Document:

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                                                                   Exhibit 10.47

                          MASTER DEVELOPMENT AGREEMENT

                                     between

            EDISON SCHOOLS INC., as Agent for Certain Charter Holders

                                       and

                                  KSIXTEEN LLC,
                                  as Developer
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                                TABLE OF CONTENTS

                                                                            Page

ARTICLE 1 - DEFINED TERMS...............................................      1

ARTICLE 2 - APPOINTMENT AND TERM........................................      4

   2.1      Appointment.................................................      4
   2.2      Term........................................................      5

ARTICLE 3 - RELATIONSHIP................................................      5

ARTICLE 4 - DEVELOPMENT PROCESS.........................................      5

   4.1      Preparation and Approval of Development Proposals...........      5
   4.2      Development of a Project....................................      7
   4.3      Construction of a Project...................................      9
   4.4      Additional Services.........................................     14
   4.5      Additional Obligations......................................     14
   4.6      Employees...................................................     15
   4.7      Emergencies.................................................     15
   4.8      Lender and Legal Compliance.................................     15
   4.9      Project Information.........................................     16
   4.10     Edison and Charter Holder Information.......................     16

ARTICLE 5 - DEVELOPER'S AUTHORITY.......................................     16

ARTICLE 6 - INSURANCE AND INDEMNIFICATION...............................     16

   6.1      Property Coverage...........................................     16
   6.2      Loss of Use of Property.....................................     17
   6.3      Liability Coverages.........................................     18
   6.4      Fidelity Insurance..........................................     19
   6.5      General Insurance Requirements..............................     19
   6.6      Liability of Developer......................................     20
   6.7      Waiver of Subrogation.......................................     20
   6.8      Indemnification.............................................     21

ARTICLE 7 - EDISON'S RIGHT TO INSPECT...................................     21

ARTICLE 8 - TERMINATION.................................................     21

   8.1      Termination.................................................     21
   8.2      Other Remedies..............................................     23

ARTICLE 9 - COOPERATION.................................................     23

ARTICLE 10 - DELAYS.....................................................     23

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ARTICLE 11 - CONSENT; APPROVAL..........................................     24

ARTICLE 12 - NOTICES....................................................     24

ARTICLE 13 - COMPENSATION...............................................     25

   13.1     Development Fee.............................................     25
   13.2     Construction Management Fee.................................     26
   13.3     Reimbursable Expenses.......................................     26
   13.4     Fee for Additional Services.................................     26

ARTICLE 14 - ASSIGNABILITY..............................................     26

ARTICLE 15 - MISCELLANEOUS..............................................     27

   15.1     Entire Agreement............................................     27
   15.2     Bind and Inure..............................................     27
   15.3     Amendment...................................................     27
   15.4     Governing Law; Waiver of Jury Trial.........................     27
   15.5     Headings....................................................     27
   15.6     No Waiver...................................................     27
   15.7     Counterparts................................................     27
   15.8     Other Interests.............................................     27
   15.9     Non-Recourse................................................     27
   15.10    Confidentiality.............................................     28
   15.11    Exhibits....................................................     28

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                          MASTER DEVELOPMENT AGREEMENT

         This Agreement is entered into as of __________, 2000 by and between
Edison Schools Inc., a Delaware Corporation as operator of certain charter
schools for and on behalf of the respective Charter Holders (as hereinafter
defined) ("Edison"), and Ksixteen LLC, a Delaware limited liability company
("Developer").

                              W I T N E S S E T H:

         WHEREAS, Edison operates Charter Schools (as hereinafter defined) in
various locations through-out the United States and in connection therewith
assists the corporations holding the charter for such schools (individually, a
"Charter Holder" and collectively, the "Charter Holders") in finding suitable
parcels of land or existing buildings (said parcels being individually referred
to herein as a "Parcel") on which to develop such schools and assisting the
Charter Holders in the development and construction of the building and other
improvements (individually, a "Building") in which such schools will operate;
and

         WHEREAS, Edison as agent for and on behalf of the Charter Holders
desires to enter this contract with Developer under which Developer shall act as
developer and construction manager for each of the Charter Holders, providing
professional development, construction management and financial advisory
services applicable to the planning, development, construction and financing of
the Buildings to be developed by the Charter Holders (said Buildings and related
improvements on the respective Parcels being referred to individually as a
"Project", and collectively as the "Projects"), all on the terms and conditions
herein set forth;

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained and of other good and valuable consideration, the parties hereto agree
as follows:

                                    ARTICLE 1

                                  DEFINED TERMS

         The following capitalized terms shall have the meanings set forth
below:

         1.1 "Affiliate" is defined in Article 14.

         1.2 "Agency Agreement" as defined in Section 2.1.

         1.3 "Approval Period" shall mean thirty (30) days from the date a
              Development Proposal for a Project is submitted to Edison and the
              relevant Charter Holder.

         1.4 "Approved Plans and Specifications" is defined in Section 4.2(b).

         1.5 "Architect" is defined in Section 4.2(b).

         1.6 "Budget" is defined in Section 4.2(e).

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         1.7 "Building" is defined in the Recitals.

         1.8 "Charter Holder(s)" is defined in the Recitals.

         1.9 "Charter School" means a school operated or to be operated by
Edison under contract with a Charter Holder.

         1.10 "Completion Date" shall mean the date on which the Architect
certifies that the work on a Project has been finally completed, including
completion of all landscaping, driveways and so-called punchlist items and if
issued by the requisite governmental authority having jurisdiction over the
Project, a permanent, unconditional certificate of occupancy has been issued
from the appropriate governmental authority for such Project.

         1.11 "Contractor" is defined in Section 4.2(d).

         1.12 "Contract School" means a school operated or to be operated by
Edison under contract with a public board of education or school board.

         1.13 "Construction Financing" is defined in Section 4.2(f).

         1.14 "Development Costs" shall mean with respect to each Project the
total of site acquisition costs and all hard and soft costs of developing,
financing and constructing the Project, including, without limitation, the
Development Fee, building permit fees, consultants' and architects' fees, and
costs of bonds, permitting and financing.

         1.15 "Development Fee" is defined in Section 13.1.

         1.16 "Development Period" shall mean with respect to each Project the
period of time beginning on the date of the Notice of Edison Approval and ending
on the Completion Date.

         1.17 "Development Proposal" shall mean a written proposal given by
Developer to Edison and the applicable Charter Holder describing Developer's
detailed proposal for site acquisition, planning, developing, financing and
constructing a Project, which shall include, without limitation, the following:

                  (a) Developer's site selection recommendation;

                  (b) Feasibility and environmental studies for the development
of the Project;

                  (c) A detailed budget setting forth the estimated total
Development Costs to be incurred;

                  (d) A list of proposed contractors to be employed in the
construction and development of the Project, if available;

                  (e) A list of key permits and approvals required for each
Project and a schedule for obtaining the same;

                  (f) A schedule for the construction of the Project;

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                  (g) A plan for Project financing; and

                  (h) A staffing plan, naming the Developer's proposed Project
Manager for the Project and other staffing as described in Section 4.5.

         1.18 "Force Majeure" shall have the meaning set forth in Article 10.

         1.19 "Land" is defined in the Recitals.

         1.20 Intentionally Omitted.

         1.21 "Notice of Disapproval" shall mean a written notice given by
Edison or the relevant Charter Holder to Developer stating that Edison or the
Charter Holder does not approve the proposal for a Project as set forth in a
Development Proposal.

         1.22 "Notice of Approval" shall mean a written notice given by Edison
and the relevant Charter Holder to Developer stating that Edison and the
relevant Charter Holder approve of the Project described in the Development
Proposal.

         1.23 Intentionally Omitted

         1.24 "Parcel" is defined in the Recitals.

         1.25 "Permanent Financing" is defined in Section 4.2(f).

         1.26 Intentionally Omitted.

         1.27 "Progress Schedule" is defined in Section 4.2(e).

         1.28 "Project" is defined in the Recitals.

         1.29 "Project Manager" is defined in Section 4.5.

         1.30 Intentionally Omitted

         1.31 "Submitted Plans" is defined in Section 4.2(b).

         1.32 "Substantial Completion of Construction" is defined in Section
4.3(c).

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                                    ARTICLE 2

                              APPOINTMENT AND TERM

         2.1 Appointment. Except as hereinafter provided, Edison hereby engages
Developer to oversee, arrange, supervise and coordinate on behalf of each
relevant Charter Holder all development, construction management and financial
advisory services for site selection, planning, design, construction and
financing of each Project for which a Notice of Approval has been issued, as
required and subject to the specifications in this Agreement, and Developer
hereby accepts such engagement on the terms and conditions herein contained.
Developer accepts the relationship of trust and confidence established by this
Agreement and covenants with Edison, on behalf of the Charter Holder, to utilize
the Developer's best skill, efforts and judgment in furthering the interests of
Edison and the Charter Holders in the performance of the services to be provided
by Developer hereunder.

         Developer acknowledges and agrees that Edison is acting hereunder as
agent for and on behalf of the respective Charter Holders; however, in some
cases at Edison's election, Edison may direct Developer in writing to commence
work on one or more Projects before the Charter Holders which will own such
Projects are organized. Until the Charter Holder for any one or more Projects is
organized and executes an Agency Agreement with Edison substantially in the form
attached hereto as Exhibit A (each an "Agency Agreement"), Edison shall make all
decisions with respect to such Project hereunder (and neither Developer nor
Edison need obtain such Charter Holder's consent or approval of any matter in
connection with such Project(s) as would otherwise require the Charter Holder's
consent or approval hereunder) and Edison shall be solely responsible to
Developer for all amounts due with respect to such Project(s) and shall pay all
amounts due Developer hereunder in connection with such Project(s). As and when
Edison enters an Agency Agreement with the Charter Holder for any such
Project(s) and delivers to Developer (i) a copy of such Agency Agreement and
(ii) evidence that the Charter Holder has or will obtain necessary construction
financing for the Project necessary to pay the Development Costs for the Project
set forth in the Project's Budget, the respective Charter Holders shall have all
rights of a Charter Holder hereunder as to its Project and such Charter Holder
shall be solely responsible for the obligations and liabilities of Edison
arising hereunder with respect to such Project(s) and Edison shall be relieved
from any further liability for the Development Costs, including, without
limitation, the Development Fee payable for such Project(s) hereunder (excepting
only obligations and liabilities caused by Edison's gross negligence or willful
misconduct). If Developer is not satisfied that the Charter Holder is
financially able to discharge its obligations under this Agreement, Developer
may notify Edison within ten (10) days after delivery to it of the Agency
Agreement, and unless Edison elects (in its sole discretion) in a written notice
to Developer to guarantee the obligations of such Charter Holder hereunder,
Developer may upon written notice to Edison, withdraw from the affected Project,
in which case Developer shall be paid all amounts due to Developer on such
Project hereunder as of the date of such notice and Developer shall have no
further obligation to perform services in connection therewith, however, this
Agreement shall remain in full force and effect in all other respects.

         Edison has advised Developer that a number of Projects are currently
underway and are in the various stages of development as shown on Exhibit B
attached hereto and made a part hereof (the "Existing Projects"). Also shown on
Exhibit B is the Charter Holder responsible for

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each of such Existing Projects together with the stage of completion thereof. As
to such Existing Projects, Developer shall assume responsibility for the
development, construction management and financial advisory services to be
performed from and after the date of this Agreement and in recognition of the
fact that development services on such Projects have been partially completed,
the Developer shall be paid for each such Project the Development Fee set forth
on Exhibit B hereto in lieu of the Development Fee otherwise payable in
accordance with Article 13 hereof.

         Developer shall perform all development, construction management and
financial advisory services required hereunder for the benefit of each of the
Charter Holders as if such Charter Holders were parties to this Agreement,
however, Edison shall remain the agent for such Charter Holders. Copies of all
communications by and between the Charter Holders and Developer with respect to
any Project shall be forwarded to Edison. It is understood and agreed that no
Charter Holder has any liability or obligation under this Agreement or under its
Agency Agreement for obligations or liabilities arising hereunder with respect
to any Project other than the Project identified in its Agency Agreement or for
costs or liabilities arising from Edison's gross negligence or willful
misconduct.

         Edison shall diligently endeavor to provide or cause the applicable
Charter Holders to provide timely responses to all requests by Developer for
Edison's or a Charter Holder's approval or other decisions required of them
hereunder.

         2.2 Term. Subject to the provisions of Article 8 hereof, this Agreement
shall be for a term commencing as of the date of this Agreement and continuing
through the later of the fifth anniversary of the date of this Agreement or the
Completion Date for the last Project for which Edison has issued a Notice of
Edison Approval.

