LEASE AGREEMENT

                                 by and between



                           SCAN (OR) QRS 11-47, INC.,

                             a Delaware corporation



                                   as LANDLORD



                                       and



                               PSC SCANNING, INC.,

                             a Delaware corporation,



                                    as TENANT



                           Premises: 959 Terry Street
                                 Eugene, Oregon





                            Dated as of: May __, 1999









<PAGE>
                                 TABLE OF CONTENTS

                                                                          Page
Parties.....................................................................1
1.  Demise of Premises......................................................1
2.  Certain Definitions.....................................................1
3.  Title and Condition.....................................................8
4.  Use of Leased Premises; Quiet Enjoyment................................10
5.  Term...................................................................11
6.  Basic Rent.............................................................11
7.  Additional Rent........................................................11
8.  Net Lease; Non-Terminability...........................................12
9.  Payment of Impositions.................................................13
10.  Compliance with Laws and Easement Agreements; Environmental Matters...15
11.  Liens; Recording......................................................16
12.  Maintenance and Repair................................................17
13.  Alterations and Improvements..........................................18
14.  Permitted Contests....................................................18
15.  Indemnification.......................................................19
16.  Insurance.............................................................20
17.  Casualty and Condemnation.............................................23
18.  Termination Events....................................................25
19.  Restoration...........................................................26
20.  Procedures Upon Purchase..............................................28
21.  Assignment and Subletting; Prohibition against Leasehold Financing....29
22.  Events of Default.....................................................33
23.  Remedies and Damages Upon Default.....................................35
24.  Notices...............................................................38
25.  Estoppel Certificate..................................................39
26.  Surrender.............................................................39
27.  No Merger of Title....................................................39
28.  Books and Records.....................................................40
29.  Determination of Value................................................40
30.  Non-Recourse as to Landlord...........................................42
31.  Financing.............................................................43
32.  Subordination, Non-Disturbance and Attornment.........................43
33.  Financial Covenants...................................................44
34.  Tax Treatment; Reporting..............................................44
35.  Financing Major Alterations...........................................44
36.  Option to Purchase....................................................46
37.  Miscellaneous.........................................................49

EXHIBITS

         Exhibit "A"   - Premises
         Exhibit "B"   - Machinery and Equipment
         Exhibit "C"   - Schedule of Permitted Encumbrances
         Exhibit "D"   - Rent Schedule
         Exhibit "E"   - Financial Covenants
<PAGE>


     LEASE  AGREEMENT,  made as of May __,  1999,  between  SCAN (OR) QRS 11-47,
INC.,  a Delaware  corporation  ("Landlord"),  with an address c/o W. P. Carey &
Co., Inc., 50 Rockefeller  Plaza,  2nd Floor,  New York, New York 10020, and PSC
SCANNING,  INC.,  corporation  ("Tenant"),  with an address at 959 Terry Street,
Eugene, Oregon.

     In consideration of the rents and provisions  herein  stipulated to be paid
and performed, Landlord and Tenant hereby covenant and agree as follows:

     1. Demise of  Premises.  Landlord  hereby  demises and lets to Tenant,  and
Tenant  hereby  takes  and  leases  from  Landlord,  for the  term  and upon the
provisions   hereinafter    specified,    the   following   described   property
(collectively, the "Leased Premises"): (a) the premises described in Exhibit "A"
hereto,  together with the  Appurtenances  (collectively,  the "Land");  (b) the
buildings, structures and other improvements now or hereafter constructed on the
Land  (collectively,  the  "Improvements");  and  (c) the  fixtures,  machinery,
equipment and other property described in Exhibit "B" hereto (collectively,  the
"Equipment").

     2. Certain Definitions.

     "Acquisition Cost" shall mean $8,717,278.00.

     "Additional Rent" shall mean Additional Rent as defined in Paragraph 7.

     "Adjoining Property" shall mean all sidewalks,  driveways, curbs, gores and
vault spaces adjoining any of the Leased Premises.

     "Alterations"  shall mean all changes,  additions,  improvements or repairs
to, all alterations, reconstructions,  renewals, replacements or removals of and
all substitutions or replacements for any of the Improvements or Equipment, both
interior  and  exterior,   structural  and  non-structural,   and  ordinary  and
extraordinary.

     "Appurtenances"  shall  mean  all  tenements,   hereditaments,   easements,
rights-of-way,  rights,  privileges in and to the Land,  including (a) easements
over other lands granted by any Easement  Agreement  and (b) any streets,  ways,
alleys, vaults, gores or strips of land adjoining the Land.

     "Assignment" shall mean any assignment of rents and leases from Landlord to
a  Lender  which  (a)  encumbers  any of the  Leased  Premises  and (b)  secures
Landlord's obligation to repay a Loan, as the same may be amended,  supplemented
or modified from time to time.

     "Basic Rent" shall mean Basic Rent as defined in Paragraph 6.

     "Basic  Rent  Payment  Dates"  shall mean the Basic Rent  Payment  Dates as
defined in Paragraph 6.
<PAGE>

     "Casualty"  shall  mean any injury to or death of any person or any loss of
or damage to any property  (including the Leased  Premises)  included  within or
related to the Leased Premises or arising from the Adjoining Property.

     "Commencement Date" shall mean Commencement Date as defined in Paragraph 5.

     "Condemnation" shall mean a Taking.

     "Condemnation  Notice"  shall  mean  notice  or  actual  knowledge  of  the
institution of or intention to institute any proceeding for Condemnation.

     "Costs" of a Person or associated with a specified  transaction  shall mean
all actual and  reasonable  out-of-pocket  costs and  expenses  incurred by such
Person  or  associated  with such  transaction,  including  without  limitation,
attorneys' fees and expenses,  court costs,  brokerage fees,  escrow fees, title
insurance premiums,  mortgage  commitment fees, mortgage points,  recording fees
and transfer taxes, as the circumstances require.

     "Covenants"  shall mean the covenants and  agreements  described on Exhibit
"E".

     "CPI" shall mean CPI as defined in Exhibit "D" hereto.

     "Default  Termination  Amount" shall mean the Default Termination Amount as
defined in Paragraph 23(a)(iii).

     "Default  Rate"  shall  mean  the  Default  Rate as  defined  in  Paragraph
7(a)(iv).

     "Easement  Agreement" shall mean any conditions,  covenants,  restrictions,
easements,  declarations,  licenses  and other  agreements  listed as  Permitted
Encumbrances  or as may  hereafter  affect (as a benefit or a burden) the Leased
Premises.

     "Environmental  Law" shall mean (i) whenever  enacted or  promulgated,  any
applicable  federal,  state,  foreign and local law, statute,  ordinance,  rule,
regulation,  license,  permit,  authorization,  approval,  consent, court order,
judgment,   decree,   injunction,   code,  requirement  or  agreement  with  any
governmental entity, (x) relating to pollution (or the cleanup thereof),  or the
protection of air,  water vapor,  surface  water,  groundwater,  drinking  water
supply, land (including land surface or subsurface),  plant,  aquatic and animal
life from injury caused by a Hazardous  Substance or (y) concerning exposure to,
or the use, containment,  storage,  recycling,  reclamation,  reuse,  treatment,
generation,   discharge,   transportation,   processing,   handling,   labeling,
production,   disposal  or  remediation  of  Hazardous   Substances,   Hazardous
Conditions  or  Hazardous  Activities,  in each  case as  amended  and as now or
hereafter in effect, and (ii) any common law or equitable  doctrine  (including,

<PAGE>

without  limitation,  injunctive  relief and tort  doctrines such as negligence,
nuisance,   trespass  and  strict   liability)  that  may  impose  liability  or
obligations  or  injuries  or damages  due to or  threatened  as a result of the
presence of,  exposure to, or ingestion  of, any Hazardous  Substance.  The term
Environmental  Law  includes,  without  limitation,  the  federal  Comprehensive
Environmental  Response  Compensation  and Liability Act of 1980,  the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act, the
federal  Clean Air Act,  the  federal  Clean Water Act,  the  federal  Resources
Conservation  and Recovery Act of 1976  (including the Hazardous and Solid Waste
Amendments  to RCRA),  the federal  Solid Waste  Disposal Act, the federal Toxic
Substance Control Act, the federal  Insecticide,  Fungicide and Rodenticide Act,
the federal  Occupational  Safety and Health Act of 1970,  the federal  National
Environmental Policy Act and the federal Hazardous Materials Transportation Act,
each as amended and as now or hereafter in effect and any similar state or local
Law.

     "Environmental  Violation" shall mean (a) any direct or indirect discharge,
disposal,  spillage,  emission, escape, pumping, pouring,  injection,  leaching,
release,  seepage,  filtration or  transporting  of any Hazardous  Substance at,
upon, under, onto or within the Leased Premises,  or from the Leased Premises to
the  environment,  in  violation  of any  Environmental  Law or in excess of any
reportable  quantity  established  under any  Environmental  Law or which  could
reasonably be expected to result in any liability to Landlord, Tenant or Lender,
any Federal,  state or local government or any other Person for the costs of any
removal or remedial action or natural  resources  damage or for bodily injury or
property  damage,  (b) any deposit,  storage,  dumping,  placement or use of any
Hazardous  Substance  at,  upon,  under or within the Leased  Premises  or which
extends to any Adjoining  Property in violation of any  Environmental  Law or in
excess of any reportable  quantity  established  under any  Environmental Law or
which could  reasonably  be expected to result in any  liability to any Federal,
state or local government or to any other Person for the costs of any removal or
remedial  action or natural  resources  damage or for bodily  injury or property
damage,  (c) the  abandonment or discarding of any barrels,  containers or other
receptacles   containing   any   Hazardous   Substances   in  violation  of  any
Environmental  Laws,  (d) any  activity,  occurrence  or  condition  which could
reasonably be expected to result in any  liability,  cost or expense to Landlord
or Lender or any other owner or occupier of the Leased Premises,  or which could
reasonably be expected to result in a creation of a lien on the Leased  Premises
under any Environmental  Law, or (e) any violation of or noncompliance  with any
Environmental Law.

     "Equipment" shall mean the Equipment as defined in Paragraph 1.

     "Event of Default"  shall mean an Event of Default as defined in  Paragraph
22(a).

     "Expansion Parcel" shall mean that certain  undeveloped portion of the Land
identified  as Tax Lot No.  3400 on the tax map filed in the  County  Assessor's
Office for Lane County, Oregon.

     "Expansion  Parcel Price" shall mean the Expansion  Parcel Price as defined
in Paragraph 36(a).
<PAGE>

     "Fair  Market  Value" shall mean the higher of (a) the fair market value of
the Leased Premises as of the Relevant Date as if unaffected and unencumbered by
this  Lease  or (b) the  fair  market  value of the  Leased  Premises  as of the
Relevant Date as affected and encumbered by this Lease. For all purposes of this
Lease,  Fair Market Value shall be determined  in accordance  with the procedure
specified in Paragraph 29.

     "Fair  Market Value Date" shall mean the date when the Fair Market Value is
determined in accordance with Paragraph 29.

     "Federal  Funds" shall mean federal or other  immediately  available  funds
which at the time of  payment  are legal  tender  for the  payment of public and
private debts in the United States of America.

     "Guarantor" shall mean PSC Inc., a New York corporation.

     "Guaranty" shall mean the Guaranty and Suretyship Agreement dated as of the
date hereof from Guarantor to Landlord  guaranteeing the payment and performance
by Tenant of all of Tenant's obligations under the Lease.

     "Hazardous Activity" means any activity,  process, procedure or undertaking
which  directly or indirectly  (i) procures,  generates or creates any Hazardous
Substance;  (ii) causes or results in (or  threatens  to cause or result in) the
release,  seepage,  spill,  leak,  flow,  discharge or emission of any Hazardous
Substance into the environment (including the air, ground water, watercourses or
water  systems),  (iii)  involves the  containment  or storage of any  Hazardous
Substance;  or (iv) would cause the Leased  Premises  or any portion  thereof to
become a hazardous waste treatment, recycling, reclamation,  processing, storage
or disposal facility within the meaning of any Environmental Law.

     "Hazardous  Condition" means any condition which would support any claim or
liability  under any  Environmental  Law,  including the presence of underground
storage tanks.

     "Hazardous   Substance"  means  (i)  any  substance,   material,   product,
petroleum,   petroleum  product,   derivative,   compound  or  mixture,  mineral
(including asbestos),  chemical, gas, medical waste, or other pollutant, in each
case whether  naturally  occurring,  man-made or the  by-product of any process,
that is toxic,  harmful or hazardous or acutely  hazardous to the environment or
public  health or  safety or (ii) any  substance  supporting  a claim  under any
Environmental  Law,  whether  or not  defined  as  hazardous  as such  under any
Environmental Law. Hazardous Substances include,  without limitation,  any toxic
or hazardous  waste,  pollutant,  contaminant,  industrial  waste,  petroleum or
petroleum-derived  substances or waste, radon, radioactive materials,  asbestos,
asbestos  containing  materials,  urea  formaldehyde  foam insulation,  lead and
polychlorinated biphenyls.

     "Impositions" shall mean the Impositions as defined in Paragraph 9(a).

     "Improvements" shall mean the Improvements as defined in Paragraph 1.

     "Indemnitee" shall mean an Indemnitee as defined in Paragraph 15.
<PAGE>

     "Insurance  Requirements"  shall  mean the  requirements  of all  insurance
policies required to be maintained in accordance with this Lease.

     "Land" shall mean the Land as defined in Paragraph 1.

     "Law" shall mean any constitution,  statute,  rule of law, code, ordinance,
order, judgment,  decree, injunction,  rule, regulation,  policy, requirement or
administrative or judicial  determination,  even if unforeseen or extraordinary,
of every  duly  constituted  governmental  authority,  court or  agency,  now or
hereafter enacted or in effect.

     "Lease" shall mean this Lease Agreement.

     "Lease Year" shall mean,  with respect to the first Lease Year,  the period
commencing  on the  Commencement  Date and ending at midnight on the last day of
the twelfth (12th)  consecutive  calendar month following the month in which the
Commencement Date occurred,  and each succeeding twelve (12) month period during
the Term.

     "Leased Premises" shall mean the Leased Premises as defined in Paragraph 1.

     "Legal  Requirements" shall mean the requirements of all present and future
Laws  (including  but not  limited to  Environmental  Laws and Laws  relating to
accessibility   to,   usability  by,  and   discrimination   against,   disabled
individuals) and all covenants,  restrictions and conditions now or hereafter of
record which may be applicable to Tenant or to any of the Leased Premises, or to
the  use,  manner  of  use,  occupancy,  possession,   operation,   maintenance,
alteration,  repair  or  restoration  of any of the  Leased  Premises,  even  if
compliance therewith necessitates  structural changes or improvements or results
in interference with the use or enjoyment of any of the Leased Premises.

     "Lender" shall mean any person or entity (and their  respective  successors
and assigns) which may, after the date hereof, make a Loan to Landlord or is the
holder of any Note.

     "Loan" shall mean any loan made by one or more  Lenders to Landlord,  which
loan is secured by a Mortgage and an Assignment and evidenced by a Note.

     "Monetary Obligations" shall mean Rent and all other sums payable by Tenant
under this Lease to Landlord, to any third party on behalf of Landlord or to any
Indemnitee.

     "Mortgage"  shall mean any  mortgage  or deed of trust from  Landlord  to a
Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's
obligation  to  repay  a Loan,  as the  same  may be  amended,  supplemented  or
modified.
<PAGE>

     "Net Award" shall mean (a) the entire  award  payable to Landlord or Lender
by reason of a  Condemnation  whether  pursuant to a judgment or by agreement or
otherwise,  or (b) the entire  proceeds of any insurance  required under clauses
(i), (ii) (to the extent  payable to Landlord or Lender),  (iv),  (v) or (vi) of
Paragraph 16(a), as the case may be, less any expenses  incurred by Landlord and
Lender in collecting such award or proceeds.

     "Non-Preapproved Assignee" shall have the meaning set forth in Paragraph 21
hereof.

     "Non-Preapproved  Assignment" shall have the meaning set forth in Paragraph
21  hereof.   

     "Note" shall mean any promissory note evidencing  Landlord's  obligation to
repay a Loan, as the same may be amended, supplemented or modified.

     "Partial  Casualty"  shall mean any  Casualty  which does not  constitute a
Termination Event.

     "Partial   Condemnation"   shall  mean  any  Condemnation  which  does  not
constitute a Termination Event.

     "Permitted   Encumbrances"   shall  mean  those  covenants,   restrictions,
reservations, liens, conditions and easements and other encumbrances, other than
any Mortgage or Assignment, listed on Exhibit "C" hereto (but such listing shall
not be deemed to revive any such encumbrances that have expired or terminated or
are otherwise invalid or unenforceable).

     "Person" shall mean an individual, partnership, association, corporation or
other entity.

     "Preapproved  Assignee"  shall have the meaning set forth in  Paragraph  21
hereof.

     "Preapproved  Assignment"  shall have the meaning set forth in Paragraph 21
hereof.

     "Preapproved  Sublet"  shall have the  meaning  set forth in  Paragraph  21
hereof.

     "Prepayment  Premium"  shall  mean any  payment  (other  than a payment  of
principal  and/or  interest which Landlord is required to make under a Note or a
Mortgage) by reason of any  prepayment  by Landlord of any principal due under a
Note or  Mortgage,  and  which  may be (in lieu of such  prepayment  premium  or
prepayment  penalty) a "make  whole" or yield  maintenance  clause  requiring  a
prepayment  premium or a defeasance  premium (such  defeasance  premium to be an
amount equal to the positive difference between (a) the total amount required to
defease a Loan and (b) the outstanding  principal  balance of the Loan as of the
date of such  defeasance,  in either case in an amount  sufficient to compensate
the Lender for the loss of the benefit of the Loan due to a prepayment.
<PAGE>

     "Present  Value" of any amount shall mean such amount  discounted by a rate
per  annum  which is the lower of (a) the  Prime  Rate at the time such  present
value is determined or (b) five percent (5 %) per annum.

     "Prime Rate" shall mean the annual interest rate as published, from time to
time,  in The Wall  Street  Journal as the "Prime  Rate" in its column  entitled
"Money Rate".  The Prime Rate may not be the lowest rate of interest  charged by
any  "large  U.S.  money  center   commercial   banks"  and  Landlord  makes  no
representations  or  warranties  to that  effect.  In the event The Wall  Street
Journal  ceases  publication  or ceases to publish the "Prime Rate" as described
above,  the  Prime  Rate  shall be the  average  per  annum  discount  rate (the
"Discount  Rate") on ninety-one  (91) day bills  ("Treasury  Bills") issued from
time to time by the United  States  Treasury  at its most recent  auction,  plus
three  hundred  (300) basis points.  If no such 91-day  Treasury  Bills are then
being issued,  the Discount  Rate shall be the discount  rate on Treasury  Bills
then being issued for the period of time closest to ninety-one (91) days.

     "Relevant   Amount"  shall  mean  the  Termination   Amount,   the  Default
Termination Amount or the Expansion Parcel Price, as the case may be.

     "Relevant  Date" shall mean (a) the date  immediately  prior to the date on
which  the  applicable  Condemnation  Notice  is  received,  in the  event  of a
Termination  Notice under Paragraph 18 which is occasioned by a Taking,  (b) the
date immediately  prior to the date on which the applicable  Casualty occurs, in
the event of a  Termination  Notice under  Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination  of Fair Market Value pursuant to Paragraph  20(c), (d) the date
immediately  prior to the Event of Default  giving rise to the need to determine
Fair  Market  Value in the event  Landlord  provides  Tenant  with notice of its
intention  to  require  Tenant  to  make a  termination  offer  under  Paragraph
23(a)(iii) and (e) the Option Purchase Date in connection with Tenant's exercise
of its option to purchase the Leased Premises under Paragraph 36 hereof.

     "Remaining Sum" shall mean Remaining Sum as defined in Paragraph 19(c).

     "Requisition"  shall mean any temporary  requisition or confiscation of the
use or occupancy of any of the Leased  Premises by any  governmental  authority,
civil or  military,  whether  pursuant to an  agreement  with such  governmental
authority  in  settlement  of  or  under  threat  of  any  such  requisition  or
confiscation, or otherwise.

     "Renewal Term" shall mean Renewal Term as defined in Paragraph 5.

     "Rent" shall mean, collectively, Basic Rent and Additional Rent.

     "Review  Criteria"  shall mean the Review  Criteria as defined in Paragraph
21.
<PAGE>

     "Site  Assessment"  shall mean a Site  Assessment  as defined in  Paragraph
10(c).

     "State" shall mean the State of Oregon.

     "Surviving  Obligations"  shall mean any  obligations  of Tenant under this
Lease, actual or contingent,  which arise on or prior to the expiration or prior
termination  of this Lease and which survive such  expiration or  termination by
their own terms.

     "Taking"  shall mean any taking or  damaging  of all or a portion of any of
the  Leased  Premises  (i)  in  or  by  condemnation  or  other  eminent  domain
proceedings  pursuant to any Law,  general or special,  or (ii) by reason of any
agreement  with any  condemnor  in  settlement  of or under  threat  of any such
condemnation  or other eminent domain  proceeding,  or (iii) by any other means.
The Taking shall be  considered  to have taken place as of the later of the date
actual physical  possession is taken by the condemnor,  or the date on which the
right to compensation and damages accrues under the law applicable to the Leased
Premises.

     "Term" shall mean the Term as defined in Paragraph 5.

     "Termination  Amount"  shall  mean the  greater  of (a) the sum of the Fair
Market Value plus any Prepayment  Premium which Landlord will be required to pay
in prepaying any Loan with proceeds of the Termination  Amount or (b) the sum of
the Acquisition Cost plus any Prepayment Premium which Landlord will be required
to pay in prepaying any Loan with proceeds of the Termination Amount.

     "Termination Date" shall mean Termination Date as defined in Paragraph 18.

     "Termination  Event" shall mean a Termination Event as defined in Paragraph
18.

     "Termination  Notice" shall mean Termination Notice as defined in Paragraph
18(a).

     "Trigger Offer" shall mean the Trigger Offer as defined in Paragraph 36(d)

     3. Title and Condition.

(a) The Leased  Premises  are  demised  and let subject to (i) the rights of any
Persons in possession of the Leased  Premises,  (ii) the existing state of title
of any of the Leased Premises,  including any Permitted Encumbrances,  (iii) any
state of facts which an accurate  survey or  physical  inspection  of the Leased
Premises  might  show,  (iv) all  Legal  Requirements,  including  any  existing
violation of any thereof, and (v) the condition of the Leased Premises as of the
commencement of the Term, without representation or warranty by Landlord.
<PAGE>

(b) Tenant acknowledges that the Leased Premises is in good condition and repair
at the inception of this Lease.  LANDLORD LEASES AND WILL LEASE AND TENANT TAKES
AND WILL TAKE THE LEASED  PREMISES  AS IS.  TENANT  ACKNOWLEDGES  THAT  LANDLORD
(WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND
WILL NOT MAKE,  NOR SHALL  LANDLORD  BE DEEMED TO HAVE  MADE,  ANY  WARRANTY  OR
REPRESENTATION,  EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES,
INCLUDING  ANY  WARRANTY  OR  REPRESENTATION  AS TO (i) ITS  FITNESS,  DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN,  (iii) THE EXISTENCE OF ANY DEFECT,  LATENT OR PATENT, (iv)
LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS,  (vii)
LOCATION,  (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY,  (xi) QUALITY, (xii)
DESCRIPTION,  (xiii)  DURABILITY,  (xiv)  OPERATION,  (xv) THE  EXISTENCE OF ANY
HAZARDOUS  SUBSTANCE,   HAZARDOUS  CONDITION  OR  HAZARDOUS  ACTIVITY  OR  (xvi)
COMPLIANCE  OF THE LEASED  PREMISES WITH ANY LAW OR LEGAL  REQUIREMENT;  AND ALL
RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT.  TENANT  ACKNOWLEDGES THAT THE
LEASED  PREMISES  IS OF ITS  SELECTION  AND TO ITS  SPECIFICATIONS  AND THAT THE
LEASED  PREMISES HAS BEEN INSPECTED BY TENANT AND IS  SATISFACTORY TO IT. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY  IN ANY OF THE LEASED  PREMISES OF ANY NATURE,
WHETHER  LATENT  OR  PATENT,  LANDLORD  SHALL  NOT  HAVE ANY  RESPONSIBILITY  OR
LIABILITY WITH RESPECT  THERETO OR FOR ANY INCIDENTAL OR  CONSEQUENTIAL  DAMAGES
(INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE
BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES  BY LANDLORD,  EXPRESS OR IMPLIED,  WITH RESPECT TO ANY OF THE LEASED
PREMISES,  ARISING PURSUANT TO THE UNIFORM  COMMERCIAL CODE OR ANY OTHER LAW NOW
OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.

