Document:

EXHIBIT 10.8
                                                                    ------------

                  BASIC LEASE TERMS AND DESCRIPTION OF EXHIBITS
                                   (Base Year)

           The following list is a summary of certain basic terms of this Lease.
In case of a conflict between any provision of this Lease and the information
contained in this summary, the applicable provision of this Lease shall control.
Terms set forth in the left-hand column, below, and used in this Lease shall,
unless otherwise defined in the Lease, have the meaning given opposite each such
term in the right-hand column, below.

LANDLORD:                          JEFFSQUARE INVESTMENTS, L.L.C., an
                                   Oregon limited liability company

ADDRESS OF LANDLORD:               c/o ScanlanKemperBard Companies
                                   Attn: Operating Manager
                                   2650 Pacwest Center
                                   1211 SW Fifth Avenue
                                   Portland, OR 97204

TENANT:                            Lion Inc., a Washington corporation

ADDRESS OF TENANT:                 Lion Inc.
                                   4700 42nd Avenue SW, Suite 430
                                   Seattle, WA 98116

PROPERTY MANAGER:                  Martin Smith Inc

ADDRESS OF PROPERTY MANAGER:       Martin Smith Inc
                                   1109 First Avenue, Suite 500
                                   Seattle, WA 98101-2988

CITY, COUNTY AND STATE             City of Seattle, County of King, State of
                                   Washington, respectively.

PREMISES:                          A total of approximately 8,274 rentable
                                   square feet of floor area (subject to
                                   adjustment pursuant to Section 2.1.1) located
                                   on the fourth floor of the Building comprised
                                   of Suite 430 measuring approximately 5,600
                                   rentable square feet and Suite 440
                                   approximately 2,674 rentable square feet
                                   (hereafter known as Suite 430), as identified
                                   on the floor plan attached as Exhibit B.

LEASE TERM:                        Seventy-two (72) months.

EFFECTIVE DATE:                    The date on which this Lease has been
                                   executed by both Landlord and Tenant, as
                                   indicated following the signature block for
                                   each.

COMMENCEMENT DATE:                 August 1, 2001, or as otherwise set forth in
                                   Section 1.3.1.

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EXPIRATION DATE:                   July 31, 2007, or as otherwise set forth in
                                   Section 1.3.1.

BASE RENT:                         Base Rent payable by Tenant shall be the
                                   following amounts for the following periods
                                   during the Term:

                                          Period           Monthly      Annual
                                          ------           -------      ------
                                   08/01/01 to 07/31/02  $16,548.00  $198,576.00
                                   08/01/02 to 07/31/03  $17,237.50  $206,850.00
                                   08/01/03 to 07/31/04  $17,927.00  $215,124.00
                                   08/01/04 to 07/31/05  $18,616.50  $223,398.00
                                   08/01/05 to 07/31/06  $19,306.00  $231,672.00
                                   08/01/06 to 07/31/07  $19,995.50  $239,946.00

                                   Base Rent is subject to adjustment pursuant
                                   to Section 2.1.1 and Section 4.

ADJUSTMENT DATE FOR BASE RENT:     The first day of the thirteenth month of the
                                   Term, and on each annual anniversary of such
                                   date.

BASE YEAR:                         The calendar year 2001.

BUILDING SQUARE FOOTAGE:           Approximately 148,687 rentable square feet of
                                   floor area.

INITIAL PROPORTIONATE SHARE OF     Five and fifty-six/100ths percent (5.56%),
EXCESS OPERATING EXPENSES:         subject to adjustment pursuant to  Section 4,
                                   which percentage is equal to the Premises
                                   area divided by the Building area
                                   (approximately 148,687 rentable square feet).
                                   Notwithstanding the foregoing, if one or more
                                   of the facilities, services and utilities the
                                   costs of which are included within the
                                   definition of Operating Costs is not
                                   furnished to one or more tenants or to
                                   particular types of tenants, then in
                                   connection with the calculation of Tenant's
                                   Share of each of such costs the Building Area
                                   shall be reduced by the number of rentable
                                   square feet of space occupied by such tenants
                                   and Tenant's Share shall be separately
                                   computed as to each of such costs. If the
                                   Building shall contain non-office uses during
                                   any period, Landlord shall have the right to
                                   determine, in accordance with sound
                                   accounting and management principles,
                                   Tenant's Share of Real Property Taxes and
                                   Operating Costs for only the office portion
                                   of the Building; in such event, Tenant's
                                   Share shall be based on the ratio of the
                                   rentable area of the Premises to the rentable
                                   area of such office portion (approximately
                                   72,047 rentable square feet) for such period,
                                   in which case Tenant's percentage for such
                                   purposes shall be eleven and
                                   forty-eight/100ths percent (11.48%).

PERMITTED USE:                     Use for purposes of general business/
                                   administrative offices.

SECURITY DEPOSIT:                  Twenty-four Thousand Eight Hundred Twenty-two
                                   and no/100th Dollars ($24,822.00).

                                       II

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PARKING:                           Initially, Tenant may use up to six (6)
                                   unreserved parking stalls which shall be
                                   guaranteed available during the term at no
                                   charge. Tenant may lease on a month-to-month
                                   basis up to fifteen (15) parking stalls, if
                                   available for use, at no charge. Any
                                   additional stalls over and above the number
                                   of stalls provided for herein shall be leased
                                   at the prevailing market rate.

BROKERS:                           Martin Smith Inc and First Western
                                   Properties.

AGENCY DISCLOSURE:                 Martin Smith Inc hereby discloses that it
                                   represents the Landlord.

                                    EXHIBITS
                                    --------

               Exhibit A         Legal Description of Land
               Exhibit B         Premises and Floor Plan
               Exhibit C         Work Letter Agreement
               Exhibit D         Rules and Regulations
               Exhibit E         Acceptance Letter
               Exhibit F         Standards for Utilities and Services

                                       III

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                                 LEASE AGREEMENT
                                 ---------------
                                   (Base Year)

           THIS LEASE AGREEMENT (this "Lease" or this "Agreement) is made and
entered into as of the Effective Date identified in the summary of Basic Lease
Terms preceding this Lease by and between the Tenant and Landlord also
identified in such summary.

1. DEMISE AND PREMISES.

           1.1 DEMISE. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord, upon the terms and subject to the conditions set forth in this
Lease, the Premises described in Section 1.2 within the project known as
Jefferson Square, in the City, County and State (the "Building"), SUBJECT,
HOWEVER, to any and all existing liens and encumbrances of record (the "Existing
Encumbrances"), and the terms of this Lease. The Building is located upon the
land legally described in Exhibit A (the "Land").

           1.2 PREMISES

                     1.2.1 PREMISES AND ASSOCIATED RIGHTS. The premises leased
to Tenant consist of space in the Building having the square footage and
location generally identified in the summary of Basic Lease Terms preceding this
Lease, as more particularly identified on the description and/or floor plans
attached as Exhibit B (the "Premises"). The Premises also include the
appurtenant right to use, in common with others, the public portions of the
Building, including public hallways and lobbies, elevators, parking facilities
to the extent allocated to Tenant in the summary of Basic Lease Terms,
restrooms, sidewalks, ramps, landscape areas, and driveways. The Premises shall
be improved by Landlord with the leasehold improvements described in and in
accordance with the provisions of, the Work Letter Agreement, attached as
Exhibit C.

           1.3 COMMENCEMENT AND EXPIRATION DATES. The term of this Lease shall
be for the period of months designated in the summary of Basic Lease Terms
preceding this Lease, and shall have the Commencement Date and Expiration Date
also designated in such summary (the "Term"); provided that:

                     1.3.1 CONFORMING COMMENCEMENT DATE. If the Premises are for
any reason not ready for occupancy by said Commencement Date, this Lease shall
not be void or voidable, and Landlord shall not be liable or responsible for any
claims, damages or liabilities in connection therewith or by reason thereof and
the term of this Lease shall be for the same term of months as set forth in the
preceding sentence, but the Commencement Date shall occur only at the time that
the Premises are ready for occupancy by the Tenant in accordance with the terms
and conditions set forth herein. Should the term of this Lease commence on a
date other than the date certain specified in Section 1.3, Tenant shall, upon
Landlord's request, execute an acceptance letter in the form of Exhibit E,
specifying the revised Commencement Date. In such event, rent under this Lease
shall not commence until said revised Commencement Date, and the term of this
Lease shall thereupon commence and the expiration date shall be extended so as
to give effect to the full stated term. Within five (5) days after Tenant
receives Landlord's notice that the Premises are ready for occupancy, Tenant
shall inspect the Premises and, except for items specified by Tenant to Landlord
in writing within five (5) days of Tenant's inspection, Tenant shall be deemed
to have accepted the Premises in their then condition, as is. The existence of
"punch list" (as that term is generally used in the construction industry) items
shall not postpone the Commencement Date.

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2. RENT. Tenant shall pay to Landlord rent consisting of a Base Rent, as set
forth in this Section 2, and Additional Rent, as set forth in Section 3 (Base
Rent and Additional Rent, along with all other sums that become payable by
Tenant under this Lease, whether to Landlord directly, or to a third party for
the benefit of Landlord and the Premises, are referred to herein as "Rent"). All
Rent shall be paid in advance on the first day of each month unless otherwise
provided herein. All Rent shall be paid in lawful money of the United States to
Landlord, c/o Martin Smith Inc, 1109 First Avenue, Suite 500, Seattle, WA
98101-2988 or at such other place as Landlord shall designate by written notice
to Tenant. Tenant shall pay all Rent promptly when due without notice or demand
therefor and without any abatement, deduction or off set, for any reason
whatsoever, except as may be expressly provided in this Lease. If the Tenant's
obligation to pay Base Rent does not commence on the first day of a calendar
month, or does not expire on the last day of the calendar month, the Base Rent
payable by Tenant on the first fractional month, or the last fractional month,
as the case may be, shall be prorated for said month. Base Rent for the first
full calendar month of the Term shall be paid upon execution of this Lease, and
Base Rent for any partial month at the beginning of the Term shall be due on the
Commencement Date. Tenant acknowledges that Tenant's late payment of Rent due
Landlord will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of such cost being extremely difficult and impractical to
ascertain. Therefore, if Landlord does not receive any Rent due from Tenant
within five (5) days of when due, Tenant shall pay to Landlord an additional sum
equal to five percent (5%) of the overdue amount, which late charge shall be due
and payable on demand. By their execution of this Lease, Landlord and Tenant
confirm that such late charge represents a fair and reasonable estimate of the
costs that Landlord will incur by reason of any such late payment, that the late
charge is in addition to any and all remedies available to Landlord and that the
assessment and/or collection of the late charge shall not be deemed a waiver by
Landlord of such failure or to any other default under this Lease. Additionally,
all such delinquent Rent, plus any late charge, shall bear interest at the rate
of fourteen percent (14%) per annum, or, if lower, the maximum interest rate
permitted by law (as applicable, the "Default Rate"), from the date due until
paid. If any payment of Rent is returned for insufficient funds, Landlord may
require Tenant to pay all future payments by cashier's check.

           2.1 BASE RENT. Subject to adjustment as provided in Section 2.1.1,
the monthly Base Rent shall be the amount specified in the summary of Basic
Lease Terms preceding this Lease (the "Base Rent"). As of the first day of each
Adjustment Date specified in the summary of Basic Lease Terms preceding this
Lease, Base Rent shall be increased as provided in such summary.

                     2.1.1 RENTABLE SQUARE FOOTAGE ADJUSTMENT. The Base Rent
specified in the summary of Basic Lease Terms preceding this Lease has been
calculated based on the approximate rentable square feet contained within the
Premises, as specified in such summary, resulting in a monthly Base Rent per
square foot represented by the total monthly Base Rent specified divided by the
approximate number of square feet specified. Landlord may, from time to time,
recalculate the rentable square feet contained within the Premises (including,
without limitation, in connection with any expansion, contraction or
reconfiguration of either) and, upon completion thereof, Landlord shall adjust
the Base Rent hereunder, based upon the actual rentable square footage of the
Premises and the monthly rent per square foot represented by the Base Rent and
approximate square footage set forth in the Basic Lease Terms, and shall notify
Tenant in writing of any such adjustment stating therein the effective date of
such adjustment. The rentable square footage of the Premises and the Building
will be determined based on current BOMA measurement standards.

                     2.1.2 REMEASUREMENT. Landlord and Tenant agree that the
Building Areas will be remeasured by Landlord's architect to accurately
determine the number of rentable square feet of space in the Building and the
Premises, which determination shall be made in accordance with the Building
Owners and Managers Association International ("BOMA") standards, namely the
"Standard Method for

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Measuring Floor Area in Office Buildings - American National Standard," ANSI
Z65.1-1996. Promptly after Landlord's architect makes such determination, this
Lease shall be amended to accurately reflect the number of rentable square feet
of space in the Building and the Premises as so determined. In addition, the
Base Rent and Tenant's Proportionate Share, shall be proportionately adjusted
based on the actual number of rentable square feet of space in the Premises as
so determined.

3. ADDITIONAL RENT. Tenant, throughout the Term, shall be obligated to pay its
Proportionate Share (as that term is defined in Section 4) of all Excess
Operating Expenses (as that term is defined in Section 3.3) actually incurred by
Landlord. Tenant's Proportionate Share of Excess Operating Expenses shall be
Additional Rent.

           3.1 OPERATING EXPENSES. The term "Operating Expenses" shall mean all
expenses paid or incurred by Landlord or on Landlord's behalf as determined by
Landlord to be necessary or appropriate for the operation, maintenance and
repair of the Land and/or Building, including the common areas thereof, and the
curbs, sidewalks and plazas adjoining the same, including without limitation:

                     3.1.1 Salaries, wages, medical, insurance, union and
general welfare benefits, pension payments, payroll taxes, worker's compensation
insurance, uniforms and related expenses and benefits of employees of Landlord
engaged in the repair, operation, maintenance, management, engineering and
security of the Land and/or Building;

                     3.1.2 All expenses incurred for gas, steam, electricity,
heat, ventilation, air-conditioning, water, elevator service and other services
or utilities furnished to the Building, together with any taxes thereon;

                     3.1.3 All maintenance costs relating to public and service
areas of the Building and/or Land, including, but not limited to sidewalks,
landscaping, parking, service areas, mechanical rooms, loading areas, and
Building exteriors;

                     3.1.4 The cost of all insurance premiums and charges
including but not limited to rent loss insurance, casualty, liability, fire with
extended coverage endorsement, flood and fidelity insurance, with regard to the
Land and/or Building and the maintenance and/or operation thereof;

                     3.1.5 The cost or rental of all supplies, including without
limitation, cleaning supplies, light bulbs, tubes and ballasts, materials and
equipment, and all taxes thereon;

                     3.1.6 The cost of hand tools and other moveable equipment
used in the repair, maintenance or operation of the Building and Land;

                     3.1.7 The cost of all charges for window and other
cleaning, janitorial and security services;

                     3.1.8 Charges of independent contractors performing repairs
or services to the Land and/or Building not otherwise chargeable to a specific
tenant;

                     3.1.9 Repairs, replacement and general maintenance made by
Landlord;

                     3.1.10 All taxes and assessments and governmental charges,
whether federal, state, county, or municipal, and whether by taxing districts or
authorities presently taxing the Land and/or Building, or by others, whether
subsequently created or otherwise, whether foreseen or unforeseen, and

                                       3
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any other taxes and assessments attributable to the Land and/or Building,
whether or not directly paid by Landlord, including local improvement district
assessments, traffic or signalization improvement assessments, rent taxes, gross
receipt taxes, business license taxes and fees for permits for the Building, and
any other tax or charge, including income taxes and sales taxes, levied wholly
or partly in lieu thereof and any increase in any tax, including income taxes
and any imposition of any taxes such as a sales tax, if increased or imposed due
to a reduction in property taxes, excepting only inheritance or estate taxes and
state or federal income taxes computed on the basis of the net income of the
owners of the Building;

                     3.1.11 Alterations and improvements to the Building made by
reason of the laws and requirements of any public authorities or the
requirements of insurance companies or the holders of any encumbrances against
the land and/or Building;

                     3.1.12 Management fees paid to a third party, or, if no
managing agent is employed by Landlord, a management fee which is not in excess
of the then-prevailing rates for management fees of other first-class buildings
devoted to similar uses in the County and State, metropolitan area;

                     3.1.13 The costs of any capital improvements or repairs to
the Building and/or of any machinery or equipment installed in the Building
amortized over the useful life of the improvements, machinery and/or equipment
as estimated by Landlord, that is made or becomes operational, as the case may
be, after the completion of the initial construction of the Building that will
improve the operating efficiency of the Building or which may be required to
comply with laws, ordinances, rules or regulations' promulgated, adopted or
enforced after completion of the initial construction of the Building;

                     3.1.14 Legal, accounting and other professional fees
incurred in connection with operation, maintenance and management of the Land
and/or Building;

                     3.1.15 All other charges properly allocable to the
operation, repair and maintenance of the Land and/or Building in accordance with
generally accepted accounting principles;

                     3.1.16 Reasonable reserves for payment of any of the
expenses described in this Section; and

                     3.1.17 The cost of air monitoring within the Building in
order to detect and monitor the level of any hazardous materials within the air
in the Building.

           3.2 OPERATING EXPENSE EXCLUSIONS. Notwithstanding anything contained
in the foregoing Section 3.1 the following expenses shall be excluded from
Operating Expenses:

                     3.2.1 Depreciation or amortization on the initial
construction of the Building;

                     3.2.2 Debt service (including without limitation, interest,
principal and any impound payments) required to be made on any mortgage or deed
of trust recorded with respect to the Building and/or Land;

                     3.2.3 The cost of leasehold improvements made for any
tenants of the Building;

                     3.2.4 Leasing commissions, costs and disbursements and
other expenses (including advertising) incurred in connection with leasing,
renovating, or improving space for tenants or other occupants of the Building;

                                       4
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                     3.2.5 Repairs, replacements, supplies, alterations,
janitorial services, and general maintenance paid for by insurance proceeds or
by Tenant or other third parties; or

                     3.2.6 Specific costs incurred for the account of, or
separately billed to and paid by specific tenants of the Building.

           3.3 EXCESS OPERATING EXPENSES. The term "Excess Operating Expenses"
means, for any Operating Year (defined at Section 4.1), the amount by which the
total Operating Expenses for such Operating Year exceed the total Operating
Expenses for the Base Year identified in the Basic Lease Terms preceding this
Lease.

           3.4 DIRECT TENANT OBLIGATIONS.

                     3.4.1 BUSINESS TAXES. Tenant shall be directly liable for,
and shall pay as and when due throughout the Term, all license and excise fees
and occupation taxes covering the business conducted on the Premises. If any
governmental authority or unit under any present or future law effective at any
time during the Term shall in any manner levy a tax on rents payable under this
Lease or rents accruing from use of the Premises, or a tax in any form against
Landlord because of, or measured by, income derived from the leasing or rental
thereof, such tax shall be paid by Tenant, either directly or through Landlord,
and Tenant's failure to do so shall constitute an Event of Default. Tenant shall
not, however, be liable to pay any net income tax imposed on Landlord unless,
and then only to the extent that, the net income tax is a substitute for real
estate taxes.