                                    ARTICLE 3

                                  RELATIONSHIP

         Developer shall at all times be an independent contractor and neither
Developer nor its employees shall be agents or employees of Edison or any
Charter Holder. Nothing herein shall be deemed to create a partnership or joint
venture between Developer and Edison or any Charter Holder.

         Edison acknowledges that this Agreement is not an exclusive engagement
of Developer and Developer may provide similar or other real estates services to
parochial, public or private schools unrelated to Edison or any of the Charter
Holders.

                                    ARTICLE 4

                               DEVELOPMENT PROCESS

         4.1 Preparation and Approval of Development Proposals. Edison may from
time to time during the term of this Agreement request that Developer perform
the following pre-development services:

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                  (a) Intentionally Omitted.

                  (b) Preparation of Development Proposal. In the event
Edison and the relevant Charter Holder authorize Developer in writing to prepare
a Development Proposal for a Project, the Developer shall deliver a Development
Proposal for such Project to Edison and the relevant Charter Holder within sixty
(60) days after the date of such written authorization or within such additional
time (not to exceed ninety (90) days in the aggregate) as Developer may request
in writing. The third party costs and expenses to be incurred by Developer and
fees and charges payable to Developer in the preparation of any such Development
Proposal shall not exceed the Retainer paid to Developer therefor in accordance
with Section 13.1(a) hereof. If Developer wishes to incur any cost or expense
which together with its fee shall cause all costs of the Development Proposal to
exceed the Retainer, Developer shall provide Edison and the relevant Charter
Holder with such information as Edison or the relevant Charter Holder shall
reasonably require in order to approve the proposed excess costs. Edison or the
relevant Charter Holder shall have the right to approve or disapprove the
Development Proposal for such Project in Edison's or the relevant Charter
Holder's sole discretion.

                  (c) Intentionally Omitted.

                  (d) Timing for Approval. Edison and the relevant Charter
Holder may send Developer a Notice of Approval or a Notice of Disapproval within
the applicable Approval Period. If Edison and the relevant Charter Holder send a
Notice of Approval, Developer shall commence the development of the Project
described in the Development Proposal subject to and in accordance with the
provisions of Section 4.2 hereof. If the Approval Period expires and Edison and
the relevant Charter Holder have not sent a Notice of Approval, as the case may
be, the Project described in the Development Proposal, as the case may be, shall
be deemed disapproved. The parties may agree in writing to extend the Approval
Period to permit the Developer to submit additional information, documents and
plans reasonably requested by Edison or to revise same.

                  (e) Reimbursement for Certain Costs. Developer may charge
1.1 times all third party out-of-pocket costs and expenses reasonably incurred
by Developer in connection with the preparation of a Development Proposal
against the Retainer paid to Developer in accordance with Section 13.1(a)
hereof, provided that the sum of such reimbursements plus the Developer's fee in
connection with the preparation of any Development Proposal do not exceed in the
aggregate the Retainer. Upon completion of the Development Proposal, Developer
shall submit to Edison a detailed accounting (supported by documentation as
Edison shall reasonably request) of all such costs and fees charged against the
Retainer and any amounts in excess of the Retainer that were approved in writing
in advance by Edison and the applicable Charter Holder in accordance with
Section 4.1(b). Amounts in excess of the Retainer approved by Edison and the
applicable Charter Holder shall be paid within fifteen (15) days following
submission of Developer's invoice therefor together with such additional
documentation as Edison may reasonably require.

                  (f) Ownership of Development Proposals. Each Development
Proposal shall be made in the name of Edison, or, if an Agency Agreement has
been signed, in the name of the relevant Charter Holder. Edison, or, if an
Agency Agreement has been signed, the relevant

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Charter Holder, shall have title to and the right to rely upon any and all of
the contents thereof, and such materials may not be used for any other purpose
by Developer without prior written approval from Edison or the relevant Charter
Holder's, as the case may be, which approval shall not be unreasonably withheld,
conditioned or delayed.

         4.2 Development of a Project. In the event Edison and the relevant
Charter Holder approve a Development Proposal, the Developer shall perform the
following development services:

                  (a) Site Acquisition. Developer shall work with legal
counsel reasonably selected by Edison to negotiate a contract to purchase or a
suitable lease of the selected Parcel on the most favorable terms reasonably
achievable, and thereafter assist Edison in conducting all necessary or
appropriate due diligence with respect to the selected Parcel including,
analysis of applicable zoning and subdivision laws and regulations, title
searches, site surveys and environmental assessments.

                  (b) Engagement and Supervision of Architect. Developer
shall, on behalf of Edison as agent for the relevant Charter Holder, solicit and
recommend a reputable and licensed architect (the "Architect") and such other
engineers, designers, experts and consultants, as necessary or appropriate, to
provide design services for the construction and operation of the Project.
Before engaging any such persons, Developer shall obtain the prior written
consent of Edison (not to be unreasonably withheld) as to the identity of the
person to be engaged and as to the form and substance of the contract therefor
which shall be entered into and executed by Edison as agent for the applicable
Charter Holder. In no event, however, shall Edison have any liability or
obligation under such contracts except to the extent that Edison elects, in its
sole discretion, in writing to guarantee the obligations of the Charter Holder
thereunder. Developer shall cause the parties engaged pursuant to this Section
4.2(b) to prepare and submit to Edison, Developer and the relevant Charter
Holder, for Edison's, Developer's and the relevant Charter Holder's review and
approval (not to be unreasonably withheld), complete plans, specifications and
working drawings for the construction of the Project in such form as Edison may
reasonably require (the "Submitted Plans"). Developer shall supervise all of
such architectural/engineering and design services such that the Submitted Plans
will be prepared and be substantially consistent with the conceptual plans
identified in the Development Proposal. Edison and the relevant Charter Holder
shall provide their written approval or notice of any modifications required to
such plans, specifications and drawings within thirty (30) days after receipt
thereof. The Architect shall make any required modifications within thirty (30)
days of receiving comments from Edison or the relevant Charter Holder. Such
plans, specifications and drawings, when approved by Edison in writing, shall be
referred to herein as the "Approved Plans and Specifications." The Approved
Plans and Specifications shall not be revised in any material respect without
the prior written consent of Edison and the relevant Charter Holder (which
consent shall not be unreasonably withheld).

                  (c) Procuring Entitlements, Permits and Approvals.
Immediately following the engagement of the Architect provided above, Developer
shall process, procure and maintain in the name of Edison or the applicable
Charter Holder all necessary entitlements and governmental approvals for the
design, development, construction, completion, equipping, occupancy, operation,
and use of the Project, including, without limitation, any special permits,

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rezoning, subdivisions, variances or authorizations required by applicable law.
Developer shall maintain true and complete copies of all such permits and
authorizations and, at the request of Edison or the relevant Charter Holder,
promptly provide copies of same to Edison or the relevant Charter Holder. In
addition, Developer shall make all requisite arrangements with public and/or
private utilities to ensure that water, sewer, electric, gas and other
utilities, in appropriate capacities, will be available to serve the Project.

                  (d) Engagement of Contractor. Following completion of the
Approved Plans and Specifications, Developer shall negotiate and submit to
Edison for its review and approval (not to be unreasonably withheld), all
necessary construction and other contracts for the construction of the Project,
all of which shall be consistent with the Approved Plans and Specifications. The
total amounts payable under all such contracts which relate to the construction
of the Project shall not exceed the amounts set forth in the Development
Proposal, without prior written approval from Edison and the relevant Charter
Holder. Developer shall obtain the prior written consent of Edison (not to be
unreasonably withheld) as to the selection of the general contractor (the
"Contractor") to be engaged. The construction contract shall be in a form
reasonably satisfactory to Edison and shall be subject to the prior written
approval (not to be unreasonably withheld) of Edison and shall be consistent
with the Budget. Edison (and, in the case of any change order which will cause
an increase in the Budget, the relevant Charter Holder) shall have the right to
approve any change order for a single change in excess of $50,000 and all change
orders after more than $250,000 of change orders of any type have been requested
per Project.

                  (e) Budget and Progress Schedule. Developer shall prepare
and submit to Edison and the relevant Charter Holder for their approval (i) a
final development budget (the "Budget") for each Project setting forth in detail
on a line item basis reasonably satisfactory to Edison the Development Costs of
the Project and which shall substantially conform to the budget contained in the
Development Proposal except as otherwise approved by Edison and the relevant
Charter Holder, and (ii) a "Progress Schedule" for the Project which shall set
forth the dates for starting and completing the various stages of construction
of the Project and which shall substantially conform to the timing set forth in
the Development Proposal except as otherwise approved by Edison and the relevant
Charter Holder. In the event the Budget or the Progress Schedule do not
substantially conform to those approved by Edison and the relevant Charter
Holder in the Development Proposal, either Edison or the relevant Charter Holder
shall have the right to disapprove the construction of such Project. Developer
shall not revise the Progress Schedule without the prior written consent of
Edison and the relevant Charter Holder. Developer shall keep Edison and the
relevant Charter Holder advised, on a monthly basis, or more frequently as
Edison or the relevant Charter Holder may reasonably request, as to the progress
of the various stages of construction under the Progress Schedule and any
acceleration or delay with respect to such stage.

                  (f) Financing. Developer shall assist Edison or the
relevant Charter Holder, if requested by Edison or the relevant Charter Holder,
in applying for (i) construction and development financing for the Project
("Construction Financing"), and (ii) upon completion of each Project, long term
financing of the Project (the "Permanent Financing"), which will be sufficient
(to the extent a loan of such amount is available on terms acceptable to Edison
and the applicable Charter Holder) to discharge the construction loan, if any.
Such assistance shall

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include (a) the preparation of those portions of the application packages
relating to the nature, extent and cost of the Project and other matters
relating to the site acquisition and the construction of the Project and
operation of the Project, (b) making available to any such lenders all reports,
tests, studies, plans, specifications, governmental approvals and other
documentation relating to the Project and the construction thereof, (c)
negotiating for Edison or the relevant Charter Holder the terms of all
applicable loan commitments, and (d) obtaining all title insurance policies,
surveys, opinions of counsel and other documentation or information required in
connection therewith. Developer shall coordinate its activities with counsel
reasonably selected by Edison or the relevant Charter Holder in their
discretion. Developer shall also monitor and advise Edison and the relevant
Charter Holder regarding compliance with Edison's or the relevant Charter
Holder's obligations under the loan documents evidencing or securing such loan.

         4.3 Construction of a Project. In the event that Edison and the
relevant Charter Holder elect to proceed with construction of the Building(s)
required in connection with any Project, Developer shall provide the following
construction management services:

                  (a) Construction Management. Developer shall supervise,
coordinate and manage all construction work by Contractor and others engaged for
the construction of the Project in order to expedite completion of the Project
on schedule and on budget, and in connection therewith, Developer shall:

                           1.       Provide overall supervision, coordination,
                                    and direction of the construction of the
                                    Project (herein sometimes referred to as the
                                    "Work") of the Contractor and shall
                                    coordinate the Work of Contractor with the
                                    work of all other contractors performing
                                    services or construction work for Edison in
                                    connection with the Project (the "Other
                                    Contractors"), if any;

                           2.       Assure that a competent construction,
                                    supervisory, and inspection staff is
                                    assigned for the supervision, coordination,
                                    and direction of the Work of the Contractor
                                    and prepare and submit to Edison an
                                    organization chart showing proposed job-site
                                    staff, job classifications, time and period
                                    of commencement and termination of each
                                    member of such staff, and salary ranges of
                                    such staff; such chart and any revisions
                                    thereto shall be subject to the prior
                                    written approval of Edison;

                           3.       Establish on-site organization and lines of
                                    authority in order to carry out all phases
                                    of Project on a totally coordinated basis;

                           4.       Establish and implement procedures for
                                    coordination of services by and among
                                    Edison, Architect, and Contractor with
                                    respect to all aspects of Project;

                           5.       Maintain the Progress Schedule approved by
                                    Edison and the Charter Holder in accordance
                                    with Section 4.2(e) and if necessary,

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                                    add thereto a comprehensive schedule of work
                                    for the Contractor and all Other
                                    Contractors, and submit such schedule for
                                    approval by Edison and the relevant Charter
                                    Holder; revise the Progress Schedule as
                                    required to incorporate such approved
                                    scheduling data submitted by the Contractor
                                    and Other Contractors; periodically update
                                    such schedule to reflect actual construction
                                    progress; coordinate contractor lead times,
                                    procurement, and field starts to accomplish
                                    the schedule; report to Edison on progress
                                    and to identify all failures and causes
                                    thereof to maintain the schedule; and to
                                    make recommendations for recovery of any
                                    lost time;

