EXHIBIT
      10.5


    Commercial
      Lease Form

    


    1.
      Parties.
      This
      Lease dated December 11, 1996, is made by and between The Richlar Partnership
      (a
      California general partnership) (herein called "Lessor") and Digital Domain,
      Inc. (a Delaware corporation) (herein called "Lessee).

    


    2.
      Premises.
      Lessor
      hereby leases to Lessee and Lessee leases from Lessor for the term, at the
      rental, and upon all of the conditions set forth herein, that certain premises
      situated in the County of Los Angeles, State of California, commonly known
      as
      344 Main Street, Venice, California, consisting of approximately 21,295 square
      feet of offices and warehouse (see Exhibit A) (herein called "The
      Premises").

    


    3.
      Term.

    


    3.1
      Term.
      The term
      of this Lease shall be for five (5) years commencing on January 1, 1997 and
      ending on December 31, 2001 unless sooner terminated pursuant to any provision
      hereof.

    


    3.2
      Delay in Commencement.
      Notwithstanding said commencement date, if for any reason Lessor cannot deliver
      possession of the Premises to Lessee on said date, Lessor shall not be subject
      to any liability therefor, nor shall such failure affect the validity of this
      Lease or the obligations of Lessee hereunder or extend the term hereof, but
      in
      such case Lessee shall not be obligated to pay rent until possession of the
      Premises is tendered to Lessee. If Lessee occupies the Premises prior to said
      commencement date (any such occupancy to be only with Lessor's consent), such
      occupancy shall be subject to all provisions hereof, such occupancy shall be
      subject to all provisions hereof, such occupancy shall not advance the
      termination date, and Lessee shall pay rent for such period at the initial
      monthly rates set forth below.

    


    4.
      Rent.
      Lessee
      shall pay to Lessor rent for the Premises at an annual rate
      of (See
      Addendum) payable in equal monthly payments of (See
      Addendum) in advance, on the first day of each month of the term hereof. Lessee
      shall pay Lessor upon execution hereof $19,493.96 as base rent for January
      1997.
Rent
      for
      any period during the term hereof which is for less than one month shall be
      a
      pro rata portion
      of the monthly installment. Rent shall be payable without deduction or offset,
      in lawful money of the United States, to Lessor at
      the
      address stated herein or to such other persons or at such other places as Lessor
      may designate in writing.

     

    5.
      Security Deposit.
      Lessee
      shall deposit with Lessor upon execution hereof $21,295 as security for Lessee's
      faithful performance of Lessee's
      obligation hereunder. If Lessee fails to pay rent or other charges due
      hereunder, or otherwise defaults with respect to any provision of this Lease,
      Lessor may use, apply or retain all or any portion of said deposit for the
      payment of any rent or any other charge in default beyond any applicable grace
      period or for the payment of any other sum which the Lessor may spend or become
      obligated
      to spend by reason of Lessee's default, or to compensate Lessor for any loss
      or
      damage which Lessor may suffer thereby. If
      Lessor
      so uses or applies all or any portion of said deposit, Lessee shall within
      ten
      (10) days after demand therefor deposit cash
      with
      Lessor in an amount sufficient to restore said deposit to the full amount
      hereinbefore stated and Lessee's failure to do so shall
      be
      a material breach of this Lease. Lessor shall not be required to keep said
      deposit separate from its general accounts. If Lessee
      performs all of Lessee's obligations hereunder as of the expiration of the
      Lease, said deposit, or so much thereof as has
      not
      been theretofore applied by Lessor,
      shall be
      returned, without payment of interest or other increment for its use, to
Lessee
      (or, at Lessor's option,
      to the
      last assignee, if any, of Lessee's interest hereunder) at the expiration of
      the
      term hereof, and after
      Lessee has vacated the Premises. No trust relationship is created herein between
      Lessor and Lessee with respect to said Security
      Deposit.

     

    6.
      Use

     

    6.1
      Use.
      The
      Premises shall be used and occupied only for an entertainment, communications,
      computer applications and film production
      firm and related office and support functions and parking therefor and for
      no
      other purpose.

     

    6.2
      Compliance with Law.
      Lessee
      shall, at Lessee's expense, comply promptly with all applicable statutes,
      ordinances, rules, regulations,
      orders, restrictions of record, and requirements in effect during the term
      or
      any part of the term hereof regulating the use by Lessee of the Premises, Lessee
      shall not use nor permit the use of the Premises in any manner that will tend
      to
      create waste or a nuisance
      or, if there shall be more than one tenant in the building containing the
      Premises, shall tend to disturb other tenants.

    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.3
      Condition of Premises.
      Lessee
      hereby accepts the Premises in their condition existing as of the date of the
      execution hereof, subject
      to all applicable zoning, municipal, county and state laws, ordinances and
      regulations governing and regulating the use of the Premises,
      and accepts this Lease subject thereto and to all matters disclosed thereby
      and
      by any exhibits attached hereto. Lessee acknowledges
      that neither Lessor nor Lessor's agent has made any representation or warranty
      as to the suitability of the Premises for the
      conduct of Lessee's business.

     

    7.
      Maintenance, Repairs and Alterations.

     

    7.1
      Lessee's Obligations.
      Lessee
      shall keep in good order, condition and repair the Premises and every part
      thereof, structural (excepting
      pre-existing structural defects) and nonstructural whether or not such portion
      of the Premises requiring repair, or the means
      of
      repairing the same are reasonable or readily accessible to Lessee and whether
      or
      not the need for such repairs occurs as a result
      of
      Lessee's use, any prior use, the elements or age of such portion of the
      equipment within the Premises, fixtures, walls (interior and
      exterior), foundations, ceilings, roofs (interior and exterior), floors,
      windows, doors, plate glass and skylights located within the Premises,
      and all landscaping, driveways, parking lots, fences and signs located on the
      Premises and sidewalks and parkways adjacent
      to the Premises.

     

    7.2
      Surrender.
      On the
      last day of the term hereof, or on any sooner termination, Lessee shall
      surrender the Premises to Lessor in good
      condition and repair, broom clean, ordinary wear and tear and casualty excepted.
      Lessee shall repair any damage to the Premises
      occasioned by
      the
      installation and/or removal of Lessee's trade fixtures, furnishings and
      equipment pursuant to Paragraph 7.5(d), which repair shall include without
      limitation the patching and filling of holes and repair of structural
      damage.

     

    7.3
      Lessor's Rights.
      If
      Lessee fails to perform Lessee's obligations under this Paragraph 7, Lessor
      may
      at its option (but shall not be
      required to) enter upon the Premises, after ten (10) days' prior notice to
      Lessee, and put the same in good order, condition and repair, and the reasonable
      cost thereof together with interest thereon at the maximum rate permitted by
      law
      shall become due and shall be collectible as additional rental to Lessor
      together with Lessee's next rental installment.

    


    7.4
      Lessor's Obligation.
      Except
      for the obligations of Lessor under Paragraph 9 (relating to destruction of
      the
      Premises) and under
      Paragraph 14 (relating to condemnation of the Premises), it is intended by
      the
      parties hereto that Lessor have no obligation, in any
      manner whatsoever, to repair and maintain the Premises nor the building located
      thereon nor the equipment therein, whether structural (excepting pre-existing
      structural defects) or non-structural,
      all of
      which obligations are intended to be those of Lessee under Paragraph 7.1 hereof.
      Lessee expressly waives the benefit of any statute now or hereinafter
      in effect which would otherwise afford Lessee the right to make repairs at
      Lessor's expense or to terminate this Lease because of Lessor's failure to
      keep
      the Premises in good order, condition and repair.

    


    7.5
      Alterations and Additions.

    


    (a)
      Lessor may require Lessee to
      provide
      Lessor, at Lessee's sole cost and expense, a lien and completion bond in an
      amount equal
      to
      one and one-half times the estimated cost of such improvements, to insure Lessor
      against any liability for mechanic's and materialmen's liens and to insure
      completion of the work. Should Lessee make any alterations, improvements,
      additions or Utility Installations without the prior approval of Lessor, Lessor
      may require that Lessee remove any or all of the same.

    


    (b)
      Deleted.


     

    (c)
      Lessee shall pay, when due, all claims for labor or materials furnished or
      alleged to have been furnished to or for Lessee at or for use in the Premises,
      which claims are or may be secured by any mechanic's or materialmen's lien
      against the Premises or any interest
      therein. Lessee shall give Lessor not less than ten (10) days' notice prior
      to
      the commencement of any work in the Premises, and
      Lessor shall have the right to post notices of non-responsibility in or on
      the
      Premises as provided by law. Lessee shall discharge,
      by bond or otherwise, within ten (10) days after the filing thereof, any
      mechanic's lien filed against the Premises for work claimed
      to have been done for, or materials claimed to have been furnished to, Lessee.
      If Lessee shall, in good faith, contest the validity
      of any such lien, claim or demand, then Lessee shall, at its sole expense,
      defend itself and Lessor against the same and shall pay
      and
      satisfy any such adverse judgment that may be rendered thereon before the
      enforcement thereof against the Lessor or the Premises,
      upon condition that Lessor may require Lessee to furnish to Lessor a surety
      bond
      satisfactory to Lessor in an amount equal
      to
      such contested lien, claim or demand indemnifying Lessor against liability
      for
      the same and holding the Premises free from
      the
      effect of such a lien or claim. In addition, Lessor may require Lessee to pay
      Lessor's attorneys' fees and costs in participating
      in such an action if Lessor shall decide it is to its best interest to do
      so.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)
      Unless Lessor requires their removal, as set forth in Paragraph 7.5(a), all
      alterations, improvements, additions and Utility Installations
      (whether or not such Utility Installations constitute trade fixtures of Lessee),
      which may be made on the Premises, shall become the property of Lessor and
      remain upon and be surrendered with the Premises at the expiration of the term.
      Notwithstanding the provisions of this Paragraph 7 5(d), Lessee's machinery
      and
      equipment, other than that which is affixed to the Premises so that it
cannot
      be
      removed without material damage to the Premises, shall remain the property
      of
      Lessee and may be removed by Lessee subject to the provisions of Paragraph
      7.2.