                     3.4.2 TAXES ON TENANT'S PROPERTY. Tenant shall be liable
for and shall pay at least ten (10) days before delinquency, taxes levied
against any personal property or trade fixtures placed by Tenant in or about the
Premises. If any such taxes on Tenant's personal property or trade fixtures are
levied against the Premises, Landlord or Landlord's property, or if the assessed
value of the Premises is increased by the inclusion therein of a value placed
upon such personal property or trade fixtures, then Landlord shall have the
right to pay the taxes based upon such increased assessments, regardless of the
validity thereof, but only under proper protest if requested by Tenant in
writing. If Landlord shall so-pay such taxes, then Tenant shall, upon demand,
repay to Landlord the taxes so-levied and paid by Landlord, or the proportion of
such taxes resulting from such increase in the assessment. In any such event,
Tenant, shall have the right, at Tenant's sole cost and expense, in the name of
Landlord and with Landlord's full cooperation, to bring suit in any court of
competent jurisdiction to recover the amount of any such taxes so paid under
protest, any amount so recovered to belong to Tenant.

                     3.4.3 TENANT IMPROVEMENTS. If the Tenant Improvements in
the Premises, whether installed and/or paid for by Landlord or Tenant and
whether or not affixed to the real property so as to become a part thereof, are
assessed for real property tax purposes at a valuation higher than the valuation
at which improvements conforming to Landlord's "Building standard" in other
space in the Building are assessed, then the real property taxes and assessments
levied against Landlord or the Premises by reason of such excess assessed
valuation shall be deemed to be property taxes and assessments levied against
personal property of Tenant and shall be governed by the provisions of Section
3.4.2, above. If the records of the county assessor are available and
sufficiently detailed to serve as a basis for determining whether said Leasehold
Improvements are assessed at a higher valuation than Landlord's "Building
standard", such records shall be binding on both Landlord and Tenant. If the
records of the county assessor are not available or sufficiently detailed to
serve as a basis for making said determination, the actual costs of construction
shall be used.

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4. PAYMENT OF ADDITIONAL RENT.

           4.1 OPERATING YEAR. As used in this Section 4 the term "Operating
Year" shall mean each calendar year of the Lease Term specified in Section 1.3
and if this Lease begins or ends on any date other than the first day of the
calendar year, the calculations, costs and payment referred to herein shall be
prorated on a daily basis.

           4.2 TENANT'S PROPORTIONATE SHARE. Tenant's Proportionate Share of
Excess Operating Expenses shall equal the rentable square feet contained within
the Leased Premises divided by the total rentable square feet from time to time
contained within the Building and intended for lease to Tenants, subject to an
equitable adjustment, determined by Landlord if there is any disproportionate
usage or consumption by Tenant. As of the date of this Lease Tenant's
Proportionate Share is the percentage stated in the summary of Basic Lease Terms
preceding this Lease. Landlord may, from time to time, recalculate the rentable
square feet contained within the Premises and/or the Building (including,
without limitation, in connection with any expansion, contraction or
reconfiguration of either and, upon completion thereof, Landlord shall adjust
Tenant's Proportionate Share and shall notify Tenant in writing of any such
adjustment stating therein the effective date of such adjustment. The rentable
square footage of the Premises and the Building will be determined based on
current BOMA measurement standards.

           4.3 WRITTEN STATEMENT OF ESTIMATED EXCESS OPERATING EXPENSES. As
Landlord prepares written estimates of future Operating Expenses, Landlord will
provide Tenant with a copy of such estimates, but Tenant acknowledges that such
estimates are preliminary only, are only for Tenant's information, and cannot be
relied upon by Tenant. At least ten (10) days prior to the commencement of each
Operating Year during the term of this Lease, Landlord shall furnish Tenant with
a written statement setting forth Landlord's estimate of Tenant's Proportionate
Share of the estimated Excess Operating Expenses for the next Operating Year.
Failure of Landlord to deliver the statement of estimated Excess Operating
Expenses shall not relieve Tenant of its obligation to pay Tenant's
Proportionate Share of Excess Operating Expenses. Tenant shall each month pay to
Landlord as Additional Rent commencing on January 1 of each Operating Year an
amount equal to one-twelfth of the amount of Tenant's Proportionate Share of
estimated Excess Operating Expenses for that year as shown in Landlord's written
statement.

           4.4 FINAL WRITTEN STATEMENT. Within ninety (90) days after the close
of each Operating Year during the Term, Landlord shall deliver to Tenant a
written statement (the "Operating Statement') setting forth Tenant's actual
Proportionate Share of the Excess Operating Expenses for the preceding Operating
Year. If Tenant's Proportionate Share of the actual Excess Operating Expenses is
in excess of the amount actually paid by Tenant for the prior year, Tenant shall
pay the amount of such excess to Landlord as Additional Rent within thirty (30)
days following the date of such statement. If Tenant's Proportionate Share of
actual Excess Operating Expenses is less than the amount of Tenant's actual
payments for estimated Operating Expenses, then Landlord shall apply the
overpayment to Tenant's next Rent payment(s), as and when due.

           4.5 PAYMENT FOLLOWING LEASE EXPIRATION. If an Operating Year ends
after the expiration or termination of this Lease, Tenant shall pay the
Additional Rent in respect thereof payable under this Section within ten (10)
days of Tenant's receipt of the Operating Statement for such Operating Year.

                                       6
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5. USE.

           5.1 GENERAL

                     5.1.1 Tenant shall use and occupy the Premises continuously
during the term of this Lease for uses specified in the summary of Basic Lease
Terms preceding this Lease.

                     5.1.2 If any governmental license or permit, other than a
Certificate of Occupancy, shall be required for the proper and lawful conduct of
Tenant's business in the Premises, Tenant, at its expense, shall procure,
maintain and comply with the terms and conditions of each such license or
permit. Tenant shall, at Tenant's expense, comply with all laws and requirements
of public authorities relating to Tenant's use and occupancy of the Premises and
shall observe the Rules and Regulations as may be adopted pursuant to Section
5.4 hereof of which Landlord notifies Tenant from time to time for the safety
and general order of the Premises and the Building.

           5.2 NEGATIVE COVENANTS AS TO USE. Tenant shall not, without the prior
written consent of Landlord, use any apparatus, machinery or device in or about
the Premises that will cause any substantial noise, vibration, fumes or
electronic interference Tenant shall not at any time use or occupy, or suffer or
permit anyone to use or occupy the Premises, or permit anything to be done in
the Premises, in any manner that: (a) violates the Certificate of Occupancy for
the Premises or for the Building; (b) causes injury to the Premises or the
Building or any equipment, facilities or systems therein; (c) constitutes a
violation of the laws or requirements of any public authorities or the
requirements of insurance bodies, or the requirements of any restrictive
covenants of record; (d) impairs the character, reputation or appearance of the
Building as a first-class office building; (e) impairs the proper and economic
maintenance, operation and repair of the Building and/or its equipment,
facilities or systems; or (f) annoys or inconveniences other tenants or
occupants of the Building.

           5.3 HAZARDOUS SUBSTANCES.

                     5.3.1 TENANT SHALL NOT PERMIT HAZARDOUS SUBSTANCES UPON THE
PREMISES. Tenant will not itself, and will not suffer or permit its employees,
agents, contractors or invitees in or about the Premises or Building to use,
generate, process, store, transport, handle, or dispose of, on, under, in, or
from the Premises, the Building or the Land, any Hazardous Substances (as that
term is defined in Section 5.3.4, below) in quantities or concentrations that
exceed amounts allowed by, or in a manner that fails to comply with, applicable
law.

                     5.3.2 NOTIFICATION. Tenant shall immediately notify
Landlord should Tenant (a) become aware of the existence of any Hazardous
Substance on the Premises or the Building, (b) receive any notice of, or become
aware of, any actual or alleged violation with respect to the Premises or
Building of any federal, state, or local statute, ordinance, rule, regulation,
or other law pertaining to Hazardous Substances, or (c) become aware of any lien
or action with respect to any of the foregoing. Tenant shall deliver to
Landlord, promptly upon receipt, (i) copies of any documents received from the
United States Environmental Protection Agency ("EPA") and/or any state, county,
or municipal environmental or health agency concerning Tenant's ownership, use,
or operations upon or in connection with the Premises; and (ii) copies of any
documents submitted by Tenant to the EPA and/or any state, county, or municipal
environmental or health agency concerning the Premises.

                     5.3.3 INSPECTION AND REMEDIAL ACTION. Landlord is hereby
authorized to enter the Premises thereon at reasonable times, and after
reasonable notice, for the purpose of inspecting the Premises, to ascertain
Tenant's compliance with all covenants made in this Section. Upon Landlord's
written

                                       7
<PAGE>

request (a) Tenant, through professional engineers approved by Landlord and at
Tenant's cost, shall thoroughly investigate suspected Hazardous Substances
contamination of the Premises occurring after the Commencement Date, or of the
Building or Land and caused by a breach of Tenant's covenant at Section 5.3.1,
and (b) Tenant shall forthwith take such remedial action with respect to any
such contamination as may be necessary to ensure that no such Hazardous
Substances are present on the Premises or in the groundwater of the Premises,
Building or Land in quantities or concentrations that exceed amounts allowed by
applicable law. Tenant's obligations under this Section shall arise upon
Landlord's demand as provided herein, regardless of whether the EPA or any other
federal, state, or local agency or governmental authority has taken or
threatened any action in connection with the presence of any Hazardous Substance
on, or release of any Hazardous Substance from, the Premises, Building or the
Land. If Tenant shall fail promptly to discharge its obligations under this
Section, Landlord may, at its election, but without the obligation to do so,
cause such investigation to be made or remedial action to be taken and/or take
any and all other actions that Landlord may deem necessary or advisable to
protect its interests or to avoid or minimize its liability for the existence of
Hazardous Substances on the Premises, the Building or the Land, or for a release
thereof from the Premises, the Building or Land. All amounts expended by
Landlord under this Section shall be payable by Tenant to Landlord upon demand.

                     5.3.4 DEFINITION OF HAZARDOUS SUBSTANCE(S). The term
"Hazardous Substance" shall mean:

                               (a)  "Hazardous substances", as defined by 40 CFR
Part 302;

                               (b)  "Extremely hazardous substance", as defined
by 40 CFR Part 355;

                               (c)  "Toxic chemicals", as defined by 40 CFR Part
372;

                               (d)  "Hazardous  chemical" as defined by 29
CFRss. 1910.120,  to the extent it is included in the employer's written Hazard
Communication Program or in Material Safety Data Sheets that are located on
site;

                               (e)  "Hazardous Waste" as defined by applicable
administrative rules;

                               (f)  Petroleum, including crude oil and any
fraction thereof; and

                               (g)  Any material that contains more than 1% of
asbestos.

                     5.3.5 SURVIVAL. Tenant's covenants set forth in this
Section 5.3 shall survive the termination of the Lease or any transfer by
Tenant, by assignment or otherwise, of any or all right, title, or interest of
Tenant in the Premises.

           5.4 RULES AND REGULATIONS. Tenant and its employees and agents shall
faithfully observe and comply with, and Tenant shall cause its invitees and
licensees to observe and comply with, the rules and regulations attached as
Exhibit D and with such changes therein as Landlord may from time to time make
and of which Landlord has notified Tenant (the "Rules and Regulations").
Landlord shall not be liable to Tenant for violation of the Rules and
Regulations by any other tenant or such other tenant's employees, agents,
invitees or licensees.

                                       8
<PAGE>

6. CONDITION OF PREMISES, MAINTENANCE AND REPAIR.

           6.1 TENANT'S ACCEPTANCE. By taking possession of the Premises on the
Commencement Date, but subject to Section 1.2.1, Tenant shall be deemed to have
accepted the Premises AS IS, and as being in good, sanitary and working order,
condition, and repair

           6.2 TENANT'S MAINTENANCE OBLIGATIONS. Tenant, at its expense, shall
be responsible for maintaining the Premises, the fixtures and improvements in
the Premises, and Tenant's Property (defined at Section 9.2), except for the
maintenance of structural elements of the Building included in the Premises,
lighting, plumbing, mechanical, and electrical systems which shall be maintained
by Landlord and the cost of which shall be a Operating Expense. Tenant, at its
expense, shall promptly replace all scratched, damaged or broken doors and glass
in and about the Premises and shall be responsible for all repairs, maintenance
and replacement of millwork, cabinets, wall and floor coverings in the Premises.
Tenant shall be responsible for all repairs, interior and exterior, structural
and non-structural, ordinary and extraordinary, in and to the Premises and the
Building and the facilities and systems thereof, the need for which arises out
of the performance or existence of Tenant Improvements (defined at Section 7.1);
the installation, use or operation of Tenant's Property in the Premises; the
moving of Tenant's Property in or out of the Building; or the act, omission,
misuse or neglect of Tenant or any of its subtenants or its or their employees,
agents, contractors or invitees. Tenant shall promptly report to Landlord any
damage or injury occurring on or to the Premises or the Building.

           6.3 MANNER. Tenant shall promptly make, at Tenant's expense, all
repairs in or to the Premises and the Building for which Tenant is responsible.
Such work shall be performed only by contractors approved by Landlord. Any such
repairs in or to the Building and the facilities and systems thereof for which
Tenant is responsible may, at Landlord's election be performed by Landlord at
Tenant's expense, and Landlord may, at its option before commencing any such
work or at any time thereafter, require Tenant to furnish to Landlord such
security, bond or surety in a form and amount as Landlord shall reasonably deem
necessary to assure the payment for such work by Tenant.

           6.4 JANITORIAL SERVICES. Landlord shall provide routine janitorial
services to the Building and the Premises of a standard that is substantially
equivalent to the services provided in similar buildings in the County and State
metropolitan area, and in accordance with the Standards for Utilities and
Services attached as Exhibit F. Such services shall be provided at Landlord's
cost and expense, but such cost and expense shall be an Operating Expense.

           6.5 LANDLORD'S MAINTENANCE AND REPAIR OBLIGATIONS. Landlord shall
cause to be made all structural repairs to the roof, walls and foundations of
the Building as and when needed in or about the Premises and the cost thereof
shall be an item of Operating Expenses as defined in Section 3.1 hereof, except
for those repairs for which Tenant is responsible pursuant to any of the
provisions of this Lease.

           6.6 WAIVER. Landlord shall have no liability to Tenant, nor shall
Tenant's covenants and obligations under this Lease be reduced or abated in any
manner whatsoever, by reason of any inconvenience, annoyance, interruption of or
injury to Tenant's business arising from Landlord's making any repairs or
changes that Landlord is required or permitted by this Lease or required by law
to make in or to any portion of the Building or the Premises, or in or to the
fixtures, equipment or appurtenances of the Building or the Premises. Landlord
shall have no liability to Tenant nor shall Tenant's covenants and obligations
under this Lease be reduced or abated in any manner whatsoever, by reason of any
act or failure to act of any security personnel or mechanism used in the
Building, or by reason of any lack of security in the Building.

                                       9
<PAGE>

           6.7 END OF TERM. Upon termination of this Lease for any reason
whatsoever Tenant will peacefully surrender to Landlord the entire Premises,
together, subject to the provisions of Section 7.5, with all improvements,
changes, alterations and replacements thereto, in good order, condition and
repair, but in any event with all windows, walls, floors, and carpets cleaned,
all equipment in good working order, and the Premises restored to their original
condition as of the Commencement Date, ordinary wear and tear excepted. Upon
such termination, Tenant shall have the right to remove Tenant's Property, as
provided at Section 9.2.

7. TENANT ALTERATIONS.

           7.1 LANDLORD'S CONSENT. Tenant shall make no alterations, additions,
or improvements in or to the Premises (herein, "Tenant Improvements") without
Landlord's prior written consent, to be granted or withheld pursuant to Sections
7.2 and 7.3 below, and, if such consent is granted, then only contractors or
mechanics that are approved by Landlord shall effect such Tenant Improvements.

           7.2 PROCEDURE FOR APPROVAL. If Tenant wishes to make any Tenant
Improvements to the Premises that either (a) are of a structural nature, or (b)
involve a cost greater than $2,500.00, or (c) involve the roof, foundation,
exterior walls or interior load- bearing walls of the Building, Tenant shall
submit to Landlord, for Landlord's written approval, a written description of
the Major Work that Tenant proposes to perform together with detailed plans and
specifications for such Major Work. If Tenant wishes to make any alterations,
additions, or improvements to the Premises that do not constitute Major Work,
Tenant shall submit to Landlord, for Landlord's written approval, a written
description of such work. Reference herein to "structural work" or "work of a
structural nature" shall have the meaning that such terms normally connote in
the construction industry. By way of example, alteration of interior non-load
bearing walls and partitions, alteration of ceilings, installation of wall
coverings, painting, installation of rugs, and similar work shall not be deemed
to constitute structural work; alteration to any exterior wall, load bearing
wall, roof, plumbing system, heating, ventilation, and air conditioning system
or similar work shall be deemed to be of a structural nature.

           7.3 STANDARD FOR APPROVAL. Landlord's approval of proposed work shall
not be unreasonably withheld or delayed if such work (a) does not adversely
affect, in Landlord's judgment, the appearance of the Premises and/or Building
or the value of the Premises and/or Building, (b) does not adversely affect, in
Landlord's judgment, Landlord's ability to release the Premises, (c) does not
affect the structural integrity of the Building or its systems, (d) conforms to
the requirements of all building codes and any other applicable laws and
regulations, and (e) can be performed and completed without disrupting the
business or operation of the Building or of any other tenant of the Building.
Tenant's failure to obtain Landlord's prior written consent to any proposed work
shall constitute an Event of Default hereunder.

           7.4 COMPLIANCE WITH LAWS. All work done by Tenant shall be performed
in full compliance with all laws, rules, orders and ordinances. Without limiting
the generality of the foregoing: (a) Tenant, at its expense, shall obtain all
necessary governmental permits and certificates for the commencement and
prosecution of Tenant Improvements and for final approval thereof upon
completion, and shall cause the Tenant Improvements work to be performed in
compliance with all such permits and certificates, applicable laws and
requirements of public authorities and with all applicable requirements of
insurance, and (b) Tenant shall be responsible for assuring that the Premises
complies with any and all requirements of the Americans with Disabilities Act
and any other Federal, state or local governmental agency requirements relating
to Tenant's specific use of the Premises or Tenant's business operation.
Landlord's approval or consent to any proposed work shall not be deemed a waiver
of, or an opinion respecting, the compliance of the proposed work with the
requirements of this Section 7.4.

                                       10
<PAGE>

           7.5 TITLE TO IMPROVEMENTS. All Tenant Improvements upon the Premises,
including (without limiting the generality of the foregoing) all wall covering,
built-in cabinet work, paneling, and the like shall, unless Landlord elects
otherwise in writing, be the property of Landlord, and shall remain upon and be
surrendered with the Premises as a part thereof at expiration or earlier
termination of this Lease, except that Landlord may, by written notice to
Tenant, require Tenant, at Tenant's cost, (a) to remove any or all Tenant
Improvements, and (b) to repair all damage resulting from such removal. If
Tenant fails to perform the foregoing, Tenant shall pay to Landlord all costs
arising from Landlord's performance of the same, which shall be due and payable
upon Landlord's demand.