                           6.       Monitor Architect's coordination, review,
                                    and distribution of construction contract
                                    documents, including revised drawings and
                                    specifications;

                           7.       Schedule and conduct job meetings to be
                                    attended by the Contractor, Other
                                    Contractors, if any, and various
                                    subcontractors, Architect, and Edison to
                                    discuss such matters as procedures,
                                    progress, problems, and scheduling and to
                                    establish status and accountability for
                                    necessary timely action for each item of
                                    work; cause minutes of such job meetings to
                                    be transcribed and distributed;

                           8.       Until final completion and acceptance of the
                                    Project by Edison and the relevant Charter
                                    Holder, direct and inspect the Work of the
                                    Contractor and the work of any Other
                                    Contractors in an effort to see that the
                                    materials furnished and work performed are
                                    in accordance with the applicable contract
                                    documents and that all work on Project is
                                    progressing on schedule and, when the work
                                    is completed, make recommendations relating
                                    to acceptance thereof by Edison and
                                    Architect; in the event the interpretation
                                    of the meaning and intent of said
                                    construction contract documents becomes
                                    necessary during construction, Developer
                                    shall consult with Architect and Edison,
                                    ascertain said interpretation, and transmit
                                    such information to the Contractor and Other
                                    Contractors, as appropriate; and promptly
                                    advise Edison of any undue delay in
                                    obtaining such interpretations;

                           9.       Determine the adequacy of the Contractor's
                                    and Other Contractors' personnel and
                                    equipment and the availability of necessary
                                    materials and supplies;

                           10.      Assist the Contractor in establishing a
                                    comprehensive safety program for Project and
                                    to monitor compliance therewith by the
                                    Contractor and Other Contractors, if any.
                                    The performance of these services by
                                    Developer shall not relieve the Contractor,
                                    Other Contractors and various subcontractors
                                    of their responsibilities for

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<PAGE>   14
                                    the safety of persons and property and
                                    compliance with all statutes, rules,
                                    regulations, and orders applicable to the
                                    conduct of the work, nor shall it impose on
                                    Developer any responsibility for the safety
                                    program or compliance therewith by
                                    Contractor, Other Contractors and
                                    subcontractors;

                           11.      Make recommendations and render assistance
                                    as necessary to the development and
                                    administration of an effective labor
                                    relations program for Project and to the
                                    avoidance of labor disputes during
                                    construction;

                           12.      Monitor Architect's coordination, review for
                                    approval, and distribution of shop drawings,
                                    catalogs, and samples, and to promptly
                                    advise Edison and the relevant Charter
                                    Holder of any undue delay in connection
                                    therewith;

                           13.      Make recommendations to Edison, the Charter
                                    Holder, and Architect for such changes in
                                    the work as Developer may consider necessary
                                    or desirable;

                           14.      Review for propriety all requests for
                                    changes to the Construction Contract for the
                                    Project; monitor Architect's preparation and
                                    verification of quantity and price accuracy
                                    and processing of all change proposals; to
                                    review and analyze change proposals for
                                    reasonableness of costs; and recommend
                                    action by Architect and Edison with respect
                                    thereto;

                           15.      Make recommendations to Edison and Architect
                                    regarding the approval of subcontractors and
                                    material vendors;

                           16.      Keep accurate and detailed written records
                                    of the progress of the Project during all
                                    stages of planning and construction; submit
                                    monthly written progress reports to Edison
                                    and the Architect, including, but not
                                    limited to, reports concerning the progress
                                    of the work of the Contractor and Other
                                    Contractors, if any, the percentage of
                                    completion, the number and amount of change
                                    orders, and the existence of any present or
                                    anticipated problems;

                           17.      Inspect the Project, jointly with Architect,
                                    no less than seven (7) days prior to the
                                    time Edison is to take over, use, occupy, or
                                    operate any part of all of the Project and
                                    to furnish a detailed report to Edison, the
                                    Charter Holder, and Architect of observed
                                    discrepancies, deficiencies, and incomplete
                                    items in the work performed by the
                                    Contractor and Other Contractors, if any;

                           18.      Provide assistance to Architect in
                                    assembling and transmitting written
                                    guarantees, warranties, instruction manuals,
                                    and other data required of the Contractor
                                    and Other Contractors;

                                     - 11 -
<PAGE>   15
                           19.      Monitor compliance with all laws (including,
                                    without limitation, laws pertaining to the
                                    Americans With Disabilities Act), and with
                                    all rules and regulations that may
                                    reasonably be prescribed from time to time
                                    by Edison or the relevant Charter Holder;
                                    and

                           20.      Monitor all costs and expenses of the
                                    construction to confirm and verify that at
                                    each stage of the construction process there
                                    are sufficient remaining funds within the
                                    Budget to complete the Project in accordance
                                    with the Development Proposal, as may be
                                    amended by change orders approved by Edison
                                    and the relevant Charter Holder or as
                                    otherwise amended by Edison, the relevant
                                    Charter Holder, and Developer, and so that
                                    at the Completion Date, the Budget will not
                                    be exceeded.

                  (b) Construction and Draw Disbursements. Developer shall
review and submit to Edison and, if requested by Edison, any construction lender
and/or construction consultant named by Edison, all demands for payment made
under any contract or agreement with respect to the construction of the Project,
or for any labor, materials or services furnished in connection with the
construction of the Project, all of which demands for payment shall be made on
the standard form AIA Construction Draw Request or such other form of draw
request agreed to by Edison and Developer. All such demands for payment shall
include all appropriate lien releases (in accordance with local custom) and
shall be accompanied by copies of all invoices and such other materials as
Edison or such construction lender shall reasonably require to analyze such
demand for payment. Developer shall determine whether such labor, materials or
services have been supplied and completed in accordance, and otherwise
consistent with, the Approved Plans and Specifications, and with the general
contract or other agreement pursuant to which such labor, materials or services
were supplied. Developer shall certify to Edison, the relevant Charter Holder
and such construction lender, if any, that the amounts due pursuant to the
construction contract or relevant agreement relate to the labor, materials,
services and work for which payment has been sought and that such work has been
completed in accordance with such governing contract or agreement. Developer
shall also provide such evidence as Edison or such construction lender deems
reasonably necessary to confirm that the requested payment is due. No payment
shall be made by Developer without the express written approval of Edison. The
construction funds delivered by Edison or the relevant Charter Holder to
Developer for payment of the cost of construction shall be maintained in a
separate bank account established in the name of Edison or the relevant Charter
Holder on terms and conditions approved by Edison.

                  (c) Completion of Construction. When the construction of
the Project has been substantially completed in accordance with the Approved
Plans and Specifications (other than any punch list items), and in accordance
with all governmental laws, rules and regulations and when the Project is ready
for occupancy, Developer shall obtain, on behalf of Edison and the applicable
Charter Holder, a certification to that effect from the Architect to the extent
that the Architect is required under its contract or otherwise agrees to provide
such a certification (it being understood that Developer shall endeavor to
include such requirement in the Architect's contract). At such point in time the
construction of the Project shall be deemed substantially completed (the
"Substantial Completion of Construction"). During the course of construction and
from and after the Substantial Completion of Construction, Developer shall,
subject to the

                                     - 12 -
<PAGE>   16
prior written approval of Edison (and, if any such settlement will cause an
increase in the Budget, the relevant Charter Holder), negotiate final
settlements with all mechanics, materialmen and subcontractors and, if any
mechanic's, materialmen's or similar lien is filed with respect to all or any
portion of the Project, take such action at Edison's or the relevant Charter
Holder's cost (or the cost of the contractor or subcontractor responsible
therefor to the extent funds are received) as is necessary or appropriate to
contest any such liens and to cause all related claims to be settled and such
liens to be removed by bonding or otherwise. Following Substantial Completion of
Construction, Developer shall enforce on behalf of Edison or the applicable
Charter Holder all warranties, representations and guarantees of the Architect,
Contractor and subcontractors, suppliers and materialmen, and all other persons
furnishing supplies, materials, equipment, or services in connection with the
construction or equipping of the Project, with respect to any defects in the
construction of the Project or the installation or operation of any fixture or
equipment therein. Upon the Completion of the Project, Developer shall (i)
deliver to Edison and the relevant Charter Holder a Statement of Costs
(including all Development Costs incurred in connection with the Project)
certified as true and correct by Developer, and (ii) monitor the compliance of
the Architect and the Contractor, as appropriate, with respect to the provision
of any and all documentation and other materials relating to the Project in
their possession to the extent required by the applicable contract, such as, but
not limited to, the following:

                           1.       As-built drawings and specifications;

                           2.       Change Orders;

                           3.       Reports including, but not limited to, soils
                                    reports, concrete reports, equipment testing
                                    and balancing reports, termite reports, etc;

                           4.       Operation maintenance manuals for all
                                    equipment;

                           5.       Certifications and test results;

                           6.       Warranties or guarantees, including but not
                                    limited to the roof warranty, HVAC
                                    warranties, plumbing warranties, etc.;

                           7.       Keys for all locks;

                           8.       Maintenance stock; and

                           9.       Progress photos taken at least monthly
                                    throughout the Project.

                  (d) Legal Actions. At the direction of Edison or the relevant
Charter Holder, Developer shall institute, commence and prosecute on behalf of
Edison and the applicable Charter Holders and, at Edison's or the applicable
Charter Holder's expense, all such legal actions and suits as may be required in
connection with the construction of a Project and cause Edison and the Charter
Holders to be defended in connection with any legal action or suit commenced
against any of them. All such legal actions, and any and all decisions with
respect

                                     - 13 -
<PAGE>   17
to the prosecution and defense of such actions, shall be made by Edison, in
consultation with the relevant Charter Holder, with counsel approved by Edison.

                  (e) Design Errors. In no event shall Developer have any
liability or obligation for any errors or omissions of architects or engineers
retained to perform architectural or engineering services in connection with any
Projects.

         4.4 Additional Services. Developer shall from time to time upon request
of Edison provide in connection with the Project(s) additional services not
described in Section 4.2 or 4.3 above for an additional fee as provided in
Section 13.4. Upon receipt of a request from Edison or any Charter Holder for
such additional service, Developer shall first, before performing any such
service, notify Edison and the relevant Charter Holder in writing (i) that
Developer considers the service to be an additional service for which an
additional charge shall be made, and (ii) of Developer's estimate of the
additional fees that will be charged for such service. Developer shall not
undertake to perform any such additional services unless and until such
performance and reimbursement at the rate requested by Developer is approved in
writing by Edison and the relevant Charter Holder.

         4.5 Additional Obligations. Developer's services under this Agreement
shall be subject to the following:

                  (a) Contracts with Affiliates. Notwithstanding any
provision contained in this Agreement to the contrary, Developer shall not be
permitted to enter into any contract with an Affiliate unless prior thereto
Developer first discloses to Edison and the relevant Charter Holder in writing
(i) the Affiliate with which such contract will be entered, (ii) the relation of
such Affiliate to Developer and (iii) all proposed terms for any such contract.
Developer agrees that any contract with an Affiliate shall be at prevailing
market rates and on customary terms and conditions, and Developer shall provide
to Edison and the relevant Charter Holder such evidence as Edison or the
relevant Charter Holder shall reasonably require to confirm the foregoing.

                  (b) In performing its services hereunder, Developer shall
place emphasis on considerations that will aid in expediting the construction of
the Project consistent with the construction standards and procedures of Edison.
Developer acknowledges that time will be of the essence of the Project and
agrees to use reasonable care and diligence and to exercise its commercially
reasonable efforts to supervise, coordinate, and direct the work of the
Contractor so as to assist Edison in having the Project completed on or before
its established completion date subject however to delays due to Force Majeure;
provided, however, that Developer, except as may otherwise herein be specified,
shall not be responsible for any failure or inability of the Contractor to
complete the Project or any portion thereof within the time or times provided in
the Construction Contract.

                  (c) All recommendations and communications by Developer
to Edison, the relevant Charter Holder, and Architect that will affect the cost
of the Project shall be made or confirmed by it in writing. Edison or the
relevant Charter Holder may also require other recommendations and
communications by Developer to be made or confirmed by it in writing. All
recommendations relating to proposed changes in the work, work schedules,
instructions to Contractor, and all other matters requiring action by Edison,
the relevant Charter Holder,

                                     - 14 -
<PAGE>   18
Architect, and/or the Contractor shall be made directly to Edison, the relevant
Charter Holder and Architect, unless otherwise directed by Edison and the
relevant Charter Holder. After approval by Edison, the relevant Charter Holder,
and/or Architect and subject to the general supervision of Edison, Developer
shall issue instructions directly to the Contractor.