(c) Tenant  represents  to Landlord  that Tenant has  examined  the title to the
Leased  Premises prior to the execution and delivery of this Lease and has found
the  same  to be  satisfactory  for the  purposes  contemplated  hereby.  Tenant
acknowledges that (i) fee simple title (both legal and equitable) is in Landlord
and that Tenant has only the leasehold right of possession and use of the Leased
Premises  as  provided  herein,  (ii) to the  best of  Tenant's  knowledge,  the
Improvements  conform  to all  material  Legal  Requirements  and all  Insurance
Requirements,  (iii)  all  easements  necessary  or  appropriate  for the use or
operation of the Leased  Premises have been obtained,  (iv) all  contractors and
subcontractors  who have performed  work on or supplied  materials to the Leased
Premises  have been fully paid,  and all  materials and supplies have been fully
paid  for,  (v) the  Improvements  have been  fully  completed  in all  material
respects to the full satisfaction of Tenant, and (vi) all Equipment necessary or
appropriate  for the use or operation of the Leased  Premises has been installed
and  is  presently  fully  operative  in  all  material  respects  to  the  full
satisfaction of Tenant.
<PAGE>

(d) Landlord hereby assigns to Tenant,  without recourse or warranty whatsoever,
all  assignable   warranties,   guaranties,   indemnities   and  similar  rights
(collectively,  "Warranties")  which Landlord may have against any manufacturer,
seller,  engineer,  contractor  or  builder  in  respect  of any  of the  Leased
Premises.  Such  assignment  shall  remain in effect  until an Event of  Default
occurs or until the expiration or earlier  termination of this Lease,  whereupon
such assignment shall cease and all of Warranties,  guaranties,  indemnities and
other rights shall  automatically  revert to Landlord.  Tenant shall enforce the
Warranties in accordance with their respective terms.

4. Use of Leased Premises; Quiet Enjoyment.

(a) Tenant may occupy and use the Leased  Premises  for  general  and  executive
offices,  light  manufacturing,  and research  and  development  facilities,  in
connection with Tenant's business and for no other purpose,  without the express
prior  written  consent of Landlord,  which  consent  shall not be  unreasonably
withheld  or delayed;  provided,  however,  that,  Tenant  shall not,  under any
circumstances,  use or occupy or permit any of the Leased Premises to be used or
occupied,  nor do or  permit  anything  to be  done  in or on any of the  Leased
Premises,  in a  manner  which  would  or  might  (i)  violate  any Law or Legal
Requirement,  (ii) make void or  voidable  or cause any  insurer  to cancel  any
insurance  required by this Lease,  or make it difficult or impossible to obtain
any  such  insurance  at  commercially  reasonable  rates,  (iii)  make  void or
voidable,  cancel or cause to be cancelled or release any warranty,  guaranty or
indemnity,  (iv)  cause  structural  injury  to any of the  Improvements  or (v)
constitute a public or private nuisance or waste.

(b)  Subject  to the  provisions  hereof,  so long as no  Event of  Default  has
occurred and is  continuing,  Tenant shall  quietly  hold,  occupy and enjoy the
Leased  Premises  throughout  the  Term,  without  any  hindrance,  ejection  or
molestation  by  Landlord  with  respect  to matters  that arise  after the date
hereof,  provided  that Landlord or its agents may enter upon and examine any of
the Leased  Premises at such  reasonable  times as Landlord  may select and upon
reasonable  notice to Tenant  (except in the case of an  emergency,  in which no
notice shall be required)  for the purpose of  inspecting  the Leased  Premises,
verifying compliance or non-compliance by Tenant with its obligations  hereunder
and the  existence or  non-existence  of an Event of Default or event which with
the passage of time and/or notice would constitute an Event of Default,  showing
the Leased Premises to prospective  Lenders and purchasers and taking such other
action with  respect to the Leased  Premises as is  permitted  by any  provision
hereof.  In conducting any such  inspections  or otherwise  having access to the
Leased  Premises  (including  , but not  limited  to,  any  access  pursuant  to
Paragraph  10(c)  hereof),  Landlord  shall  comply,  and shall  cause all other
persons  on  entities  having  such  access  to  comply,   with  the  reasonable
instructions and  requirements of Tenant,  to not interfere with Tenant's use or
occupancy  of the Leased  Premises and to preserve  the  confidentiality  of any
materials, information, data and/or operations of or with respect to Tenant.
<PAGE>

5. Term.

     Subject to the  provisions  hereof,  Tenant  shall have and hold the Leased
Premises  for an initial term (such term,  as extended or renewed in  accordance
with the  provisions  hereof,  being called the "Term")  commencing  on the date
hereof (the  "Commencement  Date") and ending on the last day of the one hundred
eightieth (180th) calendar month next following the date hereof (the "Expiration
Date").  If all Rent and all other sums due hereunder  shall not have been fully
paid by the end of the Term, Landlord may, at its option,  extend the Term until
all said sums shall have been fully paid.

6. Basic  Rent.  Tenant  shall pay to  Landlord,  as annual  rent for the Leased
Premises during the Term, the amounts  determined in accordance with Exhibit "D"
hereto ("Basic  Rent"),  quarterly,  in advance,  commencing on the first day of
June, 1999, and continuing on the first day of each September,  December,  March
and June  thereafter  during the Term (each such day being a "Basic Rent Payment
Date").  Each  such  rental  payment  shall  be  made  (a)  at  Landlord's  sole
discretion,  to Landlord  at its  address set forth above  and/or to such one or
more other Persons,  at such  addresses and in such  proportions as Landlord may
direct by fifteen  (15) days'  prior  written  notice to Tenant (in which  event
Tenant  shall give  Landlord  notice of each such  payment  concurrent  with the
making  thereof),  and  (b) at  Tenant's  option,  either  by (x) a  check  hand
delivered  at least five (5)  business  days  before or mailed at least ten (10)
days before the  applicable  Basic Rent Payment  Date,  or (y) wire  transfer in
immediately  available  Federal  Funds on or before  the  applicable  Basic Rent
Payment  Date.  Pro rata Basic Rent for the period from the date hereof  through
the last day of May, 1999 shall be paid on the date hereof.

7. Additional Rent.

     (a) Tenant  shall pay and  discharge,  as  additional  rent  (collectively,
"Additional Rent"):

(i) except as otherwise  specifically provided herein, all costs and expenses of
Tenant,  Landlord and any other Persons specifically referenced herein which are
incurred in connection  or  associated  with (A) the  ownership,  use,  non-use,
occupancy, possession, operation, condition, design, construction,  maintenance,
alteration,  repair  or  restoration  of any of the  Leased  Premises,  (B)  the
performance  of any of Tenant's  obligations  under this Lease,  (C) any sale or
other transfer of any of the Leased Premises to Tenant under this Lease, (D) any
Condemnation  proceedings,  (E) the adjustment,  settlement or compromise of any
insurance claims  involving or arising from any of the Leased Premises,  (F) the
prosecution,  defense or settlement of any litigation  involving or arising from
any of the Leased  Premises,  this Lease,  or the sale of the Leased Premises to
Landlord,  (G) the exercise or  enforcement  by  Landlord,  its  successors  and
assigns,  of any of its  rights  under  this  Lease,  (H)  any  amendment  to or
modification  or  termination  of this Lease made at the request of Tenant,  (I)
Costs of Landlord and its counsel incurred in connection with any act undertaken
or  performed  by  Landlord  (or its  counsel)  at the request of Tenant or as a
result of Tenant's  failure to act promptly in an emergency  situation,  and (J)
any other items specifically required to be paid by Tenant under this Lease;
<PAGE>

(ii) after the date all or any portion of any  installment  of Basic Rent is due
and not paid,  an amount equal to five percent (5%) of the amount of such unpaid
installment  or portion  thereof,  provided,  however,  that with respect to the
first late payment of all or any portion of any installment of Basic Rent in any
consecutive  twelve  (12) month  period,  the Late  Charge  shall not be due and
payable unless the Basic Rent has not been paid within five (5) days'  following
the due date thereof;

(iii) a sum equal to any additional  sums  (including  any late charge,  default
penalties,  interest and fees of Lender's counsel) which are payable by Landlord
to any Lender under any Note (but not to exceed the amounts that would have been
payable  under  the  Initial  Loan)  by  reason  of  Tenant's  late  payment  or
non-payment of Basic Rent or by reason of an Event of Default; and

(iv)  interest,  at the rate  (the  "Default  Rate")  of the  lesser of (x) five
percent  (5%) over the Prime  Rate per  annum or (y) such  other  rate as may be
required  by  Lender  for late  payments  due under the terms of the Loan on the
following  sums until paid in full: (A) all overdue  installments  of Basic Rent
from the  respective due dates  thereof,  (B) all overdue  amounts of Additional
Rent relating to obligations which Landlord shall have paid on behalf of Tenant,
from the date of payment thereof by Landlord,  and (C) all other overdue amounts
of Additional Rent, from the date when any such amount becomes overdue.

(b) Tenant  shall pay and  discharge  (i) any  Additional  Rent  referred  to in
Paragraph  7(a)(i) when the same shall become due,  provided  that amounts which
are billed to  Landlord  or any third  party,  but not to Tenant,  shall be paid
within ten (10) business days after Landlord's  demand for payment thereof,  and
(ii) any other Additional  Rent,  within ten (10) business days after Landlord's
demand for payment thereof.

(c)  Landlord  and Tenant  acknowledge  and agree that the  amounts set forth as
additional  rent in  subparagraphs  7(a)(ii),  (iii)  and (iv)  above  have been
specifically  negotiated  by Landlord and Tenant and  represent the parties best
estimate  of actual  losses to be  suffered  by  Landlord  under the  applicable
circumstances, and are not intended or to be construed as a penalty. In no event
shall  amounts  payable  under  Paragraph  7(a)(ii),  (iii) and (iv)  exceed the
maximum amount permitted by applicable Law.

8. Net Lease; Non-Terminability.

(a) This is a net  lease  and all  Monetary  Obligations  shall be paid  without
notice or demand  and  without  set-off,  counterclaim,  recoupment,  abatement,
suspension,    deferment,   diminution,    deduction,   reduction   or   defense
(collectively, a "Set-Off").

(b) Except as otherwise  expressly provided herein, this Lease and the rights of
Landlord and the  obligations of Tenant  hereunder  shall not be affected by any
event or for any reason,  including the  following:  (i) any damage to or theft,
loss or destruction of any of the Leased Premises, (ii) any Condemnation,  (iii)
Tenant's  acquisition  of  ownership  of any of the Leased  Premises  other than

<PAGE>

pursuant to an express  provision of this Lease,  (iv) subject to the provisions
of Paragraph 32 hereof,  any default on the part of Landlord  hereunder or under
any Note, Mortgage,  Assignment or any other agreement (but nothing herein shall
be deemed to limit or waive any  right,  claim or  remedy,  in law or in equity,
which Tenant may have against  Landlord by reason of any such default),  (v) any
latent or other  defect in any of the  Leased  Premises,  (vi) the breach of any
warranty of any seller or manufacturer of any of the Equipment, (vii) subject to
the provisions of Paragraph 4(b) hereof,  any violation of any provision of this
Lease  by  Landlord,   (viii)  the   bankruptcy,   insolvency,   reorganization,
composition,  readjustment,  liquidation, dissolution or winding-up of, or other
proceeding  affecting  Landlord,  (ix) subject to the provisions of Paragraph 32
hereof, the exercise of any remedy, including foreclosure, under any Mortgage or
Assignment,  (x) subject to the  provisions  of Paragraph 32 hereof,  any action
with respect to this Lease  (including  the  disaffirmance  hereof) which may be
taken by Landlord, any trustee,  receiver or liquidator of Landlord or any court
under the Federal  Bankruptcy  Code or  otherwise,  (xi) any  interference  with
Tenant's use of the Leased Premises  (except to the extent such  interference is
caused by acts of Landlord  not  permitted  under this  Lease),  (xii) market or
economic changes or (xiii) any other cause, whether similar or dissimilar to the
foregoing, any present or future Law to the contrary notwithstanding.

(c) The  obligations  of Tenant  hereunder  shall be  separate  and  independent
covenants and agreements,  all Monetary Obligations shall continue to be payable
in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and
the  obligations  of Tenant  hereunder  shall  continue  unaffected  unless  the
requirement to pay or perform the same shall have been terminated pursuant to an
express  provision of this Lease.  The  obligation  to pay Rent or amounts equal
thereto  shall not be affected by any  collection  of rents by any  governmental
body pursuant to a tax lien or otherwise, even though such obligation results in
a double payment of Rent. All Rent payable by Tenant  hereunder shall constitute
"rent" for all purposes  (including  Section 502(b)(6) of the Federal Bankruptcy
Code).

(d) Except as otherwise  expressly  provided herein,  Tenant shall have no right
and  hereby  waives  all  rights  which it may have  under  any Law (i) to quit,
terminate or surrender this Lease or any of the Leased Premises,  or (ii) to any
Set-Off of any Monetary Obligations.

9. Payment of Impositions.

(a)  Tenant  shall,  before  interest  or  penalties  are due  thereon,  pay and
discharge all taxes (including real and personal property,  franchise, sales and
rent  taxes),  all charges  for any  easement or  agreement  maintained  for the
benefit of any of the Leased Premises,  all assessments and levies,  all permit,
inspection and license fees, all rents and charges for water, sewer, utility and
communication  services relating to any of the Leased Premises, all ground rents
and all other  public  charges  whether of a like or different  nature,  even if
unforeseen or extraordinary,  imposed upon or assessed against (i) Tenant,  (ii)
Tenant's  leasehold  interest  in the Leased  Premises,  (iii) any of the Leased
Premises, (iv) Landlord as a result of or arising in respect of the acquisition,
ownership,  occupancy,  leasing,  use,  possession  or sale of any of the Leased
Premises,  any activity conducted on any of the Leased Premises, or the Rent, or
(v) any Lender by reason of any Note,  Mortgage,  Assignment  or other  document

<PAGE>

evidencing  or securing a Loan and which (as to this clause  (v))  Landlord  has
agreed to pay (collectively,  the "Impositions");  provided, that nothing herein
shall  obligate  Tenant to pay (A)  income,  excess  profits  or other  taxes of
Landlord  (or  Lender)  which  are  determined  on the basis of  Landlord's  (or
Lender's)  net  income  or net  worth  (unless  such  taxes  are in lieu of or a
substitute for any other tax, assessment or other charge upon or with respect to
the Leased  Premises  which,  if it were in  effect,  would be payable by Tenant
under the  provisions  hereof or by the terms of such tax,  assessment  or other
charge), (B) any estate, inheritance, succession, gift or similar tax imposed on
Landlord or (C) any capital gains tax imposed on Landlord in connection with the
sale of the Leased  Premises to any  Person.  If any  Imposition  may be paid in
installments  without  interest or penalty,  Tenant shall have the option to pay
such Imposition in installments;  in such event, Tenant shall be liable only for
those  installments  which accrue or become due and payable  during the Term. If
the Term of the Lease should  expire or terminate  (except by reason of an Event
of Default by Tenant  hereunder) prior to the conclusion of any period for which
Tenant  has paid any  Imposition,  then  Landlord  shall  immediately  upon such
expiration or termination  remit to Tenant  payment for the pro-rata  portion of
such Imposition  attributable to such unexpired period. Tenant shall prepare and
file all tax reports  required by governmental  authorities  which relate to the
Impositions.  Tenant shall deliver to Landlord (1) copies of all settlements and
notices  pertaining to the Impositions  which may be issued by any  governmental
authority  within ten (10) business days after  Tenant's  receipt  thereof,  (2)
receipts for payment of all taxes required to be paid by Tenant hereunder within
thirty (30) days after the due date  thereof and (3) receipts for payment of all
other  Impositions  within  ten (10)  business  days  after  Landlord's  request
therefor.

(b)  Subject  to any terms more  favorable  to Tenant as may be agreed by Lender
with  respect to the  number or nature of any  permitted  defaults  prior to the
application of this Paragraph 9(b) (which more favorable  terms shall  control),
following the  occurrence of an Event of Default  consisting of a failure to (i)
timely pay any  Monetary  Obligation,  (ii) timely pay any real estate  taxes or
assessments  imposed  upon the Leased  Premises or  payments in lieu  thereof or
(iii)  failure to keep and  maintain  in effect at all times  during the Term of
this Lease the insurance coverage required under this Lease, Landlord shall have
the right to require  Tenant to pay to Landlord an additional  monthly sum (each
an "Escrow  Payment")  sufficient  to pay the  Escrow  Charges  (as  hereinafter
defined) as they become due. If Landlord  receives notice,  or otherwise becomes
aware,  of Tenant's  failure to timely make payment of an  insurance  premium or
taxes or  assessments,  Landlord  shall  endeavor to provide  Tenant with notice
thereof as soon as possible.  As used herein,  "Escrow  Charges" shall mean real
estate taxes on the Leased  Premises or payments in lieu thereof and premiums on
any insurance required by this Lease. Landlord shall determine the amount of the
Escrow Charges and of each Escrow  Payment.  As long as the Escrow  Payments are
being held by Landlord,  the Escrow  Payments shall not be commingled with other
funds of Landlord or other  Persons and  interest  thereon  shall accrue for the
benefit of Tenant from the date such monies are received and invested  until the
date such monies are disbursed to pay Escrow  Charges.  Landlord shall apply the
Escrow  Payments to the payment of the Escrow  Charges in such order or priority
as  Landlord  shall  determine  or as required by law. If at any time the Escrow
Payments  theretofore  paid to Landlord shall be insufficient for the payment of
the  Escrow  Charges,  Tenant,  within  ten (10) days  after  Landlord's  demand
therefor, shall pay the amount of the deficiency to Landlord.
<PAGE>

10. Compliance with Laws and Easement Agreements; Environmental Matters.

(a) Tenant  shall,  at its  expense,  comply  with and conform to, and cause the
Leased  Premises and any other Person  occupying any part of the Leased Premises
to comply with and conform to, all Insurance Requirements and Legal Requirements
(including all applicable  Environmental Laws). Tenant shall not at any time (i)
cause, permit or suffer to occur any Environmental  Violation or (ii) permit any
sublessee,  assignee or other  Person  occupying  the Leased  Premises  under or
through Tenant to cause,  permit or suffer to occur any Environmental  Violation
and, at the  reasonable  request of Landlord or Lender,  Tenant  shall  promptly
remediate  or undertake  any other  appropriate  response  action to correct any
existing  Environmental  Violation.  Any  and  all  reports  prepared  for or by
Landlord  with respect to the Leased  Premises  shall be for the sole benefit of
Landlord and Lender and no other Person shall have the right to rely on any such
reports.

(b)  Tenant,  at its sole  cost and  expense,  will at all  times  promptly  and
faithfully abide by, discharge and perform all of the covenants,  conditions and
agreements  contained in any  Easement  Agreement on the part of Landlord or the
occupier to be kept and  performed  thereunder.  Tenant will not alter,  modify,
amend or  terminate  any  Easement  Agreement,  give  any  consent  or  approval
thereunder,  or enter into any new Easement Agreement without, in each case, the
prior written consent of Landlord.

(c) Upon prior written notice from Landlord, Tenant shall permit such persons as
Landlord  may  designate  ("Site  Reviewers")  to visit the Leased  Premises and
perform, as agents of Tenant,  environmental site investigations and assessments
("Site  Assessments")  on the Leased  Premises  for the  purpose of  determining
whether there exists on the Leased Premises any  Environmental  Violation or any
condition  which could result in any  Environmental  Violation (i) in connection
with any sale, financing or refinancing of the Leased Premises, (ii) at any time
within the six month period prior to the expiration of the Term and (iii) at any
time that,  in the opinion of Landlord or Lender,  a reasonable  basis exists to
believe  that an  Environmental  Violation  exists.  Such Site  Assessments  may
include both above and below the ground testing for Environmental Violations and
such other tests as may be necessary,  in the opinion of the Site Reviewers,  to
conduct the Site  Assessments.  Tenant shall supply to the Site  Reviewers  such
historical and operational  information  regarding the Leased Premises as may be
reasonably  requested by the Site Reviewers to facilitate the Site  Assessments,
and shall  make  available  for  meetings  with the Site  Reviewers  appropriate
personnel having knowledge of such matters. The cost of performing and reporting
any Site Assessments  shall be paid by Tenant with respect to (i) the first Site
Assessment  in any two (2) year  period,  (ii) any Site  Assessment  required by
Lender or any  governmental  authority,  (iii) any Site  Assessment  following a
known  Environmental  Violation  at  the  Leased  Premises  and  (iv)  any  Site
Assessment in which an Environmental Violation is discovered.
<PAGE>

(d) If an Environmental  Violation occurs or is found to exist and, in such Site
Reviewer's  reasonable  judgment,  the cost of remediation of, or other response
action with  respect  to, the same is likely to exceed  $500,000,  Tenant  shall
provide to Landlord,  within ten (10) days after  Landlord's  request  therefor,
adequate  financial  assurances  that Tenant will  effect  such  remediation  in
accordance with applicable  Environmental Laws. Such financial  assurances shall
be a bond or letter of credit  reasonably  satisfactory  to Landlord in form and
substance  and in an  amount  equal to one  hundred  fifteen  percent  (115%) of
Landlord's reasonable estimate,  based upon a Site Assessment performed pursuant
to  Paragraph  10(c) (a copy of which shall be provided to Tenant at the time of
the request for such bond or letter of credit),  of the anticipated cost of such
remedial action.

(e)  Notwithstanding  any other  provision  of this Lease,  if an  Environmental
Violation occurs or is found to exist and the Term would otherwise  terminate or
expire,  then,  at the  option  of  Landlord,  the Term  shall be  automatically
extended  beyond the date of  termination  or  expiration  and this Lease  shall
remain in full force and effect  beyond  such date until the earlier to occur of
(i)  the  completion  of all  remedial  action  in  accordance  with  applicable
Environmental  Laws or (ii) the date specified in a written notice from Landlord
to Tenant terminating this Lease;  provided,  however, if Landlord leases all or
any part of the Leased  Premises  during such  extended  Term,  Tenant  shall be
entitled to a credit  against  Basic Rent  hereunder  in the amount equal to the
rental payments under such other lease as and when collected by Landlord.

