range,
located where shown on the Final Plans.

j.  Window Covering - Furnish and install Landlord's Building Standard mini-
blinds on all exterior windows.

k.  Heating, Ventilating and Air Conditioning - Furnish and install Landlord's
Building Standard air-conditioning system, including reasonable duct work
thermostats for each zone, as per the Final Plans. Supply grilles installed in
accordance with plans and specifications by mechanical engineer and/or
mechanical contractor.

3.  If Landlord agrees to perform, at Tenant's request, and upon submission by
Tenant of necessary plans and specifications, any additional or non-standard
work over and above that specified in Paragraph 2 hereof, such work shall be
performed by Landlord, at Tenant's sole expense, as a Tenant extra. Prior to
commencing any such work requested by Tenant, Landlord will submit to Tenant
written estimates of the cost of any such work as indicated on Final Plans. If
Tenant shall fail to approve or disapprove any such estimate within one (1) week
from the date of submission thereof by Landlord, then Landlord shall be
authorized to proceed thereon. Tenant agrees to pay Landlord, promptly upon
being billed therefor, the cost of all such work, together with ten percent
(10%) of the cost for Landlord's fee; Tenant agrees that in the event of default
of payment thereof, Landlord shall (in addition to all other remedies) have the
same rights as in the event of default of payment of rent under the Lease.

4.  It is agreed that, notwithstanding the date provided in said Lease for the
commencement thereof, Tenant's obligation for the payment of rental thereunder
shall not commence until Landlord has substantially completed all work to be
performed by Landlord as set forth in the Lease; provided, however, that if
Landlord shall be delayed in substantially completing said work as a result of:

a.  Tenant's failure to timely furnish Landlord with the information required to
prepare the Initial Plans, or the failure of Tenant to timely approve the
Initial Plans, or Final Plans; or

b.  Tenant's request for materials, finishes or installations other than
Landlord's Building Standard; or

c.  Tenant's changes in the Initial Plans, or Final Plans; or
<PAGE>

October 1, 1999
Page 4


5.  Landlord will permit Tenant and its agents reasonable access to the Premises
during normal working hours prior to the date specified for the commencement of
Tenant's occupancy under said Lease, in order that Tenant may perform through
its own contractors such work and decorations as Tenant may desire at the time
that Landlord's contractors are working in the Premises. The foregoing license
to enter prior to the commencement of the Lease term, however, is conditioned
upon Tenant's workmen and mechanics working in harmony and not interfering with
the labor employed by Landlord, Landlord's mechanics or contractors or by any
other tenant or their contractor. Such license is further conditioned upon
Workers' Compensation and public liability insurance and property damage
insurance, all in amounts and with companies and on forms satisfactory to
Landlord, being provided and at all times maintained by Tenant's contractors
engaged in the performance of the work, and certificates of such insurance being
furnished to Landlord prior to proceeding with the work. If at any time such
entry shall cause disharmony or interference with Landlord's mechanics or
contractors, this license may be withdrawn by Landlord upon forty-eight (48)
hours written notice to Tenant.  Such entry shall be deemed to be subject to all
of the terms, covenants, provisions and conditions of said Lease except as to
the covenant to pay rent. Landlord shall not be liable in any way for any
injury, loss or damage which may occur to Tenant, its employees, contractors,
agents, workmen and mechanics, or any one or more of them, or to any of Tenant's
decorations or installations so made prior to commencement of the term of the
Lease, the same being solely at Tenant's risk and Tenant hereby agrees to
indemnify and hold Landlord harmless from any and all claims therefor or arising
therefrom.

6.  Landlord shall cause the repair or replacement of any defects in material or
workmanship in the Landlord Improvements and Tenant Improvements, if any,
installed by Landlord if Landlord receives written notification of such defect
from Tenant within the period of one (1) year after the date of substantial
completion of the Building. Tenant's sole and exclusive remedy against Landlord
shall be for the repair and replacement of defects of material and workmanship
as provided herein, and Landlord shall not be responsible for any defect of any
nature in the Landlord or Tenant Improvements installed by Landlord of which
Landlord is not so notified within such one (1) year period. LANDLORD MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, IN CONNECTION WITH
LANDLORD IMPROVEMENTS OR TENANT IMPROVEMENTS EXCEPT THE WARRANTIES EXPRESSLY SET
FORTH IN THIS SECTION 6. Tenant agrees that no other remedy, including without
limitation incidental or consequential damages for lost profits, injury to
person or property, or any other incidental or consequential loss shall be
available to Tenant.
<PAGE>

October 1, 1999
Page 5


7.   Tenant Allowances:

a.   $110,000.00 - New entry with reception desk.

b.   $10,000.00 - Signage.

c.   $20.00/square yard floor allowance for all occupied spaces; Tenant to
     select.

d.   $180,000.00 - Electrical allowance; see attached.

e.   $30,000.00 - Plumbing allowance.

f.   $275,000.00 - HVAC allowance; see attached.

g.   $125,000.00 - Wiring allowance; Tenant to contract and manage work.

8.   The Work Letter specifics are attached hereto as Exhibit A and incorporated
herein by reference.

If the foregoing correctly sets forth our understanding, kindly acknowledge your
approval in the space provided below for that purpose.

                         Yours very truly,

                         TENNEY PLACE DEVELOPMENT, LLC


                    By:       /s/ John R. Schaefer
                              ----------------------------------
                              Name: John R. Schaefer
                              Title: Managing Partner
                              "Landlord"

AGREED to and ACCEPTED this 1st day of October, 1999.