                  (d) The services to be performed by Developer hereunder
may be performed under subcontract with firms reasonably acceptable to Edison.
No provision of this Agreement shall, however, be construed as constituting an
agreement between Edison or any Charter Holder and any such person or firm.

         4.6 Employees. Developer shall employ such employees and consultants as
shall be necessary or appropriate to enable Developer at all times to oversee,
arrange, supervise, coordinate and provide the required services to the Projects
pursuant to this Agreement. Such employees shall be deemed to be the employees
of Developer or its subcontractors, and Developer shall indemnify, defend and
save Edison and the Charter Holders harmless from and against all claims made by
such employees based on job related illness or injury. The foregoing indemnity
shall survive the termination of this Agreement. All matters pertaining to the
employment, training, conduct, supervision, compensation, promotion and
discharge of such employees shall be the responsibility of Developer and
Developer shall comply with all applicable laws and regulations having to do
with worker's compensation, social security, unemployment insurance, hours of
labor, wages, working conditions and safety and similar matters with respect to
such employees. Developer shall designate a project manager (the "Project
Manager") for each Project who shall be reasonably acceptable to Edison. The
Project Manager shall not be replaced without Edison's prior written consent
unless such individual is no longer employed by Developer or any of its
Affiliates. Any substitute Project Manager shall be subject to Edison's prior
written approval, which shall not be unreasonably withheld. Edison shall have
the right to require Developer to replace the Project Manager, or any other
employee of Developer providing services hereunder, if Edison has reasonable
objections to any such individual.

         4.7 Emergencies. In the case of emergencies, Developer shall use best
efforts to notify Edison and the relevant Charter Holder immediately, but if
Developer is unable to reach Edison and the relevant Charter Holder, Developer
shall take whatever action it deems reasonable, to protect, maintain or repair
the Projects and to protect any person on or about the Projects, without the
prior consent of Edison and the relevant Charter Holder except to the extent of
any contingency set forth in the Budget. In any event, Developer shall notify
Edison and the relevant Charter Holder of any emergencies as soon as possible.
For purposes of this Section 4.7, the term "emergencies" shall mean any
immediate threat or occurrence of damage or injury to persons or property.

         4.8 Lender and Legal Compliance. Developer shall be responsible for the
planning and development of the Projects in compliance with all terms and
conditions in any ground lease, mortgages, other security instruments or similar
encumbrances affecting any Project provided that copies of such instruments have
been made available to Developer. Developer shall also be responsible for
ensuring that the Projects are completed in compliance with all applicable laws
including, without limitation, all building, zoning, fire, handicap access,
environmental and similar laws, rules and regulations of all state, federal and
local authorities having jurisdiction

                                     - 15 -
<PAGE>   19
over the Projects. Upon the Completion Date, and as a condition precedent to
payment of the last installment of the Construction Management Fee, the
Developer shall deliver to Edison and the relevant Charter Holder, a
certification of Developer and, if available under terms of the applicable
contracts, certificates from the Project architect, engineers or general
contractor, evidencing compliance with the provisions of this Section 4.8 and
certifying that the Project has been completed in accordance with the Approved
Plans and Specifications.

         4.9 Project Information. Developer shall make the Project Manager for
each Project and its other personnel available at reasonable times for
communications with Edison and will keep Edison advised of matters affecting the
Projects and will provide regular updates regarding the status of the Projects
on a basis acceptable to Edison.

         4.10 Edison and Charter Holder Information. Edison and the applicable
Charter Holder for each Project shall make personnel available at reasonable
times for communication with Developer, and will cooperate with Developer as
reasonably necessary and will provide Developer such information regarding
Edison and the applicable Charter Holder as Developer may reasonably require to
perform its services hereunder.

                                    ARTICLE 5

                              DEVELOPER'S AUTHORITY

         Developer shall have only the power and authority expressly delegated
to it hereunder. Developer shall not be permitted to execute any agreement on
behalf of, or in the name of, Edison or the relevant Charter Holder unless
Edison or the relevant Charter Holder specifically authorizes such action by
Developer.

                                    ARTICLE 6

                          INSURANCE AND INDEMNIFICATION

         6.1 Property Coverage. If requested by Edison, Developer shall procure
and maintain for each Project, on behalf of Edison and the applicable Charter
Holder and at Edison's or the Charter Holder's cost (to be pro-rated and charged
to applicable projects as a Development Cost in accordance with the Project
Budgets), the following insurance against property damage:

                  (a) All-risk coverage (including earthquake coverage, if
reasonably requested by Edison) in an amount equal to full replacement cost,
with an agreed amount endorsement or a waiver of co-insurance.

                  (b) Boiler and machinery insurance, if required by Edison or
any lender, and flood and earthquake insurance, if available, in each case in
amounts required by Edison or any lender.

                  (c) Demolition and increased cost of construction coverages.

                                     - 16 -
<PAGE>   20
                  (d) With respect to and during the construction of the
Project, Builders Risk insurance and other associated coverage with limits equal
to the replacement value of the Property (completed value form), with Edison and
the Charter Holder as the named insured.

                  (e) With respect to improvements under construction, the
following additional requirements shall apply:

                           1.       Such insurance shall be provided in
                                    completed value form, or contain a waiver of
                                    co-insurance, with Edison and the Charter
                                    Holder as the named insured.

                           2.       Transit risks shall be covered if
                                    applicable.

                           3.       The occupancy exclusion shall be deleted.

                           4.       Such insurance shall, if available, provide
                                    coverage against losses during construction
                                    resulting from design defects.

                           5.       Such insurance shall include a soft cost
                                    endorsement, which shall provide coverage to
                                    Edison and the Charter Holder against extra
                                    financing costs, taxes and insurance,
                                    overhead, loss of income, architectural and
                                    engineering fees and marketing and legal
                                    expenses which result from the
                                    insured-against casualty.

                  All of such insurance may be provided under a blanket policy,
provided that such blanket policy will, in all events, provide Edison and the
Charter Holder the protection against loss specified above. The insurance
coverages required under this Section 6.1 shall in no event provide for
deductibles in excess of $25,000 per occurrence, without the approval of Edison.

         6.2 Loss of Use of Property. If requested in writing by Edison for any
completed Project, the Developer shall maintain, at Edison's or the applicable
Charter Holder's sole cost and expense (to be charged to Edison or the
applicable Charter Holder as a Development Cost in accordance with the
applicable Project Budgets), insurance against loss of rental income from the
Project (or business interruption insurance, if applicable) which shall meet the
following requirements:

                  (a) The amount of such insurance shall equal the maximum
actual loss which might be sustained if the property to which it applies were
totally destroyed, but in no event less than the maximum tenant economic
obligations for a twelve-month period, less a deductible as may be approved by
Edison.

                  (b) Such insurance shall include extra expense coverage, if
applicable.

                  (c) Such insurance shall provide coverage against the perils
insured against under Section 6.1.

                  (d) Such insurance shall contain an agreed amount
endorsement or a waiver of co-insurance as specified by Edison.

                                     - 17 -
<PAGE>   21
         6.3 Liability Coverages. The Developer shall maintain, or cause to be
maintained, liability insurance coverages relating to the Project, naming Edison
and the applicable Charter Holder as additional insureds, at Edison's or the
applicable Charter Holder's sole cost and expense (to be pro-rated and charged
to applicable Projects as a Development Cost in accordance with the Project
Budgets) as follows:

                  (a) Commercial general liability insurance in an amount
not less than $1,000,000 combined single limit with an aggregate limit of
$2,000,000. The aggregate limit is to apply separately to each Project.

                  (b) Automobile liability insurance covering owned, hired or
non-owned vehicles with a combined single limit of not less than $1,000,000 each
accident.

                  (c) Workers' compensation in accordance with statutory
requirements including employer's liability insurance with limits not less than
$100,000.

                  (d) Umbrella or excess liability insurance with limits of not
less than $10,000,000. Such insurance shall be in excess of all liability
coverage required in subsections (a), (b) and (c)

                  (e) With respect to property under construction,
including the initial development and construction of the Project, the Developer
shall cause the Contractor to provide an owners protective policy with limits
not less than $1,000,000.

                  (f) With respect to property under construction,
including the initial development and construction of the Project, the Developer
shall cause the Contractors and subcontractors to provide the following
insurance coverages:

                           1.       Commercial general liability insurance,
                                    including products and completed operations
                                    coverage, with a combined single limit of
                                    not less than $1,000,000 with an aggregate
                                    limit of $2,000,000. The aggregate limit is
                                    to apply separately for each project.

                           2.       Automobile liability insurance covering
                                    owned, hired and non-owned vehicles, with a
                                    combined single limit of not less than
                                    $1,000,000 each accident.

                           3.       Workers' compensation in accordance with
                                    statutory requirements including employer's
                                    liability insurance with limits of not less
                                    than $100,000.

                  (g) The Developer shall cause the Contractor to maintain
umbrella or excess liability insurance with limits of not less than $5,000,000.
Such insurance shall be in excess of all liability coverage required in
subsections (f) (1), (2) and (3).

                  (h) If required by any lender making a loan relating to a
specific project, or if reasonably requested by Edison, Developer will 1)
require higher limits of coverage to be carried

                                     - 18 -
<PAGE>   22
by the Contractor and Subcontractors, and/or 2) require a higher limit of Owners
Protective Insurance to be furnished by the Contractor for Edison.

                  (i) Such additional insurance against other risks of loss
to the Project as, from time to time, may be required by any lender making a
loan relating to the Project, or which may reasonably be deemed desirable by
Edison and which additional insurance is requested by Edison in writing.

                  All liability insurance policies shall be written on an
occurrence basis. The required coverages may be provided by a blanket,
multi-location policy, if such policy provides a separate aggregate limit per
occurrence for the benefit of the Project. Except as otherwise provided herein,
no deductibles shall be permitted in any of the policies required under this
Article 6 without the approval of Edison.

         6.4 Fidelity Insurance. At the request of Edison, employees of the
Developer who handle or are responsible for funds of Edison or any Charter
Holder shall be covered by fidelity insurance (the cost of which shall be
pro-rated among the Projects as a Development Cost and included in applicable
Project Budgets) in an amount equal to $200,000 or such greater amount as may be
requested by Edison (provided such greater amount is available at commercially
reasonable rates).

         6.5 General Insurance Requirements.

                  (a) Required Provisions. All insurance policies required under
this Article 6 shall:

                           1.       be issued in a form and contain terms, all
                                    as reasonably approved by Edison,

                           2.       provide that such policies shall not be
                                    canceled nor shall any material change be
                                    made therein without at least thirty (30)
                                    days' prior written notice to Edison (or
                                    such shorter period of prior written notice
                                    as is then commercially available),

                           3.       except as otherwise provided above, name
                                    Edison and each Charter Holder as an
                                    additional insured, and

                           4.       provide that any loss shall be payable to
                                    Edison or applicable Charter Holder
                                    notwithstanding any act or negligence of the
                                    Developer which might otherwise result in
                                    forfeiture of such insurance. All insurance
                                    required by this Article 6 shall be a cost
                                    of the Project to be paid by Edison or the
                                    applicable Charter Holder.

                  (b) Rating. All insurers providing the coverages specified in
this Article 6 shall be rated A-IX or better by Best's.

                                     - 19 -
<PAGE>   23
                  (c) Certificates of Insurance. The Developer shall
provide Edison with certificates evidencing the insurance coverages required by
this Article 6 (whether maintained by the Developer or by Contractor and all
subcontractors) prior to the commencement of any activity or operation which
could give rise to a loss to be covered by such insurance. Each certificate
shall state that at least 30 days' notice shall be given to Edison (or such
shorter period of prior written notice as is then commercially available) prior
to the amendment, termination or cancellation of any policy evidenced thereby.
Replacement certificates shall be sent to Edison as policies are renewed,
replaced or modified.

                  (d) Investigation of Claims. The Developer shall promptly
investigate and make a full, timely, written report to any insurance company
providing coverage, with a copy to Edison, of all accidents, claims, or damage
relating to ownership, operation and maintenance of the Project, any damage or
destruction to the Project and the estimated cost of repair thereof, and shall
prepare any and all further reports required by any such insurance company in
connection therewith. The Developer shall have no right to settle, compromise or
otherwise dispose of any claims, demands or liabilities, whether or not covered
by insurance, exceeding $10,000.00, without the prior written consent of Edison.