     

    7.6
      Lessor's Option.
      Upon
      reasonable advance notice and notwithstanding anything to the contrary contained
      herein and in addition to the rights provided Lessor in Paragraph 7.3, Lessor
      may at its option (but shall not be required to) enter upon the Premises
      at any time during
      the term hereof and perform any maintenance, repairs or alterations which Lessor
      is entitled to perform under
      the
      terms of the Lease, and Lessee shall pay Lessor Lessee's share of the cost
      of
      any such maintenance, repairs or alterations, as
      such
      share shall be equitably determined by Lessor, promptly upon Lessor's billing
      Lessee therefor. Lessor's reasonable determination
      thereof, in good faith, shall be conclusive. Lessor agrees to perform any such
      work in a manner which reasonably minimizes disruption to Lessee's business
      activities.

     

    8.
      Insurance and Indemnity.

     

    8.1
      Insuring Party.
      As used
      in this Paragraph 8, the term "insuring party" shall mean Lessor. Lessee shall
      reimburse Lessor for the
      cost
      of the insurance obtained in monthly installments as additional rent hereunder
      in accordance with the provisions of Paragraph
      16.24. If the Premises is a part of a larger building or group of buildings
      and
      is not separately insured, Lessee's liability shall
      be
      an equitable proportion of the insurance costs for all of the insured property,
      such equitable proportion to be reasonably determined by Lessor in a manner
      reasonably satisfactory to Lessee.

    


    8.2
      Liability Insurance.
      Lessee,
      at its sole cost and expense, shall maintain during the term hereof
      comprehensive (commercial) general liability insurance on an "occurrence basis"
      against claims for "personal injury", including without limitation bodily
      injury, death and/or damage, occurring upon, in or about the Premises in a
      combined single limit or not less than $1,000,000 per occurrence and with policy
      aggregate limit of no less than $2,000,000 (or such higher amounts thereof
      as
      may be reasonably requested by Lessor not to exceed a policy aggregate limit
      of
      $5,000,000 from time to time during this Lease). Said insurance shall name
      Lessor as an additional insured; shall be written by companies and in form
      satisfactory to Lessor (which companies shall be authorized to do business
      in
      California); shall apply primary to any other comparable liability coverage;
      and
      shall contain an endorsement requiring thirty (30) days' prior written notice
      sent by certified or registered mail, return receipt requested, to Lessor at
      the
      address set forth below, or such other address as may be provided to any such
      insurer by Lessor, before cancellation thereof or change in the coverage, scope
      or amount of such policy or policies. Lessee shall provide Lessor with a
      Certificate of Insurance as evidence of such insurance within twenty (20) days
      of the date of this Lease. In the event Lessee fails to obtain such insurance
      as
      provided in this Lease, Lessor may obtain any such insurance, and the cost
      thereof shall be paid by Lessee as additional rent with the first payment of
      rent which is due subsequent to Lessor's incurring such cost, and Lessor shall
      have all remedies to collect the same as rent in the Lease provided, and/or
      as
      otherwise provided by law for the collection of rent. The policy shall contain
      "cross-liability" or "separation of insureds" coverage and shall insure
      performance by Lessee of the indemnity provisions of this Paragraph 8. The
      limits of said insurance shall not, however, limit the liability of Lessee
      hereunder. In the event that the Premises constitutes a part of a larger
      property, said insurance shall have a Lessor's Protective Liability endorsement
      attached thereto. 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8.3
      Property Insurance.

    


    (a)
      The
      insuring party shall obtain and keep in force during the term of this lease
      a
      policy or policies of insurance covering loss or damage
      to
      the Premises, in the amount of the full replacement value thereof, as the same
      may exist from time to time, which replacement value is now $2,000,000.00,
      against all perils included within the classification of fire, extended
      coverage, vandalism, malicious
      mischief, special extended perils (all risk), sprinkler leakage and,
      at
      Lessors option, earthquake. Said insurance shall provide
      for payment of loss thereunder to lessor or to the holders of mortgages or
      deeds
      of trust on the Premises. The insuring party shall,
      in
      addition, obtain and keep in force during the term of this Lease a policy of
      rental income insurance covering a period of twelve
      (12) months, with loss payable to Lessor, which insurance shall also cover
      all
      real estate taxes and insurance costs for said period.
      If such insurance coverage has a deductible clause, Lessee shall be liable
      for
      the deductible amount.

    


    (b)
      If
      the Premises are part of a larger building, or if the Premises are part of
      a
      group of buildings owned by Lessor which are adjacent to the Premises, then
      Lessee shall pay for any increase in the property insurance of such other
      building or buildings if said increase is caused by Lessee's acts, omissions,
      use or occupancy of the Premises.

    


    (c)
      Lessee shall not do or permit to be done anything which shall invalidate the
      insurance policies referred to in Paragraph 8.3. If Lessee does or permits
      to be
      done anything which shall increase the cost of the insurance policies referred
      to in Paragraph 8.3, then Lessee shall forthwith upon Lessor's demand reimburse
      Lessor for any additional premiums attributable to any act or omission or
operation
      of Lessee causing such increase in the cost of insurance.

    


    8.4
      Waiver of Subrogation.
      Lessee
      and Lessor each hereby waive any
      and
      all rights of recovery against the other, or against the officers,
      employees, agents and representatives of the other, for loss of or damage to
      such waiving party or its property or the property
      of others under its control to the extent that such loss or damage is insured
      against under any insurance policy in force at the time
      of
      such loss or damage. The insuring party shall, if possible, in obtaining the
      policies of insurance required hereunder, obtain policies
      which permit such waiver.

     

    8.5
      Indemnity.
      Lessee
      shall indemnify and hold harmless Lessor from and against any and all claims
      arising out of any alleged defective
      or unsafe condition of the Premises and from Lessee's use of the Premises,
      or
      from the conduct of Lessee's business or from
      any
      activity, work or things done, permitted or suffered by Lessee in or about
      the
      Premises or elsewhere unless due to the willful acts
      or
      gross negligence of Lessor, its employees, agents or contractors and shall
      further indemnify and hold harmless Lessor from and
      against any and all claims arising from any breach or default in the performance
      of any obligation on Lessee's part to be performed under the terms-of
      this
      Lease, or arising from willful acts or gross negligence of Lessee, or any of
      Lessee's agents, contractors,
      or employees, and from and against all costs, attorneys' fees, expenses and
      liabilities incurred in the defense of any such claim or any action or
      proceeding brought thereon; and in case any action or proceeding be brought
      against Lessor by reason of any such
      claim, Lessee upon notice from Lessor shall defend the same at Lessee's expense
      by counsel satisfactory to Lessor. Lessee, as a material part of 'he
      consideration to Lessor, hereby assumes all risk of damage to property or injury
      to persons in, upon, or about the Premises arising from any cause and Lessee
      hereby waives all claims in respect thereof against Lessor.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8.6
      Exemption of Lessor from Liability.
      Unless
      due to the willful acts or gross negligence of Lessor, its employees, agents
      or
contractors,
      Lessor shall not be liable for injury to Lessee's business or any loss of income
      therefrom or for damage to the goods, wares,
      merchandise or other property of Lessee, Lessee's employees, invitees,
      customers, agents, contractors, or any other person in or
      about
      the Premises, nor shall Lessor be liable for injury to the person of Lessee,
      Lessee's employees, invitees, customers, agents or contractors, whether such
      damage or injury is caused by or results from fire, steam, electricity, gas,
      water or rain, or from the breakage,
      leakage, obstruction or other defects of pipes, sprinklers, wires, appliances,
      plumbing, air conditioning or lighting fixtures, or from any other cause,
      whether the said damage or injury results from conditions arising upon the
      Premises or upon other portions of the building of which the Premises is a
      part,
      or from other sources or places, and regardless of whether the cause of such
      damage or
      injury
      or the means of repairing the same is inaccessible to Lessee. Lessor shall
      not
      be liable for any damages arising from any act
      or
      neglect of any other tenant, if any, of the building in which the Premises
      is
      located.

     

    9.
      Damage or Destruction.

    


    9.1
      If the
      Premises shall be partially damaged by fire or other cause, then the Premises
      shall be repaired by and at the expense of Lessor
      and the rent, until such repairs shall be made, shall be apportioned according
      to the part of the Premises which is usable by Lessee.
      No penalty shall accrue for reasonable delay which may arise by reason of
      adjustment of fire insurance on the part of Lessor or
      Lessee, for reasonable delay on account of "labor troubles", or any other cause
      beyond Lessors control. If (i) the Premises are totally
      damaged or are rendered wholly untenantable, (ii) the Premises are totally
      or
      partially damaged by uninsured fire or other uninsured
      cause, or (iii) the Premises shall be so damaged that Lessor shall decide to
      demolish the entire Premises, then within ninety
      (90) days after the occurrence of the event or damage or destruction Lessor
      may
      elect, by written notice to Lessee, to terminate
      this Lease. In such event, the term of this Lease shall expire by lapse of
      time
      upon the third day after such notice is given, and
      Lessee shall vacate the Premises and surrender the same to Lessor. If Lessor
      does not elect to terminate this Lease pursuant to the
      preceding sentence, then: Lessor shall diligently undertake and prosecute to
      completion the repair of the Premises, to substantially
      their condition immediately prior to the event of damage or destruction; and
      rent shall be apportioned according to the part
      of
      the Premises which is usable by Lessee, until such restoration or rebuilding
      is
      complete. Notwithstanding anything to the contrary
      contained herein, if Lessor notifies Lessee of Lessor's election to terminate
      this Lease pursuant to the foregoing, then for a period of ten (10) days
      following Lessee's receipt of written notice of such election, Lessee may elect,
      by written notice to Lessor, at Lessee's own cost and expense, to restore or
      rebuild the Premises to substantially their condition immediately prior to
      the
      event of damage
      or
      destruction, in which event: (i) this Lease shall continue thereafter in full
      force and effect, as if Lessors election to terminate had never been made;
      (ii)
      Lessee shall diligently cause the Premises to be restored or rebuilt in
      accordance with the foregoing;
      and (iii) rent shall be apportioned according to the part of the Premises which
      is usable by Lessee until such restoration or rebuilding is complete, to the
      extent of rental loss insurance available to Lessor.