(f) If Tenant fails, after any applicable notice and cure period, to correct any
Environmental  Violation which occurs or is found to exist,  Landlord shall have
the right (but no obligation) to take any and all actions as Landlord shall deem
necessary or advisable in order to cure such Environmental Violation.

(g) Tenant  shall  notify  Landlord  promptly  after  receipt of notice from any
governmental  authority or actual knowledge of any  Environmental  Violation (or
alleged  Environmental  Violation)  or  noncompliance  with any of the covenants
contained in this  Paragraph 10 and shall forward to Landlord  immediately  upon
receipt thereof copies of all orders, reports, notices, permits, applications or
other communications relating to any such violation or noncompliance.

(h) All future leases, subleases or concession agreements relating to the Leased
Premises  entered into by Tenant shall contain  covenants of the other party not
to at any time (i) cause any Environmental Violation to occur or (ii) permit any
Person occupying the Leased Premises through said subtenant or concessionaire to
cause any Environmental Violation to occur.

11. Liens; Recording.

(a) Tenant shall not, directly or indirectly,  create or permit to be created or
to remain and shall promptly  discharge or remove any lien,  levy or encumbrance
on any of the Leased Premises or on any Rent or any other sums payable by Tenant
under  this  Lease,  other  than  any  Mortgage  or  Assignment,  the  Permitted
Encumbrances and any mortgage,  lien,  encumbrance or other charge created by or
resulting  solely from any act or omission of  Landlord.  NOTICE IS HEREBY GIVEN
THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED
OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED
PREMISES THROUGH OR UNDER TENANT,  AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY
SUCH LABOR,  SERVICES OR  MATERIALS  SHALL  ATTACH TO OR AFFECT THE  INTEREST OF
LANDLORD IN AND TO ANY OF THE LEASED  PREMISES.  TENANT SHALL  PROMPTLY UPON THE
COMMENCEMENT  OF ANY  ALTERATIONS AT THE LEASED  PREMISES,  POST A NOTICE ON THE
LEASED PREMISES  REGARDING SUCH  NON-LIABILITY OF LANDLORD THAT IS IN CONFORMITY
WITH THE PROVISIONS OF ORS 87.030.
<PAGE>

(b) Tenant shall execute,  deliver and record,  file or register  (collectively,
"record") all such instruments as may be required or permitted by any present or
future Law in order to evidence the respective  interests of Landlord and Tenant
in the Leased Premises,  and shall cause a memorandum of this Lease (or, if such
a memorandum  cannot be  recorded,  this Lease),  and any  supplement  hereto or
thereto,  to be recorded in such manner and in such places as may be required or
permitted  by any  present or future Law in order to protect  the  validity  and
priority of this Lease.

12. Maintenance and Repair.

(a) Tenant  shall at all times  maintain the Leased  Premises and the  Adjoining
Property in as good repair and  appearance as they are in on the date hereof and
fit to be used for  their  intended  use in  accordance  with the  better of the
practices  generally  recognized as then  acceptable  by other  companies in its
industry or observed by Tenant with respect to the other real  properties  owned
or  operated by it, and,  in the case of the  Equipment,  in as good  mechanical
condition  as it  was  on the  later  of the  date  hereof  or the  date  of its
installation,  except,  in each case,  for  ordinary  wear and tear and  insured
casualty (but  excluding any  deductible).  Tenant shall take every other action
necessary or appropriate for the preservation and safety of the Leased Premises.
Tenant shall  promptly make all  Alterations  of every kind and nature,  whether
foreseen or  unforeseen,  which may be  required  to comply  with the  foregoing
requirements of this Paragraph 12(a), including Alterations required in order to
insure that the  Improvements  are year 2000  compliant.  Landlord  shall not be
required to make any Alteration,  whether foreseen or unforeseen, or to maintain
any of the Leased  Premises or Adjoining  Property in any way, and Tenant hereby
expressly waives any right which may be provided for in any Law now or hereafter
in effect to make  Alterations at the expense of Landlord or to require Landlord
to make Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12
shall be made in conformity with the provisions of Paragraph 13.

(b) If any Improvement,  now or hereafter  constructed,  shall (i) encroach upon
any  setback  or any  property,  street or  right-of-way  adjoining  the  Leased
Premises,  (ii) violate the provisions of any restrictive covenant affecting the
Leased Premises,  (iii) hinder or obstruct any easement or right-of-way to which
any of the Leased Premises is subject or (iv) impair the rights of others in, to
or under any of the foregoing,  Tenant shall, promptly after receiving notice or
otherwise  acquiring  knowledge  thereof,  either (A) obtain from all  necessary
parties waivers or settlements of all claims,  liabilities and damages resulting
from each such encroachment,  violation,  hindrance,  obstruction or impairment,
whether the same shall affect Landlord,  Tenant or both, or (B) take such action
as  shall  be  necessary  to  remove  all  such  encroachments,   hindrances  or
obstructions  and to end all  such  violations  or  impairments,  including,  if
necessary, making Alterations.
<PAGE>

13. Alterations and Improvements.

(a) Tenant  shall have the right,  without  having  obtained  the prior  written
consent of  Landlord  and Lender  and  provided  that no  monetary  or  material
non-monetary  Event of  Default  exists  beyond any  applicable  notice and cure
period,  to make (i) Alterations or a series of related  Alterations that, as to
any such Alterations or series of related Alterations,  do not cost in excess of
$750,000 and (ii) to install  Equipment in the Improvements or accessions to the
Equipment  that, as to such  Equipment or  accessions,  do not cost in excess of
$750,000,  so long as at the time of  construction  or  installation of any such
Equipment or Alterations no monetary or material  non-monetary  Event of Default
exists beyond any applicable notice and cure period and the value and utility of
the Leased Premises is not diminished  thereby in any material  respect.  If the
cost of any Alterations, series of related Alterations,  Equipment or accessions
thereto is in excess of  $750,000,  the prior  written  approval of Landlord and
Lender shall be required, such approval not to be unreasonably withheld, delayed
or  conditioned.  Tenant  shall  not  construct  upon the  Land  any  additional
buildings  without having first  obtained the prior written  consent of Landlord
and Lender.

(b) If Tenant makes any Alterations pursuant to this Paragraph 13 or as required
by  Paragraph  12  or  17  (such   Alterations  and  actions  being  hereinafter
collectively  referred  to as  "Work"),  whether  or not  Landlord's  consent is
required, then (i) the market value of the Leased Premises shall not be lessened
by any  such  Work or its  usefulness  impaired,  (ii) all  such  Work  shall be
performed by Tenant in a good and workmanlike manner,  (iii) all such Work shall
be expeditiously  completed in compliance with all Legal Requirements,  (iv) all
such Work shall  comply with the  Insurance  Requirements,  (v) if any such Work
involves  the  replacement  of  Equipment  or  parts  thereto,  all  replacement
Equipment  or parts  shall have a value and useful  life equal to the greater of
(A) the value and useful life on the date hereof of the Equipment being replaced
or (B) the value and useful life of the  Equipment  being  replaced  immediately
prior to the occurrence of the event which required its replacement, (vi) Tenant
shall  promptly  discharge  or remove all liens filed  against any of the Leased
Premises  arising out of such Work,  (vii) Tenant shall  procure and pay for all
permits and licenses  required in connection with any such Work, (viii) all such
Work shall be the property of Landlord  and shall be subject to this Lease,  and
Tenant shall execute and deliver to Landlord any document  requested by Landlord
evidencing the assignment to Landlord of all estate,  right,  title and interest
(other than the leasehold  estate created  hereby) of Tenant or any other Person
thereto or therein,  and (ix) Tenant shall comply,  to the extent of Alterations
of $750,000 or more with the provisions of Paragraph 19(a),  whether or not such
Work involves restoration of the Leased Premises.

14.  Permitted  Contests.  Notwithstanding  any other  provision  of this Lease,
Tenant shall not be required to (a) pay any Imposition,  (b) discharge or remove
any lien  referred to in  Paragraph 11 or 13 or (c) take any action with respect
to any encroachment, violation, hindrance, obstruction or impairment referred to
in Paragraph 12(b) (such  non-compliance with the terms hereof being hereinafter
referred to collectively as "Permitted  Violations"),  so long as at the time of

<PAGE>

such contest no monetary or material non-monetary Event of Default exists and so
long as Tenant shall contest,  in good faith, the existence,  amount or validity
thereof,  the  amount of the  damages  caused  thereby,  or the extent of its or
Landlord's  liability  therefor by appropriate  proceedings  which shall operate
during the pendency  thereof to prevent or stay (i) the  collection of, or other
realization  upon,  the  Permitted  Violation  so  contested,   (ii)  the  sale,
forfeiture  or loss of any of the Leased  Premises  or any Rent to satisfy or to
pay any damages caused by any Permitted  Violation,  (iii) any interference with
the use or occupancy of any of the Leased Premises,  (iv) any interference  with
the payment of any Rent,  or (v) the  cancellation  or material  increase in the
rate of any insurance policy or a statement by the carrier that coverage will be
denied.  Tenant  shall  provide  Landlord  security  which is  satisfactory,  in
Landlord's  reasonable  judgment,  to assure that such  Permitted  Violation  is
corrected,  including all Costs,  interest and penalties that may be incurred or
become due in connection therewith.  While any proceedings which comply with the
requirements of this Paragraph 14 are pending and the required  security is held
by  Landlord,  Landlord  shall  not have  the  right to  correct  any  Permitted
Violation  thereby being contested unless Landlord is required by law to correct
such  Permitted  Violation  and  Tenant's  contest does not prevent or stay such
requirement  as to Landlord.  Each such contest shall be promptly and diligently
prosecuted by Tenant to a final  conclusion,  except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, has the right to
attempt to settle or compromise such contest through negotiations.  Tenant shall
pay any and all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final non-appealable determination of such
contest,  fully pay and discharge  the amounts which shall be levied,  assessed,
charged or  imposed or be  determined  to be  payable  therein or in  connection
therewith,  together with all penalties, fines, interest and Costs thereof or in
connection  therewith,  and perform all acts the  performance  of which shall be
ordered or decreed as a result thereof.  No such contest shall subject  Landlord
to the risk of any civil or criminal liability.

     15. Indemnification.

(a)  Tenant  shall  pay,  protect,  indemnify,  defend,  save and hold  harmless
Landlord,  Lender  and all other  Persons  described  in  Paragraph  30 (each an
"Indemnitee")  from  and  against  any  and  all  liabilities,  losses,  damages
(including punitive damages), penalties, Costs, causes of action, suits, claims,
demands or judgments of any nature whatsoever,  howsoever caused, without regard
to the form of action and whether based on strict  liability,  negligence or any
other  theory of  recovery  at law or in  equity,  arising  from (i) any  matter
pertaining to the  acquisition,  or the negotiations  leading thereto  (provided
that,  nothing herein shall be deemed to make Tenant liable for Landlord's Costs
in  connection  with the initial  Loan in excess of  $70,000),  ownership,  use,
non-use, occupancy,  operation,  condition, design,  construction,  maintenance,
repair or restoration  of the Leased  Premises or Adjoining  Property,  (ii) any
casualty in any manner arising from the Leased  Premises or Adjoining  Property,
whether or not  Indemnitee  has or should have knowledge or notice of any defect
or condition  causing or contributing  to said casualty,  (iii) any violation by
Tenant of any provision of this Lease, any contract or agreement to which Tenant
is  a  party,  any  Legal  Requirement  or  any  Permitted  Encumbrance  or  any
encumbrance  Tenant consented to or the Mortgage or Assignment or (iv) except to
the extent  caused solely by the gross  negligence or willful  misconduct of any
Indemnitee, any alleged, threatened or actual Environmental Violation, including
(A)  liability for response  costs and for costs of removal and remedial  action
incurred by the United States  Government,  any state or local governmental unit
or any other Person, or damages from injury to or destruction or loss of natural

<PAGE>

resources,  including the reasonable costs of assessing such injury, destruction
or loss, incurred pursuant to Section 107 of CERCLA, or any successor section or
act or provision of any similar  state or local Law, (B) liability for costs and
expenses of abatement, correction or clean-up, fines, damages, response costs or
penalties which arise from the provisions of any of the other Environmental Laws
and (C)  liability  for personal  injury or property  damage  arising  under any
statutory  or  common-law  tort  theory,  including  damages  assessed  for  the
maintenance  of a public or private  nuisance or for  carrying on of a dangerous
activity.

(b) In case any action or proceeding is brought against any Indemnitee by reason
of any such claim, (i) Tenant may retain its own counsel and defend such action,
and Landlord may employ counsel of its choice to monitor the defense of any such
action;  provided  that in the  event of a  conflict  of  interest  or a dispute
between Tenant and any such  Indemnitee or during the continuance of an Event of
Default such counsel may be retained by Landlord at Tenant's  cost and (ii) such
Indemnitee  shall notify Tenant to resist or defend such action or proceeding by
retaining  counsel  reasonably   satisfactory  to  such  Indemnitee,   and  such
Indemnitee will cooperate and assist in the defense of such action or proceeding
if  reasonably  requested  so to do by  Tenant.  In the event of a  conflict  of
interest or dispute or during the  continuance of an Event of Default,  Landlord
shall have the right to select  counsel,  and the cost of such counsel  shall by
paid by Tenant.

(c) The  obligations  of  Tenant  under  this  Paragraph  15 shall  survive  any
termination, expiration or rejection in bankruptcy of this Lease.

16. Insurance.

(a) Tenant shall maintain the following  insurance on or in connection  with the
Leased Premises:

(i) Insurance  against physical loss or damage to the Improvements and Equipment
as  provided  under a standard  "All Risk"  property  policy  including  but not
limited  to flood (if the Leased  Premises  is in a flood  zone) and  earthquake
coverage  in  amounts  not  less  than  the  actual   replacement  cost  of  the
Improvements  and Equipment.  Such policies shall contain  Replacement  Cost and
Agreed Amount  Endorsements and shall contain  deductibles not more than $50,000
per occurrence.

(ii)  Commercial  General  Liability  Insurance  (including  but not  limited to
Incidental   Medical   Malpractice  and  Host  Liquor  Liability)  and  Business
Automobile   Liability  Insurance  (including  Non-Owned  and  Hired  Automobile
Liability)  against  claims for  personal and bodily  injury,  death or property
damage occurring on, in or as a result of the use of the Leased Premises,  in an
amount not less than $15,000,000 per  occurrence/annual  aggregate and all other
coverage extensions that are usual and customary for properties of this size and
type provided,  however,  that the Landlord shall have the right to require such
higher limits as may be reasonable and customary for properties of this size and
type.
<PAGE>

(iii) Workers' compensation insurance covering all persons employed by Tenant in
connection  with any work done on or about any of the Leased  Premises for which
claims for death,  disease or bodily  injury may be asserted  against  Landlord,
Tenant or any of the Leased  Premises or, in lieu of such Workers'  Compensation
Insurance, a program of self-insurance complying with the rules, regulations and
requirements of the appropriate agency of the State.

(iv) Comprehensive Boiler and Machinery Insurance on any of the Equipment or any
other  equipment  on or in the  Leased  Premises,  in an  amount  not less  than
$6,000,000  per accident for damage to property.  Such policies shall include at
least $6,000,000 per accident for Off-Premises Service Interruption,  Expediting
Expenses,  Ammonia  Contamination,  and Hazardous Materials Clean-Up Expense and
may contain a deductible not to exceed $50,000.

(v) Business  Income/Extra  Expense Insurance at limits sufficient to cover 100%
of the  period of  indemnity  not less  than one year  from  time of loss.  Such
insurance  shall name Landlord as loss payee solely with respect to Rent payable
to or for the benefit of Landlord as its interest appears under this Lease.

(vi) During any period in which  substantial  Alterations at the Leased Premises
are being  undertaken,  builder's  risk insurance  covering the total  completed
value including any "soft costs" with respect to the Improvements  being altered
or repaired (on a completed  value,  non-reporting  basis),  replacement cost of
work  performed and  equipment,  supplies and materials  furnished in connection
with such  construction or repair of  Improvements  or Equipment,  together with
such "soft  cost"  endorsements  and such other  endorsements  as  Landlord  may
reasonably require and general liability,  worker's  compensation and automobile
liability insurance with respect to the Improvements being constructed,  altered
or repaired.

(vii) Such  other  insurance  (or other  terms  with  respect  to any  insurance
required pursuant to this Paragraph 16, including without  limitation amounts of
coverage, deductibles, form of mortgagee clause) on or in connection with any of
the Leased Premises as Landlord or Lender may reasonably  require,  which at the
time is usual and commonly  obtained in connection  with  properties  similar in
type of building size, use and location to the Leased Premises.

(b) The  insurance  required by  Paragraph  16(a) shall be written by  companies
which,  at all times during the Term,  have a Best's  rating of A:X or above and
are  admitted  in,  and  approved  to write  insurance  policies  by,  the State
Insurance Department for the State. The insurance policies (i) shall be for such
terms as Landlord may reasonably approve and (ii) shall be in amounts sufficient
at all times to satisfy any  coinsurance  requirements  thereof.  The  insurance
referred to in Paragraphs 16(a)(i),  16(a)(iv) and 16(a)(vi) shall name Landlord

<PAGE>

as Owner and Lender as loss payee and Tenant as its  interest  may  appear.  The
insurance  referred to in Paragraph  16(a)(ii) shall name Landlord and Lender as
additional  insureds,  and the insurance referred to in Paragraph 16(a)(v) shall
name  Landlord  as insured  and  Lender  and  Landlord  as loss  payee.  If said
insurance  or any part  thereof  shall  expire,  be  withdrawn,  become  void or
voidable for any reason,  including a breach of any condition  thereof by Tenant
or the failure or impairment of the capital of any insurer,  or if for any other
reason  whatsoever  said insurance  shall become  reasonably  unsatisfactory  to
Landlord, Tenant shall immediately obtain new or additional insurance reasonably
satisfactory to Landlord.

(c) Each  insurance  policy  referred to in clauses (i),  (iv),  (v) and (vi) of
Paragraph 16(a) shall contain  standard  non-contributory  mortgagee  clauses in
favor of and  acceptable  to Lender.  Each policy  required by any  provision of
Paragraph 16(a),  except clause (iii) thereof,  shall provide that it may not be
cancelled, substantially modified or allowed to lapse on any renewal date except
after thirty (30) days' prior  notice to Landlord  and Lender.  Each such policy
shall also provide that any loss otherwise  payable  thereunder shall be payable
notwithstanding  (i) any act or  omission of  Landlord  or Tenant  which  might,
absent such provision, result in a forfeiture of all or a part of such insurance
payment,  (ii) the occupation or use of any of the Leased  Premises for purposes
more hazardous than those permitted by the provisions of such policy,  (iii) any
foreclosure  or other  action  or  proceeding  taken by Lender  pursuant  to any
provision of the  Mortgage,  Note,  Assignment or other  document  evidencing or
securing the Loan upon the happening of an event of default  therein or (iv) any
change in title to or ownership of any of the Leased Premises.

(d) Tenant shall pay as they become due all premiums for the insurance  required
by Paragraph  16(a),  shall renew or replace each policy and deliver to Landlord
evidence of the payment of the full premium  therefor or installment then due at
least thirty (30) days prior to the  expiration  date of such policy,  and shall
promptly deliver to Landlord all original certificates of insurance.

(e) Anything in this Paragraph 16 to the contrary notwithstanding, any insurance
which Tenant is required to obtain  pursuant to  Paragraph  16(a) may be carried
under a "blanket" or umbrella  policy or policies  covering other  properties or
liabilities  of Tenant,  provided  that such  "blanket"  or  umbrella  policy or
policies  otherwise comply with the provisions of this Paragraph 16 and provided
further that Tenant shall  provide to Landlord a Statement of Values which shall
be  reviewed  annually  and  amended  as  necessary  based on  Replacement  Cost
Valuations.  The original or a certified copy of each such "blanket" or umbrella
policy shall promptly be delivered to Landlord.

(f) Tenant shall promptly  comply with and conform to (i) all provisions of each
insurance  policy required by this Paragraph 16 and (ii) all requirements of the
insurers thereunder applicable to Landlord, Tenant or any of the Leased Premises
or to the use, manner of use,  occupancy,  possession,  operation,  maintenance,
alteration  or repair of any of the  Leased  Premises,  even if such  compliance
necessitates Alterations or results in interference with the use or enjoyment of
any of the Leased Premises.

(g) Tenant shall not carry separate insurance concurrent in form or contributing
in the event of a Casualty  with that  required in this  Paragraph 16 unless (i)
Landlord and Lender are included therein as named insureds, with loss payable as

<PAGE>

provided  herein,  and (ii)  such  separate  insurance  complies  with the other
provisions of this  Paragraph 16. Tenant shall  immediately  notify  Landlord of
such  separate  insurance  and shall  deliver to Landlord the original  policies
thereof;  provided  however,  that nothing  contained  herein shall be deemed to
limit Tenant's right to carry insurance with respect to any other  properties or
businesses of Tenant or any personal property of Tenant that does not constitute
a part of the Leased Premises.

(h) All policies  shall  contain  effective  waivers by the carrier  against all
claims for insurance premiums against Landlord and shall contain full waivers of
subrogation against the Landlord.

(i)  All proceeds  of any  insurance  required  under  Paragraph 16(a  shall  be
payable as follows:

(1) Proceeds  payable under clauses (ii),  (iii) and (iv) of Paragraph 16(a) and
proceeds  attributable  to the general  liabilities  coverage of Builder's  Risk
insurance  under clause (vi) of  Paragraph  16(a) shall be payable to the Person
entitled to receive such proceeds.

(2) All proceeds of insurance payable under clauses (ii),  (iii),  (iv), (v) and
(vii) of Paragraph  16(a) and  proceeds  attributable  to the general  liability
coverage  provisions of Builder's Risk insurance  under clause (vi) of Paragraph
16(a) shall be payable to Landlord or, if required by the Mortgage, to Lender.

(3) Proceeds of  insurance  required  under  clause (i) of  Paragraph  16(a) and
proceeds  attributable  to  Builder's  Risk  insurance  (other  than its general
liability  coverage  provisions)  under clause (vi) of Paragraph  16(a) shall be
payable to Landlord (or Lender) and applied as set forth in Paragraph 17. Tenant
shall apply the Net Award to  restoration  of the Leased  Premises in accordance
with the applicable provisions of this Lease.