           7.6 SCHEDULE/MANNER OF WORK. All of Tenant's contractors, suppliers,
workmen, and mechanics for any Tenant Improvements shall comply with such rules
and conditions as Landlord may reasonably impose from time to time, which rules
and conditions shall be enforced by Tenant at the discretion of Landlord. At any
time any contractor, supplier, workman, or mechanic performing construction of
any Tenant Improvements performs any work that may or does impair the quality,
integrity, or performance of any portion of the Building, Tenant shall cause
such contractor, supplier, workman, or mechanic to leave the Building and remove
all his tools, equipment, and materials immediately upon written notice
delivered to Tenant and Tenant shall reimburse Landlord for any repairs or
corrections of any portion of the Building caused by or resulting from the work
of any contractor, supplier, workman, or mechanic performing any Tenant
Improvements work. The quality of all Tenant Improvements to or involving
structural, electrical, mechanical, life/safety, energy management, or plumbing
systems in the Premises shall be at least equal to the quality of such systems
as on the Commencement Date. In the event of any labor disturbance caused by
persons employed by Tenant or Tenant's contractor, Tenant shall immediately take
all actions necessary to eliminate such disturbance in connection with the
construction of the Tenant Improvements.

           7.7 DEBRIS. Tenant will cause construction of any Tenant Improvements
to be accomplished in a neat, clean, and workmanlike manner. Tenant shall not
permit any trash, rubbish, or debris to accumulate in the Premises or the
Building, and Tenant shall remove or cause to be removed all such trash,
rubbish, and debris from the Premises and the Building and on a timely basis.
Tenant shall be responsible for any additional costs incurred by Landlord for
cleaning the Building or any portion thereof, and for removing any trash,
rubbish, or debris therefrom to the extent caused by Tenant's construction of
the Tenant Improvements.

           7.8 RIGHT OF ENTRY/INSPECTION. At all times during the period of
construction of any portion of any Tenant Improvements, Landlord and Landlord's
architects and engineers shall have the right to enter upon the Premises to
inspect the work of construction and the progress thereof. Tenant shall not
close any work affecting any portion of the life safety, heating, ventilation,
and air conditioning, plumbing, or electrical systems in the Premises or
Building until the same has been inspected and approved by Landlord's engineers.
No inspection or approval by Landlord's engineers of any such work shall
constitute an endorsement thereof or any representation as to the adequacy
thereof for any purpose or the conformance thereof with any governmental
ordinances, codes, or regulations, and Tenant shall be fully responsible and
liable therefor.

           7.9 INSURANCE. In addition to the insurance requirements set forth in
Section 8, during the period of construction of any Tenant Improvements, Tenant
and Tenant's general contractor shall maintain worker's compensation, builder's
all-risk and public liability insurance, and such other insurance as Landlord
may reasonably require in amounts satisfactory to Landlord. All policies shall
have such coverage limits, and be underwritten by such companies, as Landlord
shall approve, and shall name Landlord as an additional insured thereunder.
Before the commencement of construction of any Tenant Improvements, Tenant and
Tenant's general contractor must deliver certificates of all such insurance
policies and such insurance policies must be approved by Landlord.

                                       11
<PAGE>

           7.10 NON-RESPONSIBILITY OF LANDLORD. Tenant hereby acknowledges that
Landlord shall have no responsibility whatsoever for the construction of any
Tenant Improvements or for any defects therein. Tenant shall notify Landlord in
writing no less than ten (10) days before the commencement of construction of
any Tenant Improvements in order to afford Landlord an opportunity to post and
record appropriate notices of non-responsibility. Tenant, at its expense, shall
procure the cancellation or discharge of all notices of violation arising from
or other connected with Tenant Improvements work, or any other work, labor,
services or materials done for or supplied to Tenant, or any other person
claiming through or under Tenant, in or about the Premises or Building. Tenant
shall defend, indemnify and save harmless Landlord and any mortgagee from and
against any and all mechanics and other liens and encumbrances filed in
connection with the Tenant Improvements work, or any other work, labor, services
or materials done for or supplied to Tenant, or any person claiming through or
under Tenant, in or about the Premises or Building. Tenant, at its expense,
shall procure the satisfaction or discharge of record of all such liens and
encumbrances of record within fifteen (15) days after the filing thereof;
provided, Tenant may contest, in good faith and at its own expense, any notice
of violation, or lien, provided Tenant posts for the protection of Landlord
security in an amount and form acceptable to Landlord.

8. LIABILITY AND INSURANCE.

           8.1 ACTION BY TENANT. Further to Section 5.2, Tenant shall not do, or
permit anything to be done, or keep or permit anything to be kept in the
Premises that would subject Landlord to any liability or responsibility for
personal injury, death or property damage, or that would increase insurance
rates in respect of the Land, Building or the property therein over the rates
that would otherwise then be in effect or that would result in insurance
companies of good standing refusing to insure the Building or the property
therein in amounts satisfactory to Landlord, or that would result in the
cancellation of or the assertion of any defense by the insurer in whole or in
part to claims under any policy of insurance in respect of the Land, Building or
the property therein. If, by reason of any failure of Tenant to comply with the
provisions of Section 5 or this Section 8.1, the premiums on Landlord's
insurance on the Building and/or property therein shall be higher than they
otherwise would be, Tenant shall reimburse Landlord, on demand, for that part of
such premiums attributable to such failure on the part of Tenant.

           8.2 LANDLORD'S INSURANCE. Landlord shall procure and maintain at all
times during the Term of this Lease a policy or policies of insurance covering
loss or damage to the Premises in the amount of the full replacement value
thereof (exclusive of Tenant's trade fixtures, non-standard tenant improvements,
equipment and personal property), providing protection against all perils
included within the classification of fire, extended coverage, all risk of loss
as it relates to the standard insuring clause, loss of rental income, Landlord's
risk liability coverage, and to the extent any mortgagee of the Building may
require or as Landlord may deem prudent, coverage against such other hazards
that are then commonly insured against for similar properties. Such insurance
shall provide for payment of loss thereunder to Landlord and/or the holder of
any mortgages or deeds of trust or real estate contracts on the Land and/or
Building.

           8.3 WAIVER OF SUBROGATION. Tenant shall secure an appropriate clause
in, or an endorsement upon, each insurance policy obtained by it and covering or
applicable to the Premises or the personal property, fixtures and equipment
located therein, pursuant to which the insurance company waives subrogation or
permits the insured, prior to any loss, to agree with a third party to waive any
claim it might have against said third party without invalidating the coverage
under the insurance policy. The waiver of subrogation or permission for waiver
of any claim shall extend to Landlord and its agents and employees. Tenant
hereby releases Landlord and its agents and employees in respect of any claim
that Tenant might otherwise have against Landlord or its agents or employees for
loss, damage or other casualty

                                       12
<PAGE>

occurring during the term of this Lease and normally covered under a fire
insurance policy with extended coverage endorsement in the form normally used in
respect of similar property in the County and the State.

           8.4 PUBLIC LIABILITY INSURANCE. Tenant, at its expense, shall procure
and maintain at all times during the Term and at anytime prior to the Term that
Tenant is given possession of the Premises, public liability insurance in
respect of the Premises and the conduct or operation of business therein, with
Landlord, Landlord's Operating Manager and Landlord's managing agent, if any,
and any mortgagee whose name and address shall previously have been furnished to
Tenant, as additional named insureds, with limits of not less than $1,000,000
for bodily injury or death to any one person and $3,000,000 for bodily injury or
death to any number of persons in any one occurrence, and $1,000,000 for
property damage. All such insurance shall insure the performance by Tenant of
the indemnity agreement as to liability for injury to, illness of, or death of
persons and damage to property set forth in Section 17.2.

           8.5 TENANT'S FIRE AND ALL RISK COVERAGE INSURANCE. Tenant shall also
at its own expense maintain, during the Term, and at any time prior to the Term
that Tenant is given possession of the Premises, insurance covering its
furniture, fixtures, equipment, and inventory in an amount equal to not less
than one hundred percent (100%) of the full replacement value thereof and
insuring against fire and all risk perils coverage as provided by a standard all
risk coverage endorsement and the plate glass and all other glass is the
responsibility of the Tenant in the event of breakage from any cause.

           8.6 INSURANCE POLICIES. All insurance policies required to be carried
by Tenant hereunder shall name Landlord as additional insured and shall be with
companies and with loss-payable clauses satisfactory to Landlord, and certified
copies or originals of policies or certificates evidencing such insurance shall
be delivered to Landlord by Tenant prior to Tenant commencing occupancy and
thereafter within thirty (30) days prior to each renewal thereof. Such
certificate shall be from a company holding a "Best's Rating" of at least A:
Class IX, shall indicate that the insurance policy is in full force and effect,
and that the policy bears an endorsement that the same not be canceled or
amended unless thirty (30) days prior written notice by U.S. Certified Mail of
the proposed cancellation or amendment has been given to Landlord and any
mortgagee of which Landlord has given Tenant notice prior to the date of such
certificate. Each of said certificates of insurance and each such policy of
insurance required to be maintained by Tenant hereunder shall expressly evidence
insurance coverage as required by the Lease. All such policies shall be written
as primary policies not contributing with and not in excess of coverage which
Landlord may carry.

           8.7 INCREASE IN COVERAGE. Landlord may from time to time require that
the amount of public liability insurance to be maintained by Tenant under
Section 7.4 be increased to an amount determined by Landlord to be reasonably
necessary to adequately protect Landlord's interest. Upon receipt by Tenant of a
notice from Landlord stating the increased amount of insurance, Tenant shall
thereafter carry the insurance as set forth in such notice. In no event shall
the amount of public liability insurance to be carried by Tenant be less than
the amount specified in Section 7.4.

9. LANDLORD'S PROPERTY, TENANT'S PROPERTY

           9.1 LANDLORD'S PROPERTY. All fixtures, equipment, improvements and
appurtenances attached to or built into the Premises, whether or not by or at
the expense of Tenant, shall be and remain a part of the Premises, shall be
deemed the property of Landlord and shall not be removed by Tenant, except as
provided in Section 7.5. Any carpeting or other personal property in the
Premises on the Commencement Date shall be and remain Landlord's property and
shall not be removed by Tenant; provided, that at Landlord's written request,
Tenant shall, at its sole expense upon termination of the Lease and in
accordance with, and subject to the provisions of, Section 7.5, remove those
items specified by Landlord, including any or all fixtures,

                                       13
<PAGE>

equipment, improvements, appurtenances and other personal property, that are
deemed herein the property of Landlord.

           9.2 TENANT'S PROPERTY. All unattached business and trade fixtures,
machinery and equipment, communications equipment and office equipment that are
installed in the Premises by or for the account of Tenant without expense to
Landlord and that can be removed without structural damage to the Building and
all furniture, furnishings (excluding window coverings) and other articles of
movable personal property owned by Tenant and located in the Premises (together,
the "Tenant's Property") shall be and remain the property of Tenant and may be
removed by Tenant at any time during the term of this Lease; provided, that if
any of Tenant's Property is removed, Tenant shall repair or pay the cost of
repairing any damage to the Premises or to the Building resulting from the
installation and/or removal thereof. Any equipment or other property for which
Landlord shall have granted any allowance or credit to Tenant shall not be
deemed to have been installed by or for the account of Tenant without expense to
Landlord, shall not be considered Tenant's Property, and shall be deemed to be
the property of Landlord.

           9.3 REMOVAL. At or before the Expiration Date of this Lease, or any
earlier termination of this Lease, Tenant, at its expense, shall remove from the
Premises all of Tenant's Property (except such items thereof as Landlord shall
have expressly permitted to remain, which property shall become the property of
Landlord), and Tenant shall repair any damage to the Premises or the Building
resulting from any installation and/or removal of Tenant's Property.

           9.4 ABANDONMENT. In addition to Landlord's rights at Section 18.2.1,
any items of Tenant's Property that shall remain in the Premises after the
Expiration Date of this Lease, or any earlier termination of this Lease, at the
option of Landlord, may, at Landlord's election, be deemed to have been
abandoned, and in such case such items may be retained by Landlord, and Landlord
may deal with Tenant's Property in such manner as Landlord shall determine, at
Tenant's expense.

10. HOLDING OVER. If Tenant holds over after the Expiration Date or earlier
termination of the Term without the express written consent of Landlord, Tenant
shall become a tenant at sufferance only, at a rental rate equal to one hundred
fifty percent (150%) of the Base Rent in effect upon the date of such expiration
or termination (prorated on the basis of a thirty-day month and actual days
elapsed), and otherwise subject to the terms, covenants, and conditions herein
specified, so far as applicable. Acceptance by Landlord of rental after such
expiration or earlier termination shall not result in a renewal or extension of
this Lease. The foregoing provisions of this Section 10 are in addition to and
do not affect Landlord's right of re-entry or any rights of Landlord hereunder
or as otherwise provided by law.

11. ELECTRIC ENERGY

           11.1 HIGH VOLTAGE EQUIPMENT. Tenant shall not, without the prior
written consent of Landlord, use any equipment, machine, apparatus or device
within the Premises, such as data processing units, punch card machines or any
other specialty equipment, that individually uses electricity in excess of 110
volts.

           11.2 COST OF INCREASING CAPACITY. Should Landlord consent to
installation of equipment or a design load for the Premises in excess of that
existing upon the Commencement Date, the additional equipment required to
increase the capacity for Tenant's excess equipment or design load shall be
provided by Landlord. Tenant shall, upon installation, pay to Landlord the cost
to purchase, install, service and maintain such additional equipment. The cost
of the electric energy used in excess of the original design load for the
Premises as determined by Landlord and its engineers and consultants shall be an
Operating Expense allocable in full to Tenant.

                                       14
<PAGE>

           11.3 LIGHT FIXTURES. Landlord shall attend to any replacement of
electric light bulbs, tubes and ballasts in the Premises throughout the term of
this Lease. Landlord may adopt a system of relamping and reballasting
periodically on a group basis in accordance with generally accepted management
practice. The expenses associated with relamping and reballasting shall be an
item of Operating Expenses.

12. CLIMATE CONTROL. Landlord shall maintain and operate the heating,
ventilating and air-conditioning systems serving the Premises and shall furnish
heat, ventilating and air-conditioning in the Premises, the expense of which
shall be included as an Operating Expense (except as otherwise provided in the
Standards for Utilities and Services attached as Exhibit F or elsewhere in this
Lease, and except for any special requirements of Tenant for its particular use
of the Premises) for occupancy of the Premises during Business Hours of Business
Days. As used herein, and unless otherwise stated in the Rules and Regulations
"Business Hours" shall mean generally customary daytime business hours, but not
before 8:00 a.m. or after 6:00 p.m. on weekdays and not before 8:00 a.m. or
after 1:00 p.m. on Saturdays, and "Business Days" shall mean all days except
Sundays, and days observed by the Federal or the State government as legal
holidays. If Tenant shall require heat or air-conditioning service at any other
time, Landlord shall furnish such service subject to such terms and conditions
including cost reimbursement, as Landlord may from time to time prescribe in the
Rules and Regulations.

13. SIGNS, DISPLAYS, AUCTIONS, AND SALES.

           13.1 GENERAL. Tenant shall not place or suffer to be placed on the
exterior walls or windows of the Premises or upon the roof or any exterior door
or wall or on the exterior or interior of any window thereof any sign, awning,
canopy, marquee, advertising matter, decoration, picture, letter or other thing
of any kind without the prior written consent of Landlord. If Tenant shall
install any sign without Landlord's consent, Landlord shall have the right and
authority without liability to Tenant to enter upon the Premises, remove and
store the subject sign and repair at Tenant's cost all damage caused by the
removal of the sign. Landlord shall provide Building-standard signage at the
entrance to the Premises, the lobby reader board and the floor reader board. The
cost of any change in signage requested by Tenant shall be borne by Tenant.

           13.2 TENANT'S INTERIOR SIGNS. Tenant shall have the right, at its
sole cost and expense, to erect and maintain within the interior of the Premises
all signs and advertising matter customary or appropriate in the conduct of
Tenant's business; provided, however, that Tenant shall upon demand of Landlord
immediately remove any sign, advertisement, decoration, lettering or notice
which Tenant has placed or permitted to be placed in, upon or about the Premises
and that Landlord reasonably deems objectionable or offensive, and if Tenant
fails or refuses to so do, Landlord may enter upon the Premises and remove the
same at Tenant's cost and expense. In this connection, Tenant acknowledges that
the Premises are a part of an integrated business environment, and that control
of all signs by Landlord is essential to the maintenance of uniformity,
propriety and the aesthetic values in or pertaining to the Building.

           13.3 DISPLAYS. Tenant may not display or sell merchandise or allow
carts or other similar devices within the control of Tenant to be stored or to
remain outside the defined demising walls and permanent doorways of the
Premises. Tenant shall not install any exterior lighting, amplifiers, or similar
devices or use in or about the Premises such items as flashing lights,
searchlights, loudspeakers, phonographs or radio broadcasts, nor make, or allow
to be made, any odor or excessive noise in or around the Premises. No
advertisement or sound of advertising shall be permitted to be heard outside of
the Premises.

           13.4 AUCTIONS. Tenant shall not conduct or permit to be conducted any
sale by auction upon or from the Premises, whether said auction be voluntary,
involuntary, pursuant to any assignment for the

                                       15
<PAGE>

payment of creditors or pursuant to any bankruptcy or other insolvency
proceeding. No auction, fire, bankruptcy, "going out of business" or other
distress sales of any nature may be conducted on the Premises without prior
written consent of Landlord, which consent may be conditioned as Landlord deems
appropriate.

14. ACCESS AND CONTROL OF PREMISES.

           14.1 ACCESS TO PREMISES. Landlord shall have access to the Premises
at all reasonable times to: (a) inspect the Premises; (b) exhibit the Premises
to prospective purchasers, lenders or tenants; (c) determine whether Tenant is
complying with its obligations hereunder; (d) supply any service to be provided
by Landlord to Tenant hereunder; (e) post notices of non-responsibility; (f)
make repairs required of Landlord hereunder or repairs to any adjoining space or
utility services or make repairs, alterations or improvements to any other
portion of the Building, provided, however, that all such work shall be done in
a commercially reasonable and prompt manner, or (g) exercise any of its rights
hereunder including, without limitation, its cure rights under Section 17.1.
Landlord may, in order to carry out such purposes, erect scaffolding and other
necessary structures where reasonably required by the character of the work to
be performed, and during the course of work being performed keep and store upon
the Premises all necessary material, supplies, and equipment, provided that the
business of Tenant shall be interfered with as little as is reasonably
practicable. For each of the aforesaid purposes, Landlord shall at all times
have and retain a key with which to unlock all of the doors in, upon and about
the Premises, excluding Tenant's vaults and safes, if any. No additional locks
shall be placed by Tenant upon any doors in the Premises and if more than two
keys for any lock are desired, such additional keys shall be paid for by Tenant.
All keys shall be duplicated only by Landlord, and under no circumstance shall
Tenant cause any key to be duplicated. Landlord shall have the right to use any
and all means which Landlord may deem proper to open said doors in an emergency
or in re-taking possession in order to obtain entry to the Premises, and any
entry to the Premises obtained by Landlord by any of said means, or otherwise,
shall not under any circumstance be construed or deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant
from the Premises or any portion thereof, and any damages caused on account
thereof shall be paid by Tenant.

           14.2 WAIVER IN CONNECTION WITH LANDLORD'S ENTRY. Tenant hereby waives
any claim against Landlord for damages for any injury or inconvenience to or
interference with Tenant's business, any loss of occupancy or quiet enjoyment of
the Premises or any other loss occasioned by entry on the Premises in accordance
with any provision of this Lease except to the extent caused by the negligence
or intentional misconduct of Landlord.