    


    Notwithstanding
      anything to the contrary contained herein, in the event that Lessor does not
      or
      may not elect to terminate this Lease
      pursuant to the terms of this Paragraph 9.1, then within sixty (60) following
      the occurrence of any event of damage or destruction
      to the Premises, Lessor shall provide Lessee with written notice, prepared
      by a
      licensed California contractor, reasonably estimating
      the period of time which will be required to repair or rebuild the Premises
      to
      substantially the condition in which they existed
      immediately prior to such damage or destruction. If such reparation or
      rebuilding is not reasonably estimated to be complete within two hundred forty
      (240) days following the occurrence of such damage or destruction, then Lessee
      may elect by written notice to Lessor with ten (10) business days of Lessor's
      notice to terminate this Lease in which event: (i) the term of this Lease shall
      expire by
      lapse
      of time upon the third day after such notice is given, and (ii) Lessee shall
      vacate the Premises and surrender the same to Lessor.

    


    No
      penalty shall accrue for reasonable delay which may arise by reason of
      adjustment of fire insurance on the part of Lessor or Lessee, for reasonable
      delay on account of "labor troubles", or any other cause beyond the control
      of
      Lessor or Lessee.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.2
      Damage Near End of Term.
      If the
      Premises are partially destroyed or damaged during the last six (6) months
      of
      the term of this
      Lease, either party hereto may at its option cancel and terminate this Lease
      as
      of the date of occurrence of such damage by giving
      notice to the other party of its election to do so within thirty (30) days
      after
      the date of occurrence of such damage.

    


    9.3
      Termination - Advance Payments.
      Upon
      termination of this Lease pursuant to this Paragraph 9, an equitable adjustment
      shall be
      made
      concerning advance rent and any advance payments made by Lessee to Lessor.
      Lessor shall, in addition, return to Lessee so
      much
      of Lessee's security deposit as has not theretofore been applied by
      Lessor. 

    


    9.4
      Waiver.
      Lessee
      waives the provisions of California Civil Code Sections 1932(2) and 1933(4)
      which relate to termination of leases when the thing leased is destroyed and
      all
      rights under any law in existence during the term of this Lease authorizing
      a
      tenant to make repairs at the expense of a landlord or to terminate a lease
      on
      complete or partial destruction of the leased premises, and agrees that any
      such
      event shall be governed by the terms of this Lease.

     

    10.
      Real Property Taxes.

     

    10.1
      Payment of Taxes.
      Lessee
      shall pay to Lessor in monthly installments, as additional rent, Lessee's share
      of the real property taxes
      applicable to the Premises in accordance with the provisions of Paragraph
      16.24.

     

    10.2
      Definition of "Real Property" Tax.
      As used
      herein, the term "real property tax" shall include any form of assessment,
      license fee,
      commercial rental tax, levy, penalty, or tax (other than inheritance or estate
      tax or State or Federal income tax of Lessor), imposed
      by any authority having the direct or indirect power to tax, including any
      city,
      county, state or federal government, or any school,
      agricultural, lighting, drainage or other improvement district
      thereof,
      as
      against any legal or equitable interest of Lessor in the Premises
      or in the real property of which the Premises are a part, as against Lessor's
      right to rent or other income therefrom, or as against
      Lessor's business of leasing the Premises or any tax imposed in substitution,
      partially or totally, of any tax previously included
      within the definition of real property tax, or any additional tax the nature
      of
      which was previously included within the definition of
      real
      property tax. Any surcharge or regulatory fee imposed by any governmental entity
      with reference to parking applicable to the Premises
      shall also be included within the term "real property tax."

     

    10.3
      Proration of Taxes.
      If the
      Premises are not separately assessed, Lessee's liability shall be an equitable
      proportion of the real property
      taxes for all of the land and improvements included within the tax
      parcel assessed, such proportion to be determined by Lessor
      from the respective valuations assigned in the assessor's work sheets or such
      other information as may be reasonable available.
      Lessor's reasonable determination thereof shall be reasonably acceptable to
      Lessee.

     

    10.4
      Personal Property Taxes.

    


    (a)
      Lessee shall pay prior to delinquency all taxes assessed against and levied
      upon
      trade fixtures, furnishings, equipment and all other personal property of Lessee
      contained in the Premises or elsewhere. When possible, Lessee, shall cause
      said
      trade fixtures, furnishings,
      equipment and all other personal property to be assessed and billed separately
      from the real property of Lessor.

    


    (b)
      If
      any of Lessee's said personal property shall be assessed with Lessor's real
      property, Lessee shall pay Lessor the taxes attributable
      to Lessee in accordance with the provisions of Paragraph 16.24.

     

    11.
      Utilities. Lessee
      shall pay for all water, gas, heat, light, power, telephone and other utilities
      and services supplied to the Premises, together with any taxes thereon. If
      any
      such services are not separately metered to Lessee, Lessee shall pay a
      reasonable proportion to be determined
      by Lessor of all charges jointly metered with other premises.

     

    12.
      Assignment. Mortgage and Subletting. (See Addendum-Paragraph
      21.)

    


    12.1
      Lessor's Consent.
      Neither
      Lessee, nor Lessee's legal representatives, successors or assigns, shall assign,
      mortgage or encumber
      this Lease, or sublet, or use or occupy or permit the Premises or any part
      thereof to be used or occupied by others, without the
      prior
      consent of Lessor and the payment of any applicable processing fee in each
      instance, and any such assignment, mortgage, encumbrance,
      sublease or permission without such consent and payment shall be voidable at
      the
      option of Lessor and, at the further
      option of Lessor, shall terminate this Lease subject to the provisions of
      Paragraph 13 "Defaults; Remedies". If this Lease
      be
      assigned, or if the Premises or any part thereof be sublet or occupied by any
      party other than Lessee, Lessor may, after default
      by Lessee, collect rent from the assignee, subtenant or occupant,
      and
      apply the net amount collected to the rent herein reserved,
      but no such assignment, subletting, occupancy or collection shall be deemed
      a
      waiver of this covenant or the acceptance of the
      assignee, subtenant or occupant as tenant, or a release of Lessee from the
      further performance by Lessee of the obligations on the
      part
      of Lessee herein contained. The consent by Lessor to an assignment or subletting
      shall not in any wise be construed to relieve
      Lessee, the assignee or the subtenant from obtaining the express consent of
      Lessor to any further assignment or subletting or to release Lessee from any
      liability, whether past, present or future, under this Lease or to release
      Lessee from any liability under this Lease
      because of Lessor's failure to give notice of default under or in respect of
      any
      of the terms, covenants, conditions, provisions or agreements
      of this Lease. Notwithstanding the consent of Lessor to such assignment or
      subletting, Lessee shall remain liable for the payment
      of all bills rendered by Lessor for the charges incurred by the assignee or
      subtenant for services and materials supplied to the
      Premises. A transfer of control of Lessee shall be deemed an assignment under
      this Lease and shall be subject to all the provisions
      of this Article, including but not limited to the requirement of obtaining
      Lessor's prior consent, unless Lessee at the time of the
      proposed transfer is then a publicly held corporation freely traded on a major
      stock exchange.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Notwithstanding
      any contrary provision of the immediately preceding provisions of this Paragraph
      12.1, but subject to the provisions
      of Subparagraph 12.2(b), Lessee may assign this Lease or sublet the Premises
      or
      any portion thereof upon the following express
      conditions:

    


    (1)
      that
      the proposed assignee or subtenant shall be subject to the prior consent of
      Lessor, which consent will not be unreasonably
      withheld or delayed more than ten (10) business days after Lessor's receipt
      of
      all information required from Lessee but, without
      limiting the generality of the foregoing, it shall be reasonable for Lessor
      to
      deny such consent if:

     

    (a)
      the
      use to be made of the Premises by the proposed assignee or subtenant is a use
      which would be prohibited by any other portion
      of this Lease (including but not limited to any Rules and Regulations then
      in
      effect) or a use which would impose any additional
      burden upon Lessor in the operation of the Building; however, Lessor shall
      not
      unreasonably withhold its consent to a use differing
      from those set forth in Paragraph 6.1 of this Lease; or

    (b)
      the
      character, moral stability, reputation and financial responsibility of the
      proposed assignee or subtenant are not reasonably satisfactory
      to Lessor or in any event not at least equal to those which were possessed
      by
      Lessee as of the date of execution of this Lease;

    (2)
      that
      Lessee shall reimburse Lessor for all reasonable costs incurred by Lessor in
      connection with such assignment or subletting
      including without limitation all attorneys' fees applicable
      thereto;

    


    (3)
      that
      the proposed assignee or subtenant shall execute an agreement pursuant to which
      it shall agree to perform faithfully and be bound
      by
      all of the terms, covenants, conditions, provisions and agreements of this
      Lease;

    


    (4)
      that
      an executed duplicate original of said assignment and assumption agreement
      or
      sublease, as the case may be, on Lessor's then
      standard form, shall be delivered to Lessor within five (5) days after the
      execution thereof, and that such assignment or subletting
      shall not be binding upon Lessor until the delivery thereof to Lessor;
      and

    


    (5)
      that
      Lessee shall pay to Lessor, as additional rent, one-half (1/2) of any
      consideration given to Lessee by the proposed assignee or
      subtenant for or in connection with such assignment or subletting. Lessor and
      Lessee have each given full consideration to the possibility
      that the rental value of the Premises may appreciate during the term of the
      Lease. In such regard, Lessor and Lessee have expressly
      allocated the possibility of such rental value increase as part of their
      negotiations of this Lease. Lessor and Lessee freely negotiated all of the
      terms
      and conditions of this Lease, including but not limited to, the possibility
      that
      this Lease may be terminated by
      Lessor
      pursuant to this Paragraph 12 Lessor and Lessee expressly thus agree that any
      such rental increase value is not an element of value or property right granted
      to Lessee, and that Lessor retains all rights thereto, including, but not
      limited to, the termination
      and allocation rights herein set forth.