17.               Casualty and Condemnation.

(a) If any Casualty occurs to the Leased  Premises,  the insurance  proceeds for
which is  reasonably  estimated  by  Tenant  to be equal to or in excess of Five
Hundred  Thousand  Dollars  ($500,000),  Tenant shall promptly give Landlord and
Lender notice thereof. So long as no monetary or material  non-monetary Event of
Default  exists beyond any applicable  notice and cure period,  Tenant is hereby
authorized  to  adjust,  collect  and  compromise  all  claims  under any of the
insurance   policies  required  by  Paragraph  16(a)  (except  public  liability
insurance claims payable to a Person other than Tenant,  Landlord or Lender) and
to execute  and  deliver on behalf of  Landlord  all  necessary  proofs of loss,

<PAGE>

receipts, vouchers and releases required by the insurers and Landlord shall have
the right to join therein. Any adjustment,  settlement or compromise of any such
claim for any amount less than the  replacement  cost for the Leased Premises or
such portion  thereof so damaged,  as applicable,  shall be subject to the prior
written approval of Landlord, which approval shall not be unreasonably withheld,
delayed or  conditioned;  provided  however,  that, if the proposed  adjustment,
settlement or compromise is less than  replacement  cost for the Leased Premises
or the portion thereof so damaged (as reasonably  determined,  in each instance,
by Tenant's architect or engineer), and Tenant shall escrow any shortfall in the
funds  necessary  for the repair or  restoration  of the Leased  Premises or the
portion  thereof so damaged in accordance  with the terms of this Lease into the
Restoration  Fund,  then Landlord shall not withhold its consent  thereto.  If a
monetary or material  non-monetary Event of Default exists beyond any applicable
notice and cure  period,  (i) Tenant shall not be entitled to  participate  with
Landlord and Lender in any  adjustment,  collection  and  compromise  of the Net
Award payable in connection  with a Casualty,  (ii) Tenant agrees to sign,  upon
the request of Landlord and Lender, all such proofs of loss, receipts,  vouchers
and releases and (iii) if Landlord or Lender so requests,  Tenant shall  adjust,
collect and  compromise  any and all such claims,  and Landlord and Lender shall
have the right to join with Tenant therein.  Upon notice from Landlord or Lender
as to  the  occurrence  and  continuance  of an  Event  of  Default  beyond  any
applicable  notice  and cure  period,  each  insurer  is hereby  authorized  and
directed  to make  payment  under said  policies,  including  return or unearned
premiums,  directly to  Landlord  or, if  required  by the  Mortgage,  to Lender
instead of to Landlord and Tenant  jointly,  and Tenant hereby  appoints each of
Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft therefor.
The rights of Landlord under this Paragraph 17(a) shall be extended to Lender if
and to the extent that any Mortgage so provides.

(b) Tenant,  immediately  upon receiving any Condemnation  Notice,  shall notify
Landlord  and Lender  thereof.  So long as no monetary or material  non-monetary
Event of Default exists beyond any applicable notice and cure period,  Tenant is
authorized to collect, settle and compromise,  in its discretion,  the amount of
any Net Award and  Landlord  shall be entitled to join  therein.  If an Event of
Default exists beyond any applicable  notice and cure period,  only Landlord and
Lender are authorized to collect,  settle and compromise,  in their  discretion,
the amount of any Net Award and Tenant shall not be entitled to participate with
Landlord and Lender in any Condemnation  proceeding or negotiations under threat
thereof and to contest the Condemnation or the amount of the Net Award therefor.
No  agreement   with  any  condemnor  in  settlement  or  under  threat  of  any
Condemnation  shall be made by Tenant  without  the  prior  written  consent  of
Landlord and Lender.  Subject to the provisions of this Paragraph 17(b),  Tenant
hereby  irrevocably  assigns to Landlord any award or payment to which Tenant is
or may be entitled by reason of any Condemnation, whether the same shall be paid
or payable for Tenant's leasehold  interest hereunder or otherwise;  but nothing
in this Lease shall impair  Tenant's right to any award or payment on account of
Tenant's trade fixtures,  equipment or other tangible property which is not part
of the  Equipment,  moving  expenses or loss of business,  if available,  to the
extent  that and so long as (i) Tenant  shall  have the right to make,  and does
make, a separate claim  therefor  against the condemnor and (ii) such claim does
not in any way  reduce  either  the  amount of the award  otherwise  payable  to
Landlord for the  Condemnation of Landlord's fee interest in the Leased Premises
or the amount of the award (if any) otherwise  payable for the  Condemnation  of
Tenant's  leasehold  interest  hereunder.  The  rights of  Landlord  under  this
Paragraph  17(b)  shall also be extended to Lender if and to the extent that any
Mortgage so provides.
<PAGE>

(c) If any  Casualty  (whether or not insured  against) or Partial  Condemnation
shall occur,  this Lease shall continue,  notwithstanding  such event, and there
shall be no  abatement  or  reduction  of any  Monetary  Obligations,  except as
provided in Paragraph  17(d) and 19(c).  Promptly  after any  Casualty,  Tenant,
shall commence and diligently continue to restore the Leased Premises (including
the Equipment) to substantially the same size, layout, utility, value, condition
and character as existed  immediately  prior to such event  (assuming the Leased
Premises to have been in the condition  required by this Lease) and otherwise as
required in Paragraphs 12 and 13(b).  Promptly  after any Partial  Condemnation,
Tenant shall commence and diligently  continue to restore the Leased Premises as
nearly as possible to their value,  condition and character immediately prior to
such event (assuming the Leased Premises to have been in the condition  required
by this Lease) and otherwise as required in Paragraphs 12 and 13(b).  So long as
no Event of Default exists beyond any applicable notice and cure period, the Net
Award shall be paid by Landlord  to Tenant and Tenant  shall  restore the Leased
Premises in accordance  with the  requirements  of this Paragraph and Paragraphs
12(a)  and  13(b) of this  Lease,  and the  amount  of such Net Award so paid to
Tenant shall constitute the Restoration  Fund, shall be held in escrow by Tenant
and not commingled with any other funds of Tenant, and subject to the provisions
of Paragraphs  19(b) and 19(c) hereof.  If an Event of Default exists beyond any
applicable notice and cure period, any Net Award shall (unless such Condemnation
resulting in the Net Award is a Termination Event) be made available by Landlord
(or  Lender,  if  required  by the  terms of any  Mortgage)  to  Tenant  for the
restoration of any of the Leased Premises pursuant to and in accordance with the
provisions of Paragraph 19 hereof.  If any  Condemnation  which is not a Partial
Condemnation  shall occur,  Tenant shall comply with the terms and conditions of
Paragraph 18. Notwithstanding  anything to the contrary contained herein, in the
event of any restoration of the Leased Premises  hereunder,  Tenant shall,  upon
notice from Landlord,  be required to hire an independent  general contractor to
perform the restoration of the Leased Premises.

(d) In the event of a  Requisition  of any of the  Leased  Premises,  if any Net
Award payable by reason of such  Requisition  is (i) retained by Landlord,  each
installment of Basic Rent payable on or after the date on which the Net Award is
paid to Landlord shall be reduced by a fraction,  the denominator of which shall
be the total  amount of all Basic Rent due from such date to and  including  the
last Basic Rent Payment  Date for the then  existing  Term and the  numerator of
which shall be the amount of such Net Award  retained by Landlord,  or (ii) paid
to Lender,  then each  installment  of Basic Rent  thereafter  payable  shall be
reduced in the same amount and for the same period as payments are reduced under
the Note  until  such Net Award has been  applied  in full or until the Term has
expired, whichever first occurs.

18.               Termination Events.

(a) If (i) the  entire  Leased  Premises  shall be taken by a Taking or (ii) any
substantial  portion of the Leased  Premises  shall be taken by a Taking and, in
such case,  Tenant  certifies  and  covenants  to Landlord  that it will forever
abandon  operations at the Leased Premises (each of the events  described in the
above clauses (i) and (ii) shall  hereinafter  be referred to as a  "Termination
Event"),  then (x) Tenant  shall be  obligated,  within  thirty  (30) days after
Tenant receives a Condemnation Notice, to give to Landlord written notice of the
Tenant's  option to terminate  this Lease (a  "Termination  Notice") in the form
described in Paragraph 18(b).
<PAGE>

(b) A  Termination  Notice  shall  contain (i) notice of Tenant's  intention  to
terminate this Lease on the first Basic Rent Payment Date which  occurring after
the Fair  Market  Value  Date  (the  "Termination  Date"),  (ii) a  binding  and
irrevocable offer of Tenant to pay to Landlord the Termination  Amount and (iii)
if the  Termination  Event is an event  described  in Paragraph  18(a)(ii),  the
certification and covenants described therein and a certified  resolution of the
Board of Directors of Tenant authorizing the same. Promptly upon the delivery to
Landlord  of a  Termination  Notice,  Landlord  and  Tenant  shall  commence  to
determine the Fair Market Value.

(c) If Landlord  shall  reject such offer to  terminate  this Lease  pursuant to
Paragraph  18(b)  above by  written  notice  to Tenant  (a  "Rejection"),  which
Rejection  shall  contain the written  consent of Lender,  not later than thirty
(30) days following the Fair Market Value Date,  then this Lease shall terminate
on the Termination Date; provided that, if Tenant has not satisfied all Monetary
Obligations and all other  obligations  and  liabilities  under this Lease which
have  arisen  on or  prior to the  Termination  Date  (collectively,  "Remaining
Obligations") on the Termination Date, then Landlord may, at its option,  extend
the date on which this Lease may  terminate to a date which is no later than the
first Basic Rent  Payment  Date after the  Termination  Date on which Tenant has
satisfied all Remaining  Obligations.  Upon such termination (i) all obligations
of Tenant hereunder shall terminate except for any Surviving  Obligations,  (ii)
Tenant  shall  immediately  vacate  and shall have no  further  right,  title or
interest  in or to any of the Leased  Premises  and (iii) the Net Award shall be
retained  by  Landlord.  Notwithstanding  anything to the  contrary  hereinabove
contained,  if Tenant shall have received a Rejection and, on the date when this
Lease would  otherwise  terminate  as provided  above,  Landlord  shall not have
received  the full amount of the Net Award  payable by reason of the  applicable
Termination   Event,  then  the  date  on  which  this  Lease  is  to  terminate
automatically  shall be extended to the earlier to occur of (A) the second Basic
Rent Payment Date after the scheduled  Termination Date and (B) first Basic Rent
Payment  Date after the receipt by Landlord of the full amount of the Net Award;
provided  that, if Tenant has not satisfied  all Remaining  Obligations  on such
date, then Landlord may, at its option,  extend the date on which this Lease may
terminate  to a date which is no later than the first  Basic Rent  Payment  Date
after such date on which Tenant has satisfied all such Remaining Obligations.

(d) Unless  Tenant shall have  received a Rejection not later than the thirtieth
(30th) day following the Fair Market Value Date,  Landlord shall be conclusively
presumed  to have  accepted  such  offer.  If such offer is accepted by Landlord
then,  on the  Termination  Date,  Tenant shall pay to Landlord the  Termination
Amount and all Remaining Obligations and, if requested by Tenant, Landlord shall
(i) convey to Tenant the Leased Premises or the remaining  portion  thereof,  if
any, and (ii) pay to or assign to Tenant  Landlord's  entire  interest in and to
the Net Award, all in accordance with Paragraph 20.

19.               Restoration.

(a) If any  monetary  or  material  non-monetary  Event of  Default  shall  have
occurred and then be continuing  beyond any  applicable  notice and cure period,
Landlord (or Lender if required by any  Mortgage)  shall hold the Net Award in a
fund (the  "Restoration  Fund") and disburse  amounts from the Restoration  Fund
only in accordance with the following conditions:
<PAGE>

(i)  prior  to  commencement  of  restoration,  (A) the  architects,  contracts,
contractors,  plans  and  specifications  for the  restoration  shall  have been
approved  by  Landlord,  (which  approved  shall not be  unreasonably  withheld,
conditioned  or  delayed)  (B)  Landlord  and  Lender  shall  be  provided  with
mechanics' lien insurance (if available) and acceptable  performance and payment
bonds which insure  satisfactory  completion of and payment for the restoration,
are in an amount and form and have a surety  acceptable  to  Landlord,  and name
Landlord and Lender as additional dual obligees,  and (C) appropriate waivers of
mechanics' and materialmen's  liens shall have been filed if permitted under the
Laws of the State;

(ii) at the time of any disbursement, no monetary or material non-monetary Event
of Default shall exist and no mechanics' or materialmen's  liens shall have been
filed against any of the Leased Premises and remain undischarged of record;

(iii)  disbursements  shall be made by Landlord (or Lender) from time to time in
an  amount  not  exceeding  the  cost  of the  work  completed  since  the  last
disbursement,  promptly  upon receipt of (A)  satisfactory  evidence,  including
architects' certificates,  of the stage of completion,  the estimated total cost
of  completion  and  performance  of the work to date in a good and  workmanlike
manner in accordance with the contracts,  plans and specifications,  (B) waivers
of liens,  (C) a  satisfactory  bringdown of title  insurance and (D) other such
evidence of cost and payment  reasonably  necessary  for Landlord to verify that
the  amounts  disbursed  from  time  to time  are  represented  by work  that is
completed,  in place and free and clear of  mechanics'  and  materialmen's  lien
claims;

(iv) each request for  disbursement  shall be  accompanied  by a certificate  of
Tenant,  signed  by  the  president,   a  vice  president  or  other  authorized
representative of Tenant having sufficient  familiarity with the Leased Premises
and the work,  describing  the work for which payment is requested,  stating the
cost incurred in connection  therewith,  stating that Tenant has not  previously
received  payment for such work and, upon  completion of the work,  also stating
that the work has been fully  completed  and  complies,  to the best of Tenant's
knowledge, with the applicable requirements of this Lease;

(v)  Landlord  may retain ten percent  (10%) of the  restoration  fund until the
restoration is fully completed;

(vi) if the Restoration Fund is held by Landlord, the Restoration Fund shall not
be  commingled  with  Landlord's  other funds and shall bear  interest at a rate
agreed to by Landlord and Tenant; and

(vii) such other reasonable conditions as Landlord or Lender may impose.
<PAGE>

(b) Prior to commencement of restoration and at any time during restoration,  if
the estimated  cost of  completing  the  restoration  work free and clear of all
liens, as reasonably determined by Landlord, exceeds the amount of the Net Award
available for such restoration,  the amount of such excess shall, upon demand by
Landlord, be paid by Tenant to Landlord to be added to the Restoration Fund. Any
sum so added by Tenant which remains in the Restoration  Fund upon completion of
restoration shall be refunded to Tenant.  For purposes of determining the source
of funds with respect to the disposition of funds remaining after the completion
of  restoration,  the Net Award  shall be deemed  to be  disbursed  prior to any
amount added by Tenant.

(c) If any  sum  remains  in  the  Restoration  Fund  (after  completion  of the
restoration  and  any  refund  to  Tenant   pursuant  to  Paragraph   19(b),  if
applicable),  such sum (the  "Remaining  Sum")  shall be  retained by or paid to
Landlord or, if required by a Note or Mortgage, paid by Landlord to a Lender. If
the Remaining Sum is (i) retained by or paid to Landlord,  each  installment  of
Basic  Rent  payable  on or after  the  Retention  Date  shall be  reduced  by a
fraction,  the  denominator of which shall be the total amount of all Basic Rent
due from such date to and  including  the last Basic Rent  Payment  Date for the
then existing  Term and the  numerator of which shall be the  Remaining  Sum, or
(ii) paid to Lender,  then each  installment  of Basic Rent  thereafter  payable
shall be reduced in the same  amount as payments  are reduced  under any Note if
the Loan  corresponding to such Note is reamortized to reflect such payment,  in
each case until such  Remaining  Sum has been  applied in full or until the Term
has expired,  whichever  occurs  first.  Upon the  expiration  of the Term,  any
portion of the  Remaining Sum which has not been so applied shall be retained by
Landlord.

20. Procedures Upon Purchase.

(a) If the Leased  Premises is purchased by Tenant  pursuant to any provision of
this Lease,  Landlord  need not convey any better title  thereto than that which
was conveyed to Landlord, and Tenant shall accept such title, subject,  however,
to  the  Permitted   Encumbrances  and  to  all  other  liens,   exceptions  and
restrictions  on,  against or relating to any of the Leased  Premises and to all
applicable  Laws, but free of the lien of and security  interest  created by any
Mortgage or Assignment  and liens,  exceptions and  restrictions  on, against or
relating to the Leased  Premises  which have been created by or resulted  solely
from acts or omissions of Landlord after the date of this Lease, unless the same
are Permitted  Encumbrances or customary utility easements benefiting the Leased
Premises (created with the concurrence of Tenant) or were otherwise created with
the  concurrence  of Tenant or as a result of a  default  by Tenant  under  this
Lease.

(b) Upon the date fixed for any such purchase of the Leased Premises pursuant to
any  provision of this Lease (any such date the "Purchase  Date"),  Tenant shall
pay to Landlord, or to any Person to whom Landlord directs payment, the Relevant
Amount therefor  specified  herein, in Federal Funds, less any credit of the Net
Award received and retained by Landlord or a Lender allowed against the Relevant
Amount,  and Landlord  shall deliver to Tenant (i) an Oregon  statutory  special
warranty deed which  describes the premises being conveyed and conveys the title
thereto as provided in Paragraph 20(a),  (ii) such other instruments as shall be

<PAGE>

necessary to transfer to Tenant or its designee any other property (or rights to
any Net Award not yet received by Landlord or a Lender) then required to be sold
by Landlord to Tenant pursuant to this Lease and (iii) any Net Award received by
Landlord,  not credited to Tenant against the Relevant Amount and required to be
delivered by Landlord to Tenant  pursuant to this Lease;  provided,  that if any
Monetary  Obligations  remain outstanding on such date, then Landlord may deduct
from  the Net  Award  the  amount  of such  Monetary  Obligations;  and  further
provided,  that if any  event  has  occurred  which,  in  Landlord's  reasonable
judgment,  is likely to subject any Indemnitee to any liability  which Tenant is
required to indemnify  against pursuant to Paragraph 15, then an amount shall be
deducted  from the Net  Award  which,  in  Landlord's  reasonable  judgment,  is
sufficient  to satisfy  such  liability,  which  amount shall be deposited in an
escrow account with a financial institution reasonably  satisfactory to Landlord
and Tenant  pending  resolution of such matter.  If, on the Purchase  Date,  the
total amount of any Monetary  Obligations  outstanding exceeds the Net Award, if
any,  payable to Tenant by  Landlord,  then Tenant  shall pay to Landlord on the
Purchase Date the amount of such Monetary Obligations in excess of any Net Award
received  and  retained by Landlord (or  Lender).  Upon the  completion  of such
purchase,  this Lease and all obligations  and  liabilities of Tenant  hereunder
shall terminate, except any Surviving Obligations.

(c)  If the  completion  of  such  purchase  shall  be  delayed  after  (i)  the
Termination  Date, in the event of a purchase  pursuant to Paragraph 18 or, (ii)
the date scheduled for such purchase, in the event of a purchase under any other
provision of this Lease then (x) Rent shall continue to be due and payable until
completion  of such  purchase and (y) at  Landlord's  sole  option,  Fair Market
Value, if applicable,  shall be redetermined  and the Relevant Amount payable by
Tenant  pursuant to the applicable  provision of this Lease shall be adjusted to
reflect such redetermination.

(d) Any prepaid  Monetary  Obligations  paid to Landlord shall be prorated as of
the Purchase Date, and the prorated unapplied balance shall be deducted from the
Relevant  Amount  due  to  Landlord;  provided,  that  no  apportionment  of any
Impositions shall be made upon any such purchase.

21. Assignment and Subletting; Prohibition against Leasehold Financing.

(a) (i) Except as expressly set forth below in this Paragraph 21, Tenant may not
assign this Lease,  voluntarily or  involuntarily,  whether by operation of law,
merger,  consolidation or otherwise (it being agreed that the aggregate transfer
or  ownership  of 50% or more of the  Voting  Stock of  Tenant by or to a Person
other than the  Guarantor or a  majority-owned  subsidiary  of  Guarantor  shall
constitute an assignment of this Lease), or sublet any of the Leased Premises at
any time to any other  Person  without the prior  written  consent of  Landlord,
which consent, may be withheld by Landlord in its sole discretion,  and any such
purported sublease or assignment in violation of this Paragraph 21 shall be null
and void.

(ii) Notwithstanding the provisions of Paragraph (a)(i) above, Tenant shall have
the right,  upon not less than thirty (30) days prior written notice to Landlord
and Lender,  with no consent of Landlord or Lender  being  required or necessary
("Preapproved Assignment") to assign this Lease by operation of law or otherwise
to (i) any Person that is, and at all times  during the Term  continues to be, a
majority-owned  subsidiary of Tenant or Guarantor  first named herein or (ii) to
any other Person,  so long as (A) the Guarantor  first named herein  remains the

<PAGE>

guarantor under the Guaranty,  or (B) the successor to Guarantor or the assignee
of the Guaranty  satisfies the Fixed Charge Ratio,  Total  Debt/EBITDA Ratio and
Minimum  Consolidated  Net Worth  covenants  set forth in  Exhibit E hereto  (as
reflected on its most recently  published  audited annual  financial  statements
immediately  preceding the date of the proposed  assignment) or (C) the proposed
assignee  satisfies the Fixed Charge Ratio,  Total Debt/EBITDA Ratio and Minimum
Consolidated  Net Worth covenants set forth in Exhibit E hereto (as reflected on
its most recently  published  annual audited  financial  statements  immediately
preceding the date of the proposed  assignment (each such Person, a "Preapproved
Assignee")

(iii) If Tenant  desires to assign this Lease,  whether by  operation  of law or
otherwise,  to  a  Person  ("Non-Preapproved  Assignee")  who  would  not  be  a
Preapproved Assignee ("Non-Preapproved  Assignment") then Tenant shall, not less
than  sixty  (60)  days  prior  to the  date  on  which  it  desires  to  make a
Non-Preapproved Assignment,  submit to Landlord and Lender information regarding
the following with respect to the Non-Preapproved  Assignee  (collectively,  the
"Review  Criteria"):  (A) credit,  (B) capital  structure,  (C) management,  (D)
operating history,  (E) proposed use of the Leased Premises and (F) risk factors
associated with the proposed use of the Leased  Premises by the  Non-Preapproved
Assignee,  taking into account factors such as environmental  concerns,  product
liability and the like.  Landlord and Lender shall review such  information  and
shall  approve or  disapprove  the  Non-Preapproved  Assignee  no later than the
thirtieth (30th) day following receipt of all such information, and Landlord and
Lender  shall be deemed to have acted  reasonably  in  granting  or  withholding
consent  if such  grant or  disapproval  is based on their  review of the Review
Criteria   applying   reasonable  and  prudent   business   judgment  under  the
circumstances.

(iv) If Landlord shall  disapprove the  Non-Preapproved  Assignment by notice to
Tenant,  given  within  thirty (30) days  following  receipt of the  information
described in the foregoing Paragraph 21(a)(iii), then this Lease shall remain in
full force and effect and unmodified. Nothing provided herein shall constitute a
waiver by Landlord of the  obligation of Tenant to comply with the  requirements
of Paragraph  21(a)(iii)  if a  subsequent  Non-Preapproved  Assignment  arises.
Except  as set  forth  in  Paragraph  21  (a)  (v)  below,  no  approval  of any
Non-Preapproved  Assignment  shall be effective for any purpose unless consented
to in writing by Lender.

(v) If  Landlord  shall have  failed or refused  to  approve or  disapprove  any
Non-Preapproved Assignment by notice to Tenant on or before the thirtieth (30th)
day  following  receipt of the  information  described in  Paragraph  21(a)(iii)
above,  then Tenant shall be entitled to deliver a notice to Landlord so stating
such  failure  or  refusal  and,  if  Landlord  shall then fail to so approve or
disapprove such Non-Preapproved  Assignment within three (3) business days after
receipt of Tenant's  notice,  Landlord shall be  conclusively  be deemed to have
consented to such Non-Preapproved Assignment; provided that, no Event of Default
shall then have occurred and be continuing.
<PAGE>

(vi) If Tenant  assigns  all its  rights and  interest  under  this  Lease,  the
assignee under such  assignment  shall  expressly  assume all the obligations of
Tenant hereunder,  actual or contingent,  including  obligations of Tenant which
may  have  arisen  on or  prior to the  date of such  assignment,  by a  written
instrument delivered to Landlord at the time of such assignment.