         6.6 Liability of Developer. The Developer shall be liable to Edison for
any loss by reason of the inadequacy of the insurance proceeds payable under any
policy of insurance to be procured and maintained by the Developer pursuant to
this Article 6 if Edison previously notified and authorized the Developer, in
writing, to increase the limits of any such insurance to amounts within
reasonable industry standards (if such insurance was available), the Developer
failed to apply for such increase in insurance within fifteen (15) days after
such notice, the failure to apply for such increase in insurance constituted
gross negligence or willful misconduct on the part of the Developer and the
insured-against event occurred.

         6.7 Waiver of Subrogation. Developer shall furnish whatever information
is reasonably requested by Edison for the purpose of establishing the placement
of insurance coverages and shall aid and cooperate in every reasonable way with
respect to such insurance and any loss thereunder. All policies covering real or
personal property which either party obtains affecting the Projects shall
include a clause or endorsement denying the insurer any rights of subrogation
against the other party to the extent rights have been waived by the insured
before the occurrence of injury or loss, if the same are obtainable, and if
there is any additional charge for such clause or endorsement, such charge shall
be paid by the party benefiting from the same. Developer and Edison waive any
rights of recovery against the other for injury or loss due to hazards covered
by policies of insurance containing such a waiver of subrogation clause or
endorsement to the extent of the injury or loss covered thereby.

                                     - 20 -
<PAGE>   24
         6.8 Indemnification.

         (a) Edison or applicable Charter Holder hereby agrees that it shall
protect, defend, indemnify, and hold harmless Developer to the fullest extent
permitted by law from and against any and all claims, proceedings,
investigations, and all loss, costs, damages, liability, and expenses (including
court costs and reasonable attorneys' fees): (a) arising out of any negligent
actions or omissions or willful misconduct by Edison or its agents or employees,
or (b) arising out of any breach or violation of this Agreement by Edison. The
obligations of Edison arising under this Section 6.8(a) during the Term of this
Agreement shall survive expiration or sooner termination thereof.

         (b) Developer agrees to protect, defend, indemnify, and hold harmless
Edison and each Charter Holder to the fullest extent permitted by law from and
against any and all claims, proceedings, investigations, and all loss, costs,
damages, liability, and expenses (including court costs and reasonable
attorneys' fees): (a) arising out of any negligent actions or omissions or
willful misconduct by Developer or its agents or employees; or (b) arising out
of any breach or violation of this Agreement by Developer. The obligations of
Developer arising under this Section 6.8(b) during the Term of this Agreement
shall survive expiration or sooner termination thereof.

                                    ARTICLE 7

                            EDISON'S RIGHT TO INSPECT

Edison shall have the right, at its sole cost and expense, upon reasonable
advance notice during normal business hours, to examine the books and records
maintained by Developer pertaining to the performance of Developer's services
under this Agreement.

                                    ARTICLE 8

                                   TERMINATION

         8.1 Termination.

                  (a) Termination where no Final Notice of Approval Issued.
Either party shall have the unconditional right to terminate this Agreement
without cause on fifteen (15) days notice except as to the Projects which are
then subject to a Development Proposal for which a final Notice of Approval has
been given by Edison and, if applicable, the Charter Holder. In the case of any
such termination, Edison or the applicable Charter Holder, will reimburse all of
Developer's out-of-pocket expenses incurred through the date of such termination
as provided in Section 4.1(e).

                  (b) Termination without Cause. In addition, either party
shall have the unconditional right to terminate this Agreement without cause on
fifteen (15) days notice with respect to any Project(s) for which a final Notice
of Approval has been given by Edison and, if applicable, the Charter Holder.
This Agreement shall automatically terminate as to any Project(s) for which the
Agency Agreement(s) is(are) terminated upon delivery of notice of such
termination to Developer unless Edison elects in writing within fifteen (15)
days thereafter to

                                     - 21 -
<PAGE>   25
assume the applicable Charter Holder's obligations hereunder for such
Project(s). Upon any termination under this paragraph (b), Edison or the
applicable Charter Holder shall pay to Developer (i) any portion of the
Development Fee then due and payable to Developer, (ii) if construction of the
Project has begun, any portion of the Construction Management Fee then due based
upon the percentage of the work that is complete as determined under the
Construction Contract, and (iii) all third party costs and expenses reimbursable
to Developer in connection with such Project in accordance with this Agreement.
If Edison elects to terminate this Agreement as to any Project in accordance
with this Section 8.1(b) or this Agreement is terminated as to any Project due
to the termination of the applicable Agency Agreement therefor, Edison or the
applicable Charter Holder will also reimburse Developer for such reasonable
termination charges as Developer may actually incur in terminating contracts
entered into in accordance herewith, demobilizing Project staff and equipment
and or reassigning staff members to other projects. Upon payment of such
amounts, Edison and the applicable Charter Holder shall have no further
liability to Developer hereunder with respect to such Project(s) excepting only
such liability under Section 6.8 hereof as shall by its terms, survive
expiration or sooner termination of this Agreement.

                  (c) Termination for Default.

                           (1)      Either Edison or Developer shall have the
                                    right to terminate this Agreement with
                                    respect to any Project(s) at any time for
                                    any default by the other party in the
                                    performance of its duties hereunder
                                    (including all exhibits hereto) with respect
                                    to such Project(s), provided (i) if such
                                    default is a monetary default, that such
                                    default continues for a period of ten (10)
                                    days after notice is given to the defaulting
                                    party, or (ii) if such default is a
                                    nonmonetary default, that such default
                                    continues for a period of thirty (30) days
                                    after notice is given to the defaulting
                                    party (or if such nonmonetary default cannot
                                    reasonably be cured within 30 days, then
                                    such nonmonetary default continues for a
                                    period of ninety (90) days in the aggregate
                                    after notice is given to the defaulting
                                    party); or

                           (2)      Either Edison or Developer shall have the
                                    right to terminate this Agreement in its
                                    entirety or with respect to any or more
                                    Projects, at any time if the other party
                                    hereto makes an assignment for the benefit
                                    of creditors, or if a receiver, trustee,
                                    custodian, guardian, liquidator or similar
                                    agent is appointed with respect to such
                                    party, or if a petition is filed by or with
                                    the consent of any party hereto under any
                                    Federal or state law concerning bankruptcy,
                                    insolvency, reorganization, arrangement, or
                                    relief from creditors, or if such a petition
                                    is filed against such party and such
                                    petition is not dismissed within 90 days
                                    thereafter.

                           (3)      Generally, notwithstanding the foregoing,
                                    neither party shall have any cure period
                                    with respect to a breach caused by such
                                    party's fraud or intentional misconduct or,
                                    in the case of the Developer, in

                                     - 22 -
<PAGE>   26
                                    the event the Developer (i) fails to
                                    maintain the insurance required under
                                    Article 6 hereof, or (ii) misapplies funds
                                    provided by Edison or a Charter Holder or
                                    fails to pay the Contractor or any other
                                    person or entity performing work on the
                                    Project after Edison or the applicable
                                    Charter Holder has approved such payment and
                                    has provided Developer with any funds
                                    required hereunder. In the case of the
                                    termination of this Agreement after a
                                    default by Developer, Edison and the
                                    applicable Charter Holder(s) shall have no
                                    obligation to pay any additional portion of
                                    the Development Fee or Construction
                                    Management Fee to Developer, and Developer
                                    shall be liable to Edison and the applicable
                                    Charter Holder(s) for all damages suffered
                                    or incurred by Edison or the applicable
                                    Charter Holder(s) as a result of such
                                    default including, without limitation, costs
                                    and expenses reasonably incurred by Edison
                                    or the applicable Charter Holder(s) in
                                    completing any Project(s) which are in
                                    excess of the applicable Budget.

         8.2 Other Remedies. The specific remedies to which any party may resort
under the terms of this Agreement are cumulative and are not intended to be
exclusive of any other remedies or means of redress to which such party may be
lawfully entitled in case of the occurrence of a default beyond applicable grace
periods by the other party. The termination of this Agreement shall not relieve
any party of any of its obligations theretofore accrued under this Agreement
prior to the effective date of such termination. Notwithstanding anything herein
to the contrary, Developer, Edison and the Charter Holders shall have no
liability hereunder for special or consequential damages that may be incurred by
the other parties to this Agreement.

                                    ARTICLE 9

                                   COOPERATION

         Should any claims, demands, suits or other legal proceedings be made or
instituted by any third person against Developer, Edison or any Charter
Holder(s) which arise out of any of the matters relating to any part of the
Projects or this Agreement, Developer, Edison and the applicable Charter
Holder(s) shall each give the other, at the expense of the party being sued, all
pertinent information in its possession (excluding any such information which is
confidential or proprietary and may be withheld in accordance with Section 15.10
hereof) and reasonable assistance in the defense or other disposition thereof.

                                   ARTICLE 10

                                     DELAYS

         Neither party shall be liable for its failure to perform its
obligations hereunder due to Force Majeure. For purposes hereof, Force Majeure
shall mean any accident, unusual difficulty or inability in obtaining services
or supplies from sources usually used, unusually bad weather conditions, labor
difficulties, the other party's failure to perform its obligations hereunder or
any other causes beyond such party's reasonable control. Either party claiming
any such delay shall

                                     - 23 -
<PAGE>   27
provide notice of such claim promptly after the occurrence of the event causing
such delay. In the case of a continuing delay, only one claim shall be required.
Each such claim shall provide an estimate of the probable impact of such delay
on the Projects.

                                   ARTICLE 11

                                CONSENT; APPROVAL

         Whenever in this Agreement the consent or approval of any party is
required, such consent or approval shall be in writing only, shall not be unduly
delayed and shall only be effective if given by a duly authorized officer or
agent for the party granting such consent or approval.

                                   ARTICLE 12

                                     NOTICES

         All notices and other communications provided for herein shall be in
writing and shall be sent to the address set forth below (or such other address
as a party may hereafter designate for itself by notice to the other parties as
required hereby) of the party for whom such notice or communication is intended:

         If to Edison:         Edison Schools Inc.
                               521 Fifth Avenue
                               New York, New York 10175
                               Attention:  Chris Whittle
                               Fax:  212-419-1604

         With a copy to:       Edison Schools Inc.
                               521 Fifth Avenue
                               New York, New York 10175
                               Attention:  John Williams, Esq.
                               Fax:  212-419-1868

         If to Developer:      Ksixteen LLC
                               c/o Edison Schools Inc.
                               521 Fifth Avenue
                               New York, New York 10175
                               Attention:  Joe Keeney
                               Fax:  212-419-1715

         With a copy to:       Coudert Brothers
                               1114 Avenue of the Americas
                               New York, NY  10035
                               Attention:  Gerard Hannon, Esq.
                               Fax:  212-626-4120

                                     - 24 -
<PAGE>   28
All notices to a Charter Holder shall be in writing and shall be delivered in
accordance with the applicable Agency Agreement. Any notice or communication
shall be sufficient if sent by registered or certified mail, return receipt
requested, postage prepaid; by hand delivery; by overnight courier service; or
by facsimile, with an original by regular mail. Any such notice or communication
shall be effective the earlier of (i) the date when received by the addressee,
or (ii) the date sent if sent by overnight courier for next business day
delivery and actually received on the next business day.

                                   ARTICLE 13

                                  COMPENSATION

         13.1 Development Fee. In addition to the sums Edison or the applicable
Charter Holder is specifically obligated to reimburse to Developer related to
approved costs and expenditures as described in this Agreement, Developer shall
receive for its services described in Sections 4.1 and 4.2 in developing each
Project in accordance with this Agreement a development fee (the "Development
Fee") equal to six percent (6%) of the Development Costs (excluding the
Development Fee) for such Project as set forth in the original Budget approved
by Edison and, if applicable, the relevant Charter Holder for such Project,
payable as follows:

                  (a) Upon issuance of a request for a Development Proposal
for any Project, Edison (on behalf of the applicable Charter Holder) shall pay
to Developer a retainer in the amount of $25,000 for Charter School proposals
and $10,000 for Contract Schools (the "Retainer"). Following Edison's issuance
of a Notice of Approval for any Project, Developer shall be paid monthly by
Edison or the applicable Charter Holder for Developer's approved staff providing
services in connection with the proposed Project at the hourly rates set forth
on Exhibit C hereto, and as set forth in the Approved Development Plan,
provided, however, that the cost reimbursed shall not exceed the lesser of (i)
the amounts approved by Edison in connection therewith, or (ii) three percent
(3%) of approved Development Costs (excluding the Development Fee) set forth in
the original Development Budget approved by Edison and, if applicable, the
relevant Charter Holder for the Project. Developer shall first credit all such
charges as well as all reimbursable costs in accordance with Section 4.1(e)
hereof against the applicable Retainer until the Retainer is exhausted.
Developer shall provide Edison and the relevant Charter Holder monthly with a
written accounting of all amounts charged against Retainers. If a Project is
terminated before the Retainer for such Project is exhausted, the balance, if
any, shall be refunded to Edison or the relevant Charter Holder, as the case may
be.