    


    12.2
      Procedure.

    


    (a)
      At
      least thirty (30) days prior to any proposed subletting or assignment or
      mortgage, Lessee shall submit to Lessor a statement containing the name and
      address of the proposed subtenant or assignee or mortgagee and all of the
      principal terms and conditions of the
      proposed subletting or assignment or mortgage including, but not limited to,
      in
      the event of a subletting the proposed commencement
      and expiration dates of the term thereof. If the proposed sublet area shall
      not
      constitute the entire Premises, such statement
      shall be accompanied by a floor plan delineating the proposed sublet area.
      Lessor shall have a reasonable amount of time but
      in no
      event less than ten (10) business days from the receipt of any such notice
      to
      consent, decline to consent or make one of the elections
      provided in Subparagraph (b) below.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)
      In
      lieu of consenting or not consenting, Lessor may, at its option (i) terminate
      this Lease in its entirety if Lessee submits a written
      request for an assignment or subletting, for substantially the entire remaining
      term of the Lease, of the Premises in its entirety, (ii)
      elect to enter into a lease directly with the proposed assignee or with the
      proposed subtenant as to that portion of the Premises which
      Lessee has proposed to sublet, (iii) terminate this Lease as to that portion
      of
      the Premises which Lessee had proposed to sublet,
      or (iv) elect, where the rental charged in the sublease exceeds the pro rata
      portion of the rental for such space charged in this Lease, to receive from
      Lessee monthly, as additional rent, one-half (1/2) of the excess of the rental
      charged in the sublease, over the rental
      charged in this Lease for the subleased space, after deducting from such
      one-half of the excess the amounts, if any, which Lessee
      has reimbursed Lessor pursuant to Paragraph 12.1.(2), Lessor's termination
      rights under this subparagraph shall be exercisable only in the case of (i)
      a
      sublease or assignment occurring with the last two (2) years of the Lease Term
      or (ii) a sublease
      or assignment of more than fifty percent (50%) of the floor area of the
      buildings comprising the Premises.

     

    12.3
      Bankruptcy.

    


    (a)
      If
      Lessee shall file a petition for voluntary bankruptcy or reorganization under
      any provision of the Bankruptcy Code as then in effect,
      or if Lessee be adjudicated a bankrupt in involuntary bankruptcy proceedings
      and
      such adjudication shall not have been vacated
      within ninety (90) days from the date thereof, or a receiver or trustee be
      appointed of Lessee’s property in any involuntary proceeding and the order
      appointing such receiver or trustee be not set aside or vacated within ninety
      (90) days after the entry thereof,
      or if Lessee shall assign Lessee’s estate or effects for the benefit of
      creditors, or if Lessee becomes insolvent, or if this Lease shall otherwise
      by
      operation of law devolve or pass to any person or persons other than Lessee,
      then and in any such events Lessor may,
      at
      its option, with or without notice of such election and with or without entry
      or
      action by Lessor, forthwith terminate this Lease, and
      notwithstanding any other provisions of this Lease, Lessor, in addition to
      any
      and all rights and remedies allowed by law or equity,
      shall upon such termination be entitled to recover damages in an amount equal
      to
      the then present value of the rent reserved in
      this
      Lease for the entire residue of the stated term hereof, less the fair rental
      value of the Premises for the residue of the stated term hereof, and neither
      Lessee nor any person claiming through or under Lessee or by virtue of any
      statute or order of any court shall be entitled to possession of the Premises
      but shall forthwith quit and surrender the Premises to Lessor.

    


    (b)
      Without limiting any of the foregoing provisions of this Paragraph, if pursuant
      to the Bankruptcy Reform Act of 1978 Lessee is permitted to assign this Lease
      notwithstanding the restrictions contained in this Lease, Lessee agrees that
      adequate assurance of future
      performance by an assignee expressly permitted under such Code shall be deemed
      to mean the deposit of cash security in an amount equal to the sum of one year's
      rent reserved hereby plus an amount equal to additional rent under Paragraph
      4.1
      hereof for the
      calendar year preceding the year in which such assignment is intended to become
      effective, which deposit shall be held by Lessor
      in
      accordance with Paragraph 5 for the balance of the term, without interest,
      as
      security for the full performance of all of the obligations under this Lease
      on
      Lessee's part to be performed.

     

    12.4
      Identification of Lessee.

    


    (a)
      If
      more than one person executes this Lease as Lessee, (i) each of them shall
      be
      jointly and severally liable for the keeping, observing and performing of all
      of
      the terms, covenants, conditions, provisions and agreements of this Lease to
      be
      kept, observed and
      performed by Lessee, and (ii) the term "Lessee" as used in this Lease shall
      mean
      and include each of them jointly and severally and
      the
      act of or notice from, or notice or refund to, or the signature of, any one
      or
      more of them, with respect to tenancy of this Lease,
      including, but not limited to any renewal, extension, expiration, termination
      or
      modification of this Lease as Lessee shall have the
      same
      force and effect as if each and all of them had so acted or so given or received
      such notice or refund or so signed.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)
      If
      Lessee is a partnership (or is comprised of two or more persons, individually
      and as co-partners of a partnership) or if Lessee's interest in this Lease
      shall
      be assigned to a partnership (or to two or more persons individually and as
      co-partners of a partnership) pursuant to Paragraph 12.2 hereof (any such
      partnership and such persons are referred to in this Subparagraph as
Partnership
      Tenant): (i) the liability of each of the parties comprising Partnership Tenant
      shall be joint and several, and (ii) each of the parties
      comprising Partnership Tenant hereby consents in advance to, and agrees to
      be
      bound by, any written instrument which may hereafter
      be executed, changing, modifying or discharging this Lease, in whole or in
      part,
      or surrendering all or any part of the Premises
      to Lessor, any notices, demands, requests or other communications which may
      hereafter be given by Partnership Tenant or any of the parties comprising
      Partnership Tenant, and (iii) any bills, statements, notices, demands, requests
      or other communications given or rendered to Partnership Tenant or to any of
      the
      parties comprising Partnership Tenant shall be deemed given or rendered to
      Partnership
      Tenant and to all such parties and shall be binding upon Partnership Tenant
      and
      all such parties, and (iv) if Partnership Tenant
      shall admit new partners, all of such new partners shall, by their admission
      to
      Partnership Tenant, be deemed to have assumed
      performance of all of the terms, covenants -and conditions of this Lease on
      Lessee's part to be observed and performed, and (v)
      Partnership Tenant shall give prompt notice to Lessor of the admission of any
      such new partners, and, upon demand of Lessor, shall cause each such new partner
      to execute and deliver to Lessor an agreement in form satisfactory to Lessor,
      wherein each new partner shall assume performance of all of the terms, covenants
      and conditions of this Lease on Lessee's part to be observed and performed,
      but
      neither Lessor's failure to request any such agreement nor the failure of any
      such new partner to execute or deliver any
      such
      agreement to Lessor shall vitiate the provisions of this Subparagraph.
      Notwithstanding the foregoing, the individual shareholders,
      officers and directors of the partnership corporations shall not be personally
      liable hereunder.

     

    13.
      Defaults; Remedies.

    


    13.1
      Defaults.
      The
      occurrence of any one or more of the following events shall constitute a
      material default and breach of this Lease
      by
      Lessee:

    


    (a)
      The
      vacating or abandonment of the Premises by Lessee for three (3) consecutive
      months.

    


    (b)
      The
      failure by Lessee to make any payment of rent or any other payment required
      to
      be made by Lessee hereunder, as and when due after three (3) days’ notice having
      been given by Lessor to Lessee.

    


    (c)
      The
      failure by Lessee to observe or perform any of the covenants, conditions or
      provisions of this Lease to be observed or performed by Lessee, other than
      described in paragraph (b) above, where such failure shall continue for a period
      of thirty (30) days after
      written notice hereof from Lessor to Lessee; provided, however,
      that if
      the nature of Lessee's default is such that more than thirty (30)
      days
      are reasonably
      required for its cure, then Lessee shall not be deemed to be in default if
      Lessee commenced such cure within said thirty (30) day period and thereafter
      diligently pursues such cure to completion.

    


    (d)(i)
      The making by Lessee of any general assignment or general arrangement for the
      benefit of creditors;'(ii) the filing by or against Lessee of a petition to
      have
      Lessee adjudged a bankrupt or a petition for reorganization or arrangement
      under. any law relating to bankruptcy (unless, in the case of a petition filed
      against Lessee, the same is dismissed within ninety (90) days); (iii) the
      appointment of a trustee or receiver to take possession of substantially all
      of
      Lessee's assets located at the Premises or of Lessee's interest in this Lease,
      where possession is not restored to Lessee within
      ninety
      (90) days; or (iv) the attachment, execution or other judicial seizure of
      substantially all of Lessee's assets located at the Premises or of Lessee's
      interest in this Lease, where such seizure is not discharged within ninety
      (90)
      days.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)
      The
      discovery by Lessor that any financial statement given to Lessor by Lessee,
      an
      assignee of Lessee, any subtenant of Lessee, any successor in interest of Lessee
      or any guarantor of Lessee's obligations hereunder, and any of them, was
      materially false.

    


    (f)
      The
      removal by Lessee of substantially all of Lessee's furniture from the Premises
      for three (3) consecutive months.

    


    (g)
      The
      failure by Lessee to move into or take possession of the Premises within fifteen
      (15) days after the commencement of the term of this Lease.

    


    (h)
      Deleted.

    


    (i)
      Deleted.

    


    (j)
      Any
      default by Lessee with respect to any other lease between (i) Lessor and Lessee,
      or (ii) any parent company or subsidiary company or affiliate or agent of Lessor
      and Lessee.

