Document:

EXHIBIT 10.3

                                     WARRANT

                     To Subscribe for and Purchase Stock of

                           AVANTI OPTICS CORPORATION.

         THIS CERTIFIES THAT, for value received and subject to the terms and
provisions hereinafter set forth, CyberOptics Corporation (the "Purchaser"), or
registered assigns, is entitled to subscribe for and purchase from Avanti Optics
Corporation., a Delaware corporation (the "Company"), at any time from and after
the Initial Exercise Date (as hereinafter defined) to and including May 1, 2007,
a number of shares of the Company's Equity Securities (as hereinafter defined)
initially equal to the number of shares calculated as described in the
immediately following paragraph. This Warrant has been issued to Purchaser by
the Company in connection with the issuance by the Company to Purchaser of a
Secured Convertible Promissory Note of the Company, of even date herewith, in
the original principal amount of $1,500,000 (the "Note").

         The number of shares initially purchaseable under this Warrant (subject
to adjustment as noted below) shall be equal to 30% of the original principal
amount of the Note set forth in the immediately preceding paragraph divided by
the initial Warrant purchase price calculated as described in the immediately
following paragraph.

         This Warrant shall be for the purchase of shares of such Equity
Securities as are first offered and sold by the Company after the date of this
Warrant and shall entitle the holder of this Warrant to all of the rights under,
and to become a party to, any agreements between the Company and the purchasers
of such Equity Securities, including but not limited to, any rights with respect
to the registration of the Equity Securities or the common stock into which the
Equity Securities are convertible afforded to such purchasers (provided the
holder executes any such agreements in the same manner as the purchasers of such
Equity Securities); provided, however, that the holder may, by notifying the
Company at any time within 30 days of receipt of notice from the Company of any
subsequent sale of Equity Securities of the Company, elect to have this Warrant
become exercisable to purchase the Equity Securities sold by the Company in such
subsequent sale of its Equity Securities and to obtain the rights under and
become a party to any agreements relating to such subsequent sale of Equity
Securities; provided further that such right to elect to have this Warrant apply
to any such subsequent sale of Equity Securities shall expire 30 days after the
Company provides notice to the holder that it has offered and sold in an
offering generating $1,500,000 of gross proceeds to the Company, Equity
Securities representing indebtedness of the Company, or a series of Preferred
Stock of the Company, that is convertible into shares of Common Stock of the
Company, but only, in the case of Preferred Stock, if such series of Preferred
Stock ranks senior to the Company's Common Stock and senior to or on a parity
with the Company's Series A Convertible Preferred Stock upon liquidation of the
Company. The initial Warrant purchase price (subject to adjustment as noted
below) shall be equal to the per share sales price (prior to deduction of any
brokers', agents' and underwriters' commissions and fees) of such Equity
Securities in the sale referred to above. The term "Equity

                                      B-1
<PAGE>

Securities" as used herein shall mean the Common Stock, or any security
convertible into or exercisable or representing the right to purchase the Common
Stock of the Company, but excluding any Common Stock issued (i) upon the
conversion of any of the Company's Preferred Stock outstanding on the date of
this Warrant or pursuant to any option or warrant outstanding on the date of
this Warrant, or (ii) to any director, officer, employee or independent
contractor of the Company in connection with the employment of or services
provided by any of the foregoing, or (iii) in connection with any joint venture,
partnering, licensing or other contractual relationship not involving the
provision of cash financing to the Company. TheInitial Exercise Date shall be
the date of the first sale of Equity Securities after the date of this Warrant..

         This Warrant is subject to the following provisions, terms and
conditions:

         1. The rights represented by this Warrant may be exercised by the
holder, in whole or in part by written notice of exercise in the form attached
hereto as Exhibit 1 delivered to the Company 10 days prior to the intended date
of exercise and by the surrender of this Warrant at the principal office of the
Company and upon payment to it by check in the amount of the purchase price for
such shares. The Company agrees that the shares so purchased shall be and are
deemed to be issued to the holder hereof as of the close of business on the date
on which this Warrant shall have been surrendered and payment made for such
shares as aforesaid. Subject to the provisions of the next succeeding sentence,
certificates for the shares of the stock so purchased shall be delivered to the
holder hereof within 15 days after the rights represented by this Warrant shall
have been so exercised, and, unless this Warrant has expired, a new Warrant
representing the number of shares, if any, with respect to which this Warrant
has not been exercised shall also be delivered to the holder hereof within such
time. Notwithstanding the foregoing, however, the Company shall not be required
to deliver any certificates for shares of stock except in accordance with the
provisions and subject to the limitations of paragraph 5 hereof and the
restrictive legend set forth below.

         2. The Company covenants and agrees that all shares that may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be duly authorized and issued, fully paid and nonassessable. The Company further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of issue or transfer upon exercise of the
subscription rights evidenced by this Warrant, a sufficient number of shares of
its Warrant Stock to provide for the exercise of this Warrant.

         3. The foregoing provisions are, however, subject to the following:

                  (a) The Warrant purchase price shall, from and after the
Initial Exercise Date, be subject to adjustment from time to time as hereinafter
provided. Upon each adjustment of the Warrant purchase price, the holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant purchase price
resulting from such adjustment, the number of shares obtained by multiplying the
Warrant purchase price in effect immediately prior to such adjustment by the
number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Warrant purchase price
resulting from such adjustment.

                                      B-2
<PAGE>

                  (b) In case the Company shall at any time subdivide its
outstanding shares of Warrant Stock into a greater number of shares or declare a
dividend payable in the Warrant Stock, the Warrant purchase price in effect
immediately prior to such subdivision or dividend shall be proportionately
reduced, and conversely, in case the outstanding Warrant Stock of the Company
shall be combined into a smaller number of shares, the Warrant purchase price in
effect immediately prior to such combination shall be proportionately increased.

                  (c) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of the Warrant
Stock shall be entitled to receive stock, securities or assets ("Substituted
Property") with respect to or in exchange for such Warrant Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, the holder hereof shall have the right to purchase and receive, upon the
basis and upon the terms and conditions specified in this Warrant and in lieu of
the shares of the Warrant Stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such Substituted
Property as would have been issued or delivered to the holder hereof if the
holder hereof had exercised this Warrant and had received upon exercise of this
Warrant the shares immediately prior to the effectiveness of such
reorganization, reclassification, consolidation, merger or sale. The Company
shall not effect any such consolidation, merger or sale, unless prior to the
consummation thereof, the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed to the holder
hereof at the last address of the holder appearing on the books of the Company,
the obligation to deliver to the holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, the holder hereof may be
entitled to purchase.

                  (d) If any other event occurs as to which in the opinion of
the Board of Directors of the Company the provisions of paragraph 3(b) or 3(c)
hereof are not strictly applicable or, if strictly applicable, would not be
adequate to protect the purchase rights of the holder of this Warrant or of
Warrant Stock in accordance with the essential intent and purposes of such
provisions, then the Board of Directors shall make an appropriate adjustment in
the application of such provisions, in accordance with such essential intent and
principles so as to protect such purchase rights as aforesaid.