                         SONIC FOUNDRY, INC.


                    By:  /s/ Kenneth A. Minor
                         ---------------------------------------
                         Name: Kenneth A. Minor
                         Title: Chief Financial Officer
                         "Tenant"
<PAGE>

                                   EXHIBIT A

Sonic Foundry - Work Letter
10/1/99
See attached floorplan.

1.   Lower (4) windowsills at Human Resources to match the existing windows.
2.   $110,000 allowance for new entry with reception desk.
3.   Retain stair down. New stair up in existing opening to the standards of the
     stairway in Sonic's building at 754 Williamson Street.
4.   Plumbed counter and base unit in break area. Wall separating vending from
     break area.
5.   New accessible lift in existing shaft - per Wisconsin Commercial Building
     Code chapters 54 and 69.
6.   Dropped acoustic tile ceiling over tenant's cubicles - 2'x2' revealed edge
     grid system.
7.   Paint existing plaster ceiling (typical in original building).
8.   Reveal & paint exposed structure (typical in addition).
9.   Offices adjoining corridor, partitions to underside of joists. Demising
     walls between offices go above ceiling.
10.  New ceiling over office/conference room. Standard ceiling height 9'.
     Boardroom, conference room and executive office's ceilings to be as high as
     mechanical systems allow.
11.  Batt insulation in partitions between offices (typical).
12.  No batt insulation in open space/office partition (typical).
13.  Run all S Communication Closet partitions to ceiling/deck (typical).
14.  New restrooms per Wisconsin Commercial Building Code chapters 54 and 69
     with ceramic tile floors and 4' wainscoting on all restroom walls.
15.  Ceramic tile floor in restrooms.
16.  Rework stone and/or add feature to conference room.
17.  Replace lakeside entry with new glass storefront system.
18.  $10,000 allowance for signage.
19.  Repave entry drive.
20.  Repair, seal coat and stripe parking lot.
21.  New light fixtures in parking lot, poles to be scraped and repainted.
     Supplement existing exterior building lighting per City of Madison
     standards.
22.  New proximity card access system at (4) doors and security system.
23.  New intercom system at Loading Dock.
24.  Refresh landscaping to include removing sidewalk and stairs. Landscape plan
     to a level expected in a professional office building. If stairs can not be
     removed, Landlord to convert stairs to a planter or other agreed upon plan.
25.  Birch solid core door in Hollow Metal frame (typical) with lever handles,
     lock sets on no more than 1/3 of the handles.
26.  Sidelight at all office doors (typical).
27.  Sound Wall at areas identified per plan. If Sound Wall area deleted and
     used for cubicles, savings to be added to allowances.
28.  $20.00/square yard floor allowance for all occupied spaces, tenant to
     select.
<PAGE>

29.  $180,000 electrical allowance, electrical to be delivered complete. Power
     distribution, outlets, telephone openings and ambient lighting except in
     cubicle areas that will be provided by tenant's task lighting. Minimum of
     two 4-plex outlets per office. Non-glare ambient lighting in open areas.
     Minimum of one 2x4 florescent I '/2" deep paracube fixture in private
     offices.
30.  $30,000 plumbing allowance.
31.  $275,000 HVAC allowance - see attached letter dated 9/8/99 from Kilgust
     Mechanical Add individual temperature control to boardroom and to
     communications closet on I ~' fi.
32.  Retain steam heat baseboard at building perimeter. Units to be cleaned and
     painted.
33.  (6) unplumbed 4'-6' counters with lower cabinets.
34.  Remove mechanical penthouses and patch roof to manufacture's
     specifications.
35   Partition to plaster ceiling.
36.  Expanded finish allowance for board room and conference room.
37.  (9) 4'/4' windows with maple sills and building standard blinds at West
     End.
38.  (5) 4'/4' windows with maple sills and building standard blinds at East
     End.
39.  Half wall with maple cap.
40.  Painted 6" wood base throughout of style specifications to match base in
     Sonic's current location. Existing marble sills refinish or clean as
     needed.
41.  Horizontal mini-blinds on all exterior windows. Existing blinds to be
     removed during construction, cleaned and rehung.
42.  Repair to exterior to include tuckpointing, caulking and power washing.
43.  Sprinkler system as per State of Wisconsin Code and NFPA 13.
44.  $125,000 Wiring Allowance, Sonic to contract and manage work.
45.  Remove exterior sheds, concrete ramps, transformers, poles and wiring.
     Lift is to remain.
46.  Patio to meet ADA code and to be of a professional appearance.
47.  Construct floorplan as shown on drawing. All new walls primed to receive 2
     coats of paint. All existing walls repaired as needed and to receive 2
     coats of paint.
48.  Building to meet all codes including fire and ADA per State of Wisconsin
     Commercial Building Code.
49.  Conduits installed for cabeling included in electrical allowance, (#29).
     Empty conduit from above ceiling down to outlet box 18" AFF in all newly
     constructed offices.
50.  Elevations - provided by landlord.
51.  Site plan with parking layout - provided by landlord.
52.  Smoke detectors, fire alarms and fire extinguishers per State of Wisconsin
     Commercial Building Code and as directed by the City of Madison Fire
     Department.



This work letter itemizes key points in the remodeling of the space for Sonic
Foundry, Inc. Landlord is to provide a turnkey space. Landlord represents that
finishes will be to the quality as specified above. Additional costs brought
about by unexpected findings with the building will be at Landlord's sole cost.