                  (b) Upon Edison's (or the applicable Charter Holder's)
lease or purchase of the Parcel for any Project, Edison (on behalf of the
applicable Charter Holder) shall pay Developer -1/2 of the total Development Fee
for the Project less all amounts previously paid to Developer in connection with
such Project.

                  (c) Upon Closing of the Permanent Financing for any
Project obtained in accordance with Section 4.2(f), Edison (on behalf of the
applicable Charter Holder) shall pay Developer the remaining unpaid balance of
the Development Fee for the Project. If Permanent Financing is not available for
any Project then, except as otherwise provided under Article 8, Edison (on
behalf of the applicable Charter Holder) shall pay Developer such unpaid balance
of

                                     - 25 -
<PAGE>   29
the Development Fee for such Project no later than twelve (12) months following
Substantial Completion of Construction of such Project.

         13.2 Construction Management Fee. In addition to the sums Edison (on
behalf of the applicable Charter Holder) is obligated to pay Developer for each
Project in accordance with Section 13.1 above, Developer shall receive for its
services described in Section 4.3 in construction management of a Project, in
accordance with this Agreement, a construction management fee (the "Construction
Management Fee") for the Developer's staff performing construction management
services in connection with the Project at the hourly rates set forth on Exhibit
C hereto, provided, however, that the cost reimbursed shall not exceed the
Construction Management Fee set forth in the Budget.

         13.3 Reimbursable Expenses. Except as herein expressly provided, all
expenses incurred by Developer under this Agreement shall be paid by Developer,
unless Edison and the relevant Charter Holder have previously approved such
expenses under the provisions of the Budget.

         13.4 Fee for Additional Services. In the event that Edison and the
applicable Charter Holder approve performance by Developer of any additional
services in connection with the Project, Edison (on behalf of the applicable
Charter Holder) shall pay Developer a fee for the time spent by Developer's
staff performing additional services in connection with the Project at a rate
equal to 1.25 times the hourly rate set forth in Exhibit C hereto and shall
reimburse all costs reasonably incurred by Developer in connection therewith
provided, however, that in no event shall such fee and costs payable to
Developer for additional services exceed the amount estimated by Developer and
approved in advance by Edison and the applicable Charter Holder therefor.

                                   ARTICLE 14

                                  ASSIGNABILITY

         The services to be performed by Developer under this Agreement are
personal to Developer and Developer shall not assign its rights or obligations
under this Agreement without the prior consent of Edison (and the applicable
Charter Holders on Projects affected by such assignment), however Developer may
subcontract with Affiliates or others reasonably acceptable to Edison (and the
applicable Charter Holders on Projects affected by such subcontract) for the
services or staffing required hereunder. Edison shall be permitted to assign its
rights under this Agreement to any Affiliate of Edison and/or the respective
Charter Holders. No assignment by Edison, Developer or a Charter Holder shall
relieve Edison, Developer or such Charter Holder of its liabilities hereunder
except as otherwise herein expressly provided. For purposes of this Agreement,
the term "Affiliate" means any corporation, partnership or other entity or party
which either directly or indirectly, through one or more intermediaries, (i)
controls or has the right to control, (ii) is controlled by, or (iii) is under
common control with the other specified corporation, partnership or other
entity.

                                     - 26 -
<PAGE>   30
                                   ARTICLE 15

                                  MISCELLANEOUS

         15.1 Entire Agreement. This Agreement contains the entire agreement
between the parties respecting the matters herein set forth and supersedes all
prior agreements between the parties hereto respecting such matters.

         15.2 Bind and Inure. Subject to Article 14 hereof, the rights, duties
and obligations of the parties to this Agreement shall be binding upon and inure
to the benefit of the respective successors and permitted assigns of such
parties.

         15.3 Amendment. This Agreement may not be amended or modified except by
an instrument in writing and signed by all parties hereto.

         15.4 Governing Law; Waiver of Jury Trial. This Agreement shall be
governed and construed in accordance with the laws of the State of New York.
Each party hereto waives the right of trial by jury in any action brought in
connection with this Agreement.

         15.5 Headings. The headings used in this Agreement are for convenience
only and are not to be considered in connection with the interpretation or
construction of this Agreement.

         15.6 No Waiver. The failure of any party to seek redress for violation
of, or to insist upon the strict performance of, any covenant, agreement,
provision or condition of this Agreement shall not constitute a waiver thereof
nor prevent any subsequent act, which would have originally constituted a
violation, from having all the force and effect of an original violation.

         15.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original of this Agreement, but all of
which, taken together, shall constitute one and the same agreement.

         15.8 Other Interests. Subject to the limitations set forth in Section
4.5 hereof, any party may, individually or with others, be engaged with respect
to, or possess an interest in, any other projects and ventures of any kind or
nature, whether or not competitive with the Projects, and the other parties
shall not, by virtue of this Agreement, have any rights to any such project or
any income, profits or compensation derived therefrom.

         15.9 Non-Recourse. Developer hereby agrees that in no event shall
Edison have any liability for amounts due and owing the architect, engineers,
contractor or others with whom or which Developer may enter into contracts in
accordance with this Agreement except to the extent, if any, that Edison elects
(in its sole discretion) in writing to guaranty the obligations under such
contract(s). In addition, Developer shall neither assert nor seek to enforce any
claim for breach of this Agreement, for any default by Edison or any Charter
Holder under this Agreement, or otherwise directly or indirectly as a result of
or incident to this Agreement against any party who at any time is or has been
an officer, trustee, director, partner, beneficiary, joint venturer, member,
agent, stockholder or other principal of Edison or such Charter Holder. In no
event shall any of the officers, trustees, directors, partners, beneficiaries,
joint venturers,

                                     - 27 -
<PAGE>   31
members, agents, stockholders or other principals, disclosed or undisclosed, of
Edison or any Charter Holder ever be liable for any such liability.

         15.10 Confidentiality. Each party to this Agreement, including, as to
each Project, the applicable Charter Holder agree that it will not disclose any
oral or written information about the transactions contemplated herein to anyone
without the prior written approval of the other parties hereto involved in such
transactions except as may be required by law. After termination of this
Agreement as to any Project(s), Developer shall return to Edison or the
applicable Charter Holder(s) any documents and written information produced by
and belonging to the Charter Holder(s) or Edison related to such Project(s) in
the possession of the Developer or its attorneys, agents or other consultants
and Edison or the applicable Charter Holder(s) shall return to the Developer any
documents and written information produced by and belonging to Developer related
to such Project(s) in the possession of Edison of such Charter Holder(s) or
their respective attorneys, agents or other consultants. The provisions of this
Section 15.10 shall survive the cancellation or termination of this Agreement.

         15.11 Exhibits. The exhibits listed below are hereby attached hereto
and incorporated herein:

         Exhibit A - Agency Agreement

         Exhibit B - Existing Project and Remaining Development Fees Payable
                     Therefor

         Exhibit C - Personnel Hourly Rates

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.

EDISON SCHOOLS INC.

By:__________________________
Its:

KSIXTEEN LLC

By: _________________________
Its:

                                     - 28 -
<PAGE>   32
                                    EXHIBIT A

                                AGENCY AGREEMENT

                                     - 29 -
<PAGE>   33
                                    EXHIBIT B

                         EXISTING PROJECT AND REMAINING
                        DEVELOPMENT FEES PAYABLE THEREFOR

1.       Schomburg Charter School, Jersey City, NJ $210,000 payable upon closing
         of financing

2.       Milwaukee Academy of Science, Milwaukee, WI $195,000 payable upon
         closing of Phase I financing $117,000 payable upon lease execution
         $117,000 payable upon closing of Phase II financing

3.       Renaissance Academy-Edison Charter School, Phoenixville, PA $185,000
         payable upon closing of financing

4.       Rochester Charter School of Science and Technology, Rochester, NY
         $195,000 payable upon closing of Phase I financing $60,000 payable upon
         closing of Phase II financing

5.       Edison-Friendship Public Charter School $249,000 payable upon closing
         of Phase II financing

6.       Detroit YMCA $90,000 payable upon closing of financing

                                     - 30 -
<PAGE>   34
                                    EXHIBIT C

                             PERSONNEL HOURLY RATES

                      Chief Executive Officer   $200/hour
                      Senior Vice President     $175/hour
                      Vice President            $150/hour
                      Director                  $125/hour
                      Manager                   $100/hour
                      Senior Associate          $75/hour
                      Associate                 $50/hour
                      Analyst                   $35/hour
                      Support staff             $30/hour

                                     - 31 -<PAGE>   1
                                                                   Exhibit 10.48

                                                                    No._________

                       MASTER AGREEMENT TO LEASE EQUIPMENT

         THIS MASTER AGREEMENT TO LEASE EQUIPMENT (this "AGREEMENT") is entered
into as of June 30, 2000 by and between CISCO SYSTEMS CAPITAL CORPORATION
("LESSOR"), having its principal place of business at 170 West Tasman Drive,
Mailstop SJC2, 3rd Floor, San Jose, California 95134 and Edison Schools Inc, a
Delaware Corporation, ("LESSEE"), having its principal place of business at 521
Fifth Ave., New York City, New York, 10175.

                                  1. THE LEASE

         1.1 LEASE OF EQUIPMENT. In accordance with the terms and conditions of
this Agreement, Lessor shall lease to Lessee, and Lessee shall lease from
Lessor, the personal property described in the lease schedule(s) (each, a
"SCHEDULE") to be entered into from time to time into which this Agreement is
incorporated (each Schedule, together with this Agreement, a "LEASE"), together
with all substitutions, replacements, repairs, parts and attachments,
improvements and accessions thereto (the "EQUIPMENT"). Capitalized terms not
otherwise defined in this Agreement have the meanings specified in the
applicable Schedule. Each Lease shall constitute a separate, distinct, and
independent lease and contractual obligation of Lessee. Except as expressly set
forth in any Lease, Lessor shall at all times retain the full legal title to the
Equipment, it being expressly agreed by both parties that each Lease is an
agreement of lease only.

         1.2 EQUIPMENT PROCUREMENT. Lessee has ordered or shall order the
Equipment pursuant to one or more purchase orders or purchase contracts
(together, "PURCHASE ORDER") to or with Cisco Systems, Inc., or a Cisco-approved
reseller (together, "VENDOR"), which Purchase Order shall be promptly delivered
to Lessor. Subject to Lessor's acceptance of such Equipment, as evidenced by its
preparation and delivery to Lessee for signature of a Schedule relating to such
Equipment, Lessee shall be deemed to have assigned to Lessor all Lessee's right,
title and interest in and to the Equipment and the Purchase Order; provided that
Lessor shall have no obligations under the Purchase Order. Lessee shall execute
and return to Lessor (a) each Schedule within five days of Lessee's receipt of
same, and (b) each Certificate of Acceptance within five days of receipt and
acceptance of the applicable Equipment. If for whatever reason the lease
transaction in respect of the Equipment is not consummated, (i) Lessee shall
remain solely liable to pay Vendor in accordance with the Purchase Order, and
(ii) upon receipt of satisfactory evidence of such payment by Lessee, Lessor
shall assign to Lessee, without warranty, its right, title and interest in and
to the Equipment and the Purchase Order

         1.3 TERM OF LEASE. The Original Term of each Lease shall begin on the
Commencement Date as specified in the applicable Schedule and, subject to
Sections 3.5 and 4.2, shall terminate on the date specified in the applicable
Schedule. If so provided in the applicable Schedule, the Original Term for any
Lease may be succeeded by one or more
<PAGE>   2
Extended Terms. Subject to Sections 3.5 and 4.2 and any express provisions of
the Schedule, no Lease may be terminated by Lessor or Lessee, for any reason
whatsoever, prior to the end of the Original Term or any pending Extended Term.

         1.4 PAYMENTS. The terms of the applicable schedule shall set forth
whether the lease is a Fair Market Value Lease or a Capital Lease. Under either
lease, Lessee shall pay Lessor Rent or Payment for the Equipment in the amounts
and at the times specified in the applicable Schedule. Such Schedule shall set
forth any applicable purchase options, including bargain purchase options,
agreed upon by the parties. All Rent or other amounts payable by Lessee to
Lessor hereunder shall be paid to Lessor at the address specified above, or at
such other place as Lessor may designate in writing to Lessee from time to time.