(b)  Notwithstanding the provisions of Paragraph (a)(i) above, Tenant shall have
the right, upon thirty (30) days prior written notice to Landlord and Lender, to
enter into one or more  subleases  (i) to any  Person  that is, and at all times
during  the Term  continues  to be, a  majority-owned  subsidiary  of  Tenant or
Guarantor  first named  herein or (ii) to any other  Person,  so long as (A) the
Guarantor  first named herein remains the guarantor  under the Guaranty,  or (B)
the successor to Guarantor, or the assignee of the Guaranty, satisfies the Fixed
Charge  Ratio,  Total  Debt/EBITDA  Ratio  and  Minimum  Consolidated  Net Worth
covenants  set forth in  Exhibit E hereto  (as  reflected  on its most  recently
published audited annual financial statements  immediately preceding the date of
the proposed  subletting)  or (C) the  proposed  subtenant  satisfies  the Fixed
Charge  Ratio,  Total  Debt/EBITDA  Ratio  and  Minimum  Consolidated  Net Worth
covenants  set forth in  Exhibit E hereto  (as  reflected  on its most  recently
published annual audited financial statements  immediately preceding the date of
the proposed subletting (each, a "Preapproved Sublet"). Other than pursuant to a
Preapproved  Sublet,  at no time during the Term shall  subleases  for more than
twenty-five percent (25%) of the gross space in the Leased Premises be permitted
without the prior written consent of Landlord, which consent shall be granted or
withheld  based on a review of the proposed  sublessee's  management,  operating
history,  proposed use of the Leased  Premises and risk factors  associated with
the proposed use of the Leased Premises by such proposed sublessee,  taking into
account factors such as environmental concerns,  product liability and the like,
in each case, to the extent same relate to the proposed  sublessee and the terms
of the proposed sublease.  Landlord and Lender shall review such information and
shall  approve  or  disapprove  the such  proposed  sublessee  no later than the
thirtieth (30th) day following receipt of all such information, and Landlord and
Lender  shall be deemed to have acted  reasonably  in  granting  or  withholding
consent if such grant or  disapproval  is based on their review of the foregoing
factors applying reasonable and prudent business judgment.

(c) If  Landlord  shall have  failed or refused  to  approve or  disapprove  any
Non-Preapproved Sublet by notice to Tenant on or before the thirtieth (30th) day
following  receipt of the information  described in Paragraph 21(b) above,  then
Tenant shall be entitled to deliver a notice to Landlord so stating such failure
or refusal  and, if Landlord  shall then fail to so approve or  disapprove  such
Non-Preapproved  Sublet within three (3) business days after receipt of Tenant's
notice,  Landlord  shall be  conclusively  be deemed to have  consented  to such
Non-Preapproved  Sublet;  provided  that,  no Event of  Default  shall then have
occurred and be continuing.
<PAGE>

(d) With respect to any  Preapproved  Assignment or Preapproved  Sublet,  Tenant
shall provide to Landlord in advance of the effective date of such assignment or
subletting  information  reasonably  required by Landlord to establish  that any
proposed Preapproved Assignment or Preapproved Sublet satisfies the criteria set
forth above.  Each sublease of any of the Leased  Premises  shall be subject and
subordinate  to the  provisions  of this  Lease.  No  assignment  (other  than a
Pre-Approved Assignment to a Person meeting the Financial Covenants set forth in
Paragraphs  2(a),  (b), (c) of Exhibit E) or sublease  made as permitted by this
Paragraph 21 shall affect or reduce any of the  obligations of Tenant  hereunder
or Guarantor under the Guaranty, and all such obligations shall continue in full
force and effect as  obligations  of a  principal  and not as  obligations  of a
guarantor,  as if no  assignment  or  sublease  had  been  made  (other  than  a
Pre-Approved Assignment to a Person meeting the Financial Covenants set forth in
Paragraphs  2(a), (b), (c) of Exhibit E). No assignment or sublease shall impose
any additional obligations on Landlord under this Lease.

(e) Tenant  shall,  within ten (10) days after the execution and delivery of any
assignment or sublease, whether or not Landlord's consent is required, deliver a
duplicate  original  copy  thereof  to  Landlord  which,  in  the  event  of  an
assignment, shall be in recordable form.

(f) As security for  performance  of its  obligations  under this Lease,  Tenant
hereby grants,  conveys and assigns to Landlord all right, title and interest of
Tenant in and to all  subleases  now in existence or hereafter  entered into for
any or all of the Leased  Premises,  any and all extensions,  modifications  and
renewals thereof and all rents,  issues and profits  therefrom.  Landlord hereby
grants to  Tenant a license  to  collect  and enjoy all rents and other  sums of
money  payable  under any  sublease  of any of the  Leased  Premises,  provided,
however,  that Landlord  shall have the absolute right upon notice to Tenant and
any  subtenants at any time  following the  occurrence of an Event of Default to
revoke said  license  and to collect  such rents and sums of money and to retain
the same.  Tenant  shall not  consent  to,  cause or allow any  modification  or
alteration of any of the terms,  conditions or covenants of any of the subleases
or the  termination  thereof,  without the prior  written  approval of Landlord,
which consent shall not be  unreasonably  withheld,  nor shall Tenant accept any
rents more than thirty  (30) days in advance of the  accrual  thereof nor do nor
permit  anything to be done, the doing of which,  nor omit or refrain from doing
anything,  the omission of which, will or could be a breach of or default in the
terms of any of the subleases.

(g) Tenant  shall not have the power to mortgage,  pledge or otherwise  encumber
its interest  under this Lease or any sublease of the Leased  Premises,  and any
such  mortgage,  pledge or  encumbrance  made in violation of this  Paragraph 21
shall be void and of no force and effect.

(h)  Landlord  may sell or  transfer  the Leased  Premises  at any time  without
Tenant's consent to any third party (each a "Third Party Purchaser");  provided,
however,  that  Landlord  shall not be  permitted to sell or transfer the Leased
Premises (or any interest  therein) to any  competitor of Tenant or Guarantor as
identified in the most recently filed 10-K of the  Guarantor,  without the prior
written consent of Tenant. In the event of any such permitted  transfer,  Tenant
shall  attorn to any Third  Party  Purchaser  as  Landlord so long as such Third
Party Purchaser and Landlord  notify Tenant in writing of such transfer.  At the
request of Landlord, Tenant will execute such documents confirming the agreement
referred to above and such other agreements as Landlord may reasonably  request,
provided that such agreements do not increase the liabilities and obligations of
Tenant hereunder.
<PAGE>

22. Events of Default.

(a) The occurrence of any one or more of the following (after  expiration of any
applicable cure period as provided in Paragraph 22(b)) shall, at the sole option
of Landlord, constitute an "Event of Default" under this Lease:

(i) a  failure  by  Tenant  to make  any  payment  of any  Monetary  Obligation,
regardless of the reason for such failure;

(ii) a failure by Tenant duly to perform and  observe,  or a violation or breach
of, any other  provision  hereof not  otherwise  specifically  mentioned in this
Paragraph 22(a);

(iii)  any   representation  or  warranty  made  by  Tenant  herein  or  in  any
certificate,  demand or request made pursuant hereto proves to be incorrect, now
or hereafter, in any material respect;

(iv) a default  beyond any  applicable  cure  period or at maturity by Tenant or
Guarantor  in any  payment of  principal  or  interest  on any  obligations  for
borrowed money having an original principal balance of $3,000,000 or more in the
aggregate,  or in  the  performance  of any  other  provision  contained  in any
instrument under which any such obligation is created or secured  (including the
breach of any covenant thereunder), (x) if such payment is a payment at maturity
or a final payment,  or (y) if an effect of such default is to cause,  or permit
any Person to cause, such obligation to become due prior to its stated maturity;

(v) a default by Tenant or Guarantor  beyond any  applicable  cure period in the
payment of rent under, or in the performance of any other material provision of,
any other lease or leases that have, in the aggregate,  rental  obligations over
the terms thereof of $3,000,000 or more if the Landlord  under any such lease or
leases commences to exercise its remedies thereunder;

(vi) a final,  non-appealable  judgment or judgments for the payment of money in
excess of  $3,000,000  in the  aggregate  shall be  rendered  against  Tenant or
Guarantor  and the same  shall  remain  undischarged  for a period of sixty (60)
consecutive days;

(vii) The breach of any financial Covenant contained in Exhibit E shall occur;

(viii) Tenant shall (A) voluntarily be adjudicated a bankrupt or insolvent,  (B)
seek or consent to the  appointment  of a receiver  or trustee for itself or for
the Leased Premises,  (C) file a petition seeking relief under the bankruptcy or
other similar laws of the United States, any state or any jurisdiction, (D) make
a general  assignment for the benefit of creditors,  or (E) be unable to pay its
debts as they mature;
<PAGE>

(ix) a court shall enter an order,  judgment or decree  appointing,  without the
consent  of  Tenant,  a  receiver  or  trustee  for it or for any of the  Leased
Premises or approving a petition  filed against  Tenant which seeks relief under
the  bankruptcy  or other  similar laws of the United  States,  any state or any
jurisdiction,  and such order,  judgment or decree shall remain  undischarged or
unstayed ninety (90) days after it is entered;

(x) the Leased Premises shall have been vacated (for a period in excess of sixty
(60) consecutive days) or abandoned;

(xi) Tenant shall be liquidated or dissolved or shall begin proceedings  towards
its liquidation or dissolution;

(xii) the estate or  interest of Tenant in any of the Leased  Premises  shall be
levied upon or attached in any  proceeding  and such estate or interest is about
to be sold or  transferred  or such process  shall not be vacated or  discharged
within sixty (60) days after it is made;

(xiii) a failure by Tenant to perform or observe,  or a violation  or breach of,
or a  misrepresentation  by Tenant under any provision of any  Assignment or any
other document between Tenant and Lender, if such failure,  violation, breach or
misrepresentation gives rise to a default beyond any applicable cure period with
respect to any Loan and,  as a result  thereof,  Lender  accelerates  the stated
maturity  date  of the  Loan or  commences  to  exercise  its  remedies  against
Landlord's interest in the Leased Premises;

(xiv) a failure by Tenant to  maintain in effect any other  material  license or
permit necessary for the use, occupancy or operation of the Leased Premises;

(xv) an Event of Default (as defined in the Guaranty) beyond any applicable cure
period shall occur under the Guaranty.

(b) No  notice  or  cure  period  shall  be  required  in any one or more of the
following  events:  (A) the  occurrence  of an Event of Default under clause (i)
(except as otherwise set forth below),  (iv), (v), (vi),  (vii),  (viii),  (ix),
(xi),  (xii),  (xiii) or (xv) of Paragraph  22(a); (B) the default consists of a
failure to pay Basic  Rent,  a failure  to provide  any  insurance  required  by
Paragraph 16 or an assignment or sublease entered into in violation of Paragraph
21; or (C) the  default  is such that any delay in the  exercise  of a remedy by
Landlord could reasonably be expected to cause irreparable harm to Landlord.  If
the default consists of the failure to pay any Monetary  Obligation under clause
(i) of Paragraph  22(a),  the applicable cure period shall be three (3) business
days from the date on which notice is given, but Landlord shall not be obligated
to give notice of, or allow any cure period for,  any such default more than one
(1) time within any Lease  Year.  If the  default  consists  of a default  under
clauses  (ii),  (iii),  (x) or (xiv) of Paragraph  22(a),  other than the events
specified in clauses (B) and (C) of the first sentence of this Paragraph  22(b),
the  applicable  cure  period  shall be thirty  (30) days from the date on which
notice is given or, if the default  cannot be cured  within such thirty (30) day
period and delay in the exercise of a remedy would not (in Landlord's reasonable
judgment)  cause any  material  adverse  harm to  Landlord  or any of the Leased
Premises,  the cure period shall be extended for the period required to cure the
default  (but  such  cure  period,  including  any  extension,  shall not in the
aggregate  exceed one hundred  twenty  (120) days),  provided  that Tenant shall
commence  to cure the  default  within the said thirty (30) day period and shall
actively,  diligently  and in good faith proceed with and continue the curing of
the default until it shall be fully cured.
<PAGE>

(c)  Notwithstanding  anything  in the  foregoing  paragraphs  (a) or (b) to the
contrary,  in the  event  any  owner or  holder  of any  senior  or  subordinate
indebtedness of either Tenant or Guarantor shall waive or consent to any breach,
violation,  default  or event of  default  under the terms of any  documents  or
instruments   evidencing,   securing,   or  executed  in  connection  with  such
indebtedness with respect to those matters set forth in subparagraph  (iv), (v),
(vi) and (vii),  Landlord  shall  waive or consent to the same;  provided,  such
consent or waiver  shall be upon  substantially  the same or a pari passu  basis
with such senior and/or subordinated lender, as applicable,  as to time periods,
payment and other material terms and conditions.

23. Remedies and Damages Upon Default.

(a) If an Event of Default shall have occurred and is continuing, Landlord shall
have the right, at its sole option, then or at any time thereafter,  to exercise
its  remedies  and to  collect  damages  from  Tenant  in  accordance  with this
Paragraph 23, in all events subject to, and to the fullest extent  permitted by,
applicable  Law,  without  demand upon or notice to Tenant  except as  otherwise
provided in Paragraph 22(b) and this Paragraph 23.

(i)  Whether  or not  Landlord  elects to  terminate  this  Lease and the estate
created  thereby,  Landlord may give Tenant  notice of  Landlord's  intention to
terminate  Tenant's right to possession of the Leased  Premises under this Lease
on a date  specified  in such  notice and upon such  date,  all rights of Tenant
hereunder  to the use and  possession  of the Leased  Premises  shall expire and
terminate. Upon such termination, Tenant shall immediately surrender and deliver
possession of the Leased  Premises to Landlord in accordance  with Paragraph 26.
If Tenant does not so surrender and deliver  possession of the Leased  Premises,
Landlord may re-enter and repossess the Leased  Premises,  with or without legal
process,  by  peaceably  entering the Leased  Premises and changing  locks or by
summary proceedings,  ejectment or any other lawful means or procedure.  Upon or
at any time after taking  possession  of the Leased  Premises,  Landlord may, by
peaceable  means or legal  process,  remove any Persons or  property  therefrom.
Landlord  shall  be under  no  liability  for or by  reason  of any such  entry,
repossession or removal.  Notwithstanding  such entry or repossession,  Landlord
may (A)  exercise  the remedy set forth in and collect the damages  permitted by
Paragraph  23(a)(iii) or (B) collect the damages set forth in Paragraph 23(b)(i)
or 23(b)(ii).

(ii) After  repossession of the Leased Premises pursuant to clause (i) above and
subject to  applicable  Law,  Landlord  shall have the right to relet any of the
Leased  Premises  to such tenant or  tenants,  for such term or terms,  for such
rent, on such  conditions  and for such uses as Landlord in its sole  discretion
may  determine,  and collect  and  receive  any rents  payable by reason of such
reletting.  Landlord may make such Alterations in connection with such reletting
as it may  deem  advisable  in its  sole  discretion.  Notwithstanding  any such
reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii).
<PAGE>

(iii)  Provided that Landlord  shall not have  repossessed  and relet the Leased
Premises under Paragraph 23(a)(ii) above,  Landlord may, to the extent permitted
by applicable Law, upon notice to Tenant,  require Tenant to make an irrevocable
offer to  terminate  this  Lease  upon  payment to  Landlord  of an amount  (the
"Default  Termination  Amount")  specified  in the next  sentence.  The "Default
Termination  Amount" shall be the greater of (A) the sum of the Acquisition Cost
and any  Prepayment  Premium which Landlord will be required to pay in prepaying
any Loan with the proceeds of the Default Termination Amount and (B) the greater
of (1)  the  sum of the  Fair  Market  Value  of the  Leased  Premises  and  any
Prepayment  Premium which Landlord will be required to pay in prepaying any Loan
with the proceeds of the Default  Termination  Amount and (2) an amount equal to
the Present Value of the entire Basic Rent from the date of such purchase to the
date on which the Term would expire,  less, in the case of (1) and (2) above, an
amount equal to the unamortized cost of any expenditures  properly classified as
capital  expenditures  under  GAAP made by Tenant  pursuant  to this  Lease with
respect to the roof, structural elements or foundation, or electrical,  plumbing
or HVAC  systems,  at the Leased  Premises.  Upon such notice to Tenant,  Tenant
shall be deemed to have made such offer and shall,  if  requested  by  Landlord,
within ten (10) business days  following  such request  deposit with Landlord as
payment against the Default Termination Amount the amount described in (A) above
and Landlord and Tenant shall promptly  commence to determine Fair Market Value.
Within thirty (30) days after the Fair Market Value Date,  Landlord shall accept
or reject such offer.  If Landlord  accepts such offer then, on the tenth (10th)
business  day after such  acceptance,  Tenant  shall pay to Landlord the Default
Termination  Amount,  less the amount of an deposit paid by Tenant in accordance
with the previous sentence,  and, at the request of Tenant, Landlord will convey
the Leased  Premises to Tenant or its designee in accordance  with Paragraph 20.
Any rejection by Landlord of such offer shall have no effect on any other remedy
Landlord may have under this Lease.

(iv) Landlord may, to the extent  permitted by applicable Law, declare by notice
to Tenant the entire Basic Rent (in the amount of Basic Rent then in effect) for
the remainder of the then current Term to be immediately due and payable. Tenant
shall  immediately pay to Landlord all such Basic Rent discounted to its Present
Value,  all accrued  Rent then due and unpaid,  all other  Monetary  Obligations
which are then due and unpaid and all Monetary Obligations which arise or become
due by reason of such Event of Default  (including any Costs of Landlord).  Upon
receipt by Landlord of all such accelerated Basic Rent and Monetary Obligations,
this Lease shall remain in full force and effect and Tenant shall have the right
to possession  of the Leased  Premises from the date of such receipt by Landlord
to the end of the  Term,  and  subject  to all  the  provisions  of this  Lease,
including  the  obligation  to pay all  increases in Basic Rent and all Monetary
Obligations  that  subsequently  become due, except that (A) no Basic Rent which
has been prepaid  hereunder shall be due thereafter during the said Term and (B)
Tenant shall have no option to extend or renew the Term.

(b) The  following  constitute  damages to which  Landlord  shall be entitled if
Landlord exercises its remedies under Paragraph 23(a)(i) or 23(a)(ii):
<PAGE>

(i) If Landlord exercises its remedy under Paragraph 23(a)(i) but not its remedy
under  Paragraph   23(a)(ii)  (or  attempts  to  exercise  such  remedy  and  is
unsuccessful  in reletting the Leased  Premises) or Paragraph  23(a)(iii)  then,
upon written demand from Landlord,  Tenant shall pay to Landlord,  as liquidated
and agreed final damages for Tenant's default and in lieu of all current damages
beyond the date of such demand (it being  agreed that it would be  impracticable
or  extremely  difficult  to fix the  actual  damages),  an amount  equal to the
Present Value of the excess, if any, of (A) all Basic Rent from the date of such
demand to the date on which the Term is  scheduled  to expire  hereunder  in the
absence of any earlier  termination,  re-entry or repossession over (B) the then
fair market  rental value of the Leased  Premises  for the same  period.  Tenant
shall  also pay to  Landlord  all of  Landlord's  Costs in  connection  with the
repossession  of the  Leased  Premises  and  any  attempted  reletting  thereof,
including  customary  brokerage  commissions,  reasonable  attorneys'  fees  and
expenses, employees' expenses, costs of Alterations and expenses and preparation
for reletting.

(ii) If Landlord  exercises its remedy under Paragraph  23(a)(i) or its remedies
under Paragraph 23(a)(i) and 23(a)(ii), then Tenant shall, until the end of what
would have been the Term in the  absence of the  termination  of the Lease,  and
whether or not any of the Leased  Premises  shall have been relet,  be liable to
Landlord  for,  and shall pay to  Landlord,  as  liquidated  and agreed  current
damages all  Monetary  Obligations  which  would be payable  under this Lease by
Tenant in the absence of such termination less the net proceeds,  if any, of any
reletting  pursuant to Paragraph  23(a)(ii),  after deducting from such proceeds
all of  Landlord's  Costs  (including  the items listed in the last  sentence of
Paragraph  23(b)(i)  hereof)  incurred in connection with such  repossessing and
reletting;  provided,  that if Landlord has not relet the Leased Premises,  such
Costs of Landlord  shall be  considered  to be Monetary  Obligations  payable by
Tenant.  Tenant shall be and remain liable for all sums aforesaid,  and Landlord
may recover such damages from Tenant and, to the extent  permitted by applicable
Law,  institute and maintain  successive  actions or legal  proceedings  against
Tenant for the  recovery of such  damages.  Nothing  herein  contained  shall be
deemed  to  require  Landlord  to wait to  begin  such  action  or  other  legal
proceedings until the date when the Term would have expired by its own terms had
there been no such Event of Default.

(c) Notwithstanding  anything to the contrary herein contained, in lieu of or in
addition to any of the foregoing remedies and damages, Landlord may exercise any
remedies  and  collect  any  damages  available  to it at law or in  equity.  If
Landlord is unable to obtain full  satisfaction  pursuant to the exercise of any
remedy,  it may pursue any other remedy  which it has  hereunder or at law or in
equity.

(d)  Landlord  shall not be required to  mitigate  any of its damages  hereunder
unless  required to by applicable Law. If any Law shall validly limit the amount
of any damages  provided  for herein to an amount  which is less than the amount
agreed to herein,  Landlord  shall be entitled to the maximum  amount  available
under such Law.

(e) No  termination  of this  Lease,  repossession  or  reletting  of the Leased
Premises,  exercise of any remedy or collection of any damages  pursuant to this
Paragraph 23 shall relieve Tenant of any Surviving Obligations.

(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD HEREUNDER, LANDLORD AND
TENANT EACH HEREBY WAIVES,  TO THE FULLEST EXTENT  PERMITTED BY APPLICABLE  LAW,
ANY RIGHT TO A TRIAL BY JURY.
<PAGE>

(g) Upon the  occurrence of any Event of Default,  Landlord shall have the right
(but no  obligation)  to perform any act  required of Tenant  hereunder  and, if
performance  of such act  requires  that  Landlord  enter the  Leased  Premises,
Landlord may enter the Leased Premises for such purpose.

(h) No failure of Landlord (i) to insist at any time upon the strict performance
of any provision of this Lease or (ii) to exercise any option,  right,  power or
remedy  contained in this Lease shall be construed as a waiver,  modification or
relinquishment  thereof. A receipt by Landlord of any sum in satisfaction of any
Monetary  Obligation with knowledge of the breach of any provision  hereof shall
not be  deemed a  waiver  of such  breach,  and no  waiver  by  Landlord  of any
provision hereof shall be deemed to have been made unless expressed in a writing
signed by Landlord.

(i) Tenant hereby waives and surrenders, for itself and all those claiming under
it,  including  creditors of all kinds,  (i) any right and privilege which it or
any of them may have under any present or future Law to redeem any of the Leased
Premises or to have a continuance of this Lease after  termination of this Lease
or of Tenant's  right of occupancy or possession  pursuant to any court order or
any provision  hereof,  and (ii) the benefits of any present or future Law which
exempts property from liability for debt or for distress for rent.