           14.3 BUILDING CHANGES. Landlord reserves the right, at any time,
without incurring any liability by Tenant therefor, and without affecting or
reducing any of Tenant's covenants and obligations hereunder, to make such
changes, alterations and improvements in or to the Building and the fixtures and
equipment thereof, as well as in or to the doors, halls, passages, elevators,
escalators and stairways thereof, and other public parts and common areas of the
Building and Land, as Landlord shall reasonably deem necessary or desirable,
including the temporary or permanent closure or inoperability. Landlord reserves
the right, and Tenant shall permit Landlord, to install, erect, use and maintain
pipes, ducts and conduits in and through the Premises, so long as the
installation and maintenance thereof do not detract from the use or appearance
of the Premises.

                                       16
<PAGE>

15. DAMAGE OR DESTRUCTION.

           15.1 RIGHTS AND OBLIGATIONS.

                     15.1.1 OBLIGATION TO REBUILD. If rentable area of the
Building, or any portion thereof, is damaged, destroyed, or rendered
untenantable due to fire or other casualty (which is not due to the fault or
negligence of Tenant or its agents, employees, or invitees and is not due to-any
default by Tenant), and if

                               (a)  the damage or destruction does not exceed
twenty-five percent (25%) of the insurable value of the Building,

                               (b)  the Building is capable of being repaired,
reconstructed or restored within a period of ninety (90) days from
commencement of such work, and

                               (c)  Landlord will receive insurance proceeds
sufficient to cover the cost of such repairs,
reconstruction or restoration,

then Landlord shall be obligated to restore the Building to a condition
reasonable comparable to its condition prior to such casualty. In such event,
this Lease shall remain in full force and effect, Rent shall be adjusted
pursuant to Section 15.2, Landlord will commence restoring that portion of the
Building so damaged as soon as commercially practicable, and will diligently
complete the restoration.

                     15.1.2 RIGHT TO TERMINATE. In the case of a casualty loss
not described in Section 15.1.1, then within 60 days after such a casualty
Landlord shall have the right to elect either to terminate this Lease or to
restore the Building. Landlord shall make its election by written notice to
Tenant within such 60 day period of time. If Landlord elects to terminate this
Lease, the termination shall be effective 30 days after receipt of the notice by
Tenant. If Landlord does not elect to terminate this Lease, then Rent shall be
abated in accordance with Section 15.2 and Landlord shall restore the Building
in accordance with the requirements of Section 15.1.1.

                     15.1.3 TENANT'S PROPERTY. If Landlord undertakes to repair
the Building after an event of casualty, such restoration shall not include
replacement of furniture, equipment or other items designated as Tenant's
Property herein.

                     15.1.4 LATE TERM CASUALTY. Regardless of Sections 15.1.1
and 15.1.2, if the casualty loss occurs within the last two (2) years of the
Term, then, regardless of the extent of the damage, Section 15.1.2 shall
establish the rights and obligations of Landlord and Tenant.

           15.2 RENT ABATEMENT. If all or part of the Premises shall be damaged
or destroyed or rendered untenantable as a result of fire or other casualty, not
caused by Tenant, its agents, employees or invitees, the Base Rent shall be
abated or reduced based on the number of square feet of space rendered
untenantable and Additional Rent provided herein shall be abated or reduced, as
the case may be, in the proportion that the untenantable area of the Premises
bears to the total area of the Premises, for the period from the date of the
damage or destruction to the date the damage to the Premises shall be
substantially repaired, or the date on which Tenant again uses the untenantable
portion, whichever first occurs.

           15.3 INTERFERENCE WITH TENANT'S BUSINESS. Tenant shall not be
entitled to terminate this Lease and no damages, compensation or claim shall be
payable by Landlord for inconvenience, loss of business or annoyance arising
from any repair or restoration of any portion of the Premises or of the Building
pursuant to this Section 15.

                                       17
<PAGE>

           15.4 INSURANCE ON TENANT'S PROPERTY. Landlord will not carry
insurance of any kind on Tenant's Property, and, except as provided by law or by
reason of Landlord's breach of any of its obligations under this Lease, Landlord
shall not be obligated to repair an damage to or replace any improvements paid
for by Tenant, or any of Tenant's Property. If Landlord elects to restore the
Premises as provided in this Section 15, Tenant shall use all proceeds from the
insurance it carries on Tenant's Property to restore Tenant's Property on the
Premises.

16. EMINENT DOMAIN.

           16.1 TOTAL CONDEMNATION. If the whole of the Building or the Premises
shall be taken by condemnation or in any other manner for any public or
quasi-public use or purpose, (including a sale under threat of condemnation)
this Lease shall terminate as of the date of vesting of title on such taking
(herein called "Date of Taking"), and the Base Rent and Additional Rent shall be
prorated and adjusted as Date of Taking.

           16.2 PARTIAL CONDEMNATION. If a part of the Building or the Land
shall be so taken, this Lease shall be unaffected by such taking, except that:

                     16.2.1 LANDLORD'S OPTION TO TERMINATE. Landlord may, at its
option, terminate this Lease by giving Tenant notice to that effect within
ninety (90) days after the Date of Taking; and

                     16.2.2 TENANT'S OPTION TO TERMINATE. If twenty percent
(20%) or more of the Premises shall be so taken and the remaining area of the
Premises shall not be reasonably sufficient for Tenant to continue feasible
operation of its business, Tenant may terminate this Lease by giving Landlord
notice to that effect within ninety (90) days after the Date of Taking.

           16.3 EFFECT OF TERMINATION OR CONTINUATION. This Lease shall
terminate on the date that such notice from the Landlord or Tenant to the other
shall be given, and the Base Rent and Additional Rent shall be prorated and
adjusted as of such termination date. Upon a partial taking this Lease shall
continue in force as to the remaining part of the Premises, and the Base Rent
and Additional Rent shall be adjusted according to the rentable Area remaining.

           16.4 AWARD. Landlord shall be entitled to receive the entire award or
payment in connection with any taking without deduction therefrom for any estate
vested in Tenant by this Lease and Tenant shall receive no part of such award.
Tenant shall have no claim against Landlord or the condemning authority for the
unexpired portion of the Lease term. Nothing contained in this Section 16.4
shall be deemed to prevent Tenant from making a claim in any condemnation
proceeding for the value of any fixtures or furnishings installed by Tenant at
its sole expense and which are included in the taking.

           16.5 TEMPORARY TAKING. A temporary taking (or transfer in lieu
thereof) of any portion of the Premises by any authorized authority shall not
cause a termination of this Lease, but Tenant shall be entitled to a rent
reduction or abatement during the period its possession is interfered with
because of any such taking of the Premises. Such rent reduction or abatement
shall equal the lesser of the Rent that would have been payable by Tenant during
the period of such temporary taking or an amount equal to the award paid by the
condemning authority for such taking. If the taking is for a period of longer
than one year, or for an indefinite period that extends beyond one year, either
Landlord or Tenant may elect to terminate this Lease by notice to the other
given within thirty (30) days after the event giving rise to the right of
termination. No temporary taking of the Land or of any portion of the Building
not including the Premises shall give Tenant the right to any rent abatement,
reduction, or lease termination.

                                       18
<PAGE>

17. LANDLORD'S SELF-HELP RIGHTS; LIABILITY AND INDEMNIFICATION.

           17.1 LANDLORD'S RIGHT TO CURE. If Tenant fails to pay or perform any
of its obligations under this Lease, Landlord may, without waiving or releasing
Tenant from its obligations hereunder, but shall not be required to, pay or
perform such oblations on Tenant's behalf upon ten (10) days notice to Tenant
(except where, in Landlord's opinion, an emergency exists, in which event no
notice shall be required), and Tenant shall reimburse or pay promptly to
Landlord the reasonable cost thereof as Additional Rent. "Reasonable cost," as
used in this Section 17, means Landlord's actual out-of-pocket costs to effect
such cure plus twenty percent (20%) to cover overhead, administrative and
collection charges. There shall be no abatement of Rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
arising from Landlord's exercise of its rights under this Section 17.1.

           17.2 TENANT'S INDEMNITY. As between Landlord and Tenant, and except
to the limited extent otherwise provided in this Section 17.2, Landlord shall
not be liable for injury to any person, or for the loss of or damage to any
property (including property of Tenant) occurring in or about the Premises from
any cause whatsoever. Tenant hereby assumes all risk of damage to property or
injury to persons in, upon or about the Premises, from any cause whatsoever
except that which is caused by the failure of Landlord to observe any of the
terms and conditions of this Lease where such failure has persisted for an
unreasonable period of time after Tenant has given Landlord written notice of
such failure. Tenant hereby indemnifies and holds Landlord harmless, and shall
defend Landlord, from and against any and all claims, charges, liabilities,
obligations, penalties, causes of action, liens, damages, costs and expenses
(including attorneys' fees) arising, claimed, charged or incurred against or by
Landlord and arising from or in connection with: (a) Tenant's use or occupancy
of, or any activity, work or other thing done, permitted or suffered by Tenant
on or about, the Premises, whether before, after or during the Term, (b) any
breach or default in the performance of any obligation on Tenant's part to be
performed under this Lease, or (c) any act or omission of Tenant, or any
officer, contractor, agent, employee, guest, licensee, or invitee of Tenant.
Such indemnification obligation shall extend to all costs, attorneys' fees, and
liabilities incurred in connection with the defense of any such claim (including
appeals and petitions for review) or any action or proceeding brought thereon.

           17.3 LIMIT ON LANDLORD'S LIABILITY. Landlord and its agents shall not
be liable for any loss or damage to persons or property resulting from fire,
explosion, falling plaster or other material, steam, gas, electricity, or from
bursting, overflowing, or leaking of water, water or rain which may leak from or
into any part of the Premises or from pipes, appliances or plumbing works
therein or from the roof, street or subsurface or from any other place, from
dampness, from electrical wiring, circuitry, power surges, overloads, spiking or
interruption of any kind, from air conditioning equipment, or from gas or odors,
sprinkler leakage, or from any other cause whatsoever, unless caused by or due
to the gross negligence of Landlord, its agents, invitees, servants or
employees. Landlord and its agents shall not be liable for interference with the
light, air, or other incorporeal hereditaments or for any latent defect in or on
the Premises or the Building. Tenant shall give prompt notice to Landlord in
case of casualty or accidents on or about the Premises. Landlord or its agents
shall not be liable for any damage to property entrusted to employees of the
Building or its management, nor for the loss of or damage to any property by
theft or otherwise.

           17.4 DEFENSE OF CLAIMS. In case any action or proceeding shall be
brought against Landlord by reason of a claim covered by the provisions of
Section 17.2, Tenant, upon notice from Landlord, shall defend the same at
Tenant's expense, by counsel approved in writing by Landlord.

                                       19
<PAGE>

18. DEFAULTS AND REMEDIES.

           18.1 EVENTS OF DEFAULT. In addition to events described elsewhere in
this Lease as constituting a "default" or an "Event of Default," the occurrence
of any one or more of the following events shall constitute an Event of Default
hereunder by Tenant:

                     (a) Tenant's vacation or abandonment of the Premises.
Abandonment is herein defined to include, but is not limited to, failure to
conduct its business at the Premises during any five (5) business-day period;

                     (b) Tenant's failure to make any payment of Rent hereunder
as and when due, where such failure shall continue for a period of three days
after Tenant's receipt of written notice thereof; provided, that no such notice
shall be required more frequently than once in any consecutive 12-month period
and, where no notice is required, an Event of Default shall arise automatically
upon the due date for the payment of Rent;

                     (c) Tenant's failure at any time to carry insurance, with
the coverage and in the amounts, required to be carried pursuant to Sections
7.9, 8.4 and 8.5;

                     (d) Tenant's failure to observe or perform any of the other
covenants or provisions of this Lease to be observed or performed by Tenant,
where such failure shall continue for a period of five (5) days after written
notice thereof from Landlord to Tenant (unless this Lease elsewhere provides
that such failure alone constitutes an Event of Default hereunder upon its
occurrence). If the nature of Tenant's default is such that more than 5 days are
reasonably required for its cure, then an Event of Default shall not be deemed
to occur if Tenant shall commence such cure within said 5-day period and shall
thereafter diligently prosecute such cure to completion, but in no event shall
such default extend beyond thirty (30) days. Once notice of default has been
given, no additional notice shall be required in order for Landlord to exercise
remedies under Section 18.2 by reason of a recurrence or continuation of such
default; or

                     (e) If (i) Tenant or any Guarantor named in the Basic Lease
Terms summary preceding this Lease shall make any general assignment for the
benefit of creditors; (ii) a petition to have Tenant adjudged a bankrupt or a
petition for reorganization or arrangement under any law relating to bankruptcy
shall be filed by or against Tenant or any such Guarantor (unless the same is
dismissed within 30 days); (iii) a trustee or receiver is appointed to take
possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant
within 30 days; or (iv) substantially all of Tenant's assets located at the
Premises, or of Tenant's interest in this Lease, is attached, executed upon, or
otherwise judicially seized, where such seizure is not discharged within 30
days.

           18.2 REMEDIES. Upon the occurrence of an Event of Default, Landlord
may exercise any one or more of the remedies set forth in this Section 18, or
any other remedy available under applicable law or contained in this Lease.

                     18.2.1 RE-ENTRY. Landlord or Landlord's agents and
employees may immediately or at any time thereafter re-enter the Premises, or
any part thereof, peaceably but using such reasonable force as may be required,
and without judicial process, or by any suitable action or proceeding at law,
and may repossess the Premises, and may remove any persons, fixtures or chattels
therefrom, to the end that Landlord may have, hold and enjoy the Premises. In
the event of any such retaking of possession of Premises by Landlord, Tenant
shall remove all personal property located thereon and upon failure to do so
upon demand of Landlord, Landlord may in addition to any other remedies allowed
by law, remove and store the same in any place selected by Landlord, including
but not limited to a public warehouse, at

                                       20
<PAGE>

the expense and risk of Tenant. If Tenant shall fail to pay all sums due
hereunder together with the cost of storing any such property within thirty (30)
days after it has been stored, Landlord may sell any or all of such property at
public or private sale and shall apply the proceeds of such sale first, to the
cost of such sale; second, to the payment of the charges and expenses for
reentry, removal and storage; third, to the payment of any other sums of money
that may be due from Tenant to Landlord under the terms of this Lease; and the
balance, if any, to Tenant. Tenant hereby waives all claims for damages that may
be caused by Landlord's re-entering and taking possession of Premises or
removing and storing or selling the property of Tenant as herein provided, and
will indemnify, defend and save Landlord harmless from loss, costs or damages to
Tenant occasioned thereby, and no such re-entry shall be considered or construed
to be a forcible entry. RE-ENTRY OR TAKING POSSESSION OF SAID PREMISES BY
LANDLORD SHALL NOT BE CONSTRUED AS AN ELECTION ON ITS PART TO TERMINATE THIS
LEASE UNLESS A WRITTEN NOTICE OF SUCH INTENTION IS GIVEN TO TENANT.

                     18.2.2 CONTINUE THE LEASE. Landlord may elect to continue
this Lease in effect, whether or not Tenant shall have abandoned or Landlord
shall have re-entered the Premises. In such event Landlord shall be entitled to
enforce all Landlord's rights and remedies under this Lease, including the right
to recover the Rent as the same may become due hereunder and to recover damages
from Tenant in accordance with the provisions of this Section 18.

                     18.2.3 TERMINATE LEASE. Terminate Tenant's right to
possession and use of the Premises by any lawful means, in which case this Lease
shall terminate and Tenant shall immediately surrender possession of the
Premises to Landlord and shall pay Landlord damages as provided at this Section
18.

                     18.2.4 MONETARY DAMAGES AND RECOVERY. Tenant shall have
full liability for payment of all damages directly or indirectly suffered by
Landlord which are proximately caused by any default or breach under this Lease,
whether or not such default or breach is declared by Landlord, and such elements
of damage and recovery by Landlord from Tenant shall specifically include, but
not be limited to:

                               (a) the worth at the time of award of any unpaid
Rent which had been earned at the time of such termination of the Lease or
possession; plus

                               (b) the worth at the time of award of the amount
by which the unpaid  Rent which would have been earned after termination of the
Lease or possession until the time of award exceeds the amount of such Rent loss
that Tenant proves could have been reasonably avoided; plus

                               (c) the worth at the time of award of the amount
by which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such Rent loss that Tenant proves could be reasonably
avoided; plus

                               (d) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to perform
his obligations under this Lease or that in the ordinary course of things would
be likely to result therefrom, including but not limited to, all legal expenses
and other related costs incurred by Landlord following Tenant's default; that
portion of any leasing commission paid by Landlord as a result of this Lease
which is attributable to the unexpired portion of this Lease; all costs incurred
by Landlord in restoring the Premises to good order and condition, or in
remodeling, renovating or otherwise preparing the Premises for reletting; all
other costs incurred by Landlord in reletting the Premises, including, without
limitation, any brokerage commissions, legal fees and the value of Landlord's
time; and Default Interest, late charges and administrative fees, as herein
provided. Landlord shall not be obligated to relet the Premises to a particular
tenant, or, in the event of

                                       21
<PAGE>

any such reletting, for refusal or failure to collect any rent due upon such
reletting; and no such refusal or failure shall operate to relieve Tenant of any
liability under this Lease or otherwise affect any such liability. Landlord at
its option may make such physical changes to the Premises as Landlord, in its
sole discretion, considers advisable or necessary in connection with any such
reletting or proposed reletting, without relieving Tenant of any liability under
this Lease or otherwise affecting Tenant's liability. If there is other unleased
space in the Building, Landlord shall have no obligation to attempt to relet the
Premises prior to leasing such other space in the Building.

                     18.2.5 FORM OF ACTION FOR DAMAGES. To the extent permitted
under State law, Landlord may sue periodically for damages as they accrue
without barring a later action for further damages. If the Lease or possession
is terminated and the Premises are subsequently re-let, no portion of the rents
from such new Lease that is in excess of the contracted rent hereunder shall be
treated as an offset to monies owed by defaulting Tenant. All unpaid Rent after
its due date shall bear interest from the date due at the Default Rate in
addition to any late charges and administration costs related to such
delinquency, whether or not a default is declared.

                     18.2.6 DEPOSIT. Landlord may apply any deposit held
pursuant to Section 21.2, or pursuant to or in connection with any guarantee of
Tenant's obligations under this Lease, in payment of any sums due from Tenant
hereunder.

           18.3 CUMULATIVE REMEDIES. The remedies provided for in this Lease are
cumulative and in addition to any other remedy available to Landlord at law or
in equity. In the event of a breach by Tenant, of any of its obligations under
this Lease, Landlord shall also have the right to obtain an injunction and any
other appropriate equitable relief.

           18.4 TERMINATION. Even though Tenant has breached this Lease,
Tenant's contractual obligations under this Lease shall continue in effect for
so long as Landlord does not terminate the same (and even though Landlord may
have terminated Tenant's estate and right to possession) by written notice to
Tenant, and Landlord may enforce all its rights and remedies under this Lease,
including the right to recover the Rent as it becomes due under this Lease. Acts
of maintenance or preservation or efforts to relet the Premises or the
appointment of a receiver upon initiative of Landlord to protect Landlord's
interest under this Lease shall not constitute a termination of Tenant's rights
to possession unless written notice of termination is given by Landlord to
Tenant.