    


    (k)
      The
      assignment or other transfer by Lessee of substantially all of the assets used
      in connection with the business conducted in the Premises.

    


    13.2
      Remedies.
      In the
      event of any such material default or breach by Lessee, Lessor may at any time
      thereafter, with or without notice or demand and without limiting Lessor in
      the
      exercise of any right or remedy which Lessor may have by reason of such default
      or breach:

    


    (a)
      Terminate Lessee's right to possession of the Premises by any lawful means,
      in
      which case this Lease shall terminate and Lessee shall immediately surrender
      possession of the premises to Lessor.

    


    (b)
      Maintain Lessee's right to possession in which case this Lease shall continue
      in
      effect whether or not Lessee shall have abandoned the Premises. In such event
      Lessor shall be entitled to enforce all of Lessor's rights and remedies under
      this Lease, including the right to recover the rent as it becomes due hereunder.
      Lessor shall not be deemed to have elected to terminate unless Lessor gives
      Lessee notice of such election to terminate, and in no event shall Lessor's
      acts
      of maintenance or preservation of the Premises, efforts to relet the Premises,
      or obtaining the appointment of a receiver to protect the interest of Lessor
      under this Lease be deemed to constitute such termination.

    


    (c)
      Pursue any other remedy now or hereafter available to Lessor under the laws
      or
      judicial decisions of the State in which the Premises are located.

    


    (d)
      In
      the event Lessor elects to terminate this Lease and Lessee's right to possession
      in accordance with this Paragraph, or the same are terminated by operation
      of
      law, Lessor may recover as damages from Lessee the following:

    


    (i)
      The
      worth at the time of award of the unpaid rental (including but not limited
      to
      any additional rent payable under Paragraph 4.1 hereof even if determined at
      a
      later date) and other sums due hereunder which had been earned at the time
      of
      the termination of this Lease, and (ii) The worth at the time of award of the
      amount by which the unpaid rental (including but not limited to any additional
      rent payable under Paragraph 4.1 hereof) and other sums due hereunder which
      would have been earned after the date of termination of this Lease until the
      time of award exceeds the amount of such loss of rental and other sums due
      that
      Lessee proves could have been reasonably avoided; and (iii) The worth at the
      time of the award of the amount by which the unpaid rental (including but not
      limited to any additional rent payable under Paragraph 4.1 hereof) and other
      sums due hereunder for the balance of the term after the time of award exceeds
      the amount of the loss of such rental and other sums that Lessee proves could
      be
      reasonably avoided: and (iv) Any other amount, including attorneys' fees and
      court costs, necessary to compensate Lessor for all detriment proximately caused
      by Lessee's act of default or which in the ordinary course of things would
      be
      likely to result therefrom. The "worth at the time of award" of the amounts
      referred to in (i) and (ii) above, is computed by allowing interest at the
      maximum rate allowed by law. The "worth at the time of award" of the amount
      referred to in (iii) above, is computed by discounting such amount at the
      discount rate of the Federal Reserve Bank of San Francisco at the time of award
      plus one percent.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    13.3
      Late Charges.
      Lessee
      hereby acknowledges that late payment by Lessee to Lessor of rent and other
      sums
      due hereunder will cause Lessor to incur costs not contemplated by this Lease,
      the exact amount of which will be extremely difficult to ascertain. Such costs
      include, but are not limited to, processing and accounting charges, and late
      charges which may be imposed on Lessor by the terms of any mortgage or trust
      deed covering the Premises. Accordingly, if any installment of rent or any
      other
      sum due from Lessee shall not be received by Lessor or Lessor's designee within
      ten (10) days after such amount shall be due, Lessee shall pay to Lessor a
      late
      charge equal to 6% of such overdue amount. The parties hereby agree that such
      late charge by Lessor shall in no event constitute a waiver of Lessee's default
      with respect to such overdue amount, nor prevent Lessor from exercising any
      of
      the other rights and remedies granted hereunder. If the payment of rent is
      received late for two consecutive months or more than four times within any
      twelve month period, then, upon notice to Lessee by Lessor, rent for the balance
      of the Lease term shall be payable quarterly, in advance.

    


    14.
      Condemnation.
      If the
      Premises or any portion thereof are taken under the power of eminent domain,
      or
      sold under the threat of the exercise of said power (all of which are herein
      called "condemnation"), this Lease shall terminate as to the part so taken
      as of
      the date the condemning authority takes title or possession, whichever first
      occurs. If more than 10% of the floor area of the improvements on the Premises,
      or more than 25% of the land area of the Premises which is not occupied by
      any
      improvements, is taken by condemnation, Lessor or Lessee may, at either party's
      option, to be exercised in writing only within ten (10) days after Lessor shall
      have given Lessee written notice of such taking (or in the absence of such
      notice, within ten (10) days after the condemning authority shall have taken
      possession) terminate this Lease as of the date of the condemning authority
      takes possession. If neither party terminates this Lease in accordance with
      the
      foregoing, this Lease shall remain in full force and effect as to the portion
      of
      the Premises remaining, except that the rent shall be reduced in proportion
      that
      the floor area taken bears to the total floor area of the building situated
      on
      the Premises. Any award for the taking of all or any part of the Premises under
      the power of eminent domain or any payment made under threat of the exercise
      of
      such power shall be the property of Lessor, whether such award shall be made
      as
      compensation for diminution in value of the leasehold or for the taking of
      the
      fee, or as severance damages. In the event that this Lease is not terminated
      by
      reason of such condemnation, Lessor shall, to the extent of severance damages
      received by Lessor in connection with such condemnation, repair any damage
      to
      the Premises caused by such condemnation except to the extent that Lessee has
      been reimbursed therefor by the condemning authority. Lessee shall pay any
      amount in excess of such severance damages required to complete such
      repair.

    


    15.
      Brokers.
      In
      connection with this Lease, Lessee and Lessor warrant and represent to each
      other that neither has had dealings with any broker or finder and that each
      knows of no person who is or might be entitled to a commission, finder's fee
      or
      other like payment in connection herewith and do hereby indemnify and agree
      to
      hold each other harmless from and against any and all loss, liability and
      expenses that the other may incur should such warranty and representation prove
      incorrect.

    


    16.
      General Provisions.

    


    16.1
      Estoppel Certificate.

    


    (a)
      Lessee shall, each time and from time to time upon receipt of request therefor
      from Lessor, within five (5) business days after receipt of such request,
      execute, acknowledge and deliver to Lessor a statement in writing addressed
      to
      Lessor or its designee: (i) certifying that this Lease is unmodified and in
      full
      force and effect (or, if modified, stating the nature of such modification
      and
      certifying that this Lease as so modified is in full force and effect), (ii)
      setting forth the dates to which the rental and other charges are paid (and
      if
      any amounts are paid in advance so stating), and (iii) acknowledging that there
      are not any uncured defaults on the part of Lessor or Lessee (or if any defaults
      are claimed, specifying the same). Such statement as given by Lessee (or Lessor
      pursuant to subparagraph (b) hereof) may be relied upon by a prospective
      purchaser or encumbrancer of the real property or any part thereof of which
      the
      Premises are a part. Lessor shall also agree to provide, upon request by Lessee,
      and within five (5) days of request, the same information as described in
      16.1(a)(i), (ii) and (iii).

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)
      The
      failure or refusal of Lessee to deliver the statement(s) as requested by Lessor
      pursuant to subparagraph (a) hereof within the time provided shall, at the
      option of Lessor, constitutes a default under this Lease, and in the event
      of
      any such failure or refusal Lessee shall be conclusively bound by any statement
      of such import given by Lessor.

    


    (c)
      If
      Lessor desires to finance or refinance the Premises, or any part thereof, and
      from time to time during the term of this Lease, at the sole discretion of
      Lessor, Lessee hereby agrees to deliver to any lender designated by Lessor
      such
      financial statements and tax returns of Lessee as may be reasonably requested
      by
      Lessor. Such statements shall include the past three years' financial statements
      of Lessee or such shorter period based on the time Lessee has been in existence.
      All such financial statements shall be received in confidence and shall be
      used
      only for the purposes herein set forth.

    


    16.2
      Lessor's Liability.
      The term
“Lessor” as used herein shall mean only the owner or owners at the time in
      question of the fee title or a lessee's interest in a ground lease of the
      Premises. In the event of any transfer of such title or interest, Lessor herein
      named (and in case of any subsequent transfers the then grantor) shall be
      relieved from and after the date of such transfer of all liability as respects
      Lessor's obligations thereafter to be performed, provided that any funds in
      the
      hands of Lessor or the then grantor at the time of such transfer, in which
      Lessee has an interest, shall be delivered to the grantee. The obligations
      contained in this Lease to be performed by Lessor shall, subject as aforesaid,
      be binding on Lessor's successors and assigns, only during their respective
      periods of ownership. Lessee agrees to look solely to Lessor’s estate and
      interest in the real property of which the Premises is a part (or the proceeds
      thereof) for the satisfaction of any remedy of Lessee for the collection of
      a
      judgment (or other judicial process) requiring the payment of money by Lessor
      in
      the event of any default by Lessor hereunder, and no other property or assets
      of
      Lessor or of any of the partners of Lessor shall be subject to levy, execution
      or other enforcement procedure for the satisfaction of Lessee's remedies under
      or with respect to this Lease, the relationship of Lessor and Lessee hereunder
      or Lessee's use or occupancy of the Premises. This Lease and the obligations
      of
      Lessee hereunder shall not be affected or impaired because Lessor is unable
      to
      fulfill any of its obligations hereunder or is delayed in doing so if such
      inability or delay is caused by reason of strike or labor troubles or any other
      cause beyond the reasonable control of Lessor.

    


    16.3
      Severability.
      The
      invalidity of any provision of this Lease as determined by a court of competent
      jurisdiction, shall in no way affect the validity of any other provision
      hereof.