         1.5 RETURN OF EQUIPMENT. Upon expiration of the Lease Term, Lessee
shall immediately return the Equipment to Lessor in the condition and at the
place provided in Section 3.3; unless Lessee exercises any purchase option as
agreed upon by the parties and set forth in the applicable schedule.

         2. DISCLAIMERS AND WARRANTIES; INTELLECTUAL PROPERTY

         2.1 DISCLAIMERS; WARRANTIES. Lessee represents and acknowledges that
the Equipment is of a size, design, capacity and manufacture selected by it, and
that it is satisfied that the Equipment is suitable for its purposes. LESSEE
LEASES THE EQUIPMENT AS IS, AND, NOT BEING THE MANUFACTURER OF THE EQUIPMENT,
THE MANUFACTURER'S AGENT OR THE SELLER'S AGENT, LESSOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR PURPOSE, DESIGN OR CONDITION OF THE EQUIPMENT. LESSOR SHALL NOT BE
RESPONSIBLE FOR ANY LOSS OR DAMAGE RESULTING FROM THE INSTALLATION, OPERATION OR
OTHER USE, OR DEINSTALLATION OF THE EQUIPMENT, INCLUDING ANY DIRECT, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOSS. Lessee shall look solely to the
manufacturer or the supplier of the Equipment for correction of any problems
that may arise with respect thereto, and all transferable manufacturer and
supplier warranty rights are, to the extent such rights have been transferred to
Lessor, hereby assigned without representation or warranty by Lessor to Lessee
for the Lease Term, which warranties Lessee is authorized to enforce if and when
there exists no Event of Default. Any such enforcement shall be at Lessee's sole
cost and expense.

         2.2 INTELLECTUAL PROPERTY. Lessee acknowledges that neither this
Agreement nor any Lease conveys any explicit or implicit license for the use of
software or other intellectual property of Cisco Systems, Inc. or its affiliates
relating to the Equipment and that such license rights, to the extent they
exist, are contained in separate documentation entered into between Lessee and
Cisco Systems, Inc. or other persons. LESSOR MAKES NO WARRANTIES OR
REPRESENTATIONS WHATSOEVER WITH RESPECT TO THE INTELLECTUAL PROPERTY RIGHTS,
INCLUDING ANY PATENT, COPYRIGHT AND TRADEMARK RIGHTS, OF ANY THIRD PARTY WITH
RESPECT TO THE EQUIPMENT, WHETHER RELATING TO INFRINGEMENT OR OTHERWISE. Lessor
shall, when reasonably requested in writing by Lessee, provided there exists no
Event of Default and an indemnity satisfactory to Lessor is delivered by Lessee,
and at Lessee's cost and expense,

                                      -2-
<PAGE>   3
enforce rights of indemnification, if any, for patent, copyright or other
intellectual property infringement obtained from the manufacturer under any
agreement for purchase of the Equipment. If notified promptly in writing of any
action brought against Lessee based on a claim that the Equipment infringes a
United States patent, copyright or other intellectual property right, Lessor
shall promptly notify the manufacturer thereof for purposes of exercising, for
the benefit of Lessee, Lessor's rights with respect to such claim under any such
agreement.

                             3. LESSEE OBLIGATIONS

         3.1 NET LEASE; PAYMENTS UNCONDITIONAL. EACH LEASE IS A NET LEASE, AND
ALL COSTS, EXPENSES AND LIABILITIES RELATING TO THE EQUIPMENT, INCLUDING IN
RESPECT OF TAXES, INSURANCE AND MAINTENANCE, SHALL BE BORNE SOLELY BY LESSEE.
LESSEE'S OBLIGATION TO PAY ALL RENT AND OTHER SUMS THEREUNDER, AND THE RIGHTS OF
LESSOR IN AND TO SUCH PAYMENTS, SHALL BE ABSOLUTE AND UNCONDITIONAL, AND SHALL
NOT BE SUBJECT TO ANY ABATEMENT, REDUCTION, SETOFF, DEFENSE, COUNTERCLAIM,
INTERRUPTION, DEFERMENT OR RECOUPMENT, FOR ANY REASON WHATSOEVER.

         3.2 USE OF EQUIPMENT. Lessee shall use the Equipment solely in the
conduct of its business, in a manner and for the use contemplated by the
manufacturer thereof, and in compliance with all laws, rules and regulations of
every governmental authority having jurisdiction over the Equipment or Lessee
and with the provisions of all policies of insurance carried by Lessee pursuant
to Section 3.6.

         3.3 DELIVERY; INSTALLATION; RETURN; MAINTENANCE AND REPAIR; INSPECTION.
Lessee shall be solely responsible, at its own expense, for (a) the delivery of
the Equipment to Lessee, (b) the packing, rigging and delivery of the Equipment
back to Lessor, upon expiration or termination of the Lease Term, in good
repair, condition and working order, ordinary wear and tear excepted, at the
location(s) within the continental United States specified by Lessor, and (c)
the installation, de-installation, maintenance and repair of the Equipment.
During the Lease Term, Lessee shall ensure that the Equipment is covered by a
maintenance agreement, to the extent available, with the manufacturer of the
Equipment or other party reasonably acceptable to Lessor. Lessee shall, at its
expense, keep the Equipment in good repair, condition and working order,
ordinary wear and tear excepted, and at the expiration or termination of the
Lease Term with respect to any of the Equipment, have such Equipment inspected
and certified acceptable for maintenance service by the manufacturer. If any of
the Equipment, upon its return to Lessor, is not in good repair, condition and
working order, ordinary wear and tear excepted, and so inspected and certified,
Lessee shall be obligated to pay Lessor for the out-of-pocket expenses Lessor
incurs in bringing such Equipment up to such status, but not in excess of the
Casualty Value for such Equipment, promptly after its receipt of an invoice for
such expenses. Lessor shall be entitled to inspect the Equipment at reasonable
times.

         3.4 TAXES. Lessee shall pay, and hereby indemnifies Lessor on a net,
after-tax basis, against, and shall hold it harmless from, all license fees,
assessments, and sales, use, property, excise and other taxes and charges, other
than those measured by Lessor's net income, now and hereafter imposed by any
governmental body or agency upon or with respect to any of the Equipment, or the
possession, ownership, use or operation thereof, or any Lease, or the

                                      -3-
<PAGE>   4
consummation of the transactions contemplated by any Lease. Notwithstanding the
foregoing, to the extent required of it by applicable law and in reliance upon
Lessee's disclosure of the location of such Equipment, Lessor shall file
personal property tax returns, and shall pay personal property taxes payable
with respect to the Equipment. Lessee shall pay to Lessor the amount of all such
personal property taxes within 15 days of its receipt of an invoice for such
taxes. For any Lease that is specified as an FMV Lease in the applicable
Schedule, Lessee acknowledges that it is the intent of Lessor, and a material
inducement to Lessor to enter into such Lease, to obtain all state and Federal
income tax benefits of ownership with respect to the Equipment under such Lease,
including entitlement to annual accelerated cost recovery deductions.

         3.5 LOSS OF EQUIPMENT. Lessee assumes the risk that, and shall promptly
notify Lessor in writing if, any item of Equipment becomes lost, stolen,
damaged, destroyed or otherwise unfit or unavailable for use from any cause
whatsoever (an "EVENT OF LOSS") after it has been delivered to a common carrier
for shipment to Lessee. Unless the item is damaged and is reparable within a
reasonable period of time in the judgment of Lessor (in which event Lessee shall
promptly cause such item to be repaired and restored to the condition and value
it had prior to such Event of Loss, at its own cost and expense), Lessee shall
pay to Lessor on the Rent payment date following Lessor's receipt of such notice
(or, if none, 30 days after such Event of Loss), an amount equal to the Rent
payment or payments due and payable with respect to such Equipment on or prior
to such date, plus a sum equal to the Casualty Value of such Equipment as of
such date. Upon making such payment, the Rent for such Equipment shall cease to
accrue, the term of the Lease as to such Equipment shall terminate and (except
in the case of loss, unrecovered theft or complete destruction) Lessor shall be
entitled to recover possession of such Equipment in accordance with the
provisions of Section 3.3 above. If Lessor has received the foregoing amount,
Lessee shall be entitled to the proceeds of any recovery in respect of such
Equipment from insurance or otherwise, provided that if the Equipment is subject
to an FMV Lease, Lessee shall be entitled to receive such proceeds only up to
the Casualty Value therefor, any excess amount to be paid to Lessor.

         3.6 INSURANCE. Lessee shall obtain and maintain for the Lease Term at
its own expense, property damage and liability insurance and insurance against
loss or damage to the Equipment as a result of fire, explosion, theft, vandalism
and such other risks of loss as are normally maintained on equipment of the type
leased hereunder by companies carrying on the business in which Lessee is
engaged, in such amounts, in such form and with such insurers as shall be
satisfactory to Lessor. Each insurance policy shall name Lessee as insured and
Lessor and its assignees as additional insureds and loss payees thereof as their
interest may appear, and shall provide that it may not be cancelled or altered
without at least 30 days' prior written notice thereof being given to Lessor (or
10 days', in the event of non-payment of premium).

         3.7 INDEMNITY. Except with respect to the gross negligence or willful
misconduct of Lessor, Lessee hereby indemnifies, protects, defends and holds
harmless Lessor from and against any and all claims, liabilities (including
negligence, tort and strict liability), demands, actions, suits, and
proceedings, losses, costs, expenses and damages, including reasonable
attorneys' fees and costs (collectively, "CLAIMS"), arising out of, connected
with, or resulting from any Lease or any of the Equipment, or any ancillary or
related software or other intangibles, whether arising before, during or after
the Lease Term (but not Claims relating to events occurring after Lessee has
returned the Equipment to Lessor in accordance with Section 3.3), including
Claims relating

                                      -4-
<PAGE>   5
to the manufacture, selection, purchase, delivery, possession, condition, use,
operation, return or other disposition of the Equipment. Each of the parties
shall give the other prompt written notice of any Claim of which it becomes
aware.

         3.8 PROHIBITIONS RELATED TO LEASE AND EQUIPMENT. Without the prior
written consent of Lessor, which consent as it pertains to clauses (b) and (d)
below shall not be unreasonably withheld, Lessee shall not: (a) assign,
transfer, or otherwise dispose of any Equipment, the Lease or any rights or
obligations thereunder; (b) sublease any of the Equipment or permit the
Equipment to be controlled by any other person; (c) create or incur, or permit
to exist, any security interest, lien or encumbrance with respect to any of the
Equipment; (d) cause or permit any of the Equipment to be moved from the
location specified in the applicable Schedule; or (e) cause or permit any of the
Equipment to be moved outside the United States.

         3.9 IDENTIFICATION. Lessee shall place and maintain permanent markings
provided by Lessor on the Equipment evidencing ownership, security and other
interests therein, as specified from time to time by Lessor.

         3.10 ALTERATIONS AND MODIFICATIONS. Lessee shall not make any
additions, attachments, alterations or improvements to the Equipment without the
prior written consent of Lessor, not to be unreasonably withheld. Any addition,
attachment, alteration or improvement to any item of Equipment shall belong to
and become the property of Lessor unless, at the request of Lessor, it is
removed prior to the return of such item of Equipment by Lessee. Lessee shall be
responsible for all costs relating to such removal and shall restore such item
of Equipment to the condition and value otherwise required hereunder.

         3.11 PERSONAL PROPERTY. Lessee acknowledges and represents that the
Equipment shall be and remain personal property, notwithstanding the manner by
which it may be attached or affixed to realty, and Lessee shall do all acts and
enter into all agreements necessary to ensure that the Equipment remains
personal property. If requested by Lessor with respect to any item of Equipment,
Lessee shall obtain and deliver to Lessor equipment access agreements,
satisfactory to Lessor, from all persons claiming any interest in the real
property on which such item of Equipment is installed or located.

         3.12 FINANCIAL STATEMENTS. Lessee shall promptly furnish to Lessor
quarterly or annual financial or other statements regarding the condition and
operations of Lessee and any guarantor of any Lease, and information regarding
the Equipment, as Lessor may from time to time reasonably request.