19. TRANSFERS BY TENANT.

           19.1 GENERAL.

                     19.1.1 ASSIGNMENT AND SUBLETTING. Tenant shall not assign
this Lease or any interest therein, or sublet the Premises or any part thereof,
or permit the use of the Premises by any party other than Tenant, or
hypothecate, mortgage, encumber or otherwise transfer or dispose of Tenant's
interest in the Premises, either voluntarily or involuntarily, without the prior
written consent of Landlord. If Tenant requests consent to a proposed transfer,
Tenant shall pay for Landlord's reasonable legal and administrative expenses in
reviewing the request for consent to transfer. Consent to one such assignment or
sublease shall not imply any future consent, and all subsequent assignments and
subleases shall be made only upon obtaining prior written consent of Landlord.

                     19.1.2 OBLIGATIONS OF ASSIGNEES. Assignees or subtenants
shall become directly liable to Landlord for all obligations of Tenant
hereunder, but Tenant shall remain liable for the performance of all obligations
owed to Landlord under this Lease. The instrument by which any assignment or
subletting

                                       22
<PAGE>

consented to by Landlord is accomplished shall expressly provide that the
assignee or subtenant will perform and observe all the agreements, covenants,
conditions and provisions to be performed and observed by Tenant under this
Lease and that Landlord will have the right to enforce such agreements,
covenants and conditions directly against such assignee or subtenant.

                     19.1.3 PROCEDURE FOR CONSENT. It shall be the
responsibility of Tenant to provide Landlord, in a manner acceptable to
Landlord, with such information as Landlord reasonably determines is necessary
for Landlord to grant or withhold its consent. If Tenant desires to request
approval to assign, hypothecate or otherwise transfer this Lease or sublet the
Premises, then at least ten (10) business days prior to the date when Tenant
desires the assignment or sublease to be effective (the "Assignment Date"),
Tenant shall give Landlord a notice (the "Assignment Notice"), which shall set
forth the name, address and business of the proposed assignees or subtenant,
current and signed financial statements, credit information as required by
Landlord, the Assignment Date, any ownership or commercial relationship between
Tenant and the proposed assignee or subtenant, and the consideration and all
other material terms and conditions of the proposed assignment or sublease, all
in such detail as Landlord shall reasonably require. If Landlord requests
additional detail, the Assignment Notice shall not be deemed to have been
received until Landlord receives such additional detail, and Landlord may
withhold action on the request to any assignment or sublease until such
information is provided. Landlord may, upon receipt of all such information,
withhold its consent under this Section 19 for any reason whatsoever, provided,
however, Landlord shall not unreasonably withhold its consent to transfer this
Lease or sublet the Premises. In considering an Assignment Notice, Landlord may,
among other things, consider financial capability, business reputation, business
experience, existing and future space requirements of other tenants, existing
and future space requirements of the proposed assignee or subtenant, the
intended use, the anticipated demand for services by the assignee or subtenant,
and the assignee's or subtenant's anticipated contribution to the prestige of
the Building.

                     19.1.4 SUBLEASE INCOME. If Tenant shall sublet all or any
portion of the Premises, then any consideration paid by the subtenant for the
portion of the Premises being sublet that exceeds one hundred percent (100%) of
the Base Rent and Additional Rent provided by this Lease for such portion of the
Premises being sublet, then Tenant shall pay to Landlord an amount equal to
seventy-five percent (75%) of such excess and such amount shall be due, owing
and payable from Tenant to Landlord when paid or owing by the subtenant under
the sublease. For the purpose of this Section 19, the rent for each square foot
of floor space in the Premises shall be deemed equal.

           19.2 LISTING PREMISES. Tenant shall not list the Premises for lease
through a broker, or advertise or publicize in any way the availability of the
Premises, without prior written notice and the written approval of Landlord.

           19.3 CORPORATE CHANGES. If Tenant is a corporation, partnership or
limited liability company, then any transfer of this Lease by merger,
consolidation, liquidation, change in the ownership or power to vote the
majority of the issued and outstanding stock, or of the partnership or
membership interest, of the company shall constitute an assignment for the
purposes of this Section 19. An assignment prohibited within the meaning of this
Section 19 includes, without limitation, one or more sales or transfers, direct
or indirect, by operation of law or otherwise, or creation of new stock or
interests, by which ownership or control of an aggregate of more than fifty
percent (50%) of Tenant's stock or voting interests shall be vested in a party
or parties who are non-stockholders, partners or members, as applicable, as of
the date hereof.

           19.4 UNAPPROVED TRANSFERS. Any attempted transfer in violation of the
requirements of this Section 19 shall be void and, at the option of Landlord,
shall constitute an Event of Default.

                                       23
<PAGE>

           19.5 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Lease, all of the covenants, conditions, and provisions of this Lease shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors, and assigns.

20. SUBORDINATION; ATTORNMENT; QUIET ENJOYMENT.

           20.1 SUBORDINATION, NONDISTURBANCE. This Lease, and all rights of
Tenant hereunder, are and shall be, upon the election of the holder thereof,
subject and subordinate to all mortgages, trust deeds and other financing and
security instruments ("Mortgages"), that may now or hereafter affect the
Premises, and to all renewals, modifications, replacements and extensions of any
such Mortgages. This Section shall be self-operative, and no further instrument
of subordination shall be required to effect a subordination hereunder;
provided, however, that in confirmation of such subordination Tenant shall
promptly execute, acknowledge or deliver any instrument that Landlord or any
such mortgagee may reasonably request to evidence such subordination. If Tenant
fails to execute, acknowledge or deliver any such instruments within the ten
(10) days after a request therefor, Landlord may declare an Event of Default
hereunder. Tenant hereby irrevocably constitutes and appoints Landlord as
Tenant's attorney-in-fact, coupled with an interest, to execute and deliver any
such instruments for and on behalf of Tenant, at Landlord's sole election.

           20.2 ATTORNMENT. If the interest of Landlord under this Lease is
transferred, whether through possession, foreclosure or delivery of a new lease
or deed, then at the request of such party so succeeding to Landlord's rights
(herein called "Successor Landlord"), Tenant shall attorn to and recognize such
Successor Landlord as Tenant's Landlord under this Lease and shall promptly
execute and deliver any instrument that such Successor Landlord may reasonably
request to evidence such attornment. Upon such request for attornment, Tenant's
rights hereunder shall continue in full force and effect as a direct Lease
between the Successor Landlord and Tenant upon all of the terms, conditions and
covenants as set forth in this Lease so long as Tenant is not in default.

           20.3 QUIET ENJOYMENT. So long as Tenant pays all Rents and complies
with all of the terms and conditions of this Lease, Tenant shall peaceably and
quietly have, hold and enjoy the Premises. This covenant shall, subject to the
provisions of this Lease, be binding upon the subsequent successors in interest
of Landlord's interest in this Lease including those to whom Tenant is
subordinate and/or to whom Tenant agreed to attorn pursuant to Sections 20.1 and
20.2.

           20.4 ESTOPPEL CERTIFICATES. Within ten (10) days following any
written request that Landlord may make from time to time, Tenant shall execute
and deliver to Landlord and/or any prospective mortgagee or purchaser designated
by Landlord, a statement certifying: (a) the date of commencement of this Lease;
(b) the fact that this Lease is unmodified and in full force and effect (or, if
there have been modifications hereto, that this Lease is in full force and
effect, and stating the date and nature of such modifications); (c) the date to
which the rental and other sums payable under this Lease have been paid; (d)
that there are no current defaults under this Lease by Landlord except as
specified in such statement; and (e) such other matters as may be reasonably
requested. Landlord and Tenant intend that any statement delivered by Tenant
pursuant to this Section may be relied upon by any mortgagee, beneficiary,
purchaser, or prospective purchaser of the Premises or any interest therein.
Tenant's failure to deliver such statement within such time (x) shall be
conclusive upon Tenant (i) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in the Landlord's performance, and (iii) that no more than one
month's rental has been paid in advance, and (y) at Landlord's election, shall
constitute an Event of Default hereunder. If Landlord desires to finance or
refinance the Premises, or any part thereof, Tenant shall, within ten (10) days
following Landlord's

                                       24
<PAGE>

request therefor, deliver to any lender designated by Landlord such financial
information of Tenant as shall be required by such lender. All such information
shall be received in confidence and shall be used only for the purpose herein
set forth.

           20.5 MORTGAGEE PROTECTION. If there occurs any default on the part of
Landlord, Tenant will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgage covering the Premises, and shall
offer such beneficiary or mortgagee a reasonable opportunity to cure the
default, including time to obtain possession of the Premises by power of sale or
a judicial foreclosure, if such should prove necessary to effect a cure.

           20.6 MODIFICATION FOR LENDER. If, in connection with obtaining
construction, interim, or permanent financing related to the Premises, a lender
shall request reasonable modifications in this Lease as a condition to such
financing, Tenant will not unreasonably withhold, delay, or defer its consent
thereto provided that such modifications do not materially, adversely increase
Tenant's obligations, or decrease Tenant's rights, hereunder.

21. SECURITY.

           21.1 FINANCIAL STATEMENTS. Tenant shall furnish to Landlord on or
before ninety (90) days following the end of each fiscal year, Tenant's audited
financial statements for the preceding fiscal year, (consisting of Tenant's
balance sheet, and profit and loss statement) each prepared by a certified
public accountant in accordance with generally accepted accounting principles
(or other method approved by Landlord) consistently applied. Tenant shall
furnish to Landlord interim financial statements within forty-five (45) days
following the end of each of Tenant's fiscal quarters, upon written request by
Landlord.

           21.2 DEPOSIT. On the Commencement Date, Tenant shall deposit with
Landlord the amount specified in the summary of Basic Lease Terms preceding this
Lease, such amount to be held by Landlord during the Lease Term as security for
Tenant's performance of its obligations hereunder. If Tenant fails to make any
payment when due under this Lease, or otherwise defaults with respect to any
provision of this Lease, Landlord may use, apply or retain all or any portion of
said deposit for the payment of such obligation or default, or for the payment
of any other sum to which Landlord may be become obligated by reason of Tenant's
default, or to compensate Landlord for any loss or damage that Landlord may
suffer thereby. If Landlord so uses or applies all or any portion of said
deposit, Tenant shall, within ten (10) days after written demand therefor from
Landlord, deposit cash with Landlord in an amount sufficient to restore said
deposit to the full amount stated in this Section 21.2, and Tenant's failure to
do so shall constitute an Event of Default under this Lease. If Tenant performs
all of Tenant's obligations hereunder, Landlord shall return said deposit (or so
much thereof as has not theretofore been applied by Landlord as permitted under
this Section 21.2) within sixty (60) days following the date of expiration of
the Lease Term or the date on which Tenant has vacated the Premises. Landlord
shall not be required to keep said security deposit separate from its general
funds, and Tenant shall not be entitled to interest on said deposit. Landlord
shall be entitled to deliver the funds constituting the deposit hereunder to any
purchaser of Landlord's interest in the Premises, whether by sale, foreclosure,
deed in lieu of foreclosure, or otherwise, and upon such delivery, Landlord
shall be discharged from any further liability with respect to said deposit.

22. GOVERNING LAW. This Lease shall be governed by and construed pursuant to the
laws of the State of Washington.

23. NO MERGER. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not constitute a merger of the Landlord's and
Tenant's estate, and shall, at the option of

                                       25
<PAGE>

Landlord, operate either as an assignment to Landlord of any or all subleases or
subtenancies or as a termination thereof.

24. DISPUTES.

           24.1 ATTORNEYS' AND COLLECTION FEES. If Landlord should bring an
action or suit for possession of the Premises, for the recovery of any sum due
under this Lease, or because of the breach of any provisions of this Lease, or
for any other relief against Tenant hereunder, or in the event of any other
arbitration or litigation between the parties with respect to this Lease, then
all costs and expenses, including collection agency fees and reasonable
attorneys' fees incurred by the prevailing party in such arbitration or
litigation, including on any arbitration or court proceeding, appeal, petition
for review therefrom or in any proceeding before a U.S. Bankruptcy Court, shall
be paid by the other party, such amount to be set by the court before which the
matter is heard, which obligation on the part of the other party shall be deemed
to have accrued on the date of the commencement of such action and shall be
enforceable whether or not the action is prosecuted to judgment.

           24.2 ARBITRATION OF DISPUTES. At Landlord's option, any dispute,
controversy or claim arising out of or in connection with, or relating to, this
Agreement, its interpretation, application, or the rights, duties or liabilities
hereunder of either party, or any breach or alleged breach hereof, which the
Tenant and Landlord are unable to resolve between themselves, shall, upon the
written request of any party involved, be submitted to, and settled by, binding
arbitration in the city where the Premises is located or as agreed by the
parties, pursuant to the rules then in effect of any private arbitration service
actively engaged in providing dispute resolution services as Landlord may
designate. Any award rendered in an arbitration initiated under this Section 24
shall be final, binding and conclusive upon the parties and a judgment thereon
may be entered in the highest court of the forum, state or federal, having
jurisdiction. The expenses of the arbitration shall be borne equally by the
parties to the arbitration, and each party shall pay for and bear the cost of
its own experts, evidence and counsel's fees, except as otherwise provided in
Section 24.1.

25. BUILDING PLANNING. If Landlord requires the Premises for use in conjunction
with another suite or for other reasons connected with the Building planning
program, or space management, Landlord shall have the option at any time to
relocate Tenant, upon not less than sixty (60) days advance written notice by
Landlord to Tenant, to any floor of the Building in which the Premises are
located so long as the square footage of the Premises leased hereunder is not
reduced. Rent shall not be changed because of the relocation of Tenant
notwithstanding any increase in the square footage of the Premises to which
Tenant is relocated unless the increase in square footage is caused by Tenant's
request for additional space. In the event Landlord gives Tenant written notice
of the relocation of Tenant after Tenant and Landlord have commenced or
completed the approved installation of partitioning or other improvements,
Landlord shall furnish Tenant with similar partitioning or other improvements of
equal quality in the Premises to which Tenant is relocated. Landlord shall pay
expenses associated with relocation of existing telephones, existing office
furniture, and existing equipment. The terms and conditions of this Lease shall
remain in full force and effect, save and excepting that a revised Exhibit B and
Premises description shall become part of this Lease and reflect the location of
the new space, and this Lease shall be amended to include and state all correct
data as to the new space.

26. TENANT'S LIABILITY AND PERFORMANCE. Except as may be otherwise specifically
provided in this Lease, all covenants and agreements to be performed by Tenant
under any of the terms of this Lease shall be performed by Tenant at Tenant's
sole cost and expense and without any abatement of Rent. If more than one person
or entity executes this Lease as Tenant, (a) each of them is jointly and
severally liable for the keeping, observing and performing of all of the terms,
covenants, conditions, provisions and agreements

                                       26
<PAGE>

of this Lease to be kept, observed and performed by Tenant, and (b) the term
"Tenant" as used in this Lease shall mean and include each of them jointly and
severally. The act or notice from, or notice or refund to, or the signature of
any one or more of them, with respect to the tenancy of this Lease, including,
but not limited to any renewal, extension, expiration, termination or
modification of this Lease, shall be binding upon each and all of the persons
executing this Lease as Tenant with the same force and effect as if each and all
of them had so acted or so given or received such notice or refund or so signed.

27. DEFINITION OF LANDLORD; LIMITATION OR LIABILITY. The term "Landlord," as
used in this Lease, so far as covenants or obligations on the part of Landlord
are concerned, shall be limited to mean and include only the owner or owners, at
the time in question, of the fee title of the Premises or the tenants under any
ground lease, if any. In the event of any transfer, assignment, or other
conveyance or transfers of any such title, Landlord herein named (and in case of
any subsequent transfers or conveyances, the then grantor) shall be
automatically freed and relieved from and after the date of such transfer,
assignment, or conveyance of all liability as respects the performance of any
covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed. Without further agreement, the transferee of such
title shall be deemed to have assumed and agreed to observe and perform any and
all obligations of Landlord hereunder, during its ownership of the Premises.
Landlord may transfer its interest in the Premises without the consent of Tenant
and such transfer or subsequent transfer shall not be deemed a violation on
Landlord's part of any of the terms and conditions of this Lease. Tenant and all
successors and assigns acknowledge that, in the event of any actual or alleged
failure, breach or default hereunder by Landlord:

           (a) The sole and exclusive remedy shall be against the rent reserved
by this Lease accruing after any default or material breach for satisfaction of
any liability in respect to this Lease,

           (b) No member or manager of Landlord shall be sued, named as a party
in any suit or action, served with process or subjected to any judgment, and any
such judgment taken against any member or manager of Landlord may be vacated and
set aside at any time nunc pro tunc;

           (c) No writ of execution will ever by levied against the assets of
any member or manager of Landlord; and

           (d) This Lease and the obligations of the Tenant hereunder shall not
be affected or impaired because Landlord is unable to fulfill any of its
obligations hereunder, or is delayed in doing so, if such liability or delay is
caused by reason of strike, labor trouble, inclement weather, war, riot, acts of
God or any other cause beyond the reasonable control of Landlord.

28. WAIVER. Landlord's waiver of any breach of any term, covenant or condition
herein contained shall not be deemed to be a waiver of any subsequent breach of
the same or any other term, covenant or condition herein contained, nor shall
any custom or practice that may evolve between the parties in the administration
of the terms hereof be deemed a waiver of or in any way affect the right of
Landlord to insist upon the performance by Tenant in strict accordance with said
terms. The subsequent acceptance of Rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant, of any term, covenant,
or condition of this Lease, other than the failure of Tenant to pay the
particular Rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of such acceptance of such Rent. The consent or
approval of Landlord to or of any act by Tenant requiring Landlord's consent or
approval shall not be deemed to waive or render unnecessary the consent or
approval to or of any subsequent similar acts by the acting party. Acceptance of
one or more rental or other payments after the dates when the same first became
due or after the applicable grace period shall not prevent Landlord, with
respect to subsequent payments, (a) from insisting upon prompt payment of all
amounts due hereunder, (b) from insisting upon payment of

                                       27
<PAGE>

the late fees provided for herein, or (c) from declaring an Event of Default
hereunder. Without limiting the generality of the foregoing, no payment by
Tenant or receipt by Landlord of a lesser amount than the full Rent then due
shall be deemed to be other than on account of the earliest stipulated Rent due,
nor shall any endorsement or statement on any check or any letter accompanying
any check, or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance of such Rent or pursue any other remedy provided for in this Lease
or available at law or in equity. Acceptance of Rent from another company or
entity does not constitute consent to a purported sublease or assignment.

29. MISCELLANEOUS PROVISIONS.

           29.1 SUCCESSORS OR ASSIGNS. Except as otherwise provided herein, all
the terms, conditions, covenants and agreements of this Lease shall extend to
and be binding upon Landlord, Tenant and their respective heirs, administrators,
executors, successors, subtenants, concessionaires, assigns and marital
communities, if any, and upon any person or persons coming into ownership or
possession of any interest in the Premises by operation of law or otherwise.

           29.2 AUTHORITY OF PARTIES. If Tenant is a corporation, each
individual executing this Lease on behalf of said corporation represents and
warrants that he is duly authorized to execute and deliver this Lease on behalf
of said corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the bylaws of said
corporation, and this Lease is binding upon said corporation. Tenant shall,
simultaneously with the execution of this Lease, deliver to Landlord a certified
copy of a resolution of the Board of Directors of said corporation authorizing
or ratifying the execution of this Lease, and certified copies of other
corporation documents as may reasonably be requested by Landlord or Landlord's
Lender to authenticate the transaction. Any person executing this instrument,
its exhibits, addenda, extensions, or renewals, or represents any material fact
relevant hereto in writing, warrants and represents that he/she is duly
authorized to so act.