                  (e) Upon any adjustment of the Warrant purchase price, the
Company shall give written notice thereof, by first-class mail, postage prepaid,
addressed to the holder hereof at the address of the holder as shown on the
books of the Company, which notice shall state the Warrant purchase price
resulting from such adjustment and the increase or decrease, if any, in the
number of shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.

         4. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company.

         5. The holder hereof, by acceptance hereof, represents and warrants
that (a) it is acquiring this Warrant for its own account for investment
purposes only and not with a view to

                                      B-3
<PAGE>

its resale or distribution and (b) it has no present intention to resell or
otherwise dispose of all or any part of this Warrant. This Warrant has not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
nor any state or foreign securities laws. As a result, neither this Warrant nor
the shares of Warrant Stock to be isssued upon exercise of this Warrant may be
offered for sale, sold, pledged, assigned or otherwise disposed of, and no
transfer of this Warrant or such shares will be made by the Company or its
transfer agent, without appropriate registration under the Securities Act and
any applicable state securities laws or an opinion of counsel acceptable to the
Company with respect to the availability of an exemption from such registration.
Further, other than pursuant to registration under the Securities Act and any
applicable state securities laws or an opinion of counsel acceptable to the
Company with respect to the availability of or an exemption from such
registration, the Company will not accept the exercise of this Warrant or issue
certificates for shares to be issued upon exercise of this Warrant. The Company
may also condition such issuance or sale, pledge, assignment or other
disposition on the receipt from the party to whom this Warrant is to be so
transferred or to whom any shares of Warrant Stock are to be issued or so
transferred of any representations and agreements requested by the Company in
order to permit such issuance or transfer to be made pursuant to exemptions from
registration under federal and applicable state securities laws. Each
certificate representing the Warrant (or any part thereof) and any shares of
Warrant Stock to be issued upon exercise of this Warrant shall be stamped with
appropriate legends setting forth these restrictions on transferability.

         6. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such items and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder hereof against dilution
or other impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any shares of stock receivable on
the exercise of this Warrant above the amount payable therefor on such exercise,
and (b) will take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
shares of stock on the exercise of this Warrant.

         7. In the event of:

                  (a) any taking by the Company of a record of the holders of
the Warrant Stock for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right; or

                  (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to or
consolidation or merger of the Company with or into any other entity; or

                                      B-4
<PAGE>

                  (c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;

then and in each such event the Company will give notice to the holder hereof
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and (ii) the amount and character of
such dividend, distribution or right, and (iii) the date on which any such
reorganization, reclassification, capitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Warrant Stock (or
other securities) shall be entitled to exchange their shares of Warrant Stock
(or other securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up. Such notice shall be given in
writing to the holder hereof at least 20 days in advance by personal delivery or
by certified or registered mail, return receipt requested, to the latest address
of the holder hereof as set forth in the Company records.

         8. No fractional shares of Warrant Stock shall be issued upon the
exercise of this Warrant, but, instead of any fraction of a share which would
otherwise be issuable, the Company shall pay a cash adjustment (which may be
effected as a reduction of the amount to be paid by the holder hereof upon such
exercise) in respect of such fraction in an amount equal to the same fraction of
the market price per share of Warrant Stock as of the close of business on the
date of the notice required by paragraph 1 above. "Market price" for purposes of
this paragraph 8 shall mean, if the Warrant Stock is traded on a securities
exchange or on the NASDAQ National Market, the closing price of the Warrant
Stock on such exchange or the NASDAQ National Market, or, if the Warrant Stock
is otherwise traded in the over-the-counter market, the closing bid price, in
each case averaged over a period of 20 consecutive business days prior to the
date as of which "market price" is being determined. If at any time the Warrant
Stock is not traded on an exchange or the NASDAQ National Market, or otherwise
traded in the over-the-counter market, the "market price" shall be deemed to be
fair market value thereof determined in good faith by the Board of Directors of
the Company as of a date which is within 15 days of the date as of which the
determination is to be made.

         9. (a) In addition to and without limiting the rights of the holder of
this Warrant under the terms of this Warrant, the holder of this Warrant shall
have the right (the "Conversion Right") to convert this Warrant or any portion
thereof into shares of Warrant Stock as provided in this paragraph 9 at any time
or from time to time from and after the Initial Exercise Date and prior to its
expiration, subject to the restrictions set forth in paragraph (c) below. Upon
exercise of the Conversion Right with respect to a particular number of shares
subject to this Warrant (the "Converted Warrant Shares"), the Company shall
deliver to the holder of this Warrant, without payment by the holder of any
exercise price or any cash or other consideration, that number of shares of
Warrant Stock equal to the quotient obtained by dividing the Net Value (as
hereinafter defined) of the Converted Warrant Shares by the fair market value
(as defined in paragraph (d) below) of a single share of Warrant Stock,
determined in each case as of the close of business on the Conversion Date (as
hereinafter defined). The "Net Value" of the Converted Warrant Shares shall be
determined by subtracting the aggregate Warrant purchase price of the Converted
Warrant Shares from the aggregate fair market value of the Converted Warrant
Shares. Notwithstanding anything in this paragraph 9 to the contrary, the
Conversion Right cannot be

                                      B-5
<PAGE>

exercised with respect to a number of Converted Warrant Shares having a Net
Value below $100. No fractional shares shall be issuable upon exercise of the
Conversion Right, and if the number of shares to be issued in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder of this Warrant an amount in cash equal to the fair market value of the
resulting fractional share.

                  (b) The Conversion Right may be exercised by the holder of
this Warrant by the surrender of this Warrant at the principal office of the
Company together with a written statement, substantially in the form attached
hereto as Exhibit 2, specifying that the holder thereby intends to exercise the
Conversion Right and indicating the number of shares subject to this Warrant
which are being surrendered (referred to in paragraph (a) above as the Converted
Warrant Shares) in exercise of the Conversion Right. Such conversion shall be
effective upon receipt by the Company of this Warrant together with the
aforesaid written statement, or on such later date as is specified therein (the
"Conversion Date"), but not later than the expiration date of this Warrant.
Certificates for the shares of Warrant Stock issuable upon exercise of the
Conversion Right, together with a check in payment of any fractional share and,
in the case of a partial exercise, a new Warrant evidencing the shares remaining
subject to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the holder of this Warrant within 15 days following the Conversion
Date.

                  (c) In the event the Conversion Right would, at any time this
Warrant remains outstanding, be deemed by the Company's independent certified
public accountants to give rise to a charge to the Company's earnings for
financial reporting purposes, then the Conversion Right shall automatically
terminate upon the Company's written notice to the holder of this Warrant of
such adverse accounting treatment.