    


    16.4
      Interest on Past-due Obligations.
      Except
      as expressly herein provided to the contrary, any amount due Lessor not paid
      when due shall bear interest at the maximum rate allowed by law from the date
      due. Payment of such interest shall not excuse or cure any default by Lessee
      under this Lease, provided, however, that interest shall not be payable on
      late
      charges incurred by Lessee nor on any amounts upon which late charges are paid
      by Lessee.

    


    16.5
      Time of Essence.
      Time is
      of the essence as to Lessee's obligations hereunder.

    


    16.6
      Captions.
      Article
      and paragraph captions are for convenience only and shall not be referred to
      for
      the purpose of limiting and construing this Lease in any way.

    


    16.7
      Incorporation of Prior Agreements; Amendments.
      This
      Lease contains all agreements of the parties with respect to any matter
      mentioned herein. No prior agreement or understanding pertaining to any such
      matter shall be effective. Except as otherwise stated in this Lease, Lessee
      hereby acknowledges that neither the real estate brokers listed in Paragraph
      15
      hereof nor any cooperating broker on this transaction nor the Lessor or any
      employees or agents of any of said persons has made any oral or written
      warranties or representations to Lessee relative to the condition or use by
      Lessee of the Premises, or the costs of operating or the taxes with respect
      to
      said Premises and Lessee acknowledges that Lessee assumes all responsibility
      regarding the Occupation Safety Health Act or the legal use or adaptability
      of
      the Premises and the compliance thereof to all applicable laws and regulations
      enforced during the term of this Lease except as otherwise specifically stated
      in this Lease. This Lease may be modified in writing only, signed by the parties
      in interest at the time of the modification.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    16.8
      Notices.
      Except
      as otherwise in this Lease provided, any notice, consent, approval, demand,
      statement, bill, or other communication which Lessor may desire or be required
      to give to Lessee, shall be deemed sufficiently given or rendered if, in
      writing, delivered Lessee personally to the Chief Executive Officer or Chief
      Financial Officer of Lessee or sent by registered or certified mail addressed
      to
      Lessee at the Premises or at the address set forth below, and at the time of
      the
      rendition of such bill or statement and of the giving of such notice, consent,
      approval, demand or communication shall be deemed to be the time when the same
      is delivered to Lessee, mailed, or left at the Premises as herein provided.
      Any
      notice, request, demand or communication by Lessee to Lessor must be served
      by
      registered or certified mail addressed to Lessor, at the address set forth
      below, or at such other address as Lessor shall designate by notice given as
      herein provided, and the time of giving such notice, request, demand or
      communication shall be deemed to be the time when the same is mailed as herein
      provided.

    


    16.9
      Waivers.
      No
      waiver by Lessor of any provision hereof shall be deemed a waiver of any other
      provision hereof or of any subsequent breach by Lessee of the same or any other
      provision. Lessor's consent to or approval of any act shall not be deemed to
      render unnecessary the obtaining of Lessor's consent to or approval of any
      subsequent act by Lessee. The acceptance of rent hereunder by Lessor shall
      not
      be a waiver of any preceding breach at the time of acceptance of such rent.
      No
      payment by Lessee or receipt by Lessor of a lesser amount than the monthly
      rent
      herein stipulated shall be deemed to be other than on account of the earliest
      stipulated rent, nor shall any endorsement or statement on any check or any
      letter accompanying any check or payment as rent be deemed an accord and
      satisfaction and Lessor may accept such check or payment without prejudice
      to
      Lessors right to recover the balance of such rent or pursue any other remedy
      in
      this Lease provided.

    


    16.10
      Recording.
      Lessee
      shall not record this Lease or a short form memorandum thereof without Lessor's
      prior consent, and any such recordation without Lessor's prior consent shall,
      at
      the option of Lessor, constitute a non-curable default of Lessee hereunder
      Lessee and Lessor shall execute and acknowledge a short form memorandum of
      this
      Lease for recording purposes in form and content acceptable to both
      parties.

    


    16.11
      Holding Over.
      If
      Lessee remains in possession of the Premises or any part thereof after the
      expiration of the term hereof without the express consent of Lessor, such
      occupancy shall be a tenancy from month-to-month at a rental equal to one and
      one-half (1 1/2) the amount of the last monthly rental plus all other charges
      payable hereunder, and upon all the terms hereof applicable to a month-to-month
      tenancy.

    


    16.12
      Cumulative Remedies.
      No
      remedy or election hereunder shall be deemed exclusive but shall, wherever
      possible, be cumulative with all other remedies at law or in
      equity.

    


    16.13
      Covenants and Conditions.
      Each
      provision of this Lease performable by Lessee shall be deemed both a covenant
      and a condition.

    


    16.14
      Binding Effect; Choice of Law.
      Subject
      to any provisions hereof restricting assignment, encumbrancing or subletting
      by
      Lessee and subject to the provisions of Paragraph 16.2, this Lease shall bind
      the parties, their personal representatives, successors and assigns. This Lease
      shall be governed by the laws of the State in which the Premises are
      located.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    16.15
      Subordination.

    


    (a)This
      Lease, at Lessor's option, shall be subordinate or superior to any ground lease,
      mortgage, deed of trust, or any other hypothecation for security now or
      hereafter placed upon the real property of which the Premises is a part and
      to
      any and all advances made on the security thereof and to all renewals,
      modifications, consolidations, replacements and extensions thereof.

    


    (b)
      Lessee agrees to execute any documents required to effectuate such subordination
      or to make this Lease prior to the lien of any mortgage, deed of trust or ground
      lease, as the case may be, provided Lessor shall furnish Lessee with a
      reasonably acceptable non-disturbance agreement.

    


    (c)
      Subject to all of the provisions of this Lease, including without limitations
      this Paragraph 16.15, Lessee agrees to attorn to a lender or any other party
      who
      acquires ownership of the Premises by reason of a foreclosure.

    


    16.16
      Attorneys' Fees. (See
      Addendum - Paragraph 22)

    


    (a)
      In
      the event that Lessor should bring suit for the possession of the Premises,
      for
      the recovery of any sum due under this Lease, or because of the breach of any
      provision of this Lease, or for any other relief against Lessee hereunder,
      then
      all costs and expenses, including reasonable attorneys' fees, incurred by Lessor
      therein shall be paid by Lessee, which obligation on the part of Lessee shall
      be
      deemed to have accrued on the date of the commencement of such action and shall
      be enforceable whether or not the action is prosecuted to
      judgement.

    


    (b)
      Should Lessor be named as a defendant in any suit brought against Lessee in
      connection with or arising out of Lessee's occupancy hereunder, Lessee shall
      pay
      to Lessor its costs and expenses incurred in such suit, including reasonable
      attorneys' fees.

    


    (c)
      Lessor and Lessee covenant and agree that in any suit or proceeding arising
      out
      of, under, or by virtue of this Lease, Lessor and Lessee do hereby waive trial
      by jury.

    


    16.17
      Lessor's Access. (See
      Addendum-Paragraph 23.)
      Lessor
      and Lessor's agents shall have the right to enter the Premises at reasonable
      times for the purpose of inspecting the same, showing the same to prospective
      purchasers, or lenders, or lessees, and making such alterations, repairs,
      improvements or additions to the Premises or to the building of which they
      are a
      part as may be reasonable required pursuant hereto. Lessor may at any time
      place
      on or about the Premises any ordinary "For Sale" signs and Lessor may at any
      time during the last 120 days of the term hereof place on or about the Premises
      any ordinary "For Lease" signs, all without rebate of rent or liability to
      Lessee.

    


    16.18
      Signs and Auctions. (See Addendum-Paragraph 24.)
      Lessee
      shall not place any sign upon the Premises or conduct any auction thereon
      without Lessor's prior consent.

    


    16.19
      Merger.
      The
      voluntary or other surrender of this Lease by Lessee, or a mutual cancellation
      hereof, or a termination by Lessor, shall not work as a merger, and shall,
      at
      the option of Lessor, terminate all or any existing subtenancies or may, at
      the
      option of Lessor, operate as an assignment to Lessor of any or all of such
      subtenancies.

    


    16.20
      Corporate Authority.
      If
      Lessee is a corporation, each individual executing this Lease on behalf of
      said
      corporation represents and warrants that he is duly authorized to execute and
      deliver this Lease on behalf of said corporation in accordance with a duly
      adopted resolution of the Board of Directors of said corporation or in
      accordance with the Bylaws of said corporation, and that this Lease is binding
      upon said corporation in accordance with its terms. If Lessee is a corporation
      Lessee shall, within thirty (30) days after execution of this Lease, deliver
      to
      Lessor a certified copy of a resolution of the Board of Directors of said
      corporation authorizing or ratifying the execution of this Lease.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    16.21
      Guarantor.
      In the
      event that there is a guarantor of this Lease, said guarantor shall have the
      same obligations as Lessee under Paragraphs 16.1 and 16.20 of this
      Lease.

    


    16.22
      Quiet Possession.
      Upon
      Lessee paying the fixed rent reserved hereunder and observing and performing
      all
      of the covenants, conditions and provisions on Lessee's part to be observed
      and
      performed hereunder, Lessee shall have quiet possession of the Premises for
      the
      entire term hereof subject to all of the provisions of this Lease, including
      without limitation the provisions of Paragraph 16.15.

    


    16.24
      Common Areas and Building Costs. As
      used
      herein, "Common Areas" shall mean all areas within the building and grounds
      which are not specifically leased or held for lease by Lessor, including,
      without limiting the foregoing, parking areas, driveways, sidewalks, loading
      areas, access and egress roads, corridors, landscaped and planted areas and
      all
      other improvements provided by Lessor for the common use of lessees. Lessor
      may
      from time to time change the size, location, nature, and use of any of the
      Common Areas including converting any portion of the Common Areas to leasable
      areas and increasing or decreasing common area land and/or
      facilities.