         3.13 LESSEE REPRESENTATIONS. Lessee hereby represents that, with
respect to this Agreement, and each Schedule, certificate evidencing acceptance
of equipment, assignment of purchase order, insurance letter, proposal letter,
UCC financing statement, or other document now or hereafter executed by Lessee
in connection with any Lease (collectively, "LEASE DOCUMENTS"): (a) the
execution, delivery and performance thereof by Lessee or its attorney-in-fact
have been duly authorized by all necessary corporate, partnership or company
action; (b) the person executing such documents is duly authorized to do so; and
(c) such documents constitute legal, valid and binding obligations of Lessee,
enforceable in accordance with their terms.

                                      -5-
<PAGE>   6
                            4. DEFAULT AND REMEDIES

         4.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "EVENT OF DEFAULT" hereunder and under each Lease: (a) Lessee
fails to pay any Rent or other amount due under any Lease within fifteen days
after it becomes due and payable; (b) any representation or warranty of Lessee
made in any Lease Document proves to have been false or misleading in any
material respect as of the date when it was made; (c) Lessee fails to maintain
insurance as required herein or breaches any of clauses (a), (b) or (e) of
Section 3.8; (d) Lessee fails to perform any other covenant, condition or
agreement made by it under any Lease, and such failure continues for 20 days;
(e) bankruptcy, receivership, insolvency, reorganization, dissolution,
liquidation or other similar proceedings are instituted by or against Lessee,
any guarantor of any Lease or any partner of a partnership Lessee or guarantor,
or all or any part of such person's property, under the Federal Bankruptcy Code
or other law of the United States or of any other competent jurisdiction, and,
if such proceeding is brought against such person, it consents thereto or fails
to cause the same to be discharged within 45 days after it is filed; (f) Lessee
materially defaults under any agreement with respect to the purchase or
installation of any of the Equipment; or (g) Lessee or any guarantor of any
Lease, or any of their respective subsidiaries or other affiliates, defaults
under any other instrument or agreement with Lessor or Cisco Systems, Inc.

         4.2 REMEDIES. If an Event of Default exists, Lessor may exercise any
one or more of the following remedies, in addition to those arising under
applicable law: (a) proceed, by appropriate court action, to enforce performance
by Lessee of the applicable covenants of any or all of the Leases; (b) terminate
any or all Leases by notice to Lessee and take possession of any or all of the
Equipment and, for such purpose, enter upon any premises where the Equipment is
located with or without notice or process of law and free from all claims by
Lessee or any other person, or require Lessee to assemble the Equipment and
deliver it to Lessor in accordance with Section 3.3; (c) recover any and all
direct, incidental and consequential damages, including all accrued and unpaid
Rent and other amounts owing under any Lease, and (i) for any Lease that is an
FMV Lease, the Equipment for which has not been returned to Lessor in the
condition required hereunder, an amount equal to the Casualty Value thereof; or
(ii) for any Lease that is an FMV Lease, the Equipment for which has been so
returned to Lessor, such amounts as are provided for the lessee breach of a
personal property lease under the Uniform Commercial Code of the jurisdiction
specified in Section 5.11 (the "CODE"), using the Discount Rate to calculate
present values for such purpose; or (iii) for any Lease that is not an FMV
Lease, an amount equal to the present value, discounted at the Discount Rate, of
the sum of all Rent and other payments remaining to be paid under such Lease
through the Lease Term plus the applicable purchase option amount specified in
Paragraph 7 of the Schedule; and (d) sell or re-lease any or all of the
Equipment, through public or private sale or lease transactions, and apply the
proceeds thereof to Lessee's obligations under such Leases or otherwise seek
recovery in accordance with applicable provisions of the Code. Lessee shall
remain liable for any resulting deficiency and Lessor may retain any surplus it
may realize in connection with an FMV Lease. Whether the Lease is a FMV lease
will be set forth in the applicable Schedule. The "DISCOUNT RATE" shall be the
rate for U.S. Treasury obligations having a constant maturity of three months,
as specified in the Federal Reserve Statistical Release H.15 (or replacement
publication) issued most recently prior to the date of termination of the Lease.
Lessee shall pay all costs and expenses (including reasonable attorneys' fees)
incurred by Lessor in retaking possession of, and removing, storing, repairing,

                                      -6-
<PAGE>   7
refurbishing and selling or leasing such Equipment and enforcing any obligations
of Lessee pursuant to any Lease.

                                5. MISCELLANEOUS

         5.1 PERFORMANCE OF LESSEE'S OBLIGATIONS. Upon Lessee's failure to pay
any amount or perform any obligation under any Lease when due, Lessor shall have
the right, but shall not be obligated, to pay such sum or perform such
obligation, whereupon such sum or cost of such performance shall immediately
become due and payable thereunder, with interest thereon at the Default Rate
from the date such payment or performance was made.

         5.2 RIGHT TO USE. So long as no Event of Default exists, neither Lessor
nor its assignee shall interfere with Lessee's right to use the Equipment under
any Lease.

         5.3 ASSIGNMENT BY LESSOR. Lessor may assign or transfer any or all of
Lessor's interest in this Agreement, any Lease, any Equipment or Rents, without
notice to Lessee. Any assignee of Lessor shall have all of the rights, but none
of the obligations (unless otherwise provided in the applicable assignment), of
a "Lessor" under this Agreement and the applicable Lease, and Lessee agrees that
it will not assert against any assignee any defense, counterclaim or offset that
Lessee may have against Lessor or any preceding assignee, and that upon notice
of such assignment or transfer, it will pay all Rent and other sums due under
this Agreement and the applicable Lease to such assignee or transferee. Lessee
acknowledges that any assignment or transfer by Lessor shall not materially
change Lessee's duties or obligations under this Agreement or any Lease, nor
materially increase the burdens or risks imposed on Lessee.

         5.4 FURTHER ASSURANCES. Upon the request of Lessor from time to time,
Lessee shall execute and deliver such further documents and do such further acts
as Lessor may reasonably request in order fully to effect the purposes of this
Agreement or any Lease. Lessee hereby appoints Lessor its attorney in fact,
coupled with an interest, authorized, without any obligation to do so, (a) to
sign on Lessee's behalf and file, record and register financing statements, and
amendments and continuations thereof, and any other documents relating to liens,
security interests or property rights of Lessor, Lessee or any third person with
respect to any Equipment and ancillary property, in accordance with any Uniform
Commercial Code or other code or statute, and (b) to enforce, in its own name or
in the name of Lessee, claims relating to any Equipment against insurers,
manufacturers or other persons, and to make, adjust, settle, compromise and
receive payments as to such claims.

         5.5 RIGHTS AND REMEDIES. Each right and remedy granted to Lessor under
any Lease shall be cumulative and in addition to any other right or remedy
existing in equity, at law, by virtue of statute or otherwise, and may be
exercised by Lessor from time to time concurrently or independently and as often
and in such order as Lessor may elect. Any failure or delay on the part of
Lessor in exercising any such right or remedy shall not operate as a waiver
thereof.

         5.6 NOTICES. Any notice, request, demand, consent, approval or other
communication provided for or permitted in relation to any Lease shall be in
writing and shall be conclusively deemed to have been received by a party hereto
on the day it is delivered to such party at its address, or received by the
party at such facsimile number, as is set forth in such Lease (or at such other
addresses or fax numbers such party shall specify to the other party in
writing), or if

                                      -7-
<PAGE>   8
sent by registered or certified mail, return receipt requested, on the fifth day
after the day on which it is mailed, postage prepaid, addressed to such party.

         5.7 SECTION HEADINGS; INTERPRETATION. Section headings are inserted for
convenience of reference only and shall not affect any construction or
interpretation of any Lease Document. In interpreting the provisions of any
Lease Document, (a) the term "including" is not limiting; (b) references to
"person" include individuals, corporations and other legal persons and entities;
(c) the singular of defined terms includes the plural and vice-versa; and (d)
section and paragraph references are to the document in which such reference
appears, unless the context otherwise requires.

         5.8 ENTIRE LEASE. This Agreement, together with the other Lease
Documents, constitute the entire agreement between Lessor and Lessee with
respect to the lease of the Equipment. No waiver or amendment of, or any consent
with respect to, any provision of any Lease Document shall bind either party
unless set forth in a writing, specifying such waiver, consent, or amendment,
signed by both parties. TO THE EXTENT PERMITTED BY APPLICABLE LAW AND NOT
OTHERWISE SPECIFICALLY GRANTED TO LESSEE IN ANY LEASE DOCUMENT, LESSEE HEREBY
WAIVES ANY AND ALL RIGHTS OR REMEDIES CONFERRED UPON A LESSEE UNDER THE CODE OR
ANY OTHER APPLICABLE LAW OR STATUTE, WITH RESPECT TO A DEFAULT BY LESSOR UNDER
THIS AGREEMENT OR ANY LEASE. Each FMV Lease is intended by the parties as a
"finance lease" under the Code.

         5.9 SEVERABILITY. Should any provision of any Lease Document be or
become invalid, illegal, or unenforceable under applicable law, the other
provisions of such Lease Document shall not be affected and shall remain in full
force and effect.

         5.10 ATTORNEYS' FEES; DEFAULT INTEREST; MAXIMUM RATES. Lessee shall
reimburse Lessor for all charges, costs, expenses and attorney's fees incurred
by Lessor (a) in defending or protecting its interests in the Equipment, (b) in
the enforcement of this Agreement or any Lease, and (c) in any lawsuit or other
legal proceeding to which this Agreement or any Lease gives rise. Any nonpayment
of Rent or other amount payable under any Lease shall result in Lessee's
obligation to promptly pay Lessor on such overdue payment, for the period of
time during which it is overdue (including during any grace period), interest at
a rate ("DEFAULT RATE") equal to fourteen percent (14%) per annum. To the extent
that any payment of interest (including any amount deemed imputed interest for
purposes of applicable law) under any Lease Document would otherwise exceed
provisions of any law limiting the highest rate of interest that may be lawfully
contracted for, charged or received by Lessor, such payment amount shall be
deemed reduced to such amount as is equal to or consistent with the highest rate
permitted by applicable law.

         5.11 GOVERNING LAW AND JURISDICTION. THIS AGREEMENT AND THE OTHER LEASE
DOCUMENTS SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF
CALIFORNIA. LESSOR AND LESSEE WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
LITIGATION ARISING FROM ANY LEASE DOCUMENT. LESSEE CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF THE STATE COURTS OF CALIFORNIA, AND THE FEDERAL COURTS SITTING
IN THE STATE

                                      -8-
<PAGE>   9
OF CALIFORNIA, FOR THE RESOLUTION OF ANY DISPUTES UNDER ANY LEASE DOCUMENT.

         5.12 SURVIVAL. All obligations of Lessee to make payments to Lessor
under any Lease or to indemnify Lessor, including pursuant to Section 3.4 or 3.7
above, with respect to a Lease, and all rights of Lessor hereunder with respect
to a Lease, shall survive the termination of such Lease and the return of the
Equipment.

         5.13 SECURITY. To secure the payment and performance by Lessee of all
obligations under each Lease, Lessee hereby grants Lessor a security interest in
Lessee's right, title and interest, now existing and hereafter arising, in and
to, (a) all Equipment subject to such Lease, (b) all insurance, warranty, rental
and other claims and rights to payment and chattel paper arising out of such
Equipment, and (c) all books, records and proceeds relating to the foregoing.

         5.14 COUNTERPARTS; CHATTEL PAPER. Each Lease Document may be executed
in counterparts, and when so executed each counterpart shall be deemed to be an
original, and such counterparts together shall constitute one and the same
instrument. The original of each Schedule shall constitute chattel paper for
purposes of the Code. If there exist multiple originals of a Schedule, the one
marked "Lessor's Copy" or words of similar import, shall be the only chattel
paper.

         5.15 APPENDIX. Any lease Appendix executed by Lessor and Lessee making
reference to this Agreement is a part of and incorporated into this Agreement by
this reference.

         LESSEE, BY THE SIGNATURE BELOW OF ITS AUTHORIZED REPRESENTATIVE,
ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND AGREES TO BE
BOUND BY ITS TERMS AND CONDITIONS. EACH PERSON SIGNING BELOW ON BEHALF OF LESSEE
REPRESENTS THAT HE OR SHE IS AUTHORIZED TO EXECUTE AND DELIVER THIS AGREEMENT ON
BEHALF OF LESSEE.

LESSOR:                                   LESSEE:

CISCO SYSTEMS                             EDISON SCHOOLS
CAPITAL CORPORATION

By:_______________________________        By:___________________________________
  (Authorized Signature)                    (Authorized Signature)

                                          ______________________________________
                                            (Name/Title)
__________________________________
  (Name/Title)

                                          By:___________________________________
                                            (Authorized Signature)

                                          ______________________________________
                                            (Name/Title)

                                      -9-

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