(j) Except as  otherwise  provided  herein,  all  remedies  are  cumulative  and
concurrent  and no remedy is exclusive of any other  remedy.  Each remedy may be
exercised at any time an Event of Default has occurred and is continuing and may
be  exercised  from time to time.  No remedy  shall be exhausted by any exercise
thereof.

24.  Notices.  All notices,  demands,  requests,  consents,  approvals,  offers,
statements and other instruments or  communications  required or permitted to be
given  pursuant to the provisions of this Lease shall be in writing and shall be
deemed to have been given and received for all purposes when delivered in person
or by Federal  Express or other reliable  24-hour  delivery  service or five (5)
business days after being  deposited in the United States mail, by registered or
certified mail,  return receipt  requested,  postage  prepaid,  addressed to the
other party at its address  stated above or when delivery is refused.  A copy of
any notice given by Tenant to Landlord shall  simultaneously  be given by Tenant
to Reed Smith Shaw & McClay LLP, 2500 One Liberty Place, Philadelphia, PA 19103,
Attention:  Chairman,  Real  Estate  Department.  A copy of any notice  given by
Landlord to Tenant  shall  simultaneously  be given by Landlord to (i)  Tenant's
General  Counsel,  at  PSC  Inc.,675  Basket  Road,  Webster,  New  York  14580,
Attention: Elizabeth J. McDonald , Esq. and to (ii) Boylan, Brown, Code, Fowler,
Vigdor and Wilson LLP, 2400 Chase Square,  Rochester, New York 14604, Attention:
Patrick  Malgieri,  Esq.  For the  purposes  of this  Paragraph,  any  party may
substitute  another address stated above (or  substituted by a previous  notice)
for its address by giving  fifteen  (15) days'  notice of the new address to the
other party, in the manner provided above.
<PAGE>

25. Estoppel Certificate. At any time upon not less than twenty (20) days' prior
written  request by either  Landlord or Tenant (the  "Requesting  Party") to the
other party (the "Responding  Party"), the Responding Party shall deliver to the
Requesting  Party a statement in writing,  executed by an authorized  officer of
the Responding Party,  certifying (a) that, except as otherwise specified,  this
Lease is unmodified  and in full force and effect,  (b) the dates to which Basic
Rent,  Additional  Rent and all other Monetary  Obligations  have been paid, (c)
that, to the knowledge of the signer of such certificate and except as otherwise
specified,  no default by either Landlord or Tenant exists  hereunder,  (d) such
other matters as the  Requesting  Party may reasonably  request  relating to the
status  of the  Lease  and/or  the  Leased  Premises,  and (e) if  Tenant is the
Responding Party that, except as otherwise  specified,  there are no proceedings
pending or, to the knowledge of the signer, threatened, against Tenant before or
by any  court or  administrative  agency  which,  if  adversely  decided,  would
materially  and  adversely  affect the  financial  condition  and  operations of
Tenant.  Any such  statements by the Responding  Party may be relied upon by the
Requesting  Party,  any Person whom the Requesting Party notifies the Responding
Party in its request for the Certificate is an intended recipient or beneficiary
of the  Certificate,  any  Lender  or  their  assignees  and by any  prospective
purchaser or mortgagee of any of the Leased Premises.  Any certificate  required
under this Paragraph 25 and delivered by Tenant shall state that, in the opinion
of each person signing the same, he has made such  examination or  investigation
as is necessary  to enable him to express an informed  opinion as to the subject
matter  of  such  certificate,  and  shall  briefly  state  the  nature  of such
examination or investigation.

26. Surrender.  Upon the expiration or earlier termination of this Lease, Tenant
shall  peaceably leave and surrender the Leased Premises to Landlord in the same
condition in which the Leased  Premises was at the  commencement  of this Lease,
except  as  repaired,  rebuilt,  restored,  altered,  replaced  or  added  to as
permitted or required by any  provision  of this Lease,  and except for ordinary
wear and tear and insured casualty. Upon such surrender, Tenant shall (a) remove
from the Leased  Premises all property which is owned by Tenant or third parties
other than Landlord and (b) repair any damage  caused by such removal.  Property
not so removed shall become the property of Landlord, and Landlord may, upon ten
(10) days prior  written  notice,  thereafter  cause such property to be removed
from the Leased  Premises.  The cost of removing and  disposing of such property
and  repairing any damage to any of the Leased  Premises  caused by such removal
shall be paid by Tenant  to  Landlord  upon  demand.  Landlord  shall not in any
manner or to any extent be obligated to reimburse  Tenant for any such  property
which becomes the property of Landlord pursuant to this Paragraph 26.

27. No Merger of Title. There shall be no merger of the leasehold estate created
by this Lease with the fee estate in any of the Leased Premises by reason of the
fact that the same  Person may acquire or hold or own,  directly or  indirectly,
(a) the leasehold  estate created hereby or any part thereof or interest therein
and (b) the fee  estate in any of the  Leased  Premises  or any part  thereof or
interest  therein,  unless  and until all  Persons  having any  interest  in the
interests  described  in (a) and (b) above  which are sought to be merged  shall
join in a written  instrument  effecting  such  merger and shall duly record the
same.
<PAGE>

28. Books and Records.

(a) Tenant shall keep adequate  records and books of account with respect to the
finances  and  business  of Tenant  generally  and with  respect  to the  Leased
Premises,  in accordance with generally accepted accounting  principles ("GAAP")
consistently  applied,  and shall permit Landlord and Lender by their respective
agents,  accountants and attorneys,  upon reasonable  notice to Tenant, to visit
and  inspect  the Leased and to  discuss  the  finances  and  business  with the
officers of Tenant, at such reasonable times as may be requested by Landlord. In
connection  with any visit to or  inspection  of the Leased  Premises,  Landlord
shall comply, and Landlord shall cause its agents to comply, with the reasonable
instructions and  requirements of Tenant,  and shall not interfere with Tenant's
use or occupancy of the Leased Premises,  and shall preserve the confidentiality
of any  materials,  information,  data and/or  operations  of or with respect to
Tenant and/or the Leased Premises.

(b) If at any time  neither  Tenant  nor  Guarantor  shall  be a public  company
subject to the  reporting  requirements  of the  Securities  and Exchange Act of
1934,  or if financial  statements  meeting the criteria set forth below are not
readily  available  to  Landlord  through  Edgar or an  alternative  on-line  or
internet  source or by other means without any material  cost to Landlord,  then
(i) Tenant  shall  deliver or cause to be  delivered  to Landlord  and to Lender
within  ninety  (90)  days of the  close of each  fiscal  year,  annual  audited
consolidated  financial  statements  of  Guarantor  and  Tenant  prepared  by  a
nationally  recognized firm of independent certified public accountants and (ii)
Tenant shall also furnish or cause to be furnished to Landlord within forty-five
(45)  days  after  the end of each of the  three  remaining  quarters  unaudited
financial  statements and all other quarterly reports of Tenant or Guarantor (as
applicable),   certified  by  Tenant's  or  Guarantor's  (as  applicable)  chief
financial  officer,  and all filings,  if any, of Form 10-K, Form 10-Q and other
required  filings with the  Securities and Exchange  Commission  pursuant to the
provisions of the Securities and Exchange Act of 1934, as amended,  or any other
Law. All annual  financial  statements shall be accompanied (i) by an opinion of
said accountants stating that (A) there are no qualifications as to the scope of
the audit and (B) the audit was  performed in  accordance  with GAAP and (ii) by
the  affidavit of the  president or a vice  president of Tenant or Guarantor (as
applicable),  dated  within  five (5) days of the  delivery  of such  statement,
stating that (C) the affiant knows of no Event of Default,  or event which, upon
notice or the passage of time or both,  would  become an Event of Default  which
has occurred and is continuing  hereunder or, if any such event has occurred and
is continuing,  specifying  the nature and period of existence  thereof and what
action Tenant has taken or proposes to take with respect  thereto and (D) except
as otherwise specified in such affidavit, that Tenant has fulfilled, to the best
of  affiant's  knowledge,  all of its  obligations  under this  Lease  which are
required to be fulfilled on or prior to the date of such affidavit.

29. Determination of Value.

(a) Whenever a  determination  of Fair Market Value is required  pursuant to any
provision  of this  Lease,  such  Fair  Market  Value  shall  be  determined  in
accordance with the following procedure:
<PAGE>

(i)  Landlord  and Tenant  shall  endeavor to agree upon such Fair Market  Value
within thirty (30) days after the date (the "Applicable Initial Date"") on which
(A) Tenant  provides  Landlord  with notice of its  intention to terminate  this
Lease and purchase the Leased  Premises  pursuant to Paragraph  18, (B) Landlord
provides  Tenant with notice of its intention to  redetermine  Fair Market Value
pursuant  to  Paragraph  20(c) or (C)  Landlord  provides  Tenant with notice of
Landlord's  intention to require Tenant to make an offer to terminate this Lease
pursuant to Paragraph  23(a)(iii).  Upon  reaching such  agreement,  the parties
shall execute an agreement setting forth the amount of such Fair Market Value.

(ii) If the parties shall not have signed such agreement within thirty (30) days
after the Applicable Initial Date, Tenant shall within fifty (50) days after the
Applicable  Initial Date select an appraiser  and notify  Landlord in writing of
the name, address and qualifications of such appraiser.  Within twenty (20) days
following  Landlord's  receipt of Tenant's  notice of the appraiser  selected by
Tenant,  Landlord  shall  select an  appraiser  and  notify  Tenant of the name,
address and qualifications of such appraiser. Such two appraisers shall endeavor
to agree upon Fair  Market  Value based on a written  appraisal  made by each of
them (and given by Landlord and Tenant to each other) as of the  Relevant  Date.
If such two appraisers  shall agree upon a Fair Market Value, the amount of such
Fair Market Value as so agreed shall be binding and conclusive upon Landlord and
Tenant.

(iii) If such two  appraisers  shall be unable to agree upon a Fair Market Value
within  twenty (20) days after the  selection of an appraiser by Landlord,  then
such  appraisers   shall  advise   Landlord  and  Tenant  of  their   respective
determination  of Fair Market Value and shall  select a third  appraiser to make
the  determination  of Fair Market Value.  The selection of the third  appraiser
shall be binding and conclusive upon Landlord and Tenant.

(iv) If such two appraisers  shall be unable to agree upon the  designation of a
third appraiser within ten (10) days after the expiration of the twenty (20) day
period  referred to in clause (iii) above,  or if such third  appraiser does not
make a  determination  of Fair Market  Value  within  twenty (20) days after his
selection,  then such third  appraiser  or a  substituted  third  appraiser,  as
applicable,  shall,  at the request of either party hereto,  be appointed by the
President or Chairman of the American  Arbitration  Association in New York, New
York.  The  determination  of Fair  Market  Value  made by the  third  appraiser
appointed  pursuant  hereto  shall be made  within  twenty  (20) days after such
appointment.

(v) If a third appraiser is selected,  Fair Market Value shall be the average of
the  determination  of Fair  Market  Value made by the third  appraiser  and the
determination of Fair Market Value made by the appraiser  (selected  pursuant to
Paragraph  29(a)(ii) hereof) whose determination of Fair Market Value is nearest
to that of the third  appraiser.  Such average  shall be binding and  conclusive
upon Landlord and Tenant.

(vi) All appraisers selected or appointed pursuant to this Paragraph 29(a) shall
(A) be  independent  qualified  MAI  appraisers  (B)  have no  right,  power  or
authority  to alter or modify the  provisions  of this  Lease,  (C)  utilize the
definition  of  Fair  Market  Value  hereinabove  set  forth  above,  and (D) be
registered in the State if the State provides for or requires such registration.
The Cost of the procedure described in this Paragraph 29(a) above shall be borne
entirely by Tenant.
<PAGE>

(b) If, by virtue of any delay (not caused  solely by the acts or  omissions  of
Landlord),  Fair Market Value is not determined by the expiration or termination
of the then current Term, then the date on which the Term would otherwise expire
or terminate  shall be extended to the date  specified  for  termination  in the
particular  provision of this Lease pursuant to which the  determination of Fair
Market Value is being made.

(c) In determining  Fair Market Value as defined in clause (b) of the definition
of Fair Market Value, the appraisers shall add (a) the Present Value of the Rent
for the  remaining  Term,  assuming the Term has been extended for all extension
periods  provided herein (with assumed  increases in the CPI to be determined by
the appraisers)  using a discount rate (which may be determined by an investment
banker retained by each appraiser) based on the  creditworthiness  of Tenant and
(b) the Present Value of the Leased  Premises as of the end of such Term (having
assumed the Term has been extended for all extension  periods provided  herein).
The appraisers shall further assume that no default then exists under the Lease,
that Tenant has complied (and will comply) with all provisions of the Lease, and
that Tenant has not violated (and will not violate) any of the Covenants.

30.  Non-Recourse  as to  Landlord.  Anything  contained  herein to the contrary
notwithstanding,  any claim based on or in respect of any  liability of Landlord
under this Lease shall be enforced  only  against  the Leased  Premises  and not
against  any  other  assets,  properties  or  funds  of (i)  Landlord,  (ii) any
director,  officer,  member,  general  partner,  shareholder,  limited  partner,
beneficiary, employee or agent of Landlord or any general partner of Landlord or
any of its  members  or general  partners  (or any legal  representative,  heir,
estate,  successor or assign of any thereof), (iii) any predecessor or successor
partnership or  corporation  (or other entity) of Landlord or any of its general
partners,  shareholders,  officers,  directors,  members,  employees  or agents,
either  directly  or through  Landlord or its  general  partners,  shareholders,
officers,  directors,  employees  or  agents  or any  predecessor  or  successor
partnership or corporation (or other entity), or (iv) any Person affiliated with
any of the  foregoing,  or any  director,  officer,  employee  or  agent  of any
thereof.
<PAGE>

31. Financing.

(a) Tenant agrees to pay,  within ten (10) days following  written  request from
Landlord,  the costs and expenses  incurred by Landlord in  connection  with the
financing of the initial Loan, including any "points" or commitment fees, survey
and title costs and the fees and expenses of  Landlord's  and  Lender's  counsel
but, not to exceed an aggregate  maximum of $70,000 and exclusive of the cost of
any "rate buydown". Tenant further agrees to pay all costs and expenses incurred
by Landlord in connection  with  Landlord's  purchase of the Leased Premises and
with  this  Lease,  including,  without  limitation,  the  cost  of  appraisals,
environmental reports, title insurance,  surveys, but specifically excluding the
legal fees and expenses of Landlord's counsel and the fees and expenses incurred
by Landlord  with  respect to any "due  diligence"  conducted by or on behalf of
Landlord.

(b) If Landlord desires to obtain or refinance any Loan,  Tenant shall negotiate
in good  faith  with  Landlord  concerning  any  request  made by any  Lender or
proposed Lender for changes or modifications in this Lease;  provided same shall
be at no cost to Tenant  in  connection  with any  refinancing  of any Loan.  In
particular,  Tenant  shall agree,  upon request of Landlord,  to supply any such
Lender  with such  notices  and  information  as Tenant is  required  to give to
Landlord  hereunder  and to extend the rights of Landlord  hereunder to any such
Lender and to consent to such  financing  if such  consent is  requested by such
Lender.  Tenant shall  provide any other  consent or statement and shall execute
any and all other  documents that such Lender  requires in connection  with such
financing,  including any environmental  indemnity  agreement and subordination,
non-disturbance and attornment agreement,  so long as the same do not materially
adversely  affect any right,  benefit or privilege of Tenant under this Lease or
materially increase any of Tenant's non-monetary  obligations or increase any of
Tenant's   monetary   obligations,   under  this  Lease.   Such   subordination,
nondisturbance  and attornment  agreement may require Tenant to confirm that (i)
Lender  and its  assigns  will not be liable for any  misrepresentation,  act or
omission of Landlord  and (ii) Lender and its assigns will not be subject to any
counterclaim,  demand or offset which Tenant may have against Landlord.  Nothing
herein shall be deemed to make Tenant liable to pay any Costs of Landlord or any
Lender in  connection  with  obtaining  or  refinancing  of any Loan,  except as
otherwise provided in Paragraph 31(a) above with respect to the initial Loan.

32.  Subordination,  Non-Disturbance  and  Attornment.  This Lease and  Tenant's
interest  hereunder  shall be  subordinate  to any  Mortgage  or other  security
instrument hereafter placed upon the Leased Premises by Landlord, and to any and
all advances made or to be made  thereunder,  to the interest  thereon,  and all
renewals, replacements and extensions thereof and Tenant agrees to attorn to and
recognize  the holder of such Mortgage as landlord in the event that such holder
succeeds to the interest of Landlord hereunder; provided that, any such Mortgage
or other security  instrument (or a separate  instrument in recordable form duly
executed by the holder of any such  Mortgage or other  security  instrument  and
delivered to Tenant)  shall  provide for the  recognition  of this Lease and all
Tenant's rights hereunder (including,  but not limited to, Tenant's right to the
continued and uninterrupted  peaceable use, occupancy,  enjoyment and possession
of the Leased Premises  notwithstanding  any default by Landlord under the terms
of a Note and/or Mortgage or the exercise by Lender of any remedy  thereunder or
any other loan documents, including, but not limited to, foreclosure) unless and
until an Event of Default shall have occurred and then be continuing or Landlord
shall  have  the  right to  terminate  this  Lease  pursuant  to any  applicable
provision hereof.
<PAGE>

33. Financial  Covenants.  Tenant hereby covenants and agrees to comply with all
the covenants and agreements described in Exhibit "E" hereto.

34. Tax Treatment;  Reporting.  Landlord and Tenant each  acknowledge  that each
shall treat this  transaction  as a true lease for state law  purposes and shall
report this transaction as a Lease for Federal income tax purposes.  For Federal
income tax purposes  each shall report this Lease as a true lease with  Landlord
as the owner of the Leased  Premises and  Equipment  and Tenant as the lessee of
such Leased Premises and Equipment including: (1) treating Landlord as the owner
of the property eligible to claim  depreciation  deductions under Section 167 or
168 of the Internal Revenue Code of 1986 (the "Code") with respect to the Leased
Premises and Equipment,  (2) Tenant  reporting its Rent payments as rent expense
under Section 162 of the Code,  and (3) Landlord  reporting the Rent payments as
rental income.

35. Financing Expansion.

(a) If  Tenant,  during  the Term of this  Lease,  desires  to  construct  a new
building  and  related   improvements   upon  the   Expansion   Parcel   ("Major
Alterations"),  then Tenant may, prior to the  commencement  of  construction of
such Major  Alterations,  make a written  request (a  "Financing  Request")  for
Landlord to reimburse the costs thereof (the "Alteration  Costs") to Tenant,  to
wit: cost of labor and materials,  financing fees, legal fees, architectural and
engineering fees,  survey,  title insurance and other normal and customary loan,
site  development and preparation or construction  costs.  Landlord shall notify
Tenant in writing of its  acceptance  or rejection of the  Financing  Request no
later than sixty (60) days after  Landlord's  receipt of the same.  If  Landlord
fails or refuses to accept or reject  Tenant's  Financing  Request  within  such
60-day period, Landlord shall be deemed to have rejected the same.

(b) Should  Landlord  agree to reimburse  such  Alteration  Costs,  Landlord and
Tenant shall enter into good faith  negotiations  regarding  the  execution  and
delivery of a written  agreement of modification of this Lease,  which agreement
shall provide, among other things, for the following:

(i) payment by Landlord  to Tenant of the  Alteration  Costs in full on the date
agreed by Landlord and Tenant or in  installment  payments as agreed by Landlord
and Tenant and  commensurate  with the  progress  of  construction  of the Major
Alterations;

(ii) an extension of the then current Term with respect  solely to the Expansion
Parcel for a period which, when added to the remainder of the then current Term,
equals fifteen (15) years (the  "Amortization  Period") and if Tenant so elects,
an  extension  of the then  current  Term with  respect to the  remainder of the
Leased Premises equal in duration to the Amortization Period;
<PAGE>

(iii) an  increase  in the annual  Basic Rent  payable  during the  Amortization
Period  to an  amount  sufficient  to  amortize  the  Alteration  Costs  ("Total
Financing") over the Amortization  Period at such rate of interest and upon such
other terms as shall be agreed upon between Landlord and Tenant, but which shall
be no less favorable  than the prevailing  interest rate and terms for unsecured
loans in a principal  amount equal to the Total  Financing  for  borrowers  with
credit ratings equivalent to that of Tenant's at the time in question;

(iv) provide a rate of return to Landlord on Landlord's equity investment in the
construction  of the Major  Alteration  on the  Expansion  Parcel (or the Leased
Premises,  if Tenant  elects to extend the Term of the Lease with respect to the
entire Leased Premises) equal to that enjoyed by Landlord hereunder  immediately
prior to such proposed increase in Basic Rent; and

(v) such  other  changes  and  amendments  to this  Lease  as may be  reasonably
necessary and  appropriate  in view of such payment of the  Alteration  Costs by
Landlord to Tenant.

(c) Tenant shall pay all Costs incurred by Landlord in connection  with any such
modification to this Lease and such financing.

(d)  To the  extent  that  the  terms  of the  Mortgage  or any  other  document
encumbering  any of the Leased  Premises  shall  require  the  consent of Lender
and/or the holder or holders of any  encumbrance  on any of the Leased  Premises
(the  "Encumbrancers")  to the addition or construction of any Major Alterations
or to the financing thereof by Landlord,  the rights and obligations of Landlord
and Tenant under  Paragraph 13 and this  Paragraph 35 are expressly  conditioned
upon Landlord's  obtaining,  prior to the commencement of any construction,  the
Encumbrancers' written consent to such construction and to Landlord's obtaining,
in the event  Landlord has  accepted  Tenant's  offer to accept  payment for the
Major  Alterations,  the  Encumbrancers'  written  consent  to  such  financing.
Landlord agrees to use its best efforts (exclusive of litigation) to obtain such
written consent as promptly as possible.

(e) If within  sixty (60) days after the date of the  Financing  Request is made
(such 60-day period,  the "Financing  Request Period"),  (i) Landlord and Tenant
acting in good faith are unable to reach  agreement  on the  Financing  Request,
(ii)  Landlord  is unable to obtain the  written  consent  of the  Encumbrancers
pursuant to paragraph  (d) of this  Section 35, or (iii)  Landlord and Lender do
not consent to the Major Alterations in accordance with this Section and Section
13 of this Lease Tenant shall, subject to the provisions of Paragraph 13 of this
Lease,  have the  right,  but not the  obligation,  to (A)  construct  the Major
Alterations  at Tenant's  sole cost and expense or (B)  purchase  the  Expansion
Parcel in accordance  with the provisions of Paragraph 36 below.  If Tenant does
not timely  exercise the option to purchase the Leased  Premises as set forth in
Paragraph 36 below and if Tenant elects to construct the Major Alterations,  the
construction of the Major  Alterations shall be performed in accordance with the
provisions  of  Paragraph  13  hereof  and the  Major  Alterations  shall be the
property of Landlord and part of the Leased Premises subject to this Lease.
<PAGE>

(f)  Nothing  contained  in this  Paragraph  35 shall  be  construed  to  modify
Paragraph 13 hereof,  and the provisions of Paragraph 12 and  subparagraphs  (i)
and (ii) of  Paragraph  13(a)  shall  apply  to all  Major  Alterations  made or
constructed  hereunder,  including the  requirement  for  Landlord's  consent to
Alterations.