    


    Lessee,
      its employees, agents, customers, and business invitees shall have the
      non-exclusive right (in common with other lessees and all others whom Lessor
      has
      granted or may grant such rights) to use the Common Areas for the purposes
      intended, subject to such reasonable rules and regulations relating to such
      use
      as Lessor may from time to time establish. Lessee agrees, after notice thereof,
      to abide by such rules and regulations and to use its best efforts to cause
      its
      officers, employees, agents, customers, and business invitees to conform thereto
      Lessor may at any time close any Common Areas to effect construction, repairs,
      or changes thereto, or to prevent the acquisition of public rights in such
      areas, and may do such other acts in and to the Common Areas as in its judgement
      may be desirable to improve the convenience thereof. Lessee shall not at any
      time interfere with the rights of Lessor, or other lessees, or of any person
      entitled to use the Common Areas or to use any part thereof.

    


    Lessor
      shall operate, manage, equip, clean, sweep, remove refuse, light, patrol,
      repair, replace, and maintain the Common Areas for their intended purposes
      in
      such manner as Lessor shall in its sole discretion determine to be reasonably
      appropriate.

    


    Lessee
      shall pay to Lessor, in the manner provided in the following paragraph hereof,
      Lessee's pro-rata share of all the costs of operating, managing, leasing,
      maintaining, repairing, and replacing the Common Areas and the building of
      which
      the Premises forms a part. Such costs shall include all costs and expenses
      incurred by Lessor for the operation and maintenance of the Common Areas and
      the
      building of which the Premises forms a part during the Lease term (including
      appropriate reserves) including, without limiting the foregoing: costs and
      expenses of gardening and landscaping; water and sewage charges; maintenance
      and
      signs (other than Lessee's signs); premiums for liability, property damage,
      fire
      and other types of casualty and worker's compensation insurance (including,
      but
      not limited to, liability insurance procured by Lessor pursuant to Paragraph
      8.2); all taxes levied on or attributable to the Common Areas and the building
      of which the Premises forms a part (including, but not limited to, "real
      property taxes" as defined in Paragraph 10 2 and 10.4), fees for required
      licenses and permits; management and similar administrative fees; costs and
      expenses of repairs, resurfacing, repaving, maintenance, painting, lighting,
      cleaning, refuse removal, security, parking attendants, and other
      items.

    


    Lessee's
      pro-rata share of the costs referred to in the previous subparagraph shall
      be
      reasonably determined by Lessor and such reasonable determination made in good
      faith shall be conclusive. Lessee's annual pro-rata share as estimated by Lessor
      shall be paid as additional rent in monthly installments, in advance, on the
      first day of each calendar month of the Lease term after commencement thereof
      (pro-rated for any fractional month). Lessor shall deliver to Lessee within
      sixty (60) days after the expiration of each calendar year a reasonably detailed
      statement showing Lessee's share of the actual costs incurred during the
      preceding year. If Lessee's payments under this Paragraph 16.24 during said
      preceding year exceed Lessee's pro-rata share as indicated on said statement,
      Lessee shall be entitled to credit the amount of such overpayment against
      Lessee's pro-rata share of such costs next falling due. If Lessee's payments
      under this Paragraph during said preceding year were less than Lessee's pro-rata
      share as indicated on said statement, Lessee shall pay to Lessor the amount
      of
      the deficiency as additional rent within ten (10) days after delivery by Lessor
      to Lessee of said statement.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    17.
      Hazardous Materials. (See Addendum-Paragraph 25.)

    


    17.1
      Reportable Uses Require Consent.
      The term
      "Hazardous Substance" as used in this Lease shall mean any product, substance,
      chemical, material or waste whose presence, nature, quantity and/or intensity
      of
      existence, use, manufacture, disposal, transportation,
      spill, release or effect, either by itself or in combination with other
      materials expected to be on the Premises, is either: (i) potentially injurious
      to the public health, safety or welfare, the environment, or the Premises;
      (ii)
      regulated or monitored by any governmental
      authority; or (iii) a basis for potential liability or Lessor to any
      governmental agency or third party under any applicable statute
      or common law theory. Hazardous Substance shall include, but not be limited
      to,
      hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
      thereof. Lessee shall not engage in any activity in or about the Premises which
      constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
      without the express prior written consent of Lessor and compliance
      in
      a
      timely manner (at Lessee's sole cost and expense) with all Applicable
      Requirements (as defined in Paragraph 17.4). "Reportable Use"
      shall mean (i) the installation or use of any above or below ground storage
      tank, (ii) the generation, possession, storage, use, transportation,
      or disposal of a Hazardous Substance that requires a permit from, or with
      respect to which a report, notice, registration
      or business plan is required to be filed with, any governmental authority,
      and
      (iii) the presence in, on or about the Premises
      of a Hazardous Substance with respect to which any applicable laws require
      that
      a notice be given to persons, entering or occupying the Premises or neighboring
      properties. Notwithstanding the foregoing, Lessee may, without Lessor's prior
      consent, but upon notice to Lessor and in compliance with all Applicable
      Requirements, use any ordinary and customary materials reasonably required
      to be
      used by Lessee in the normal course of the Permitted Use, so long as such use
      is
      not a Reportable Use and does not expose the Premises or neighboring properties
      to any meaningful risk of contamination or damage or expose Lessor to any
      liability therefor In addition, Lessor may (but without any obligation to do
      so)
      condition its consent to any Reportable Use of any Hazardous Substance
      by Lessee upon Lessee's giving Lessor such additional assurances as Lessor,
      in
      its reasonable discretion, deems necessary
      to protect itself, the public, the Premises and the environment against damage,
      contamination or injury and/or liability therefor,
      including but not limited to the installation (and, at Lessor's option, removal
      on or before Lease expiration or earlier termination)
      of reasonably necessary protective modifications to the Premises (such as
      concrete encasements) and/or the deposit of an
      additional Security Deposit under Paragraph 5 hereof.

    


    17.2
      Duty to Inform Lessor.
      If
      Lessee knows, or has reasonable cause to believe, that a Hazardous Substance
      has
      come to be located
      in, on, under or about the Premises or the Building, other than as previously
      consented to by Lessor, Lessee shall immediately
      give Lessor written notice thereof, together with a copy of any statement,
      report, notice, registration, application, permit, business plan, license,
      claim, action, or proceeding given to, or received from, any governmental
      authority or private party concerning the
      presence, spill, release, discharge of, or exposure to, such Hazardous Substance
      including but not limited to all such documents as may be involved in any
      Reportable Use involving the Premises. Lessee shall not cause or permit any
      Hazardous Substance to be spilled
      or released in, on, under or about the Premises (including, without limitation,
      through the plumbing or sanitary sewer system).

    


    17.3
      Indemnification.
      Lessee
      shall indemnify, protect, defend and hold Lessor, its agents, employees, lenders
      and ground lessor, if any, and the Premises, harmless from and against any
      and
      all damages, liabilities, judgements, costs, claims, liens, expenses, penalties,
      loss of permits and attorneys' and consultants' fees arising out of or involving
      any Hazardous Substance brought onto the Premises by or for Lessee or by anyone
      under Lessee's control. Lessee's obligations under this Paragraph 17.3 shall
      include, but not be
      limited to, the effects of any contamination or injury to person, property
      or
      the environment created or suffered by Lessee, and the cost
      of
      investigation (including consultants' and attorneys' fees and testing), removal,
      remediation, restoration and/or abatement thereof,
      or of any contamination therein involved, and shall survive the expiration
      or
      earlier termination of this Lease. No termination, cancellation
      or release agreement entered into by Lessor and Lessee shall release Lessee
      from
      its obligations under this Lease with respect to Hazardous Substances, unless
      specifically so agreed by Lessor in writing at the time of such
      agreement.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    17.4
      Lessee's Compliance with Requirements.
      Lessee
      shall, at Lessee's sole cost and expense, fully, diligently and in a timely
      manner,
      comply with all "Applicable Requirements," which term is used in this Lease
      to
      mean all laws, rules, regulations, ordinances, directives, covenants, easements
      and restrictions of record, permits, the requirements of any applicable fire
      insurance underwriter or rating bureau, and the recommendations of Lessor's
      engineers and/or consultants, relating in any manner to the Premises (including
      but
      not
      limited to matters pertaining to (i) industrial hygiene, (ii) environmental
      conditions on, in, under or about the Premises, including
      soil and groundwater conditions, and (iii) the use, generation, manufacture,
      production, installation, maintenance, removal, transportation, storage, spill,
      or release of any Hazardous Substance), now in effect or which may hereafter
      come into effect. Lessee shall,
      within five (5) days after receipt of Lessor's written request, provide Lessor
      with copies of all documents and information, including but not limited to
      permits, registration, manifests, applications, reports and certificates,
      evidencing Lessee's compliances, reports
      and certificates, evidencing Lessee's compliance with any Applicable
      Requirements specified by Lessor, and shall immediately
      upon receipt, notify Lessor in writing (with copies of any documents involved)
      of any threatened or actual claim, notice, citation,
      warning, complaint or report pertaining to or involving failure by Lessee or
      the
      Premises to comply with any Applicable Requirements.

    


    18.
      Examination Lease.
      Submission of this instrument for examination or signature by Lessee does not
      constitute a reservation of or option
      for lease, and it is not effective as a lease or otherwise until execution
      and
      delivery by both Lessor and Lessee. The parties hereto
      have executed this Lease as of the date first set forth above. The Addendum
      attached containing Paragraphs 19-38 is incorporated
      as a part of this Lease. In the event of any conflict between the printed
      portion of the Lease and the typed Addendum, the typed Addendum provisions
      shall
      prevail. (See Addendum-Paragraph 19-27.)