                  (d) For purposes of this paragraph 9, the "fair market value"
of a share of Warrant Stock as of a particular date shall be its "market price",
calculated as described in paragraph 8 hereof.

         10. Notwithstanding any other provision of this Warrant, this Warrant
shall terminate and be of no further force or effect in the event that Avanti
pays the Holder the amounts set forth in Section 3 of the Note in connection
with a Disposition Transaction (as defined in the Note).

         11. This Warrant shall be transferable only on the books of the Company
by the holder hereof in person, or by duly authorized attorney, on surrender of
the Warrant, properly assigned.

         12. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.

         13. All questions concerning this Warrant will be governed and
interpreted and enforced in accordance with the internal law of the State of
Minnesota.

                                      B-6
<PAGE>

         IN WlTNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer and to be dated as of May 1, 2002.

                                                    AVANTI OPTICS CORPORATION.

                                                    By _________________________
                                                    Its  Chief Financial Officer

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE SECURITIES
WILL BE MADE BY THE COMPANY OR ITS TRANSFER AGENT IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

                                      B-7
<PAGE>

                               NOTICE OF EXERCISE
                                  FOR WARRANTS

To:      AVANTI OPTICS CORPORATION.

         The undersigned hereby irrevocably elects to purchase ______________
shares of Warrant Stock of AVANTI OPTICS CORPORATION pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.

                  Please issue a certificate or certificates for the shares of
Warrant Stock in the name set forth below:

                                             ___________________________________

                                             ___________________________________
                                             Print Name(s), if joint

                                             ___________________________________
                                             Address

                                             ___________________________________
                                             City, State, Zip Code

                                             ___________________________________

                                             ___________________________________
                                             Taxpayer ID Number(s), if joint

                                             ___________________________________

                                             ___________________________________
                                             Social Security Number(s), if joint

         The undersigned represents that the aforesaid shares resulting from the
exercise of the Warrant are acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.

Date: _________________________              ___________________________________

                                             ___________________________________
                                             Signature(s), if joint

* The signature on the Notice of Exercise must correspond to the name as written
upon the face of the Warrant in every particular without alteration or
enlargement or any change whatsoever. When signing on behalf of a corporation,
partnership, trust or other entity, PLEASE indicate your position(s) and
title(s) with such entity.

                                      B-8
<PAGE>

                                CONVERSION NOTICE

               (To be signed upon exercise of Warrant pursuant to
                          Sections 9(a) through 9(d))

To:      AVANTI OPTICS CORPORATION.

         The undersigned hereby irrevocably elects to exercise the Conversion
Right provided in Sections 9(a) through 9(d) of the within Warrant for, and to
acquire thereunder, ________ shares of Warrant Stock. If said number of shares
shall not be all the shares purchasable under the within Warrant, a new Warrant
is to be issued in the name of said undersigned for the balance remaining of the
shares purchasable thereunder rounded up to the next higher number of shares.

         Please issue a certificate or certificates for the shares of Warrant
Stock in the name set forth below:

                                             ___________________________________

                                             ___________________________________
                                             Print Name(s), if joint

                                             ___________________________________
                                             Address

                                             ___________________________________
                                             City, State, Zip Code

                                             ___________________________________

                                             ___________________________________
                                             Taxpayer ID Number(s), if joint

                                             ___________________________________

                                             ___________________________________
                                             Social Security Number(s), if joint

         The undersigned represents that the aforesaid shares resulting from the
exercise of the Warrant are acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.

Date: _________________________              ___________________________________

                                             ___________________________________
                                             Signature(s), if joint

* The signature on the Conversion Notice must correspond to the name as written
upon the face of the Warrant in every particular without alteration or
enlargement or any change whatsoever. When signing on behalf of a corporation,
partnership, trust or other entity, PLEASE indicate your position(s) and
title(s) with such entity.EXHIBIT 10.4

LEASE

BUILDING NAME:
--------------

7725 Washington Avenue Building
-------------------------------

BUILDING ADDRESS:
-----------------

7725 Washington Avenue South
----------------------------

Edina, MN 55439

TENANT:
-------

Rimage Systems, Inc.
--------------------

CONTACT:
--------

Bernie Aldrich

TELEPHONE:
----------

(612) 944-8144

<PAGE>

TABLE OF CONTENTS

1.       PREMISES
2.       TERM
3.       WORKLETTER
4.       RENT
5.       SECURITY DEPOSIT
6.       USE
7.       OPERATING COSTS
8.       LANDLORD'S REPAIRS
9.       TENANT'S REPAIRS
10.      ALTERATIONS
11.      SIGNS
12.      INSPECTION
13.      UTILITIES
14.      ASSIGNMENT AND SUBLETTING
15.      FIRE OR OTHER CASUALTY
16.      LIABILITY
17.      CONDEMNATION
18.      SURRENDER OF POSSESSION; HOLDING OVER
19.      QUIET ENJOYMENT
20.      EVENTS OF DEFAULT
21.      REMEDIES
22.      LANDLORD'S RIGHT TO CURE
23.      MORTGAGES
24.      NOTICES
25.      RULES AND REGULATIONS
26.      MISCELLANEOUS
27.      ACCEPTANCE BY LANDLORD

FLOOR PLAN                                                             EXHIBIT A
LEGAL DESCRIPTION                                                      EXHIBIT B
WORK LETTER                                                            EXHIBIT C
ADDITIONAL LEASE PROVISIONS                                            EXHIBIT D

<PAGE>

LEASE

7725 Washington Ave. Corp.        Sept. 1, 1998            $  See Exhibit D
---------------------------       -------------            ----------------
(Owner/Landlord)                  (Lease Date)              (Monthly Base Rent)

Rimage Systems. Inc.              43,000 SF                $  None
--------------------              ---------                -------
(Tenant)                          (Unit)                   (Security Deposit)

Washington Avenue Building        5 years + 2 months       $  0
---------------------------       ------------------       ----
(Project)                         (Term)                   (First Months Rent)

7725 Washington Ave. So.          Sept. 1, 1998            $  0
-------------------------         -------------            ----
(Address)                         (Beginning)              (Improvements)

Edina, MN 55439                   Dec. 31, 2003            $  0
---------------                   -------------            ----
(City, State, Zip)                (Ending)                 (Receipt By)

THIS LEASE is made and entered into this 1st day of September, 1998 between 7725
Washington Avenue Corp. with its principal place of business at 7808 Creekridqe
Circle, Suite 200, Minneapolis, MN 55439 (herein called "Landlord"), and Rimage
Systems, Inc. a (corporation) organized under the laws of the State of Minnesota
with its principal business at 7725 Washington Avenue South, Edina, MN 55439
(herein called "Tenant", whether one or more).