           29.3 INTEREST ON PAST DUE OBLIGATIONS. Any amount due from Tenant to
Landlord hereunder which is not paid when due shall bear interest at the Default
Rate from the date due until paid, but the payment of such interest shall not
excuse or cure any default by Tenant, and interest shall be compensation for the
loss of Tenant's use of the past due funds, and shall be in addition to late or
delinquent charges which are reimbursements for administrative costs associated
with collecting and processing such past due amounts. An administrative charge
of $25.00 will be assessed for any check from Tenant which is returned for any
reason.

           29.4 BROKER'S COMMISSION. The brokers who negotiated this Lease, if
any, are identified in the summary of Basic Lease Terms preceding this Lease.
Landlord recognizes Pacific Real Estate Partners as the sole broker of record
representing the Tenant. Landlord shall be solely responsible for the payment of
brokerage commissions to said brokers, and Tenant shall have no responsibility
therefore. If Tenant has dealt with any other person or real estate broker with
respect to leasing or renting space in the Building, Tenant shall be solely
responsible for the payment of any fee due said person or firm and Tenant shall
indemnify and hold Landlord harmless against any liability in respect thereto,
including attorney's fees and costs.

           29.5 TERMS AND HEADINGS. The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. Words used in any
gender include other genders. The Section headings of this Lease are not a part
of this Lease and shall have no effect upon the construction or interpretation
of any part hereof.

                                       28
<PAGE>

           29.6 EXAMINATION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for Lease, and it is not effective as a Lease or otherwise until complete
execution by and delivery to both Landlord and Tenant.

           29.7 TIME. Except as otherwise specifically provided herein, time is
of the essence with respect to the performance of every provision of this Lease
in which time of performance is a factor.

           29.8 AMENDMENTS. No provision of this Lease may be amended or added
to except by an agreement in writing signed by the parties hereto or their
respective successors in interest.

           29.9 PARTIAL INVALIDITY. If any term, covenant, or condition of this
Lease or the application thereof to any person or circumstance is, to any
extent, invalid or unenforceable, the remainder of this Lease, or the
application of such terms, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term, covenant or condition of this Lease shall be
valid and be enforced to the fullest extent permitted by law.

           29.10 RECORDING. Tenant shall not record or file this Lease, or any
assignment or security document pertaining to this Lease or all or any part of
Tenant's interest therein without the prior written consent of Landlord, which
consent may be subject to such conditions as Landlord shall deem appropriate.
However, upon the request of Landlord, both parties shall execute a memorandum
or "short form" of this Lease for the purposes of recordation in a form
customarily used for such purposes. Said memorandum or short form of this Lease
shall describe the parties, the Premises and the Lease Term and shall
incorporate this Lease by reference.

           29.11 NOTICES. All notices that either party shall be required or may
desire to deliver hereunder shall be given in writing and shall be sent by
registered or certified mail, return receipt requested, or by facsimile
transmission followed by delivery of a "hard" copy, and shall be deemed received
upon the earlier of the date of receipt or refusal thereof. Notices shall be
delivered to Tenant at the Premises and to Landlord at both the address for
Landlord and the address for Landlord's property manager, if any, each set forth
in the Summary of Basic Lease Terms preceding this Lease. In addition, a copy of
any notice to Landlord shall be delivered to the following address:

                     Parisi & Parisi, P.C.
                     Attn: Robin B. Parisi, Esq.
                     The Annand Building, Suite 100,
                     1630 SW Morrison
                     Portland, OR 97205
                     Fax: (503) 721-2300

Landlord may change its address for notice by giving notice to Tenant in the
manner set forth above, which notice shall only be effective upon receipt or
refusal. Notice to Tenant hereunder may be given by Landlord's attorney.

           29.12 ENTIRE AGREEMENT. This Lease, including the Table of Contents
and summary of Basic Lease Terms that precede this Lease, and the Exhibits
listed in such summary of Basic Lease Terms and attached hereto, all of which
are incorporated herein by this reference to them, together with any other
document to be furnished pursuant to the provisions hereof embody the entire
agreement and understanding of the parties hereto as to the subject matter
contained herein. There are no restrictions, promises, representations,
warranties, covenants, or undertakings other than those expressly set forth or
referred to in

                                       29
<PAGE>

such documents. This Lease and such documents supersede all prior agreements and
understandings among the parties with respect to the subject matter hereof.

           29.13 SURVIVAL OF OBLIGATIONS. The covenants, duties, and obligations
of Tenant contained herein that by their nature do not depend upon Tenant's
possession of the Premises (including, without limitation, obligations arising
under Section 17.2) shall survive the expiration or earlier termination of this
Lease and such expiration or termination shall not excuse Tenant from the full
performance thereof.

           29.14 REPRESENTATIONS AND WARRANTIES. Landlord has made no
representations or warranties except as contained herein. Tenant hereby
represents and warrants that financial statements and other information
furnished by Tenant to Landlord are true, accurate and complete, and such
representation and warranty shall survive the execution and termination of this
Lease and is material consideration relied upon by Landlord in executing this
Lease. Any false, misleading or inaccurate statement made by Tenant therein
shall constitute a material breach and an Event of Default hereunder.

IN WITNESS WHEREOF, the parties have executed this Lease on the Effective Date.

Landlord:                                   Tenant:

JEFFSQUARE INVESTMENTS, L.L.C., an          Lion Inc., a Washington corporation
Oregon limited liability company

By: ScanlanKemperBard Companies,            By:
an Oregon corporation                          -----------------------------
                                            Title:
                                                  --------------------------
By:                                         Date:
   ----------------------------                  ---------------------------
       Jeffrey Tallman
       Vice President
                                            By:
Date:                                          -----------------------------
     --------------------------             Title:
                                                  --------------------------
                                            Date:
                                                 ---------------------------

                                       30

<PAGE>

STATE OF OREGON                )
                               ) ss.
COUNTY OF                      )
          ---------------------

I certify that I know or have satisfactory evidence that
__________________________________________________ is the person who appeared
before me, and said person acknowledged that he/she signed this instrument, on
oath stated that he/she was authorized to execute the instrument, and
acknowledged it as the (title)__________________________ of JEFFSQUARE
INVESTMENTS, L.L.C., an Oregon limited liability company, to be the free and
voluntary act of such party for the uses and purposes mentioned in the
instrument.

Witness my hand and official seal this _____ day ____________________ 20_____.

                               -------------------------------------------------
                                                 Notary Public
                               (Print Name)
                                           -------------------------------------
                               Residing at
                                           -------------------------------------
                               My Commission Expires:
                                                      --------------------------

STATE OF                       )
         ----------------------
                               ) ss.
COUNTY OF                      )
          ---------------------

I certify that I know or have satisfactory evidence that
__________________________________________________ is the person who appeared
before me, and said person acknowledged that he/she signed this instrument, on
oath stated that he/she was authorized to execute the instrument, and
acknowledged it as the (title) _________________________________________ of
(entity) ___________________________________________________, a
______________________________ corporation, to be the free and voluntary act of
such party for the uses and purposes mentioned in the instrument.

Witness my hand and official seal this _____ day ____________________ 20_____.

                               -------------------------------------------------
                                                 Notary Public
                               (Print Name)
                                           -------------------------------------
                               Residing at
                                           -------------------------------------
                               My Commission Expires:
                                                      --------------------------

STATE OF                       )
         ----------------------
                               ) ss.
COUNTY OF                      )
          ---------------------

I certify that I know or have satisfactory evidence that
__________________________________________________ is the person who appeared
before me, and said person acknowledged that he/she signed this instrument, on
oath stated that he/she was authorized to execute the instrument, and
acknowledged it as the (title) _________________________________________ of
(entity) __________________________________________________, a
_______________________________ corporation, to be the free and voluntary act of
such party for the uses and purposes mentioned in the instrument.

Witness my hand and official seal this _____ day ____________________ 20_____.

                               -------------------------------------------------
                                                 Notary Public
                               (Print Name)
                                           -------------------------------------
                               Residing at
                                           -------------------------------------
                               My Commission Expires:
                                                      --------------------------

<PAGE>

                                    EXHIBIT A
                            LEGAL DESCRIPTION OF LAND
                            -------------------------

THE FOLLOWING DESCRIBED REAL PROPERTY IN KING COUNTY, WASHINGTON, TO-WIT:

A. Block 2, Scenic Park, according to plat thereof recorded in Volume 15 of
Plats, Page 34, Records of King County, Washington, including vacated alleys
therein, vacated by City of Seattle under Vacation Ordinance 81725. Excluding
those portions designated as Sections "B" and "C" lying above a portion of the
premises described in Section "A".

B. That portion of the Premises described in Section "A" above which lies at and
above the elevation 332 feet (332') above main sea level of Seattle datum, above
the following described tract: commencing at the northeast corner of said
described Premises and proceeding southerly along the east line of said Premises
a distance of 100 feet (100'), which point is the point of beginning, thence
continuing southerly along east line a distance of 341 feet (341') thence
westerly, parallel to the north line of said Premises a distance of 78 feet
(78'), thence northerly parallel to the east line of said Premises a distance of
341 feet (341'), thence easterly along said north line to the point of
beginning.

C. That portion of the Premises described in Section "A" above, which lies at
and above the elevation of 336.5 (336.5') above main sea level of Seattle datum,
above the following described tract: commencing at the northeast corner of said
described Premises and proceeding southerly along the east line of said Premises
a distance of 411 feet (411'), which point is the point of beginning, thence
continuing southerly along said east line of distance of 159 feet (159') to the
south line of said Premises, thence westerly along said south line of said
Premises a distance of 246 feet (246') thence northerly parallel to the east
boundary of said Premises a distance of 159 feet (159') more or less to a point
which is 411 feet (411') south of the north line of said Premises, thence
easterly parallel to the north line of said Premises to the point of beginning.

<PAGE>

                                    EXHIBIT B
                          PREMISES DESCRIPTION AND PLAN
                          -----------------------------

                                                         Initials:_____________
Suite 430                                                         _____________
Approximately 8,274 rentable square feet.                         _____________
Interior improvements are not shown.                              _____________

<PAGE>

                                    EXHIBIT C
                              WORK LETTER AGREEMENT
                              ---------------------

           Landlord and Tenant desire to set forth their agreement as to
construction of certain improvements to be made to the Premises by Tenant and
hereby agree to the terms and conditions set forth below. THE PARTIES AGREE THAT
THE PROVISIONS OF THIS WORK LETTER ARE HEREBY INCORPORATED BY THIS REFERENCE
INTO THE LEASE FULLY AS THOUGH SET FORTH THEREIN. In the event of any express
inconsistencies between the Lease and this Work Letter, the latter shall govern
and control.

1. TENANT IMPROVEMENTS. Landlord, at Landlord's sole cost and expense up to, but
not exceeding, the below-described Tenant Improvement Allowance, shall construct
or cause to be constructed the improvements described in plans and
specifications to be mutually agreed upon between the parties and prepared by
Landlord's architect, which plans and specifications shall be subject to final
written approval by Landlord (the "Tenant Improvements"). Landlord's
representatives shall oversee all aspects of the construction process, including
without limitation, space planning, design, construction bidding and
construction of the Tenant Improvements. All other items of improvement,
alteration, and repair to the Premises shall be made at Tenant's sole cost and
expense, subject to the provisions of this Lease.

2. TENANT IMPROVEMENT ALLOWANCE; PAYMENT FOR TENANT IMPROVEMENTS. Landlord shall
pay the cost of the Tenant Improvements up to an amount equal to Forty-nine
Thousand Six Hundred Forty-Four and No/100th Dollars ($49,644.00), which amount
shall hereafter be referred to as the "Tenant Improvement Allowance". Tenant
shall pay the entire cost of the Tenant Improvements in excess of the Tenant
Improvement Allowance. Cost overruns (change orders as described in 3 below)
must be pre-approved by Landlord, Tenant and Contractor. The Tenant Improvement
Allowance is intended to include architectural fees, permit fees, costs of
construction of the Tenant Improvements, construction management fees,
Washington state sales tax and any and every other cost with respect to the
construction of the Tenant Improvements to be borne by Landlord. In no event
shall Landlord be required to pay any portion of the cost of construction of the
Tenant Improvements or any other costs set forth in the preceding sentence in
excess of the Tenant Improvement Allowance The Tenant Improvement Allowance is
not intended to include the cost of consulting fees, telephone and computer
cabling, telephone installation, equipment, office furniture, or any other
Personal Property of Tenant. Any costs over and above the amount of the Tenant
Improvement Allowance shall be paid by Tenant in accordance with paragraph 3
below, or in the alternative at Landlord's sole option within thirty days of
receipt of an invoice therefor from Landlord.

3. CHANGE ORDERS. Tenant or Landlord, without invalidating this agreement, may
order changes in the work consisting of additions, deletions, or modifications.
All such changes in the work shall be authorized by written change order signed
and approved by Landlord, Tenant, and Contractor. Landlord and Tenant shall
approve any and all such change orders within two (2) business days. Neither
Landlord, Tenant nor the Contractor shall be liable to pay for or perform any
additions, deletions or modifications unless agreed to in a written change
order. Each such change order shall describe:

           (a) The work added, deleted or modified;

           (b) The agreed upon adjustment, if any, to the contract sum payable
to Contractor;

                                       1
<PAGE>

           (c) The agreed upon adjustment, if any, to the date of substantial
completion and/or Lease Commencement Date; and

           (d) The date by which Landlord or Tenant must pay Contractor for any
added or modified work. Tenant shall be responsible for the cost of any such
change orders requested by Tenant.

4. PRIOR AGREEMENTS. This Work Letter, together with the Lease, contains the
entire agreement of the parties with respect to any matters covered or mentioned
in this Work Letter and no prior agreements or understandings pertaining to any
such matter shall be effective for any purpose. No provision of this Work Letter
may be amended or added to except in writing signed by the parties hereto or
their respective successors and assigns in interest. This Work Letter shall not
be effective or binding upon any party until fully executed by both parties
hereto.

           DATED as of the Effective Date.

Landlord:                                                              Tenant:

JEFFSQUARE INVESTMENTS, L.L.C., an          Lion Inc., a Washington corporation
Oregon limited liability company

By: ScanlanKemperBard Companies, an         By:
Oregon corporation                             ---------------------------------
                                            Title:
                                                  ------------------------------
By:                                         Date:
   ------------------------------                -------------------------------
       Jeffrey Tallman
       Vice President
                                            By:
Date:                                          ---------------------------------
                                            Title:
                                                  ------------------------------
                                            Date:
                                                 -------------------------------

                                       2
<PAGE>

                                    EXHIBIT D
                              RULES AND REGULATIONS
                              ---------------------

1. No sign, placard, picture, advertisement, name or notice shall be installed
or displayed on any part of the outside or inside of the Building without the
prior written consent of the Landlord. Landlord shall have the right to remove,
at Tenant's expense and without notice, any sign installed or displayed in
violation of this rule. All approved signs or lettering on doors and walls shall
be printed, painted, affixed or inscribed at the expense of Tenant by a person
chosen by Landlord.

2. If Landlord objects in writing to any curtains, blinds, shades, screens or
hanging plants or other similar objects attached to or used in connection with
any window or door of the Premises, Tenant shall immediately discontinue such
use. No awning shall be permitted on any part of the Premises without Landlord's
specific approval in writing. Tenant shall not place anything against or near
glass partitions or doors or windows which may appear unsightly from outside the
Premises.

3. Tenant shall not obstruct any sidewalk, halls, passages, exits, entrances,
elevators, escalators, or stairways of the Building. The halls, passages, exits,
entrances, shopping malls, elevators, escalators and stairways are not open to
the general public. Landlord shall in all cases retain the right to control and
prevent access thereto of all persons whose presence in the judgment of Landlord
would be prejudicial to the safety, character, reputation and interest of the
Building and its tenants; provided that nothing herein contained shall be
construed to prevent such access to persons with whom any tenant normally deals
in the ordinary course of its business, unless such persons are engaged in
illegal activities. No tenant and no employee or invitee of any tenant shall go
upon the roof of the Building.

4. The directory of the Building will be provided exclusively for the display of
the name and location of tenants only, and Landlord reserves the right to
exclude any other names therefrom.

5. All cleaning and janitorial services for the Building and the Premises shall
be provided exclusively through Landlord, and except with the written consent of
Landlord, no person or persons other than those approved by Landlord shall be
employed by Tenant or permitted to enter the Building for the purpose of
cleaning the same. Tenant shall not cause any unnecessary labor by carelessness
or indifference to the good order and cleanliness of the Premises. Landlord
shall not in any way be responsible to any Tenant for any loss of property on
the Premises, however occurring, or for any damage to any of Tenant's property
by the janitor or any other employee or any other persons.

6. Landlord will furnish Tenant, free of charge, two keys to each door lock in
the Premises. Landlord may make a reasonable charge for any additional keys.
Tenant shall not make or have made additional keys, and Tenant shall not alter
any lock or install a new additional lock or bolt on any door of its Premises.
Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys
of all doors which have been furnished to Tenant, and in the event of loss of
any keys so furnished, shall pay Landlord therefore.

7. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions in
their installation.

8. Any freight elevator shall be available for use by all tenants in the
Building, subject to such reasonable scheduling as Landlord in its discretion
shall deem appropriate. No equipment, materials, furniture, packages, supplies,
merchandise or other property will be received in the Building or carried in the
elevators except between such hours and in such elevators as may be designated
by Landlord.

                                       1
<PAGE>

9. Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which is
allowed by law. Landlord shall have the right to prescribe the weight, size and
position of all equipment, materials, furniture or other property brought in to
the Building. Heavy objects shall, if considered necessary by Landlord, stand on
such platforms as determined by Landlord to be necessary to properly distribute
the weight. Business machines and mechanical equipment belonging to Tenant,
which cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein to any tenants in the Building, shall be placed
and maintained by Tenant, at Tenant's expense, on vibration eliminators or other
devices sufficient to eliminate noise or vibration. The persons employed to move
such equipment in or out of the Building must be acceptable to Landlord. Tenant
agrees to place a plywood covering over any lobby, hallway, elevator and office
flooring and carpeting during any time where it is constructing in the Premises
or moving furniture into or out of the Building. Pads shall be used in such a
manner to protect walls and ceilings in said lobbies, hallways, elevators and
offices during said construction or moving periods. Landlord will not be
responsible for loss of, or damage to, any such equipment or other property from
any cause, and all damage done to the Building including common areas, hallways,
elevators and doors by maintaining or moving such equipment or other property
shall be repaired at the expense of Tenant.

10. Tenant shall not use or keep in the Premises any kerosene, gasoline or
flammable or combustible fluid or material other than those limited quantities
necessary for the operation or maintenance of office equipment. Tenant shall not
use or permit to be used in the Premises any foul or noxious gas or substance,
or permit or allow the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of noise,
odors or vibrations, nor shall Tenant bring into or keep in or about the
Premises any birds, dogs, cats or animals of any kind.

11. Tenant shall not use any method of heating or air-conditioning other than
that supplied by Landlord.

12. Tenant shall not waste electricity, water or air-conditioning and agrees to
cooperate fully with Landlord to assure the most effective operation of the
Building's heating and air-conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice, and
shall refrain from attempting to adjust controls. Tenant shall keep corridor
doors closed, and shall close window coverings at the end of each business day.

13. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.

14. Landlord reserves the right to exclude from the Building between the hours
of 6 P.M. and 7 A.M. the following day, or such other hours as may be
established from time to time by Landlord, and on Sundays and legal holidays,
any person unless that person is known to the person or employee in charge of
the Building and has a pass or is properly identified. Tenant shall be
responsible for all persons for whom it requests passes and shall be liable to
Landlord for all acts of such persons. Landlord shall not be liable for damages
for any error with regard to the admission to or exclusion from the Building of
any persons. Landlord reserves the right to prevent access to the Building in
case of invasion, mob, riot, public excitement or other commotion by closing the
doors or by other appropriate action. It is understood that Tenant requires
access for clients until 8 p.m. weekdays and occasionally on weekends. Landlord
shall coordinate with Tenant a mutually acceptable way for after-hours entry in
to the Building.

15. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, and electricity, gas or air outlets
before Tenant and its employees leave the

                                       2
<PAGE>

Premises. Tenant shall be responsible for any damage or injuries sustained by
other tenants or occupants of the Building or by Landlord for noncompliance with
this rule.

16. Tenant shall not obtain for use on the Premises ice, drinking water, food,
beverage, towel or other similar services or accept barbering or bootblacking
service upon the Premises, except at such hours and under such regulations as
may be fixed by Landlord.

17. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage or damage resulting from the violation of this rule shall
be borne by the tenant who, or whose employees or invitees, shall have caused
it.

18. Tenant shall not sell, or permit any sales of newspapers, magazines,
periodicals, theater tickets or any other goods or merchandise to the general
public in or on the Premises or the common area. Tenant shall not make any
room-to-room solicitation of business from other tenants in the Building nor
shall Tenant solicit in any part of the common areas. Tenant shall not use the
Premises for any business or activity other than that specifically provided for
in Tenant's Lease.

19. Tenant shall not install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the Building. Tenant shall not
interfere with radio or television broadcasting or reception from or in the
Building or elsewhere.

20. Tenant shall not mark, drive nails, screws or drill in to the partitions,
woodwork or plaster or in any way deface the Premises or any part thereof.
Landlord reserves the right to direct electricians as to where and how telephone
and telegraph wires are to be introduced to the Premises. Tenant shall not cut
or bore holes for wires. Tenant shall not affix any floor covering to the floor
of the Premises in any manner except as approved by Landlord. Tenant shall
repair any damage resulting from noncompliance with this rule. Tenant shall pay
for any and all damages to the Building, walls, doors, glass, carpeting or
otherwise which may be caused by Tenant's use of the Building, moving equipment,
supplies or furniture into or out of the Building whether caused by Tenant or
its employees, agents, contractors or invitees to the Premises.

21. Tenant shall not install, maintain or operate upon the Premises any vending
machine without the written consent of Landlord.

22. Canvassing, soliciting and distribution of handbills or any other written
material, and peddling in the Building or in the common areas and parking lot
are prohibited, and each tenant shall cooperate to prevent same.

23. Landlord reserves the right to exclude or expel from the Building any person
who, in Landlord's judgment, is intoxicated or under the influence of liquor or
drugs or who is in violation of any of the Rules and Regulations of the
Building.

24. Tenant shall store all its trash and garbage within its Premises. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of trash and garbage disposal.
All garbage and refuse disposal shall be made in accordance with directions
issued from time to time by Landlord.

25. The Premises shall not be used for the storage of merchandise held for sale
to the general public, or for lodging or for manufacturing of any kind, nor
shall the Premises be used for any improper,

                                       3
<PAGE>

immoral or objectionable purpose. NO cooking shall be done or permitted by any
tenant on the Premises, except that use by Tenant of Underwriters' Laboratory
approved equipment for brewing coffee, tea, hot chocolate and similar beverages
and small appliances (such as toaster or microwave ovens) for warming foods
shall be permitted, provided that such equipment and use is in accordance with
all applicable federal, state, county and city laws, codes, ordinances, rules
and regulations.

26. Tenant shall not use in any space or in the public halls of the Building any
hand truck except those equipped with rubber tires and side guards or such other
material-handling equipment as Landlord may approve. Tenant shall not bring any
other vehicles of any kind in to the Building.

27. Without the written consent of Landlord, Tenant shall not use the name of
the Building in connection with or in promoting or advertising the business of
Tenant except as Tenant's address.

28. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

29. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed. Tenant agrees that the cost to repair any
damage to the Building and Premises, as a result of theft, robbery and
pilferage, shall be borne by the Tenant.

30. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual. Employees
of Landlord shall not perform any work or do anything outside of their regulated
duties unless under special instructions from Landlord, and no employee of
Landlord will admit any persons (Tenant or otherwise) to any office without
specific instruction from Landlord.

31. Tenant shall not park its vehicles in any parking areas designated by
Landlord as areas for parking by visitors to the Building. Tenant shall not
leave vehicles in the Building parking areas overnight nor park any vehicles in
the Building parking areas other than automobiles, motorcycles, motor drive or
non-motor drive bicycles or four-wheeled trucks. Said vehicles improperly parked
shall be subject to a fine of $20.00 per day per violating vehicle or, upon 24
hours notice, shall be subject to towing at the vehicle owner's expense.

32. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations in favor of Tenant or any
other tenant, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against any or all of the tenants of the Building.

33. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of premises in the Building.

34. Landlord reserves the right to make such other and reasonable Rules and
Regulations as, in its judgment, may from time to time be needed for safety and
security, for care and cleanliness of the Building and for the preservation of
good order therein. Tenant agrees to abide by all such Rules and Regulations
hereinabove stated and any additional rules and regulations which are adopted.

35. Tenant shall be responsible for the observance of all of the foregoing rules
of Tenant's employees, agents, clients, customers, invitees and guests.

                                       4
<PAGE>

                                    EXHIBIT E
                                ACCEPTANCE LETTER
                                -----------------

[date]

JEFFSQUARE INVESTMENTS, L.L.C.
c/o ScanlanKemperBard Companies
2650 Pacwest Center
1211 SW Fifth Avenue
Portland, OR 97204

RE:   Lease Dated:
                   --------------------------------

      Landlord:
                   --------------------------------

      Tenant:
                   --------------------------------

      Premises:
                   --------------------------------

Gentlemen:

The undersigned, tenant under the above-described Lease, hereby confirms, as of
the date hereof, the following:

1. That it is in full and complete possession of the Demised Premises, such
possession having been delivered by Landlord and having been accepted by the
undersigned.

2. That the improvements and space required to be furnished by the terms of the
Lease have been completed in all respects to the satisfaction of the undersigned
and are open for the use of, the undersigned, its employees and invitees.

3. That all duties of an inducement nature required of Landlord in said Lease
have been fulfilled.

4. That said Lease is in full force and effect; that there are no existing
defaults on the part of the Landlord under the terms thereof.

5. That said Lease has not been amended, modified, supplemented or superseded
except as follows:

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

6. That no rents have been prepaid except as provided by said Lease.

7. That undersigned has received no notice of prior sale, transfer, assignment,
hypothecation or pledge of the said Lease or of the rents secured herein, except
to you.

                                       1
<PAGE>

8. The rents provided in said Lease commenced to accrue, and that the
Commencement Date occurred, on _____________________, 20_____.

Very truly yours,

--------------------------------------------
           (Tenant)

By: ________________________________________
           (Title)

Date:
      --------------------------------------

                                       2
<PAGE>

                                    EXHIBIT F
                      STANDARDS FOR UTILITIES AND SERVICES
                      ------------------------------------

The following Standards for Utilities and Services are in effect. Landlord
reserves the right to adopt nondiscriminatory modifications and additions
hereto:

As long as Tenant is not in default under any of the terms, covenants,
conditions, provisions or agreements of this Lease, Landlord shall:

a. Provide non-attended automatic elevator facilities Monday through Friday,
except holidays, from 8 A.M. to 6 P.M., and have one elevator available at all
other times.

b. On Monday through Friday, except holidays, from 8 A.M. to 6 P.M. (and other
times for a reasonable additional charge to be fixed by Landlord), ventilate the
Premises and furnish air conditioning or heating on such days and hours, when in
the judgment of Landlord it may be required for the comfortable occupancy of the
premises. The air conditioning system achieves maximum cooling when the window
coverings are closed. Landlord shall not be responsible for room temperatures if
Tenant does not keep all window coverings in the Premises closed whenever the
system is in operation. Tenant agrees to cooperate fully at all times with
Landlord, and to abide by all regulations and requirements which Landlord may
prescribe for the proper function and protection of said air conditioning
system. Tenant agrees not to connect any apparatus, device, conduit or pipe to
the Building chilled and hot water air conditioning supply lines. Tenant further
agrees that neither Tenant nor its servants, employees, agents, visitors,
licensees or contractors shall at any time enter mechanical installations or
facilities of the Building or adjust, tamper with, touch or otherwise in any
manner affect said installations or facilities.

c. Landlord shall furnish to the Premises, during the usual business hours on
business days, electric current as required by the Building standard office
lighting and fractional horsepower office business machines in the amount of
approximately two and one-half (2.5) watts per square foot. Tenant agrees,
should its electrical installation or electrical consumption be in excess of the
aforesaid quantity or extend beyond normal business hours, to reimburse Landlord
monthly for the measured consumption at the terms, classifications and rates
charged to similar consumers by said public utility serving the neighborhood in
which the Building is located. If a separate meter is not installed at Tenant's
cost, such excess cost will be established by an estimate agreed upon by
Landlord and Tenant, and if the parties fail to agree, as established by an
independent licensed engineer. Tenant agrees not to use any apparatus or device
in, or upon, or about the premises which may in any way increase the amount of
such services usually furnished or supplied to said Premises, and Tenant further
agrees not to connect any apparatus or device with wires, conduits or pipes, or
other means by which such services are supplied, for the purpose of using
additional or unusual amounts of such services without written consent of
Landlord. Should Tenant use the same to excess, the refusal on the part of
Tenant to pay upon demand of Landlord the amount established by Landlord for
such excess charge shall constitute a breach of the obligation to pay rent under
this Lease and shall entitle Landlord to the rights therein granted for such
breach. At all times Tenant's use of electric current shall never exceed the
capacity of the feeders to the Building or the risers or wiring installation and
Tenant shall not install or use or permit the installation or use of any
computer or electronic data processing equipment in the Premises without the
prior written consent of Landlord.

d. Water will be available in public areas for drinking and lavatory purposes
only, but if Tenant requires, uses or consumes water for any purposes in
addition to ordinary drinking and lavatory purposes of which fact Tenant
constitutes Landlord to be the sole judge, Landlord may install a water meter
and thereby measure Tenant's water consumption for all purposes. Tenant shall
pay Landlord for the cost of

                                       1
<PAGE>

the meter and the cost of the installation thereof and throughout the duration
of Tenant's occupancy Tenant shall keep said meter and installation equipment in
good working order and repair at Tenant's own cost and expenses, in default of
which Landlord may cause such meter and equipment to be replaced or repaired and
collect the cost thereof from Tenant. Tenant agrees to pay for water consumed,
as shown on said meter, as and when bills are rendered, and on default in making
such payment, Landlord may pay such charges and collect the same from Tenant.
Any such costs or expenses incurred, or payments made by Landlord for any of the
reasons or purposes hereinabove stated shall be deemed to be additional rent
payable by Tenant and collectible by Landlord as such.

e. Provide janitor service to the Premises, provided the same are used
exclusively as offices, and are kept reasonably in order by Tenant, and if to be
kept clean by Tenant, no one other than persons approved by Landlord shall be
permitted to enter the Premises for such purposes. If the Premises are not used
exclusively as offices, they shall be kept clean and in order by Tenant, at
Tenant's expense and to the satisfaction of Landlord, and by persons approved by
Landlord. Tenant shall pay to Landlord the cost of removal of any of Tenant's
refuse and rubbish, to the extent that the same exceeds the refuse and rubbish
usually attendant upon the use of the Premises as offices.

           Landlord reserves the right to stop service of the elevator,
plumbing, ventilation, air conditioning and electric systems, when necessary, by
reason of accident or emergency or for repairs, alterations or improvements, in
the judgment of Landlord desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed, and shall further have no
responsibility or liability for failure to supply elevator facilities, plumbing,
ventilating, air conditioning or electric service, when prevented from so doing
by strike or accident or by any cause beyond Landlord's reasonable control, or
by laws, rules, orders, ordinances, directions, regulations or requirements of
any federal, state, county or municipal authority or failure of gas, oil, or
other suitable fuel supply or inability by exercise of reasonable diligence to
obtain gas, oil or other suitable fuel. It is expressly understood and agreed
that any covenants on Landlord's part to furnish any service pursuant to any of
the terms, covenant, conditions, provisions or agreements of this Lease, or to
perform any act or thing for the benefit of Tenant shall not be deemed breach if
Landlord's unable to furnish or perform the same by virtue of a strike or labor
trouble or any other cause whatsoever beyond Landlord's control.

                                       2EXHIBIT 10.1
                                                                    ------------

                             SUBSCRIPTION AGREEMENT

           SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of May 9, 2001,
by and among DynaGen, Inc., a corporation organized under the laws of the State
of Delaware (the "Company"), with headquarters located at 200 Highland Avenue,
Needham, Massachusetts and the undersigned ("Purchaser").

           WHEREAS:

           A. The Company and Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "Securities
Act").

           B. The Company desires to sell and issue to Purchaser and Purchaser
desires to purchase, upon the terms and conditions stated in this Agreement, the
number of shares of Series P Preferred Stock., $.01 par value per share (the
"Preferred Stock"), of the Company convertible into shares of common stock, par
value $.01 per share, of the Company (the "Common Stock") in accordance with the
terms and conditions set forth herein. The Series P Preferred Stock Designation
setting forth the rights, preferences, including the terms upon which the shares
of Preferred Stock are convertible into shares of Common Stock, is attached
hereto as Exhibit A. The shares of Common Stock issuable upon conversion of the
Preferred Stock or otherwise pursuant to the Preferred Stock are referred to
herein as the "Conversion Shares." The Preferred Stock and the Conversion Shares
are collectively referred to herein as the "Securities."

           NOW, THEREFORE, the Company and the Purchaser hereby agree as
follows:

           1. PURCHASE AND SALE OF PREFERRED STOCK

           a. Purchase of Preferred Stock. On the Closing Date (as defined
below), subject to the satisfaction (or waiver) of the conditions set forth in
Sections 6 and 7 below, the Company shall issue and sell to Purchaser and
Purchaser agrees to purchase from the Company, the number of shares of Preferred
Stock (the "Preferred Shares") set forth on the signature page. The purchase
price (the "Purchase Price Per Share") for each of the Preferred Shares is
$100.00 per share.

           b. Form of Payment. On the Closing Date (as hereinafter defined),
Purchaser shall pay the aggregate Purchase Price for the Preferred Shares by
wire transfer to the Company and shall deliver by telecopier (with originals
following by first class mail) a fully executed copy of this Subscription
Agreement to the Company. Payment and delivery instructions are attached as
Exhibit B hereto. Promptly upon receipt of the Purchase Price and the executed
Agreement, the Company shall deliver a certificate (the "Certificate")
representing the Preferred Shares together with the accepted Agreement to the
Purchaser by Federal Express or other overnight courier at the address set forth
on the signature page of this Agreement.

                                       1
<PAGE>

           c. Closing Date. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the shares of Preferred Shares pursuant to this
Agreement shall take place from time to time as may be mutually agreed upon by
the Company and Purchaser. Each closing shall occur at the offices of the
Company.

           2. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents
and warrants to the Company that:

           a. Investment Purpose. Purchaser is purchasing the Preferred Stock
for Purchaser's own account for investment only and not with a present view
towards the public sale or distribution thereof, except pursuant to sales that
are exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act. Purchaser understands that Purchaser must
bear the economic risk of this investment indefinitely, unless the Preferred
Shares or the Conversion Shares are registered pursuant to the Securities Act
and any applicable state securities or blue sky laws or an exemption from such
registration is available, and that the Company has no present intention of
registering any such Securities other than as contemplated by the Registration
Rights Agreement, dated as of the date hereof, between the Company and the
Purchaser (the "Registration Rights Agreement").

           b. Accredited Investor Status. Purchaser is an "accredited investor"
as defined in Rule 501(a) promulgated under the Securities Act.

           c. Reliance on Exemptions. Purchaser understands that the Preferred
Shares and the Conversion Shares are being offered and sold to Purchaser in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying upon
the truth and accuracy of, and Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of Purchaser to acquire the Preferred Shares and Conversion Shares.

           d. Information. Purchaser and its counsel or representative, if any,
have been furnished all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Preferred Shares which have been requested by Purchaser or its counsel or
representative. Purchaser and its counsel, if any, have been afforded the
opportunity to ask questions of the Company and have received what Purchaser
believes to be complete and satisfactory answers to any such inquiries. Neither
such inquiries nor any other due diligence investigation conducted by Purchaser
or its counsel or any of its representatives shall modify, amend or affect
Purchaser's right to rely on the Company's representations and warranties
contained in Section 3 below. Purchaser has been informed and understands that
(i) this investment involves a HIGH DEGREE OF RISK, (ii) the Company's
independent auditors have included an explanatory paragraph in their opinion on
the Company's financial statements expressing substantial doubt about the
Company's ability to continue as a going concern, and (iii) the Company's common
stock has been delisted by the NASDAQ Stock

                                       2
<PAGE>

Market and is currently quoted on the NASD OTC Bulletin Board and traded on the
Boston Stock Exchange.

           e. Governmental Review. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.

           f. Transfer or Resale. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless (a) subsequently registered thereunder, or (b)
Purchaser shall have delivered to the Company an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration, including without limitation Rule 144 promulgated under the
Securities Act (or a successor rule) ("Rule 144"), or (c) transferred without
consideration to an affiliate of Purchaser; (ii) any sale of such Securities
made in reliance on Rule 144 may be made only in accordance with the terms of
said Rule and further, if said Rule 144 is not applicable, any resale of such
Securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the Securities and Exchange
Commission (the "SEC") thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder (in each case, other than pursuant to the Registration
Rights Agreement).

           g. Legends. Purchaser understands that the Preferred Shares and,
until such time as the Conversion Shares have been registered under the
Securities Act as contemplated by Section 5 of this Agreement or otherwise may
be sold by Purchaser pursuant to Rule 144 without any restriction as to the
public resale thereof, the certificates for the Conversion Shares, may bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):

           The securities represented by this certificate have not been
           registered under the Securities Act of 1933, as amended. The
           securities have been acquired for investment and may not be sold,
           transferred or assigned in the absence of an effective registration
           statement for the securities under said Act, or an opinion of
           counsel, in form, substance and scope customary for opinions of
           counsel in comparable transactions, that registration is not required
           under said Act or unless the Company is provided with reasonable
           assurances that the securities were sold pursuant to Rule 144 under
           said Act.

           h. Authorization: Enforcement. This Agreement and the Registration
Rights Agreements (together, the "Transaction Agreements") have been duly and
validly authorized, executed and delivered on behalf of Purchaser and are valid
and binding agreements of Purchaser enforceable in accordance with their
respective terms.