(g) If the Landlord does not finance the construction of the new building on the
Expansion Parcel,  Tenant shall nevertheless  ensure that the following criteria
is met.  With  respect  to the new  building  and  related  improvements  on the
Expansion Parcel,  (i) the construction  quality and building materials utilized
shall be of comparable or greater  quality as the then existing  Improvements on
the  Leased  Premises,  (ii) same  shall not,  in the  reasonable  opinion of an
appraiser mutually  acceptable to Landlord and Tenant,  materially  diminish the
value of the  existing  Improvements,  (iii) same shall be completed in good and
workmanlike  manner and otherwise in compliance with the provisions of Paragraph
12 hereof, and (iv) same shall be built in conformance with all applicable laws,
regulations and ordinances  including but not limited to local zoning codes and,
if then required by prudent commercial lenders for similar properties located in
the vicinity of the Leased Premises,  commercially  reasonable  earthquake-proof
standards;  provided, however, that Landlord shall not have the right to approve
Lessee's plans and specifications.

36. Option to Purchase.

(a) If Landlord and Tenant acting in good faith are unable to reach agreement on
the Financing Request within the Financing Request Period,  Landlord does hereby
give and grant to Tenant the option to purchase the  Expansion  Parcel (i) for a
purchase price of One ($1.00) Dollar (the "Expansion Parcel Price") ,and (ii) on
any date (the  "Option  Purchase  Date")  between  the  sixtieth  (60th) and one
hundred  twentieth  (120th)  day (which  date  shall be  mutually  agreeable  to
Landlord and Tenant) after the expiration of the Financing  Request  Period.  If
Tenant  intends to exercise  such option,  Tenant  shall give written  notice to
Landlord to such effect not later than fifteen (15) days after the expiration of
the Financing Request Period.

(b) If Tenant shall  exercise  the  foregoing  option to purchase the  Expansion
Parcel,  then on the later to occur of (i) the Option  Purchase Date or (ii) the
date when Tenant has paid the Expansion Parcel Price and has satisfied all other
Monetary  Obligations,  Landlord shall convey the Expansion  Parcel to Tenant in
accordance with the provisions of Paragraph  20(a),  (b) (other than the next to
last  sentence  thereof)  and (d);  provided,  that if an Event of  Default  has
occurred and is continuing on the Option  Purchase Date,  Landlord,  at its sole
option, may terminate Tenant's option to purchase hereunder. IF THIS LEASE SHALL
TERMINATE  FOR ANY  REASON  PRIOR TO THE DATE  ORIGINALLY  FIXED  HEREIN FOR THE
EXPIRATION OF THE TERM, OR IF TENANT SHALL FAIL TO GIVE THE AFORESAID  NOTICE OF
INTENTION TO PURCHASE,  TIME BEING OF THE ESSENCE,  THE OPTION  PROVIDED IN THIS
PARAGRAPH 36 AND ANY EXERCISE  THEREOF BY TENANT SHALL CEASE AND  TERMINATE  AND
SHALL BE NULL AND VOID. IN SUCH EVENT TENANT SHALL EXECUTE A QUITCLAIM  DEED AND
SUCH OTHER  DOCUMENTS  AS  LANDLORD  SHALL  REASONABLY  REQUEST  EVIDENCING  THE
TERMINATION OF ITS OPTIONS.
<PAGE>

(c) If Tenant shall  exercise  the  foregoing  option to purchase the  Expansion
Parcel, then, simultaneous with Landlord's conveyance of the same to Tenant (and
from time to time  thereafter  as may be  necessary),  Landlord and Tenant shall
execute  and deliver to each  other,  in  recordable  form,  the  cross-easement
agreement appended hereto as Exhibit "F" together with such other  declarations,
easements  or  agreements  (including,   but  not  limited  to  electric,   gas,
telecommunications,  water, sanitary sewer and storm water sewer easements) with
respect to the Leased Premises,  including, but not limited to (if required by a
municipality or other governmental  entity only), the conveyance of a fee simple
interest,  by  tenancy  in common or  otherwise,  in and to such  portion of the
Leased  Premises  necessary  to  provide  ingress  and  egress  to and  from the
Expansion  Parcel  and  a  publicly  dedicated  road,  or  the  dedication  to a
municipality or other governmental  entity of any road or driveway located or to
be located on such  portion of the Leased  Premises  as shall be  necessary  for
Tenant to secure any required governmental approvals, consents,  certificates or
permits  for the  development,  occupancy  and use of the  Expansion  Parcel  or
contemplated hereby (provided that such declarations, easements or agreements do
not materially  interfere with the use of, or access to, buildings or structures
then located on the remainder of the Leased Premises or diminish in any material
respect,  in the  reasonable  opinion  of an  appraiser  selected  by Tenant and
reasonably  acceptable  to  Landlord,  the value or utility  thereof).  Landlord
shall,  at the same time or times,  cause to have  executed and delivered by and
from  each  Encumbrancer,  in  recordable  form,  a consent  (and  subordination
agreement,  if necessary  or  desirable)  to any and all of the above  described
declarations, easements and agreements.

(d) If (1)Tenant  shall exercise the foregoing  option to purchase the Expansion
Parcel and (2) Tenant  shall  have  constructed  the new  building  and  related
improvements  thereon  by any  means of  financing  (including  a  self-financed
project)  other  than  a  third  party  sale-leaseback  transaction,   then,  if
thereafter  the Tenant shall desire to sell the  Expansion  Parcel and receive a
bona fide written offer (the "Trigger  Offer") for the purchase of the Expansion
Parcel from a third party  purchaser (and which may include other property owned
by Tenant so long as a specific  purchase  price is allocated  to the  Expansion
Parcel), which Trigger Offer Tenant intends to accept, Tenant shall give written
notice to Landlord of the Trigger  Offer,  together  with a copy thereof and the
name and business address of the third party  purchaser.  Any acceptance of such
Trigger Offer by Tenant shall be conditioned upon Landlord's failure to exercise
its right under this Paragraph  36(d).  Landlord shall have the right during the
Term to exercise the foregoing right of first refusal upon each proposed sale of
the Expansion Parcel meeting the criteria set forth herein.  

(e) For a period of thirty (30) days following receipt of such notice,  Landlord
shall have the right,  exercisable by written notice to Tenant given within said
thirty  (30) day  period,  to elect to  purchase  the  Expansion  Parcel  at the
purchase price and upon the same material terms and conditions set forth in such
Trigger  Offer,  except that  Landlord  shall have no  obligation to acquire any
property  other than the Expansion  Parcel.  If at the expiration of such thirty
(30) day period  Landlord shall have failed to exercise the such option,  Tenant
may sell the Expansion  Parcel to such third party  purchaser upon the terms set
forth in the Trigger Offer.
<PAGE>

(f) Except as otherwise  specifically  provided herein, the closing date for any
purchase of the Expansion Parcel by Landlord pursuant to this Paragraph 36 shall
be the  earlier  to occur of (i)  ninety  (90) days  after the date of  Tenant's
notice to Landlord of its intention to sell the Expansion  Parcel upon the terms
of the Trigger Offer,  but not later than the Expiration  Date of this Lease, or
(ii) the closing date provided in such Trigger  Offer.  At such closing,  Tenant
shall convey the Expansion  Parcel to Landlord in accordance  with, and Landlord
shall pay to Tenant the purchase price and other consideration set forth in, the
Trigger Offer.

(g) If  Tenant  shall  have  acquired  the  Expansion  Parcel  pursuant  to this
Paragraph 36 and  subsequently  receives a bona fide written  offer from a third
party to finance the  construction of the new building and related  improvements
thereon by means of a  sale-leaseback  transaction,  then,  if (1) the effective
cost of financing  such  improvements  as set forth in such offer is higher than
Landlord's  last  written  proposal  given to Tenant  in  response  to  Tenant's
Financing  Request,  Landlord shall have the option to provide such financing by
means of a  sale-leaseback  transaction  at a rate equal to such higher rate, or
(2) ) the effective  cost of financing  such  improvements  as set forth in such
offer is lower than Landlord's last written proposal given to Tenant in response
to Tenant's  Financing  Request,  Landlord shall have the option to provide such
financing by means of a  sale-leaseback  transaction  at a  capitalization  rate
equal to such lower rate minus 25 basis points.

(h) Tenant may,  at any time  during the Term,  make any  application  for,  and
commence and prosecute any action or proceeding, administrative or otherwise, to
effect,  the subdivision or partition of the Expansion Parcel from the remainder
of the Leased Premises under  applicable law, at Tenant's sole cost and expense.
Landlord agrees,  at no cost to Landlord,  to cooperate fully with Tenant in any
such  applications,  actions or  proceedings,  and Tenant shall pay or reimburse
Landlord  for all costs and expenses of Landlord in respect  thereof  (including
attorney's  fees and  expenses).  Such  cooperation  shall  include,  but not be
limited to, (i) permitting such application,  action or proceeding to be made or
commenced in Landlord's  name or in Tenant's  name as agent for  Landlord,  (ii)
executing and delivering any applications,  affidavits,  statements,  petitions,
pleadings or other documents, and (iii) granting any declarations, easements and
agreements  (including,  but not limited to electric,  gas,  telecommunications,
water,  sanitary  sewer and storm water  sewer  easements)  with  respect to the
Leased Premises; including, but not limited to (if required by a municipality or
other  governmental  entity only), the conveyance of a fee simple  interest,  by
tenancy in common or  otherwise,  in and to such portion of the Leased  Premises
necessary to provide ingress and egress to and from the Expansion  Parcel and, a
publicly-dedicated   road  or  the  dedication  to  a   municipality   or  other
governmental  entity of any road or  driveway  located  on such  portion  of the
Leased  Premises) as shall be necessary  for Tenant to secure  approval for such
subdivision  or  partition  (provided  that  such  declarations,   easements  or
agreements do not materially  interfere with the use of, or access to, buildings
or structures  then located on the remainder of the Leased  Premises).  Landlord
shall,  at the same time or times,  cause to have  executed and delivered by and
from  any  Encumbrancer,  in  recordable  form,  a  consent  (and  subordination
agreement,  if necessary  or  desirable)  to any and all of the above  described
easements and agreements.
<PAGE>

37. Miscellaneous.

(a) The  paragraph  headings  in this  Lease  are used only for  convenience  in
finding  the  subject  matters  and are not part of this  Lease or to be used in
determining the intent of the parties or otherwise interpreting this Lease.

(b) As used in this Lease,  the singular shall include the plural and any gender
shall include all genders as the context  requires and the  following  words and
phrases shall have the following meanings: (i) "including" shall mean "including
without   limitation";   (ii)  "provisions"   shall  mean  "provisions,   terms,
agreements, covenants and/or conditions"; (iii) "lien" shall mean "lien, charge,
encumbrance,  title retention  agreement,  pledge,  security interest,  mortgage
and/or  deed  of  trust";  (iv)  "obligation"  shall  mean  "obligation,   duty,
agreement,  liability,  covenant  and/or  condition";  (v)  "any  of the  Leased
Premises"  shall mean "the  Leased  Premises  or any part  thereof  or  interest
therein";  (vi) "any of the Land"  shall  mean "the Land or any part  thereof or
interest therein";  (vii) "any of the Improvements" shall mean "the Improvements
or any part thereof or interest  therein";  (viii) "any of the Equipment"  shall
mean "the Equipment or any part thereof or interest  therein";  and (ix) "any of
the Adjoining  Property" shall mean "the Adjoining  Property or any part thereof
or interest therein".

(c) Any act which  Landlord  is  permitted  to  perform  under this Lease may be
performed  at any time and from time to time by Landlord or any person or entity
designated by Landlord.  Each  appointment of Landlord as  attorney-in-fact  for
Tenant  hereunder  is  irrevocable  and  coupled  with an  interest.  Except  as
otherwise specifically provided herein,  whenever Landlord's consent is required
under  this  Lease,  Landlord  shall have the right,  in its  absolute  and sole
discretion,  to withhold or delay its  consent  thereto.  Time is of the essence
with respect to the performance by Tenant of its obligations under this Lease.

(d)  Landlord  shall in no event be  construed  for any purpose to be a partner,
joint  venturer  or  associate  of  Tenant  or  of  any   subtenant,   operator,
concessionaire  or licensee of Tenant with respect to any of the Leased Premises
or otherwise in the conduct of their respective businesses.

(e) This Lease and any documents which may be executed by Tenant on or about the
effective  date hereof at Landlord's  request  constitute  the entire  agreement
between the parties  and  supersede  all prior  understandings  and  agreements,
whether  written or oral,  between  the  parties  hereto  relating to the Leased
Premises and the transactions provided for herein,  including but not limited to
that certain letter of intent dated  February 16, 1999.  Landlord and Tenant are
business entities having substantial  experience with the subject matter of this
Lease and have each fully  participated  in the negotiation and drafting of this
Lease.  Accordingly,  this Lease shall be construed  without  regard to the rule
that ambiguities in a document are to be construed against the drafter.

(f) This  Lease  may be  modified,  amended,  discharged  or  waived  only by an
agreement in writing  signed by the party against whom  enforcement  of any such
modification, amendment, discharge or waiver is sought.
<PAGE>

(g) The  covenants  of this Lease shall run with the land and bind  Tenant,  its
successors  and  assigns  and  all  present  and  subsequent  encumbrancers  and
subtenants  of any of the Leased  Premises,  and shall  inure to the  benefit of
Landlord,  its  successors  and assigns.  If there is more than one Tenant,  the
obligations of each shall be joint and several.

(h) If any one or more of the  provisions  contained in this Lease shall for any
reason be held to be invalid,  illegal or  unenforceable  in any  respect,  such
invalidity,  illegality or unenforceability shall not affect any other provision
of this Lease, but this Lease shall be construed as if such invalid,  illegal or
unenforceable provision had never been contained herein.

(i) This Lease shall be governed by and  construed  and  enforced in  accordance
with the Laws of the State.



<PAGE>


                  IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease
to be duly executed under seal as of the day and year first above written.

                                    LANDLORD:

                                     SCAN (OR) QRS 11-47, INC.
                                     a Delaware corporation



                                     By:  
                                     Title:                              


ATTEST:                              TENANT:

                                     PSC SCANNING, INC
                                     a Delaware corporation



By:                                  By:          

Title:                               Title:               


<PAGE>
                                                                       EXHIBIT A

                                    PREMISES
PARCEL I:

Lot 1, Block 1, SWEETLAND  INDUSTRIAL  PARK, as platted and recorded in Book 56,
Page 25, Lane County Oregon Plat Records, in Lane County, Oregon.

PARCEL II:

Beginning at the Initial  Point of  SWEETLAND  INDUSTRIAL  PARK,  as platted and
recorded in Book 56, Page 25, Lane County Oregon Plat Records,  said point being
on the Easterly  right of way of Terry Street and being North  0(degree) 01' 02"
West  1322.13  feet and South  89(degree)  23' 01" East 40.00 feet from the West
one-quarter section corner of Section 33, Township 17 South, Range 4 West of the
Willamette  Meridian;  run thence  along the  Northerly  line of said  Sweetland
Industrial  Park South  89(degree)  23' 01" East  400.00  feet to a point in the
Amazon Creek  Channel;  thence along the  Northeasterly  line of said  Sweetland
Industrial  Park South  48(degree) 25' 05" East 469.10 feet to the Easterly line
of said Sweetland  Industrial  Park;  thence North  0(degree) 01' 02" West 16.47
feet along the extension of said Easterly line to the  centerline of said Amazon
Creek Channel;  thence  following said  centerline  along the arc of 955.37 foot
radius curve to the left (the long chord of which bears South 63(degree) 57' 29"
East 311.15 feet),  a distance of 312.54 feet;  thence south  73(degree) 19' 48"
East 20.90 feet; thence along the arc of a 955.37 foot radius curve to the right
(the long chord of which  bears  South  71(degree)  37' 54" East 56.64  feet,  a
distance of 56.65 feet;  thence leaving said centerline  North 0(degree) 01' 02"
West  parallel with the  centerline  of Terry Street  719.59 feet;  thence North
89(degree)  23' 01" West 813.04  feet to the  centerline  of said Amazon  Creek;
thence along said centerline South  11(degree) 52' 48" East 109.57 feet;  thence
along the arc of a 287.94 foot radius curve to the left (the long chord of which
bears  South  18(degree)  44' 13" East 68.75 feet) a distance of 68.92 feet to a
point which is 100.00 feet  Northerly  of, when measured at right angles to, the
Northerly line of said Sweetland Industrial Park; thence leaving said centerline
North  89(degree)  23' 01" West parallel with said Northerly line 335.67 feet to
the Easterly right of way of Terry Street;  thence along said right of way South
0(degree)  01' 02" East 100.00 feet to the point of beginning,  in Eugene,  Lane
County, Oregon.

PARCEL III

Beginning at the Initial  Point of  Sweetland  Industrial  Park,  as platted and
recorded in Book 56, Page 25, Lane County Oregon Plat Records,  said point being
on the Easterly  right of way of Terry Street and being North  0(degree) 01' 02"
West  1322.13  feet  and  South  89(degree)  23' 01"  East  40.00  from the West
one-quarter section corner of Section 33, Township 17 South, Range 4 West of the

<PAGE>

Willamette  Meridian;  run thence  along the  Northerly  line of said  Sweetland
Industrial  Park South  89(degree)  23' 01" East  400.00  feet to a point in the
Amazon Creek  Channel;  thence along the  Northeasterly  line of said  Sweetland
Industrial  Park South  48(degree) 25' 05" East 469.10 feet to the Easterly line
of said Sweetland  Industrial  Park;  thence North  0(degree) 01' 02" West 16.47
feet along the extension of said Easterly line to the  centerline of said Amazon
Creek Channel;  thence  following said centerline along the arc of a 955.37 foot
radius curve to the left (the long chord of which bears South 63(degree) 57' 29"
East 311.15 feet),  a distance of 312.54 feet;  thence South  73(degree) 19' 48"
East 20.90 feet; thence along the arc of a 955.37 foot radius curve to the right
(the long chord of which  bears  South  71(degree)  37' 54" East 56.64  feet,  a
distance of 56.65 feet;  thence leaving said centerline  North 0(degree) 01' 02"
West  parallel with the  centerline  of Terry Street  799.12 feet;  thence North
89(degree)  23' 01" West 829.79  feet to the  centerline  of said Amazon  Creek;
thence along said centerline South  11(degree) 52' 48" East 191.02 feet;  thence
along the arc of a 287.94 foot radius curve to the left (the long chord of which
bears  South  18(degree)  44' 13" East 68.75 feet) a distance of 68.92 feet to a
point which is 100.00 feet  Northerly  of, when measured at right angles to, the
Northerly line of said Sweetland Industrial Park; thence leaving said centerline
North  89(degree)  23' 01" West parallel with said Northerly line 335.67 feet to
the Easterly right of way of Terry Street;  thence along said right of way South
0(degree)  01' 02" East 100.00 feet to the point of beginning,  in Eugene,  Lane
County, Oregon.

EXCEPTING THEREFROM:

Beginning at the Initial  Point of  Sweetland  Industrial  Park,  as platted and
recorded in Book 56, Page 25, Lane County Oregon Plat Records,  said point being
on the Easterly  right of way of Terry Street and being North  0(degree) 01' 02"
West  1322.13  feet and South  89(degree)  23' 01" East 40.00 feet from the West
one-quarter section corner of Section 33, Township 17 South, Range 4 West of the
Willamette  Meridian;  run thence  along the  Northerly  line of said  Sweetland
Industrial  Park South  89(degree)  23' 01" East  400.00  feet to a point in the
Amazon Creek  Channel;  thence along the  Northeasterly  line of said  Sweetland
Industrial  Park South  48(degree) 25' 05" East 469.10 feet to the Easterly line
of said Sweetland  Industrial  Park;  thence North  0(degree) 01' 02" West 16.47
feet along the extension of said Easterly line to the  centerline of said Amazon
Creek Channel;  thence  following said centerline along the arc of a 955.37 foot
radius curve to the left (the long chord of which bears South 63(degree) 57' 29"
East 311.15 feet),  a distance of 312.54 feet;  thence South  73(degree) 19' 48"
East 20.90 feet; thence along the arc of a 955.37 foot radius curve to the right
(the long chord of which  bears  South  71(degree)  37' 54" East 56.64  feet,  a
distance of 56.65 feet;  thence leaving said centerline  North 0(degree) 01' 02"
West  parallel with the  centerline  of Terry Street  719.59 feet;  thence North
89(degree)  23' 01" West 813.04  feet to the  centerline  of said Amazon  Creek;
thence along said centerline South  11(degree) 52' 48" East 109.57 feet;  thence
along the arc of a 287.94 foot radius curve to the left (the long chord of which
bears  South  18(degree)  44' 13" East 68.75 feet) a distance of 68.92 feet to a
point which is 100.00 feet  Northerly  of, when measured at right angles to, the
Northerly line of said Sweetland Industrial Park; thence leaving said centerline
North  89(degree)  23' 01" West parallel with said Northerly line 335.67 feet to
the Easterly right of way of Terry Street;  thence along said right of way South
0(degree)  01' 02" East 100.00 feet to the point of beginning,  in Eugene,  Lane
County, Oregon.
<PAGE>

PARCEL IV:

Beginning at the Initial  Point of  Sweetland  Industrial  Park,  as platted and
recorded in Book 56, Page 25, Lane County Oregon Plat Records,  said point being
on the Easterly  right of way of Terry Street and being North  0(degree) 01' 02"
West  1322.13  feet and South  89(degree)  23' 01" East 40.00 feet from the West
one-quarter section corner of Section 33, Township 17 South, Range 4 West of the
Willamette Meridian; run thence along said Easterly right of way North 0(degree)
01' 02" West 351.39 feet;  thence South 89(degree) 23' 01" East 291.07 feet to a
point on the  centerline  of the Amazon  Creek  Channel  being the true point of
beginning;  run  thence  89(degree)  23' 01"  East  829.79  feet;  thence  North
0(degree) 01' 02" West parallel with the centerline of Terry Street 396.90 feet;
thence  North  89(degree)  23' 01" West  899.33 feet to the  centerline  of said
Amazon Creek; thence along said centerline along the arc of a 262.04 foot radius
curve to the right (the long chord of which bears South  2(degree)  48' 23" West
57.18  feet) a distance  of 57.29  feet;  thence  along the arc of a 296.47 foot
radius curve to the left (the long chord of which bears South  8(degree) 59' 48"
East 183.88  feet) a distance of 186.97  feet;  thence along the arc of a 287.94
foot radius  curve to the right (the long chord of which bears South  19(degree)
28' 18" East 76.08 feet) a distance of 76.30 feet;  thence South  11(degree) 52'
48" East 89.10  feet to the true point of  beginning,  in Eugene,  Lane  County,
Oregon.