WITNESSETH:

1. PREMISES.
In consideration of the obligation of Tenant to pay rent as herein provided, and
in consideration of the other terms, provisions and covenants hereof, Landlord
hereby leases to Tenant, and Tenant hereby takes from Landlord, certain Premises
(herein called the "Premises") situated in the County of Hennepin, State of
Minnesota, consisting of approximately 43,000 square feet of gross rentable area
outlined in red on the floor plan attached hereto Exhibit A and made a part
hereof in the building commonly known as Washington Avenue Building (herein
called the "Building") located at

        7725 Washington Avenue South, Edina, MN 55439
--------------------------------------------------------------------------------
which building is situated upon the real property described on Exhibit B
attached hereto and hereby made a part hereof (the Building and said real
property are herein called the "Project"), together with the right to use in
common with Landlord and other Tenants in the Project, and their employees,
agents, representatives and invitees, any common areas and facilities of the
Project and together with the right to use any parking area (herein called the
"Shared Parking area") located outside of the Project which is designated by
Landlord, by written notice from Landlord to Tenant, as a parking area which
Tenant may use in common with other parties designated by Landlord.

<PAGE>

2. TERM.
This Lease shall be for a term of five (5) years and two (2) months, commencing
on September 1, 1998 and expiring on December 31, 2003 with option for
additional five (5) years per attached Schedule D.

3. WORK LETTER.
Landlord, at its sole cost and expense, shall construct any leasehold
improvements required to be by Landlord constructed pursuant to the Work Letter
(herein called the "Work Letter") attached hereto as Exhibit C and made a part
hereof.

4. RENT.
Tenant shall pay Landlord, without deduction or setoff, an annual minimum rental
(herein sometimes called "Base Rent of:

See Exhibit D

and /100 Dollars ($-) payable, in advance, without demand, on or before the
first day of each and every month during the term hereof; provided, however,
that if the term hereof shall commence upon a day other than the first day of a
calendar month or expire upon a day other than the last day of the calendar
month. Base Rent for the partial calendar month shall be prorated on a per diem
basis and shall be paid by Tenant on the commencement date of the term hereof
(in the case of an initial partial month) or on the first day of the month in
which the term hereof expires (in the case of a terminal partial month).

5. SECURITY DEPOSIT.
Tenant agrees to deposit with Landlord on the date hereof the sum of NONE and
--/100Dollars ($ -) which sum shall be held by Landlord, without obligation for
interest, as security for the performance of Tenant's covenants and obligations
under this Lease, it being expressly understood and agreed that such deposit is
not an advance rental deposit or a measure of Landlord's damages in case of
Tenant's default. Upon the occurrence of any event of default by Tenant,
Landlord may, from time to time without prejudice to any other remedy provided
herein or provided by law, use such fund to the extent necessary to make good
any areas of rent and any other damage, injury, expense or liability caused by
such event of default, and Tenant shall pay to Landlord on demand the amount so
applied in order to restore the security deposit to its original amount. If
Tenant is not then in default hereunder, any remaining balance of such deposit
shall be returned by Landlord to Tenant upon termination of this Lease.

6. USE
Subject to the following provisions of this Paragraph 6, the Premises may be
used for any lawful purpose. Tenant shall comply with all governmental laws,
ordinances and regulations applicable to the use of the I Premises and shall
promptly comply with all governmental orders and directives for the correction,
prevention and abatement of nuisances in, upon or connected with the Premises,
all at Tenant's sole expenses. Tenant shall not received, store or otherwise
handle any product, material or merchandise which is explosive or highly
inflammable and will not permit the Premises to be used for any purpose which
would render the insurance thereon void or the insurance risk more hazardous, or
increase the premiums therefore, and in the event of any such increase by reason
of any activity conducted by Tenant in, on or about the Premises, Tenant shall
be liable for such increase and shall reimburse Landlord therefor. Tenant shall
not store any material or merchandise outside the Premises.

7. OPERATING COSTS.
Prior to the commencement of the term of this Lease and prior to March 1 of each
calendar year thereafter, or as soon thereafter as practicable. Landlord shall
furnish Tenant with a written statement of the estimated operating costs per
square foot of gross rentable area of the Building for such calendar year.
During the remainder of such calendar year, Tenant shall pay Landlord at the
times that the monthly Base Rent is due and payable hereunder an amount equal to
one-twelfth (1/12) of the product of the number of gross square feet in the
Premises times such estimate. If Tenant's monthly payment of estimated operating
costs is greater than the monthly amount of operating expenses Tenant paid for
the then elapsed calendar months of such calendar year, then, within ten (10)
days after such written estimate is given. Tenant shall also pay to a Landlord
the deficiency for said elapsed calendar months. After the expiration of each
calendar year falling in whole or in part within the term hereof. Landlord shall
furnish Tenant with a written statement of the actual operating costs of the
Project (and, if applicable, the Shared Parking Area) for the preceding calendar
year, and if such actual operating costs for such preceding calendar year are
more or less than the estimate, an appropriate adjustment shall be made within
ten (10) days after such written statement is furnished.

For the purposes hereof, operating costs shall be deemed to mean all taxes (both
general and special and whether now or hereafter enacted), assessments or
governmental charges levied or assessed against the Project {and, if applicable,
the Shared Parking Area) or any part thereof, and all costs which, for federal
tax purposes, may be expensed rather than capitalized, and which Landlord will
or does incur, pay or become obligated to pay in owning, maintaining, operating
and leasing the Project (and, if applicable the Shared Parking Area) and
appurtenances thereto, exclusive of interest and depreciation, Without limiting
the generality of the fore going operating costs shall include personal property
taxes, fees or permi1:s or licenses, a management fee or fees not to exceed five
percent (5%) of the Base Rent, landscaping and gardening cleaning, painting,
decorating, paving, lighting, security guards, leasing and maintenance of music
and intercom system; If any, removal of snow, trash, garbage and other refuse,
heating, ventilating and air-conditioning, costs and expenses in connection with
meeting federal state, or local environmental energy standards, fire protection,
water and sewage and other utility charges not separately metered and charged to
particular Tenants, the cost of all types of insurance carried or paid for by
Landlord, accounting costs, all costs of maintaining, repairing and replacing
paving, curb, sidewalks, roadways, landscaping, drainage, lighting and utility
systems, the cost of maintaining and repairing the walls, roof and other
portions of the Building, the cost of maintaining and repairing all heating,
ventilating and air-conditioning equipment and depreciation thereof, rental
changes for machinery and equipment used in maintaining and operating the
Project (and, if applicable, the Shared Parking Area), salaries and compensation
of personnel connected with such operation and maintenance and deductible
amounts payable under insurance policies. Landlord, in its reasonable
discretion, shall from time to time determine the method of computing

<PAGE>

and operating costs, the allocation of operating costs to various types of space
within the Building, and the extent of the appurtenances to the Project, and
Tenant shall be bound thereby.

Tenant's failure to pay Tenant's share of operating costs in the manner herein
provided shall be treated hereunder in the same manner as a default in the
payment of Base Rent.