                                       3
<PAGE>

           i. Location of Purchaser. Purchaser has advised the Company in
writing with respect to the jurisdictions wherein the investment decision
regarding Purchaser's acquisition of the Preferred Stock has been made.

           j. Conversion Limitation. Notwithstanding the provisions hereof, in
no event (except (i) in the event of a Mandatory Conversion (as defined in the
Certificate of Designations, Preferences and Rights of Series P Preferred Stock
(the "Certificate of Designation") or (ii) if the Company is in default under
any provision of the Transaction Agreements, as defined above) shall the holder
be entitled to convert any of the Preferred Shares to the extent that, after
such conversion, the sum of (1) the number of shares of Common Stock
beneficially owned by the Purchaser and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of
unconverted Preferred Shares), and (2) the number of shares of Common Stock
issuable upon the conversion of the Preferred Shares with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Purchaser and its affiliates of more than 4.99% of the
outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), except as otherwise provided in clause (1) of such proviso.

           k. Company Reliance On Purchaser's Representations. Purchaser
understands that the Company is relying on the truth and accuracy of the
representations and warranties made herein by Purchaser in offering the
Preferred Shares for sale and in relying upon applicable exemptions available
under the Act and applicable state securities laws.

           3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Purchaser that:

           a. Organization and Qualification. The Company is a corporation duly
organized and existing in good standing under the laws of the State of Delaware,
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction where
the failure so to qualify would have a Material Adverse Effect. "Material
Adverse Effect" means any material adverse effect on the operations, properties,
condition (financial or otherwise) or prospects of the Company and its
subsidiaries, taken as a whole on a consolidated basis or on the ability of the
Company to perform its obligations in connection with the transactions
contemplated hereby on a timely basis.

           b. Authorization: Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement and the
Registration Rights Agreement, to issue and sell the Preferred Shares in
accordance with the terms hereof, and to issue the Conversion Shares upon
conversion of the Preferred Shares in accordance with their terms. The
execution, delivery and performance of this Agreement and the Registration
Rights Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Preferred Shares and the issuance and reservation for issuance of the
Conversion Shares) have been duly authorized by the Company's

                                       4
<PAGE>

Board of Directors and no further consent or authorization of the Company, its
Board of Directors, or its stockholders is required; this Agreement has been
duly executed and delivered by the Company; and this Agreement constitutes the
valid and binding obligations of the Company enforceable against the Company in
accordance with its respective terms.

           c. Issuance of Securities. The Preferred Stock is duly authorized
and, upon issuance in accordance with the terms of this Agreement, the Preferred
Shares will be validly issued, fully paid and non-assessable. The Conversion
Shares have been duly authorized by the Company's Board of Directors, and have
been reserved for issuance upon conversion of the Preferred Shares in accordance
with the terms thereof, and upon issuance in accordance with the terms of this
Agreement will be validly issued, fully paid and non-assessable.

           d. Valid Issuance of Securities. The Company has an authorized
capitalization consisting of 225,000,000 shares of Common Stock and 10,000,000
shares of preferred stock, par value $0.01 per share. As of the date of this
Agreement, the Company has issued and outstanding the shares of capital stock,
options, warrants and convertible securities set forth on Schedule 3(d). All of
the shares of Common Stock of the Company issued to date have been duly and
validly authorized and issued and are fully paid and non-assessable. Except as
set forth above or as disclosed in Schedule 3(d) or in the SEC Documents as of
the date of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of it subsidiaries is
or may become bound to redeem or issue additional shares of capital stock of the
Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the Securities Act. Except as disclosed in Schedule 3(d)
or in the SEC Documents as of the date hereof there are no securities or
instruments containing any anti-dilution, right of first refusal, preemptive
rights or similar provisions that will be triggered by the issuance of the
Securities as described in this Agreement. Upon issuance of the Securities, such
securities will be duly and validly issued, fully paid and non-assessable.

           e. No Conflicts. To the Company's knowledge, the execution, delivery
and performance of this Agreement and the Registration Rights Agreement by the
Company, the performance by the Company of its obligations hereunder and
thereunder, and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance, as applicable, of the Preferred Shares and the Conversion Shares)
will not (i) result in a material violation of the Certificate of Incorporation
or Bylaws subject to the need to obtain stockholder approval to increase the
authorized shares of Common Stock as discussed in Section 3(d) above or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its

                                       5
<PAGE>

subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including U.S. federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect
or for which consents have been obtained). Except as described in the SEC
Documents, to the Company's knowledge, neither the Company nor any of its
subsidiaries is in violation of its Certificate of Incorporation or other
organizational documents and except as described in the SEC Documents, to the
Company's knowledge, neither the Company nor any of its subsidiaries is in
default under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, except for defaults as would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect or for which consents have been obtained.

           f. SEC Documents, Financial Statements. Since December 31, 2000, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (all of the foregoing, filed prior to the date hereof and after December
31, 2000, and all exhibits included therein and financial statements and
schedules thereto and documents (other than exhibits) incorporated by reference
therein together with any registration statements or other documents filed by
the Company pursuant to the Securities Act prior to the date hereof and all news
releases by the Company being hereinafter referred to herein as the "SEC
Documents"). The Company has made available to Purchaser true and complete
copies of the SEC Documents requested by the Purchaser, except for such
exhibits, schedules and incorporated documents. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with U.S generally accepted accounting principles, consistently
applied, during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set forth
in the financial statements of the Company included in the SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the date of the most
recent financial statements

                                       6
<PAGE>

included in the SEC Documents and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such financial
statements, which, individually or in the aggregate, are not material to the
financial condition or operating results of the Company.

           g. Absence of Litigation. Except as disclosed in the SEC Documents or
otherwise disclosed to Purchaser, there is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its subsidiaries, threatened against or affecting the Company, any of
its subsidiaries, or any of their respective directors or officers in their
capacities as such, wherein an unfavorable decision, ruling or finding would or
could reasonably be expected to result in a Material Adverse Effect.

           h. Disclosure. All information relating to or concerning the Company
set forth in this Agreement or provided to Purchaser pursuant to Section 2(d)
hereof and otherwise in connection with the transactions contemplated hereby is
true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or exists with respect to the
Company or its subsidiaries or their respective businesses, properties,
prospects, operations or financial conditions, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming for this purpose
that the Company's Exchange Act Reports are being incorporated into an effective
registration statement filed by the Company under the Securities Act).

           i. Current Public Information. The Company is currently eligible to
register the resale of its Common Stock by a stockholder on a registration
statement on Form S-3 under the Securities Act.

           j. No General Solicitation. Neither the Company nor any person acting
for the Company has conducted any "general solicitation," as such term is
defined in Regulation D, with respect to any of the Securities being offered
hereby.

           k. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act.

           l. Company Status. The Company has registered its shares of Common
Stock pursuant to Section 12(g) of the Exchange Act, is in full compliance with
all reporting requirements of the Exchange Act, and the Company has maintained
all requirements for the continued listing of its Common Stock on the NASD OTC
Bulletin Board, and such Common Stock is currently quoted on the NASD OTC
Bulletin Board and traded on the Boston Stock Exchange.

           m. Certain Transactions. Except as set forth in the SEC Documents and
except for arm's length transactions pursuant to which the Company makes
payments in the ordinary course

                                       7
<PAGE>

of business upon terms no less favorable than the Company could obtain from
third parties and other than the grant of stock options, none of the current
officers, directors, or employees of the Company (or any spouse or relative of
any such person) is presently a party to any transaction with the Company (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

           n. Dilution. The number of shares of Common Stock issuable upon
conversion of the Preferred Shares may increase substantially in certain
circumstances. The Company's executive officers and directors have studied and
fully understand the nature of the transactions contemplated by this Agreement
and recognize that they have a potential dilutive effect. The board of directors
of the Company has concluded, in its good faith business judgment, that such
issuance is in the best interests of the Company. The Company specifically
acknowledges that its obligation to issue additional Shares is binding upon the
Company and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.

           o. Nasdaq Listing. The Company's Common Stock is presently quoted on
the NASD OTC Bulletin Board under the symbol "DYG" and traded on the Boston
Stock Exchange under the symbol "DYGN." The Company meets all criteria of the
Boston Stock Exchange. The Company is not in receipt of any written notice from
any stock exchange, market or trading facility on which the shares of Common
Stock are or have been listed (or on which they are or have been quoted) to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such stock exchange, market or trading facility or that the
shares of Common Stock will be delisted from such stock exchange, market or
trading facility.

           p. No Integrated Offering. Neither the Company nor any of its
affiliates nor any person acting on its or their behalf has, directly or
indirectly, at any time since January 1, 2000, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under
Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.

           4. COVENANTS

           a. Best Efforts. The parties shall use their best efforts timely to
satisfy each of the conditions described in Sections 6 and 7 of this Agreement.

           b. Blue Sky Laws. The Company shall take such action as the Company
or Purchaser shall reasonably determine is necessary to qualify the Securities
for sale to Purchaser pursuant to this Agreement under applicable securities or
"blue sky" laws of the states of the United States or obtain exemption
therefrom, and shall provide evidence of any such action so taken to Purchaser.

                                       8
<PAGE>

           c. Reporting Status. So long as Purchaser beneficially owns any of
the Securities, the Company shall timely file all reports required to be filed
with the SEC pursuant to the Exchange Act.

           d. Use of Proceeds. The Company shall use the proceeds from the sale
of the Preferred Stock for internal working capital purposes and general
corporate purposes.

           e. Financial Information. Upon the written request of Purchaser while
holding any Preferred Shares, the Company shall send the following reports to
Purchaser: a copy of its Annual Report on Form 10-K, its Quarterly Reports on
Form l0-Q, any proxy statements, any Current Reports on Form 8-K and any press
releases issued by the Company or any of its subsidiaries.

           f. Reservation of Shares. The Company shall reserve and shall at all
times thereafter have authorized and reserved for the purpose of issuance a
sufficient number of shares of Common Stock to provide for the full conversion
of the shares of Preferred Shares issued in accordance herewith and issuance of
the Conversion Shares in connection therewith and as otherwise required by the
terms of the Preferred Stock.

           g. Corporate Existence. So long as Purchaser beneficially owns the
Preferred Shares, the Company shall maintain its corporate existence, except in
the event of a merger, consolidation or sale of all or substantially all of the
Company's assets, as long as the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under the
agreements and instruments entered into in connection herewith regardless of
whether or not the Company would have had a sufficient number of shares of
Common Stock authorized and available for issuance in order to effect the
conversion of the Preferred Shares as of the date of such transaction, and (ii)
is a publicly traded corporation whose common stock is listed for trading on the
Nasdaq Stock Market, the OTC Bulletin Board or a national securities exchange.

           h. Listing of Securities. The Company shall (a) as soon as
practicable after the Effective Date, prepare and file with the Boston Stock
Exchange an additional shares listing application covering the Registrable
Securities, (b) take all other steps, if any, which may be necessary to cause
such Registrable Securities to be approved for listing on the Boston Stock
Exchange as soon as possible thereafter, and (c) provide to Purchaser evidence
of such listing, and the Company shall use its best efforts to maintain the
listing of its Registrable Securities on such exchange.

           i. Reimbursement. If (i) any Purchaser, other than by reason of its
negligence or willful misconduct or violation of any applicable law, rule or
regulation, becomes involved in any capacity in any action, proceeding or
investigation brought by any stockholder of the Company, in connection with or
as a result of the consummation of the transactions contemplated by Transaction
Agreements, or is impleaded in any such action, proceeding or investigation, or
(ii) any Purchaser, other than by reason of its gross negligence or willful
misconduct or by reason of its trading of the Company's securities in a manner
that is illegal under the federal securities laws, rules or regulations or by
reason of its violation of any other law, becomes involved in any capacity in
any action, proceeding or investigation brought by the

                                       9
<PAGE>

Commission against or involving the Company or in connection with or as a result
of the consummation of the transactions contemplated by the Transaction
Agreements, or is impleaded in any such action, proceeding or investigation by
any person, then in any such case, the Company will reimburse such Purchaser for
its reasonable legal and other expenses (including the cost of any investigation
and preparation) incurred in connection therewith, as such expenses are
incurred. In addition, other than with respect to any matter in which such
Purchaser is a named party or is impleaded, the Company will pay such Purchaser
the charges, as reasonably determined by such Purchaser, for the time of any
officers or employees of such Purchaser devoted to appearing and preparing to
appear as witnesses, assisting in preparation for hearings, trials or pretrial
matters, or otherwise with respect to inquiries, hearing, trials, and other
proceedings relating to the subject matter of this Agreement. The reimbursement
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any affiliates of the Purchasers who are actually named in
such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of the
Purchasers and any such affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Purchasers and any such affiliate and any such Person. The Company
also agrees that neither any Purchaser nor any such affiliate, partners,
directors, agents, employees or controlling persons shall have any liability to
the Company or any person asserting claims on behalf of or in right of the
Company in connection with or as a result of the consummation of the Transaction
Documents except to the extent that any losses, claims, damages, liabilities or
expenses incurred by the Company result from the gross negligence or willful
misconduct or violation of law, rule or regulation by such Purchaser.

           5. REGISTRATION; TRANSFER AGENT INSTRUCTIONS

           a. Registration Rights. The Company and the Purchaser shall enter
into a Registration Rights Agreement as of the date hereof.

           b. Transfer Agent Instructions. The Company shall instruct its
transfer agent to issue certificates, registered in the name of Purchaser or its
nominee, for the Conversion Shares in such amounts as specified from time to
time by Purchaser to the Company upon conversion of the Preferred Shares. Prior
to registration of the Conversion Shares under the Securities Act or resale of
such Securities under Rule 144, all such certificates shall bear the restrictive
legend specified in Section 2(g) of this Agreement. The Company warrants that no
instruction other than such instructions referred to in this Section 5, and stop
transfer instructions to give effect to Section 2(f) hereof in the case of the
Conversion Shares prior to registration of the Conversion Shares under the
Securities Act, will be given by the Company to its transfer agent and that the
Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the Preferred
Stock terms. Nothing in this Section shall affect in any way Purchaser's
obligations and agreement set forth in Section 2(f) hereof not to resell the
Securities except pursuant to an effective registration statement (and to
deliver a prospectus in connection with such a sale) or in compliance with an
exemption from the registration requirements of applicable securities law. If
Purchaser provides the Company with an opinion of counsel, which opinion of
counsel shall be in form, substance and scope customary

                                       10
<PAGE>

for opinions of counsel in comparable transactions, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from registration, the Company shall permit the transfer, and, in the
case of the Conversion Shares, promptly instruct its transfer agent to issue one
or more certificates in such name and in such denominations as specified by a
Purchaser.

           c. Rule 144. The Company will use its best efforts to make all
filings and take all other actions so that Rule 144 promulgated under the
Securities Act of 1933, as amended, will be available for the resale of the
Conversion Shares.

           5A. CONVERSION OF THE PREFERRED SHARES

           a. If the Conversion Price (as defined in the Certificate of
Designation) exceeds $.80 per share at the time the Purchaser converts any
Preferred Shares into shares of Common Stock, then the Conversion Price at the
time of such conversion shall be deemed to be $.80 per share.

           b. The Purchaser may sell up to twenty percent (20%) of the shares of
Common Stock of the Company currently held by the Purchaser during any single
Trading Day (as Defined in the Certificate of Designation), provided, however,
that the number of shares of Common Stock able to be sold by the Purchaser
during any single Trading Day may not exceed twenty percent (20%) of the average
daily trading volume of the Common Stock for the three Trading Days prior to the
date of the sale.

           6.        CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL

           The obligation of the Company hereunder to issue and sell the
Preferred Shares to Purchaser at the closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions thereto,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.

           a. Purchaser shall have executed the execution page to this Agreement
and delivered the same to the Company.

           b. Purchaser shall have delivered the Purchase Price for the
Preferred Shares.

           c. The representations and warranties of Purchaser shall be true and
correct in all material respects.

           d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.

                                       11
<PAGE>

           7. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE

           The obligation of Purchaser hereunder to purchase the Preferred
Shares on the Closing Date is subject to the satisfaction of each of the
following conditions, provided that these conditions are for Purchaser's sole
benefit and may be waived by Purchaser at any time in Purchaser's sole
discretion:

           a. The Company shall have executed the signature page to this
Agreement and delivered the same to Purchaser.

           b. The Company shall have delivered to Purchaser one or more duly
executed Certificates representing the Preferred Shares purchased hereby in the
principal amount being purchased by Purchaser in accordance with Section 1(b)
above.

           c. The representations and warranties of the Company shall be true
and correct as of the Closing Date in all material respects and the Company
shall have performed, satisfied and complied in all material respects the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing Date.

           d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.

           8. GOVERNING LAW; MISCELLANEOUS

           a. Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The parties consent
to the jurisdiction of the United States District Courts for the District of
Massachusetts in any suit or proceeding based on or arising under this Agreement
and agree that all claims in respect of such suit or proceeding may be
determined in such court. The parties irrevocably waive the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The parties
further agree that service of process mailed by first class mail shall be deemed
in every respect effective service of process in any suit or proceeding arising
hereunder. Nothing herein shall affect Purchaser's right to serve process in any
other manner permitted by law. The parties agree that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.

           b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party.

                                       12
<PAGE>

           c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

           d. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

           e. Entire Agreement: Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor Purchaser make any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived other than by an instrument in writing signed by
the party to be charged with enforcement and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and
Purchaser.

           f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier, overnight delivery
service or by confirmed telecopy, and shall be effective five days after being
placed in the mail, if mailed, or upon receipt or refusal of receipt, if
delivered personally or by courier, overnight delivery service or confirmed
telecopy, in each case addressed to a party. The addresses for such
communications shall be:

                                          If to the Company:

                                          DynaGen, Inc.
                                          200 Highland Avenue, Suite 301
                                          Needham, Massachusetts 02494
                                          Telecopy:  (781) 449-4926
                                          Attention:  Dhananjay G. Wadekar

                                          with a copy to:

                                          Foley, Hoag & Eliot LLP
                                          One Post Office Square
                                          Boston, Massachusetts 02109
                                          Telecopy:  (617) 832-7000
                                          Attention:  David A. Broadwin, Esq.

                                          If to Purchaser:

                                          to the address set forth on the
                                          signature page hereof.

                     Each party shall provide notice to the other parties of any
change in address.

           g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of

                                       13
<PAGE>

the other. This provision shall not limit Purchaser's right to transfer the
Securities pursuant to the terms of the Preferred Stock and this Agreement or to
assign Purchaser's rights hereunder to any such transferee, nor shall this
provision limit the right of Purchaser to transfer or assign its rights under
such agreements and instruments to an affiliate (provided that Purchaser makes
no more than two (2) such transfers), provided that the representations and
warranties set forth in Section 2 are true and correct with respect to such
affiliate or managed account.

           h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

           i. Survival. The representations and warranties of the parties and
the agreements and covenants set forth in Sections 2, 3, 4 and 5 shall survive
the closing hereunder and any conversion of the Preferred Stock, notwithstanding
any due diligence investigation conducted by or on behalf of Purchaser.

           j. Publicity. Purchaser shall not make any press release or other
public statement concerning the transactions contemplated hereby without the
prior written consent of the Company.

           k. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements. certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       14
<PAGE>

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

                                          PURCHASER
                                          By: ______________________________
                                          Name:_____________________________
                                          Title:____________________________

                                          SUBCRIPTION AMOUNT:
                                          Number of Shares: ________________
                                          Total Purchase Price: ____________

                                          ACCEPTED:
                                          DYNAGEN, INC.
                                          By: ______________________________

                                          Name:_____________________________

                                          Title:____________________________

                                       15

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