     

    
      
        
          	AGREED AND ACCEPTED:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	LESSOR:	 	 	LESSEE:
	 	 	 	 	 	 	 	 	 
	
                  THE
                    RICHLAR PARTNERSHIP

                  (a
                    California general partnership)  

                	 	 	DIGITAL DOMAIN, INC.
                   (a
                    Delaware corporation)

                
	 	 	 	 	 	 	 	 	 
	 	
                  By: THE RILAR PARTNERSHIP, 

                  General
                    Partner

                	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	By:	
                   CARMELITA
                    R.E. INVESTMENTS, 

                	 	 	By:	/s/ Steven
                  J.
                  Fredericks 
	 	 	 	INC.,
                  General
                  Partner 	 	 	 	
                  
Steven
                  J. Fredericks, CFO
	 	 	 	 	 	 	 	 	 
	 	 	 	By: 	/s/ Lawrence N.
                  Field  	 	 	 	Date:
                  12/31/96
	 	 	 	 	
                  
Lawrence
                  N. Field, President	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	Date: 12/31/96	 	 	 	 
	 	 	 	 	 	 	 	 	 
	ADDRESS  	 	 	 	 
	
                  433
                    N. Camden Drive, Suite 820    

                  Beverly
                    Hills, CA 90210

                	 	 	 	300
                  Rose Avenue
                  Venice, CA
                    9029

                




        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

      

    

    ADDENDUM
      TO LEASE DATED DECEMBER 11, 1996 BY AND BETWEEN THE RICHLAR PARTNERSHIP (A
      CALIFORNIA GENERAL PARTNERSHIP), AS LESSOR, AND DIGITAL DOMAIN, INC. (A DELAWARE
      CORPORATION), AS LESSEE, FOR THE PREMISES LOCATED AT 344 MAIN STREET, VENICE,
      CALIFORNIA.

    
      
        

      



    
      	 	
              19.

            	
              Lessee
                shall take occupancy of the Premises in "as-is"
                condition.

            


    

    


    
      	 	
              20.

            	
              Rent
                Schedule

            


    

     

    Lessee
      shall pay Lessor base monthly rent during the lease term as
      follows:

     

    
      
        	
                Term

              	
                 

              	
                Base
                  Monthly Rent

              	
                 

              
	
                01/01/97
                  - 04/30/97

              	
                 

              	
                $19,493.96

              	
                 

              
	
                05/01/97
                  - 10/31/98

              	
                 

              	
                $20,559.96

              	
                 

              
	
                11/01/98
                  - 04/30/00

              	
                 

              	
                $21,623.96

              	
                 

              
	
                05/01/00
                  - 12/31/01

              	
                 

              	
                $22,688.96

              	
                 

              


      

      


       

    

    
      	 	
              21.

            	
              Option
                to Extend Term.

            


    

     

    Lessor
      hereby grants to Lessee an Option to Extend the term of this Lease for a sixty
      (60) month period
      commencing upon the expiration of the initial lease term upon the following
      terms and conditions:

     

    
      	 	
              a)

            	
              Lessee
                shall give Lessor written notice of its intent to exercise the Option
                at least
                six (6) months
                and no more than nine (9) months prior to expiration of the initial
                lease
                term.

            


    

     

    
      	 	
              b)

            	
              Both
                at the time of giving the notice of its intent to exercise the Option
                and
                at the time any agreement pursuant to such notice is entered into,
                Lessee
                shall not be in default, nor have been
                in default during the initial lease
                term.

            


    

     

    
      	 	
              c)

            	
              In
                the event Lessee elects to exercise this Option, the initial rental
                rate
                during the Option period
                shall be at ninety-five percent (95%) Fair Market Value, but in no
                event
                less than 105% or
                greater than 115% of the base rental paid for the sixtieth (60th)
                month of
                the initial lease term
                with annual CPI adjustments
                thereafter.

            


    

     

    
      	 	
              d)

            	
              "Fair
                Market Value" shall be determined by rental rates quoted for
                office/production space (built out with at least fifty percent (50%)
                office space) in the Venice/Santa Monica area in clean
                condition, with adjacent free parking ranging in size from 12,500
                to
                17,500 square feet.

            


    

    


     

    
      	
            	22.	
              Assignment
                Mortgage and Subletting. 

            


    

     

    Notwithstanding
      anything contained in the Lease to the contrary, Lessee shall be permitted
      to
      sublease or
      assign
      all or any portion of the Premises at any time during the term of the Lease
      to
      any subsidiary or affiliate
      of Lessee without obtaining the prior approval or consent of Lessor. Lessee
      shall, however, provide
      to Lessor within thirty (30) days following the execution of any such sublease
      or assignment a copy
      of
      said documentation for Lessor's files. In the case of any assignment or
      subleasing, Lessee shall remain fully liable under the terms of the
      Lease.

     

    
      
        	
              	23.	
                Attorneys'
                  Fees 

              


      

    

     

    Supplementing
      Paragraph 16.16, in the event that legal action arises out of any dispute
      connected with this
      Lease, if Lessee is the prevailing party therein, Lessee shall then be entitled
      to reasonable attorney's
      fees and court costs.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
            	24.	
              Lessor's
                Access. 

            


    

     

    Supplementing
      Paragraph 16.17, but notwithstanding anything to the contrary contained in
      the
      Lease, Lessor's
      right of access to the Premises shall be subject (except upon occasions when
      entry shall be required
      by emergency circumstances) to Lessor giving Lessee reasonable prior notice
      of
      any such entry by Lessor and to Lessee's reasonable right to preserve areas
      of
      the Premises as are security areas
      in
      the operation of Lessee's business from such showing and such work to the extent
      that the parameters
      of such security areas have theretofore been clearly indicated by Lessee to
      Lessor. Further, in
      the
      event Lessor erects any "For Lease" signs pertaining to the Premises only,
      Lessee shall have the right
      (subject to the provisions of Paragraph 28) to erect its own sign indicating
      that Lessee will be moving
      to
      another location.

     

    
      
        	
              	25.	
                Signage.

              


      

       

      Lessee
        may install at Lessee's expense any such signage as may be permitted by law
        and
        no other signs may installed on the property without the approval of Lessee.
        Prior to the installation of any such signs, Lessee shall submit detailed
        plans
        thereof to Lessor for Lessor's prior approval which approval shall not be
        unreasonably withheld.

    

    


    
      	
            	26.	
              Hazardous
                Materials

            


    

     

    To
      the
      best of Lessors knowledge, there is no asbestos or hazardous/toxic materials
      located at the Premises.
      Lessor indemnifies Lessee from liability arising from any hazardous substance
      conditions which
      existed prior to lease commencement.

     

    
      	
            	27.	
              Parking

            


    

     

    Lessee
      shall be allocated fifty (50) reserved parking spaces at the front and rear
      parking lot at no charge
      during the lease term.

     

    
      
        
          	AGREED AND ACCEPTED:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	LESSOR:	 	 	LESSEE:
	 	 	 	 	 	 	 	 	 	 
	
                  By:
                    THE RICHLAR PARTNERSHIP 

                  (a
                    California general partnership)  

                	 	 	DIGITAL DOMAIN, INC.
                   (a
                    Delaware corporation)

                
	 	 	 	 	 	 	 	 	 	 
	 	By: 	THE
                  RILAR PARTNERSHIP   
                  
                    
                      General
                        Partner

                    

                  

                	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	By:	
                   CARMELITA
                    R.E. INVESTMENTS,  INC.,
                    General Partner 

                	 	 	By:	/s/ Steven
                  J.
                  Fredricks
	 	 	 	 	 	
                	 	 	 	
                  
Steven
                  J. Fredericks, CFO
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 /s/ Lawrence N.
                  Field  	 	 	 	Date:
                  12/31/96
	 	 	 	 	 	
                  
Lawrence
                  N. Field, President	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Date: 12/31/96	 	 	 	 




      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      A:

    
 

    

     

     

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    AMENDMENT
      NO 1 TO LEASE DATED DECEMBER 11, 1996, BY AND BETWEEN THE RICHLAR PARTNERSHIP
      (A
      CALIFORNIA GENERAL PARTNERSHIP), AS LESSOR, AND DIGITAL DOMAIN, INC. (A DELAWARE
      CORPORATION), AS LESSEE, FOR THE PREMISES LOCATED AT 344 MAIN STREET, VENICE,
      CALIFORNIA.

    


    
      	
            	1.	
              Option
                to Extend.

            


    

     

    Pursuant
      to Paragraph 21 of the Lease, Lessee exercises its Option to Extend the Lease
      for the period commencing January 1, 2002 and expiring December 31, 2006
      (hereinafter referred to as "Extension Period").

     

    
      	
            	2.	
              Extension
                Period Rent.

            


    

     

    Pursuant
      to Paragraph 21 (c) of the Lease, commencing January 1, 2002, Lessee’s base
      monthly rental shall be adjusted to $26,092.30 with the annual CPI
      adjustments.

     

    
      	 	
              3.

            	
              Except
                for the above modifications, all other terms, covenants and conditions
                of
                the Lease shall remain unmodified and in full force and
                effect.

            


    

     

    
      
        
          
            	AGREED AND ACCEPTED:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	LESSOR:	 	 	LESSEE:
	 	 	 	 	 	 	 	 	 
	
                    By: THE RICHLAR PARTNERSHIP

                    (a
                      California general partnership)  

                  	 	 	DIGITAL DOMAIN, INC.
                     (a
                      Delaware corporation)

                  
	 	 	 	 	 	 	 	 	 
	 	By: 	
                     THE
                      RIHLAR PARTNERSHIP, 

                    General
                      Partner

                  	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	By:	 CARMELITA
                    R.E. INVESTMENTS, INC.,
                    General Partner 	 	 	By:	/s/ C.
                    Bradley Call  
	 	 	 	 	
                  	 	 	 	
                    
C.
                    Bradley Call, SVP
	 	 	 	 	 	 	 	 	 
	 	 	 	By: 	 /s/ Lawrence N.
                    Field  	 	 	 	Date:
                    6/26/01
	 	 	 	 	
                    
Lawrence
                    N. Field, President	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	Date: 07/02/01	 	 	 	 
	 	 	 	 	 	 	 	 	 
	ADDRESS  	 	 	 	 
	
                    433
                      N. Camden Drive, Suite 820    

                    Beverly
                      Hills, CA 90210

                  	 	 	
                    300
                      Rose Avenue

                    Venice, CA
                      9029