8. LANDLORD'S REPAIRS.
Landlord shall at its expense maintain only the roof, foundation and the
structural soundness of the exterior walls of the Building in good repair
reasonable wear and tear excepted. Tenant shall reimburse Landlord upon demand,
however, for any maintenance or repairs necessitated by the act or negligence of
Tenant for Tenant's employees, agents, representatives or invitees, or caused by
Tenant's default hereunder. The term "walls" as used herein shall not include
windows, glass or plate glass or doors. Tenant shall immediately give Landlord
written notice of defect or need for repairs, after which Landlord shall have
reasonable opportunity to repair same or cure such defect. Landlord's liability
hereunder shall be limited to the cost of such repairs or curing such defect.

9. TENANT'S REPAIRS.
Tenant shall at its own cost and expense maintain all other parts of the
Premises in good repair, reasonable wear and tear excepted and shall take good
care of the Premises and its fixtures and suffer no waste. Tenant will keep the
whole of the Premises in clean, sanitary and safe condition, and will at the
expiration or earlier termination of this Lease surrender the same to Landlord,
broom clean, and in the same order and condition as they were in at the
commencement of this Lease, reasonable wear and tear excepted.

10. ALTERATIONS.
Tenant shall not make structural additions or alterations to the Building or the
Premises or install any equipment which defaces the Building interior or
exterior or bolt or otherwise physically attach machinery or equipment to the
floors or walls of the Premises. Except for alterations which do not violate the
provisions of the proceeding sentence and the aggregate cost of which does not
exceed three (3) months Base Rent during any twelve (12) month period. Tenant
shall not make any alterations of, or additions to, the Premises without the
prior written consent of Landlord. Tenant will not permit any mechanics',
laborers' or materialmen's liens to stand against the Premises or the Project
for any labor or material furnished to, or for the account of, Tenant or claimed
to have been so furnished in connection with any work performed or claimed to
have been performed in, or about the Premises.

At the expiration or earlier termination of this Lease, Tenant shall, if the
Landlord so elects, remove all alterations and additions erected by Tenant and
restore the Premises to their original condition; otherwise such improvements
shall be delivered up to the Landlord with the Premises. All movable office
furnishings and trade fixtures installed by Tenant may be removed by Tenant at
the termination of this Lease if Tenant so elects, and shall be removed if
required by Landlord. All such removals and restoration shall be accomplished in
a good and workmanlike manner so as not to damage the primary structure or
structural qualities of the Premises. Personal property remaining in the
Premises at the expiration or earlier termination of the term of this Lease
shall be deemed abandoned, and Landlord may dispose of the same as Landlord
deems expedient.

11. SIGNS.
Tenant shall not erect any exterior signs, advertising media or lettering
without the prior written consent of Landlord. Any such items consented to by
Landlord and installed by Tenant shall comply with any applicable governmental
laws, ordinances, regulations and other requirements. Tenant shall remove all
such signs at the terII1.ination of this Lease. Such installations and removals
shall be made in such manner as to avoid injury or defacement of the Premises.

12. INSPECTION.
Upon reasonable notice to Tenant, Landlord and Landlord's agents and
representatives shall have the right to enter the Premises for the purpose of
ascertaining the condition thereof or in order to make such repairs as may be
required to be made by Landlord hereunder or as Landlord may deem necessary or
for the purpose of showing the Premises and shall have the right to erect on the
Premises a suitable sign indicating that the Premises are available for sale for
rent. Any such entry by Landlord shall never be deemed an eviction or
disturbance of Tenant's possession of the Premises, or render Landlord liable to
Tenant for damages, or relieve Tenant from performance of Tenant's obligations
under this Lease.

13. UTILITIES.
Tenant shall pay for all heating, air conditioning, ventilation, electricity,
gas, water, sewer, telephone, waste removal and other services and utilities
used in the Premises commencing on the date Tenant has access thereto for the
purpose of installing leasehold improvements and continuing throughout the term
hereof. All utilities, except water, will be separately metered and Tenant shall
contract for the same in its own name and shall promptly and directly pay all
charges for such utilities consumed in the Premises. If, in Landlord's opinion,
Tenant's use of water service is greater than the average use of water service
by other Tenants in the Project, Landlord may require Tenant to install a
separate meter for water and, in such an event, Tenant shall pay the cost of
purchasing, installing and maintaining such a metering device. In the event that
Tenant fails to install such a separate metering device within thirty (30) days
of notice of Landlord's requirement that such a device be installed, Landlord
may, but shall not be obligated to, install such a device and all sums and
incidental costs and expenses paid by Landlord in connection with the purchase
and installation of such device shall be payable by Tenant to Landlord on
demand.

Landlord does not warrant that any of the utilities and service referred to in
this paragraph, whether furnished by Landlord or by Landlord or by any other
supplier of any utility or other service will be free from interruption.
Interruption of service shall never be deemed an eviction or disturbance of
Tenants; use and possession of the Premises or any part thereof, or render
Landlord liable to Tenant from performance of Tenant's obligations under this
Leases.

14. ASSIGNMENT AND SUBLETTING.

<PAGE>

Tenant shall not have the right to assign this Lease, by operation of law or
otherwise, or to sublet the whole or any part of the Premises without the prior
written consent of Landlord. Consent by Landlord to one or more assignment or
subletting shall not operate as a waiver of Landlord's rights under this
paragraph as to any subsequent assignment or subletting Notwithstanding any
permitted assignment or subletting, Tenant shall at all times remain fully
responsible and liable for the payment of the rent herein and for compliance
worth all of its other obligations under the terms, provisions and covenants of
this Lease. If Tenant is a corporation or partnership or other entity, any
change in the control of Tenant shall be deemed to be an assignment which shall
require Landlord's consent as set forth above. Landlord shall have the right to
assign any of its rights under this Lease, and upon any such assignment, and
provided that the assignee assumes all of the Landlord's obligations hereunder,
Landlord shall be relieved of any and all such obligations.

15. FIRE OR OTHER CASUALTY DAMAGE.
A. If the Project or any part thereof is damaged or destroyed by fire or other
casualty. Landlord shall have the right to terminate this Lease, provided it
gives written notice thereof to Tenant within ninety (90) days after such damage
or destruction. If a portion of the Premises is damaged by fire or other
casualty and this Lease is not thereby terminated. Landlord shall, at its
expense, restore the Premises, exclusive of any improvements or other changes
made to the Premises by Tenant, to as near the condition which existed
immediately prior to such damage or destruction as reasonably possible, and rent
shall abate during such period of times as the Premises are untenantable in the
proportion that the untenantable portion of the Premises bears to the entire
Premises. Landlord shall not be responsible to Tenant for damage to, or
destruction of, any furniture, equipment, improvements or other changes made by
Tenant in, or about the Premises regardless of the cause of the damage or
destruction.