PARCEL V:

Beginning at the initial  point of  Sweetland  Industrial  Park,  as platted and
recorded in Book 56, Page 25, Lane County Oregon Plat Records,  said point being
on the Easterly  right of way of Terry Street and being North  0(degree) 01' 02"
West  1322.13  feet and South  89(degree)  23' 01" East 40.00 feet from the West
one-quarter section corner of Section 33, Township 17 South, Range 4 West of the
Willamette Meridian; run thence along said Easterly right of way North 0(degree)
01' 02" West 748.28 feet;  thence South 89(degree) 23' 01" East 204.79 feet to a
point on the  centerline  of the Amazon Creek  Channel,  being the true point of
beginning;  thence  South  89(degree)  23' 01" East 899.33  feet;  thence  North
0(degree)  01' 02" West 573.61 feet to the North line of said Section 33; thence
along  said  North  line  North  89(degree)  23' 30"  West  1044.12  feet to the
centerline of said Amazon Creek; thence along said centerline along the arc of a
955.37  foot  radius  curve to the right  (the long chord of which  bears  South
28(degree)  26' 31" East 67.08  feet) a distance  of 67.10  feet;  thence  South
26(degree)  25' 48" East  120.00  feet;  thence  along the arc of a 287.94  foot
radius curve to the right (the long chord of which bears south 8(degree) 28' 48"
East 177.48  feet) a distance of 180.47  feet;  thence along the arc of a 290.63
foot radius curve to the left (the long chord of which bears south 5(degree) 55'
48" East 154.36  feet)( a distance  of 156.23  feet;  thence  along the arc of a
262.04  foot  radius  curve to the right  (the long chord of which  bears  South
12(degree)  23' 37" East 81.41  feet) a distance of 81.74 feet to the true point
of beginning, in Eugene, Lane County, Oregon
<PAGE>

                                                                       EXHIBIT B
                             MACHINERY AND EQUIPMENT

All fixtures, machinery,  apparatus, equipment, fittings and appliances of every
kind and nature  whatsoever now or hereafter affixed or attached to or installed
in any of the Leased  Premises  (except as hereafter  provided),  including  all
electrical,  anti-pollution,  heating,  lighting  (including hanging fluorescent
lighting),  incinerating, power, air cooling, air conditioning,  humidification,
sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing and
ventilating systems,  devices and machinery and all engines, pipes, pumps, tanks
(including  exchange tanks and fuel storage  tanks),  motors,  conduits,  ducts,
steam  circulation  coils,  blowers,  steam  lines,  compressors,  oil  burners,
boilers,  doors, windows,  loading platforms,  lavatory facilities,  stairwells,
fencing (including cyclone fencing),  passenger and freight elevators,  overhead
cranes and garage  units,  together with all  additions  thereto,  substitutions
therefor and  replacements  thereof  required or  permitted  by this Lease,  but
excluding all personal property and all inventory furniture,  furnishings, trade
fixtures, machinery, office, manufacturing,  processing, packaging and warehouse
equipment and supplies which are not necessary to the  operation,  as buildings,
of the buildings which constitute part of the Leased Premises.
<PAGE>
                                                                       EXHIBIT C

                             PERMITTED ENCUMBRANCES

   [The exceptions, exclusions and stipulations as shown on that certain pro
    forma Title Commitment issued by Western Pioneer Title Company, as agent
    for First American Title Insurance Company, dated as of May ____, 1999,
                        and bearing title no. 152017-NM]

         [In the event that Tenant exercises its Option to Purchase the
           Expansion Parcel, as set forth in Paragraph 36 hereof, add
           that certain Cross Easement Agreement between Landlord and
                    Tenant, dated as of ___________________.]

<PAGE>
                                                                       EXHIBIT D
                               BASIC RENT PAYMENTS

1. Basic Rent. Subject to the adjustments  provided for in Paragraphs 2, 3 and 4
below,  Basic Rent  payable in  respect  of the Term shall be $  820,013.00  per
annum, payable quarterly,  in advance, on each Basic Rent Payment Date, in equal
installments of $205,003.25 each.

2. CPI Adjustments to Basic Rent. The Basic Rent shall be subject to adjustment,
in the manner  hereinafter set forth, for increases in the index known as United
States Department of Labor,  Bureau of Labor  Statistics,  Consumer Price Index,
All Urban  Consumers,  United  States  City  Average,  All Items,  (1982-84=100)
("CPI") or the successor  index that most closely  approximates  the CPI. If the
CPI shall be  discontinued  with no successor  or  comparable  successor  index,
Landlord and Tenant shall  attempt to agree upon a substitute  index or formula,
but if they are  unable to so agree,  then the  matter  shall be  determined  by
arbitration in accordance with the rules of the American Arbitration Association
then  prevailing  in New York City.  Any decision or award  resulting  from such
arbitration  shall be final and binding  upon  Landlord  and Tenant and judgment
thereon may be entered in any court of competent jurisdiction.  In no event will
the Basic Rent as adjusted by the CPI  adjustment be less than the Basic Rent in
effect for the one (1) year period immediately preceding such adjustment.

3. .  Effective  Dates of CPI  Adjustments.  Basic Rent shall not be adjusted to
reflect  changes in the CPI until the first (1st)  anniversary of the Basic Rent
Payment Date on which the first full  quarterly  installment of Basic Rent shall
be due and payable (the "First Full Basic Rent Payment  Date").  As of the first
(1st)  anniversary  of the First Full Basic Rent Payment Date and  thereafter on
each  anniversary of the First Full Basic Rent Payment Date, Basic Rent shall be
adjusted  to reflect  increases  in the CPI during the most  recent one (1) year
period  immediately  preceding each of the foregoing dates (each such date being
hereinafter referred to as the "Basic Rent Adjustment Date").

4. Method of Adjustment for CPI Adjustment.

     (a) As of each Basic Rent  Adjustment  Date when the average CPI determined
in clause (i) below  exceeds the  Beginning  CPI (as  defined in this  Paragraph
4(a)), the Basic Rent in effect  immediately  prior to the applicable Basic Rent
Adjustment Date shall be multiplied by a fraction,  the numerator of which shall
be the  difference  between  (i) the  average  CPI for the three (3) most recent
calendar  months (the "Prior Months") ending prior to such Basic Rent Adjustment
Date for which the CPI has been  published on or before the  forty-fifth  (45th)
day preceding  such Basic Rent  Adjustment  Date and (ii) the Beginning CPI, and
the  denominator  of which shall be the  Beginning  CPI. An amount  equal to the
lesser of (x) the product of such  multiplication or (y) 3.75% of the Basic Rent
in effect immediately prior to such Basic Rent Adjustment Date shall be added to
the Basic Rent in effect  immediately  prior to such Basic Rent Adjustment Date.
As used  herein,  "Beginning  CPI" shall mean the  average CPI for the three (3)
calendar months  corresponding  to the Prior Months,  but occurring one (1) year
earlier.  If the average CPI  determined  in clause (i) is the same or less than
the  Beginning  CPI, the Basic Rent will remain the same for the ensuing one (1)
year period.
<PAGE>

     (b) Effective as of a given Basic Rent Adjustment  Date, Basic Rent payable
under this Lease until the next  succeeding  Basic Rent Adjustment Date shall be
the Basic Rent in effect after the adjustment provided for as of such Basic Rent
Adjustment Date.

     (c) Notice of the new annual Basic Rent,  setting out in reasonable  detail
the method of calculation of the new Basic Rent, shall be delivered to Tenant on
or before the tenth (10th) day preceding  each Basic Rent  Adjustment  Date, but
any  failure  to do so by  Landlord  shall not be or be deemed to be a waiver by
Landlord  of  Landlord's  rights  to  collect  such  sums.  Tenant  shall pay to
Landlord,  within ten (10) days  after a notice of the new annual  Basic Rent is
delivered to Tenant, all amounts due from Tenant, but unpaid, because the stated
amount as set forth  above  was not  delivered  to Tenant at least ten (10) days
preceding the basic Rent Adjustment Date in question.
<PAGE>

                                                                       EXHIBIT E
                                    COVENANTS

1.       Corporate Existence; Control; Mergers, Etc.

(a) Guarantor  shall,  and shall cause each of its Subsidiaries to, maintain its
corporate  existence,  rights  and  franchises  in full  force and effect in its
jurisdiction of incorporation. Guarantor shall, and shall cause its Subsidiaries
to, qualify and remain qualified as a corporation in each  jurisdiction in which
failure to receive or retain such qualification  would have an adverse effect on
the business,  operations or financial condition of the enterprise  comprised of
the Guarantor and its Subsidiaries taken as a whole.

(b)  The  Tenant  shall  not  in a  single  transaction  or  series  of  related
transactions,  sell or convey,  transfer,  abandon or lease all or substantially
all of its assets to any Person,  except  that Tenant  shall have the right in a
single transaction or a series of related  transactions to sell or convey all or
substantially all of its assets to a Person if the following conditions are met:
(i) the assignment is permitted under and otherwise in accordance with Paragraph
21 of the Lease; (ii) immediately after such transaction, such Person shall meet
the  Financial  Covenants set forth in  Paragraphs  2(a),  (b) and (c) below and
(iii) this Lease is assigned to such Person.

2.  Financial  Covenants.  So long as the  Lease  shall  remain in effect or any
Monetary Obligations under the Lease shall remain outstanding, Guarantor and its
Subsidiaries (collectively , "PSC") shall:

(a)  Maintain  at the end of each  fiscal  quarter of PSC,  commencing  with the
fiscal  quarter  ending  3/31/99,  a ratio  (the  "Fixed  Charge  Ratio") of (i)
Consolidated EBITDA for the most recently completed four fiscal quarters of PSC,
less Capital  Expenditures made during such period, less the aggregate amount of
federal,  state,  local and  foreign  taxes paid by PSC on all Debt  during such
period to the (ii) sum of (w) cash  interest  payable by PSC on all Debt  during
such period plus (x) cash rentals payable under  Capitalized  Leases during such
period plus (y) principal  amounts of all Funded Debt payable,  in each case, by
PSC during such period plus (z) the aggregate  purchase price paid by PSC during
such period to purchase capital stock of Guarantor permitted by Section 5.02 (g)
of the Credit Agreement, of not less than 1.00 to 1.

(b)  Maintain  at the end of each  fiscal  quarter of PSC,  commencing  with the
fiscal quarter ending 3/31/99,  a ratio (the "Total  Debt/EBITDA  Ratio") of (i)
Total  Debt  outstanding  on the  last  day  of  such  fiscal  quarter  to  (ii)
consolidated EBITDA for such period of not more than 5.51 to 1; and

(c) Maintain,  at all times, an excess (the "Minimum Consolidated Net Worth") of
Consolidated total assets over Consolidated total liabilities,  in each case, of
PSC of not less than (i) $34,000,000 plus (ii) 49% of Consolidated net income of
PSC  during  the  period  after  June 30,  1998 to and  including  each  date of
determination computed on a cumulative basis for said entire period.
<PAGE>

3. Definitions. All accounting terms used herein which are not expressly defined
herein shall have the respective meanings given to them in the Credit Agreement,
by and  between  Guarantor  and Fleet  Bank,  dated July 12,  1996 (the  "Credit
Agreement"),   or,  if  not  defined  therein,  in  accordance  with  GAAP.  All
computations  made pursuant hereto shall be made in accordance with GAAP and any
financial  statements shall be prepared in accordance with GAAP. For the purpose
of this Exhibit "E" the following terms shall have the following meanings:

"GAAP" shall mean  generally  accepted  accounting  principles as in effect from
time to time in the United States of America, applied on a consistent basis.

"Person"  shall mean an  individual,  partnership,  limited  liability  company,
association, corporation or other entity.

"Subsidiary" of any Person means a corporation a majority of the Voting Stock of
which is at the time owned, or the management of which is otherwise  controlled,
directly or  indirectly,  through one or more  intermediaries,  or both, by such
Person.

"Voting  Stock" means shares of stock of a corporation  having  ordinary  voting
power to elect the board of directors or other managers.
<PAGE>
                                                                       EXHIBIT F

                             CROSS ACCESS AGREEMENT

                            CROSS EASEMENT AGREEMENT

         THIS EASEMENT  AGREEMENT is made this _____ day of _______,  ______, by
SCAN,(OR) QRS 11-47, INC. a __________  corporation having an office at c/o W.P.
Carey & Co., Inc., 50  Rockefeller  Plaza,  2nd Floor,  New York, New York 10020
(SCAN "SCAN") to PSC SCANNING,  INC., a Delaware Corporation having an office at
959 Terry Street, Eugene, Oregon (PSC "PSC").

                                    RECITALS:

         A.  SCAN  is  the  owner  of  certain   improved   real  property  more
particularly  described  in Schedule A attached  hereto,  commonly  known as 959
Terry  Street  and  located in the  Sweetland  Industrial  Park,  in the City of
Eugene, County of Lane, State of Oregon (the "Burdened Property").

         B.  PSC  is  the  owner  of  certain   adjacent  real  property,   more
particularly described in Schedule B attached hereto,  commonly known as Tax Lot
3400, in the City of Eugene,  County of Lane,  State of Oregon (the  "Benefitted
Property").

         C. Terry Street,  a dedicated  road,  provides access to an undedicated
internal  roadway system that provides the  Benefitted  and Burdened  Properties
with ingress and egress to facilities within the respective Properties and Terry
Street.

         D. SCAN has  agreed to grant an  easement  to PSC over the  undedicated
internal roadway system on the Burdened  Property and to permit PSC to construct
an extension of and to the same (collectively, the "Connecting Roadway") for the
purpose of providing  (i)  vehicular  and  pedestrian  access to the  Benefitted
Property, (ii) the right of PSC and/or any entity to erect, construct,  install,
lay,  maintain,  repair,  replace and relocate gas, water,  sewer,  electric and
telecommunication  lines,  cables,  poles,  equipment and facilities on, in, at,
above, under and about the Connecting  Roadway and (iii) temporary  construction
easements.

         E. PSC has agreed to grant an easement to SCAN over that portion of the
Benefited  Property upon which an existing paved surface area, situate northerly
of  certain  improvements  on the  Burdened  Property  commonly  referred  to as
"Building  2", is located (the "Turn Around  Area") for the purpose of providing
vehicular  access to the  Benefited  Property to be used by solely by trucks and
other vehicles  entering or exiting the loading dock area of the improvements on
the Burdened Property, and temporary construction easements.

         NOW THEREFORE,  in  consideration  of the sum of One Dollar ($1.00) and
other  good  and  valuable  consideration,   the  receipt  of  which  is  hereby
acknowledged,  and in consideration of the agreements contained hereinafter, (i)
SCAN grants to PSC a perpetual,  non-exclusive  easement (the "Access Easement")
for the uses stipulated below over a portion of the Burdened Property comprising
property situate,  lying and being in the City of Eugene,  County of Lane, State
of Oregon,  more particularly shown and described in Schedule C attached hereto,
and commonly known as: 959 Terry Street,  Eugene, Oregon, and (ii) PSC grants to
SCAN a perpetual  non-exclusive  easement (the  "Turn-Around  Easement") for the
uses  stipulated  below over a portion of the Benefitted  Property  compromising
property situate,  lying and being in the City of Eugene,  County of Lane, State
of Oregon, more particularly shown and described in Schedule D attached hereto.
<PAGE>

I.       Access Easement

         (1) The purpose for which this the Access  Easement is to be used is to
provide,   without   limitation,   (i)  PSC's  customers,   employees,   agents,
contractors,  visitors,  business invitees,  municipal agents, utility companies
and public  agencies with  vehicular and  pedestrian  access over the Connecting
Roadway  for the  purpose  of  assuring  ingress  and  egress  to the  Benefited
Property,  (ii) PSC, its  employees,  agents and  contractors  with the right to
erect,  construct,  install,  lay,  maintain,  repair and replace the  extension
portion of the Connecting Roadway,(iii) PSC, its employees, agents, contractors,
municipal agents, utility companies and public agencies with the right to erect,
construct,  install,  lay,  maintain,  repair,  replace and relocate gas, water,
sewer,  electric and  telecommunication  lines, cables,  conduits,  wire, pipes,
poles, guy wires,  pedestals,  switches,  equipment and other facilities on, in,
at,  above,  under  or  about  the  Connecting   Roadway,   and  (iv)  temporary
construction  easement  for a distance  of ten feet (10') on either  side of the
Connecting  Roadway for the  purposes of keeping,  storing and  maintaining  any
construction equipment,  vehicles, machinery,  materials and supplies during the
construction  of  the  extension  portion  of the  Connecting  Roadway  and  any
improvements on the Benefitted Property.

         (2) The maintenance of the Connecting Roadway, including cleaning, snow
plowing, sealing, and repaving shall be undertaken exclusively by SCAN and shall
be done promptly and in a good and workmanlike  manner.  PSC agrees that it will
pay to the  SCAN  fifty  percent  (50%)  of all  of  the  foregoing  repair  and
maintenance  charges.  Such payments  shall be made in December and June of each
year,  following the date hereof,  within fifteen (15) days of receipt by PSC of
an itemized statement of maintenance expenses of SCAN for the preceeding six (6)
month period.

         (3) PSC shall indemnify,  defend, and hold harmless SCAN for all claims
of loss,  damage,  and  injury  of any kind and  nature  whatsoever  arising  in
connection with the use of the Connecting Roadway by PSC, its agents,  officers,
employees, tenants and visitors and the exercise generally of PSC's rights under
this  Easement,  except to the extent,  if any,  caused by or arising out of the
gross negligence or willful misconduct of SCAN, its agents, officers,  employees
or visitors.

         (4) PSC covenants and agrees that it shall at all time use due care and
take all reasonable steps to minimize material  interference with SCAN's use and
enjoyment of the Connecting  Roadway and the Burdened  Property  caused by PSC's
exercise of its rights under this Cross  Easement  Agreement.  SCAN shall at all
times  use  due  care  and  take  all  reasonable  steps  to  minimize  material
interference  with PSC's use and  enjoyment  of the  Connecting  Roadway and the
Benefitted  Property.  In  the  event  any  use  of the  Connecting  Roadway  is
materially  disrupted  because  of  maintenance,  repair or  development  to any
portion of the Burdened Property or the Connecting Roadway, all such disruptions
shall be remedied within a commercially  reasonable period of time. In the event
SCAN defaults in the  performance or observance of any of the terms or covenants
contained within this Agreement, PSC may give written notice to the SCAN of such
default.  If SCAN fails to cure the default within ten (10) days of such notice,
PSC shall have the option,  at is sole  discretion,  to cure such default at the
cost and expense of SCAN.  All costs and expenses  expended by PSC in connection
with curing the default shall be paid by SCAN upon PSC's demand.
<PAGE>

         (5) PSC agrees to forever  defend,  indemnify,  and save  harmless SCAN
from any  liability to, claim of, damage to, or action by any "person" for death
of,  injury to, or damage to, any person or property and from any other claim in
any  manner  stemming  from or  arising  out of,  directly  or  indirectly,  the
existence  of, or  exercise of the rights  granted  under,  this Cross  Easement
Agreement  or any  expense  in  connection  with the  foregoing,  to the  extent
presently  permitted by law, except to the extent,  if any, caused by or arising
out of the gross negligence or willful misconduct of SCAN.

II.      Turn-Around Easement

         (1) The purpose for which the Turn-Around  Easement is to be used is to
provide,   without  limitation,   (i)  SCAN's  customers,   employees,   agents,
contractors,  visitors,  business invitees, agents, utility companies and public
agencies with vehicular and  pedestrian  access of and over the Turn Around Area
for the  purpose of  assuring a safe and  sufficient  turn  around  area for all
trucks and other  vehicles  seeking  ingress and egress to and from the Burdened
Property or loading or unloading  goods or passengers,  or requiring or desiring
access to the Burdened Property during the performance of work thereon, and (ii)
temporary  construction  easement  for a  distance  of  five  feet  (5')  on the
northerly side of the Turn Around Area for the purposes of keeping,  storing and
maintaining  any  construction  equipment,  vehicles,  machinery,  materials and
supplies during the maintenance, repair or replacement of the Turn Around Area.

         (2) The maintenance of the Turn-Around Area,  including cleaning,  snow
plowing, sealing, and repaving shall be undertaken exclusively by SCAN and shall
be done promptly and in a good and workmanlike  manner. SCAN agrees that it will
pay to one hundred percent (100%) of all of the foregoing repair and maintenance
charges.

         (3) SCAN shall indemnify,  defend, and hold harmless PSC for all claims
of loss,  damage,  and  injury  of any kind and  nature  whatsoever  arising  in
connection  with the use of the SCAN  Turn  Around  Area by  SCAN,  its  agents,
officers,  employees,  tenants and visitors and the exercise generally of SCAN's
rights under this Easement,  except to the extent,  if any, caused by or arising
out of the gross negligence or willful misconduct of PSC, its agents,  officers,
employees or visitors.

         (4) SCAN  covenants  and agrees  that it shall at all time use due care
and take all reasonable steps to minimize  material  interference with PCS's use
and  enjoyment  of the Turn Around Area and the  Benefitted  Property  caused by
SCAN's exercise of its rights under this Cross Easement Agreement.  PSC shall at
all  times  use due  care and take all  reasonable  steps to  minimize  material
interference  with  SCAN's use and  enjoyment  of the Turn  Around  Area and the
Burdened  Property.  In the event any use of the Turn Around Area is  materially
disrupted  because of  maintenance,  repair or development to any portion of the
Benefitted  Property  or the Turn Around  Area,  all such  disruptions  shall be
remedied  within a  commercially  reasonable  period  of time.  In the event PSC
defaults  in the  performance  or  observance  of any of the terms or  covenants
contained  within this  Agreement,  SCAN may give written  notice to PSC of such
default.  If PSC fails to cure the default  within ten (10) days of such notice,
SCAN shall have the option,  at is sole discretion,  to cure such default at the
cost and expense of PSC.  All costs and expenses  expended by PSC in  connection
with curing the default shall be paid by PSC upon SCAN's demand.

         (5) SCAN agrees to forever  defend,  indemnify,  and save harmless SCAN
from any  liability to, claim of, damage to, or action by any "person" for death
of,  injury to, or damage to, any person or property and from any other claim in
any  manner  stemming  from or  arising  out of,  directly  or  indirectly,  the
existence  of, or  exercise of the rights  granted  under,  this Cross  Easement
Agreement  or any  expense  in  connection  with the  foregoing,  to the  extent
presently  permitted by law, except to the extent,  if any, caused by or arising
out of the gross negligence or willful misconduct of PSC.
<PAGE>

III.     Miscellaneous

         (1) This Cross Easement Agreement is granted without representations or
warranties of any kind or nature.

         (2) SCAN and PSC each  executes  this  instrument  for the  purpose  of
acknowledging  its respective assent to the duties and obligations of such party
hereunder.

         (3) This Cross Easement  Agreement shall be governed by the laws of the
State of Oregon.

         (4) The  provisions of this Cross Easement  Agreement  shall be binding
upon and  inure to the  benefit  of the  parties  hereto  and  their  respective
distributees, successors and assigns, specifically including the indemnification
provision.  Any assignee of SCAN's or PSC's  rights  hereunder  shall  expressly
acknowledge  and  assume  SCAN's  or  PSC's,   as  applicable,   indemnification
liabilities hereunder.

                           SCAN(OR) QRS 11-47, INC.



                           ---------------------------------
                           By:
                           Its:

                           PSC SCANNING, INC.



                           ----------------------------
                           By:
                           Its:




STATE OF OREGON  )
                 ) SS.
COUNTY OF LANE   )

         This instrument was  acknowledged  before me on  _____________________,
1999, by _______________________.


                      ---------------------------
                      Notary Public for Oregon
                      My commission expires:_______________

<PAGE>

                                   SCHEDULE A



                               (BURDENED PROPERTY)


<PAGE>

                                   SCHEDULE B



                              (BENEFITTED PROPERTY)

<PAGE>

                                   SCHEDULE C



                             (ACCESS EASEMENT AREA)


<PAGE>


                                   SCHEDULE D



                           (TURN AROUND EASEMENT AREA)