B. Landlord and Tenant each hereby release the other from any and all liability
or responsibility to the other or anyone claiming through or under them by way
of subrogation or otherwise for any loss or damage to property caused by fire or
any of the extended coverage casualties covered by the insurance maintained
hereunder, even if such fire or other casualty shall have been caused by the
fault or negligence of the other party or anyone for whom such party may be
responsible; provided, however, that this release shall be applicable and in
force and effect only with respect to loss or damage occurring during such times
as the releasor's policies shall contain a clause or endorsement to the effect
that any release shall not adversely affect or impair said policies or prejudice
the right of the releasor to recover thereunder. Landlord and Tenant each agree
that it will require its insurance carriers to include in its policies such a
clause or endorsement.

C. Landlord covenants and agrees to maintain standard fire and extended coverage
insurance covering the Building in an amount not less than eighty percent (80%)
of the replacement cost thereof. Tenant covenants and agrees to maintain
standard fire and extended coverage insurance covering its property located in,
on or about the Premises in an amount not less than eighty percent (80%) of the
replacement cost thereof. Tenant agrees that said property is kept in the
Premises Tenant's sole risk.

Tenant assumes full responsibility for protection the Premises from theft,
robbery and pilferage, which includes keeping doors locked and other means of
entry to the Premises closed and secured after normal business hours.

16. LIABILITY.
Tenant agrees to indemnify and save Landlord harmless against any and all
claims, demands, damages, costs and expenses, including reasonable attorney's
fees for the defense thereof, arising from the conduct or management of the
business conducted by Tenant in the Premises or from any breach or default on
the part of Tenant in the performances of any covenant or agreement on the part
of Tenant to be performed pursuant to the terms of this Lease, or from any act
or negligence of Tenant, its agents, contractors, servants, employees,
subleases, concessionaires, licenses or invitees, or any other person entering
upon the Premises under express or implied invitation of Tenant. In case of any
action or proceeding brought against Landlord by reason of any such claim upon
notice from Landlord, Tenant covenants to defend such action of proceeding by
counsel satisfactory to Landlord. Landlord shall not be liable and Tenant waives
all claims for damage to person or property sustained by Tenant or Tenant's
agents, contractors, servants, employees, subleases, concessionaires licensees
or invitees resulting from the Building or the Premises or any equipment or
appurtenances thereunto appertaining becoming out of repair, or resulting from
any accident in or about the Premises, the Project or resulting directly or
indirectly from any act or neglect of any other Tenant in the Project. This
shall, apply expressly, but not exclusively, to the flooding of the Premises,
and to damage caused by refrigerators, sprinkling devices air-conditioning
apparatus, water, snow, frost, steam, excessive heat or cold, falling plaster,
broken glass, sewage, gas, odors and noise, or the bursting or leaking of pipes
or plumbing fixtures. Tenant, at its sole cost and expense, shall procure and
maintain throughout the term hereof a policy or policies of insurance. Insuring
both Landlord and Tenant against all claims, demands or actions arising out of
or in connection with Tenant's use or occupancy of the Premises, or by the
condition of the Premises, the limits of such policy or policies to be in an
amount not less than $1,000,000. 00 combined single limits of liability, and to
be written by insurance companies satisfactory to Landlord and qualified to do
business in the state in which the Premises are located. Such policies or duly
executed certificates of insurance shall be promptly delivered to Landlord and
renewals thereof as required shall be delivered to Landlord at least ten (10)
days prior to the expiration of the respective policy terms, shall contain an
agreement by the insurer that the same may not be canceled or materially without
at least ten (10) days' prior written notice to Landlord.

17. CONDEMNATION
A. If the entire Project is taken by eminent domain, this Lease shall
automatically terminate as of the date of taking. If a portion of the Project is
taken by eminent domain, Landlord shall have the right to terminate this Lease
by giving written notice thereof to Tenant within ninety (90) days after the
date of taking. *If a portion of the Premises is taken by eminent domain and
this Lease is not thereby terminated, Landlord shall, at its expense, restore
the Premises, exclusive of any improvements or other changes made tot he
Premises by Tenant, to as near the condition which existed immediately prior to
the date of taking as reasonable possible, and rent shall abate during such
period of time as the Premises are untenantable in the proportion that the
untenantable portion of the Premises bears tot he entire Premises.

B. Any compensation or award paid or payable on account of any such taking shall
belong to, and be the sole property of, Landlord or the then owner or owners of
the Project

<PAGE>

18. SURRENDER OF POSSESSIONS. HOLDING OVER
At the expiration or earlier termination of the term of this Lease, Tenant shall
return all keys to the Premises to landlord and shall surrender the Premises in
good condition and repair except for reasonable wear and tear, any repairs
specifically required herein to be performed by Landlord and loss by fire or
other causes covered by Landlord's insurance. Should Tenant, or any of its
successors in interest, holdover the Premises or any part thereof, after the
expiration of the term of this Lease, without Landlord's written consent, such
holding over shall, at the Landlord's option, constitute and be construed as a
tenancy from month to month only, at a rental equal to twice the rental payable
for the last month of the term of this Lease. The inclusion of the preceding
sentence shall not be construed as Landlord's permission for Tenant to hold
over.

19. OUIET ENJOYMENT
Landlord represents and warrants that it has full right and authority to enter
into this Lease and that Tenant, upon paying the rental herein set forth and
performing its other covenants and agreements herein set forth, shall peaceably
and quietly have, hold and enjoy the Premises for the term hereof without
hindrance or molestation from Landlord, subject to the terms and provisions of
this Lease.

20. EVENTS OF DEFAULT
Anyone or more of the following events shall constitute an event of default
under this Lease: A. If Tenant fails to pay, when due, any installment of Base
Rent or Tenant's share of operating costs or any other payment required to be by
Tenant paid hereunder.

B. If Tenant fails to perform or comply with any of the other terms, conditions
and obligations of this Lease;

C. If a writ of execution, attachment or other process of law shall cause levy
on or against the property of Tenant or a receiver or trustees shall be
appointed for all or substantially all of the assets of Tenant;

D. If Tenant shall become insolvent, or shall make a transfer in fraud of
creditors, shall admit in writing its inability to pay its debts as they become
due, or shall commence any proceeding or file a petition under the provisions of
the Federal Bankruptcy Code for liquidation, reorganization or adjustment of
debts, or under any insolvency law or other statute or law providing for the
modification or adjustment of the rights of creditors, or shall file an answer
admitting to or not contesting the material allegations of a petition filed
against it in any such proceeding, or an order for relief shall be entered by a
federal Bankruptcy Court in any such proceeding or Tenant shall not, within
sixty (60) days after the commencement of any such proceeding or the filing of
any such petition without its consent have the same dismissed or vacated, or
shall consent to the appointment of a custodian (as that term is defined m the
Federal Bankruptcy Code) for, or assignment to a custodian of, the whole or any
substantial part of its properties, or shall no~ within sixty (60) days after
such an appointment or assignment without its consent or acquiescence, have such
appointment or assignment vacated or set aside;

E. If Tenant shall vacate or abandon the Premises or the Premises shall become
vacant; or

F. If Tenant shall have been notified by Landlord of a default by Tenant under
this Lease more than three (3) times in any calendar year.

21. REMEDIES.
Upon the occurrence of any of such events of default described in Paragraph 20
hereof, Landlord shall have the option of pursue anyone or more of the following
remedies without any notice or demand whatsoever:

A. Terminate this Lease, in which event Tenant shall immediately surrender the
Premises to Landlord, and if Tenant fails so to do, Landlord may, without
prejudice to any other remedy which it may have for possession or arrearages in
rent, enter upon and take possession of the Premises and expel or removal Tenant
and any other person who may be occupying the Premises or any part thereof, by
force if necessary, without being liable for prosecution or any claim for
damages therefor, and Tenant agrees to pay to Landlord on demand the amount of
all loss and damage which Landlord may suffer by reason of such termination. In
the event of termination of this Lease as aforesaid, Landlord may elect to
recover from Tenant, as and for liquidated damages for loss of the bargain and
not as a penalty, an amount equal to the difference between (1) the Base Rent,
Tenant's share of operating costs and other charges reserved hereunder for the
period which otherwise should have been the balance of the term hereof; and

B. Enter upon and take possession of the Premises and expel or remove Tenant and
any other person who may be occupying the Premises or any part thereof, by force
if necessary, without being liable for prosecution or any claim for damages
therefore, all without terminating this Lease or any of Tenant's obligations
hereunder. In such event, Landlord may make alterations and repairs and
redecorate the Premises to the extent deemed by Landlord necessary or desirable,
and may relent the Premises, or any part thereof, for the account of Tenant, to
any person, firm or corporation, other than Tenant, for such rent, for such time
and upon such terms as Landlord, in Landlord's sole discretion, shall determine.
In so doing, Landlord shall not be required to accept any tenant offered by
Tenant or to observe any instruction given by Tenant concerning such reletting.
Any rent and other amounts received by Landlord upon such reletting shall be
applied first to the costs and expenses of Landlord in regaining possession of
the Premises, storing property removed from the Premises, making alterations or
repairs, redecorating the Premises and reletting the Premises including, without
limitation, brokerage and attorneys' fees and then such rent and other amounts
shall be applied to the Base Rent, operating costs and other obligations of
Tenant under this Lease, and Tenant agrees to pay to Landlord on demand any
deficiency that may arise by reason of such reletting.

C. Enter upon the Premises, by force if necessary, without liable for
prosecution or any claim for damages therefor, and do whatever Tenant is
obligated to do under the terms of this Lease, and Tenant agrees to reimburse
Landlord on demand for any expenses which landlord may incur in thus effecting
compliance with Tenant's obligations under this Lease, with interest as provided
in Paragraph 26F hereof, and Tenant further agrees that Landlord shall not be
liable for any damages resulting to Tenant from such action, whether caused by
the negligence of Landlord or otherwise.

Pursuit of any of the foregoing remedies shall not preclude pursuit of any of
the other remedies herein provided or any other remedies provided by law.
Landlord may at any time elect to terminate this Lease as described in A above
despite a prior election to exercise its remedies under B or C above. Pursuit of
any remedy herein provided shall not constitute a forfeiture or waver of any
rent due to Landlord hereunder or of any damages accruing to Landlord by reason
of the violation of any of the terms, provisions and covenants herein contained.
No waiver by Landlord of any violation or breach of

<PAGE>

any of the terms, provisions and covenants herein contained shall be deemed or
construed to constitute a waiver of any other violation or breach of any of the
terms, provisions and covenants herein contained. Landlord's acceptance of the
payment of rental or other payments hereunder after the occurrence of an event
of default shall not be construed as a waiver of such default unless Landlord so
notifies Tenant in writing. Forbearance by Landlord to enforce one or more of
the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default. If, on account of any breach
or default by Tenant in Tenant's obligations under the terms and conditions of
this Lease, it shall become necessary or appropriate for Landlord to employ or
consult with an attorney concerning or to enforce or defend any of Landlord's
rights or remedies hereunder, Tenant agrees to pay any reasonable attorneys'
fees and a management fee in the amount of Three Hundred and no/100 Dollars
($300.00). No act or thing done by the Landlord or its agents during the term
hereby granted shall be deemed an acceptance of the surrender of the Premises,
and no agreement to accept a surrender of the Premises shall be valid unless in
writing signed by Landlord.

22. LANDLORD'S RIGHT TO CURE
If Tenant defaults in the making of any payment or the doing of any act required
to, make such payment or do such act, and the costs incurred by Landlord in
doing so, with interest thereon as provided in paragraph 26F hereof, shall be
paid by Tenant to Landlord upon demand. The making of such payment or the doing
of such act by Landlord shall not operate to cure such default by Tenant or to
prevent or stop Landlord from enforcing or pursuing any rights and remedies
which Landlord would other wise have.

23. MORTGAGES
Tenant accepts this Lease subject and subordinate to any mortgage(s) and/or
deed(s) of trust and/or ground lease(s) or other underlying leases(s) now or at
any time hereafter consulting a lien or charge upon the Premises, and Tenant
shall at any time hereafter on demand execute any instruments, releases or other
documents which may require by any mortgagee, trustee or lessor for the purpose
of subjecting and subordinating this Lease to the lien of any such mortgage,
deed of trust, ground leases or other underlying lease. In the event Tenant
fails to comply with any such demand within ten (10) days following the demand,
Tenant shall be deemed to have appointed Landlord as Tenant's attorney-in-fact
to execute any such instruments, releases or other documents. With respect to
any mortgage(s) and/or deed(s) of trust and/or ground lease(s) or other
underlying lease(s) now or at any time hereafter created which constitute a lien
or charge upon the Premises, Landlord at its sole option shall have the right to
waive the applicability of this paragraph so that this Lease would not be
subject and subordinate to such mortgage(s) or deed(s) of trust or ground
lease(s) or other underlying lease(s).

24. NOTICES
Each provision of this instrument or of any applicable law or regulation with
reference to the sending, mailing or delivery of any notice or the making of any
payment by Landlord to Tenant or by Tenant to Landlord shall be deemed to be
complied with when and if the following steps are taken:

A. All rent and other payments required to be made by Tenant to Landlord
hereunder shall be payable to Landlord at the address herein below set forth or
at such other address as Landlord may specify from time to time by written
notice delivered in accordance herewith.

B. Any notice or document required or permitted to be delivered hereunder shall
be deemed to be delivered, whether actually received or not, when deposited in
the United States mail, postage prepaid, certified or registered mail, addressed
to the parties hereto at the respective addresses set out opposite their names
below, or at such other address as they have theretofore specified by written
notice delivered in accordance herewith:

Landlord:                                           Tenant:

7725 Washington Avenue Corp.                        Rimage Systems, Inc.

7808 Creekridge Circle, #200                        7725 Washington Avenue South

Minneapolis, MN 55439                               Edina, MN 55439

C. Any notice or document required or permitted to be delivered hereunder by
Landlord to Tenant also shall be deemed to be delivered if an when delivered
personally to Tenant (or to an agent of Tenant if Tenant is not an individual)
at the Premises.

25. RULES AND REGULATIONS
Tenant shall use the Premises and the common areas of the project in accordance
with such rules and regulations as may from time to time be made by Landlord for
the general safety, convenience and comfort of the owners, occupants and tenants
of the project, and shall cause Tenant's employees, agents, representatives and
invitees to abide by such rules and regulations. The rules and regulations now
in effect are attached hereto as Exhibit D and are hereby made a part hereof,
and Tenant hereby acknowledges receipt of the same.

26. MISCELLANEOUS
A. Words of any gender used in this Lease shall be held and construed to include
any other gender, and words in the singular number shall be held to include the
plural, unless the context otherwise requires. The headings of the paragraphs of
this Lease are for convenience only and do not limit or define the contents of
said paragraphs.

B. The terms, provisions and covenants and conditions contained in this Lease
shall apply to, inure to the benefit of, and be binding upon, the parties hereto
and upon their respective heirs, legal representatives, successors and permitted
assigns, except as otherwise herein expressly provided.

C. Tenant agrees, within ten (10) days after request of Landlord, or Landlord's
designee, including without limitation, the present or any future holder of a
mortgage(s) and/or deed(s) of trust and/or ground lease(s) and/or other
underlying lease(s) on the Premises, or any prospective purchaser of the
Premises, an estoppel certificate stating that this Lease is in full force and
effect, the date to which rent and other charges have been paid, the unexpired

<PAGE>

term of this Lease, whether or not Landlord is in default hereunder, and the
nature of any such default, and such other matters pertaining to this Lease as
may be reasonably requested by Landlord.

D. If any term, provision or covenant of this Lease or the application thereof
to any person or circumstances shall, to any extent, be held to be invalid or
unenforceable, the remainder thereof and the application of such term, provision
or covenant to other persons or circumstances shall not be affected thereby, and
this Lease and all the terms, provisions and covenants hereof shall, in all
other respects, continue to be valid and enforceable and to be complied with to
the full extent permitted by law.

E. This Lease may not be altered, changed or amended except by an instrument in
writing signed by Landlord and Tenant. F. Base Rent, Tenant's share of operating
costs and all other payments required of Tenant pursuant to the provisions of
this Lease, shall be deemed rent due hereunder whether or not so designated. All
such rent shall bear interest from the due date thereof (or from the date of
advancement of funds by Landlord if the payment by Tenant is required by virtue
of Landlord's advancement of funds to cure Tenant's default hereunder) until
paid at a rate equal to the lesser of (i) the highest rate permitted by law; and
(ii) two (2) percentage points in excess of the reference rate from time to time
announced by First National Bank of Minneapolis.

<PAGE>

27. ACCEPTANCE BY LANDLORD.
This Lease shall not be binding upon Landlord until approved in writing by, and
signed by an officer of, Landlord, but this Lease may not be revoked or
terminated by Tenant for a period often (10) days from the date hereof.

EXECUTED the 1st day of September, 1998.

LANDLORD:                                          CORPORATE OR BUSINESS TENANT:

7725 Washington Avenue Corp.                       Rimage Systems, Inc.
-----------------------------                      --------------------

Approved:                                          Approved:

By /S/ JAMES REISSNER                              By  /S/ BERNARD P. ALDRICH
   ------------------                                  ----------------------
Its Vice President                                 Its President and CEO
    ---------------                                    -----------------

<PAGE>

                                   EXHIBIT A

                                  (Floor Plan)

<PAGE>

                            [MAIN LEVEL FLOOR PLAN]

<PAGE>

                           [SECOND LEVEL FLOOR PLAN]

<PAGE>

EXHIBIT B

(Legal Description OF Project)

The North 109.21 feet of Tract F, Registered Land Survey No.1283 and that part
of Tract E, Registered Land Survey No.1283 lying South of the North 16.08 feet
thereof, said 109.21 feet and 16.08 feet being measured along the West line of
Registered Land Survey No. 1283.

<PAGE>

EXHIBIT C

NONE

<PAGE>

EXHIBIT D (ADDITIONAL LEASE PROVISIONS)

HAZARDOUS WASTE. Tenant warrants and represents it is not:

(a)    Engaged in the business of generating, transporting, storing, trading or
       disposing of hazardous substances or disposing of waste and agrees not to
       do so under this lease or permit others to engage in such a business at
       the premises. Hazardous substance and hazardous waste are hereby defined
       as those terms are defined in Minnesota Statutes #1158.02, Subdivisions 8
       and 9 and including any amendments' thereto, as provided from time to
       time; which sections and amendments are incorporated herein by reference
       thereto as if fully set forth at length.

(b)    Knowingly permit any person to make any regular use of the premises for
       disposal of waste.

(c)    Knowingly permit any person to use the facility for disposal of a
       hazardous substance or waste.

Landlord states it is not aware of any hazardous waste or substance on the
premises. In the event tenant discovers a hazardous substance or waste, it
agrees not to take any action to contribute to the release of same as said
release is defined in Minnesota Statutes #1158.02, Subd. 15, upon any discovery
of same.

Tenant agrees it shall hold landlord harmless from all liability under Minnesota
Statutes Chapter #1158 for any violation of said statute by tenant or the
provisions in this lease including reasonable attorneys' fees.

<PAGE>

EXHIBIT D (Continued)

Monthly Rent. This lease provides for base rent and base rent escalators as
follows:

October 1, 1998

Base rent will be $6.75 per square foot or Annually $290,250.00 Monthly
$24,187.50 October 1, 1999

Base rent will be $6.95 per square foot or Annually $298,850.00 Monthly
$24,904.17 October 1, 2000

Base rent will be $7.16 per square foot or Annually $307,880.00 Monthly
$25,656.67 October 1, 2001

Base rent will be $7.37 per square foot or Annually $316,910.00 Monthly
$26,409.17 October 1, 2002

Base rent will be $7.59 per square foot or Annually $326,370.00 Monthly
$27,197.50

The five (5) year renewal option, if exercised, will be as follows:

January 1, 2004

Base rent will be $7.82 per square foot or Annually $336,260.00 Monthly
$28,021.67 January 1, 2005

Base rent will be $8.05 per square foot or Annually $346,150.00 Monthly
$28,845.83 January 1, 2006

Base rent will be $8.29 per square foot or Annually $356,470.00 Monthly
$29, 705.83 January 1, 2007

Base rent will be $8.54 per square foot or Annually $367,220.00 Monthly
$30,601.67 January 1, 2008

Base rent will be $8.80 per square foot or Annually $378,400.00 Monthly
$31.533.33

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