Document:

EXHIBIT 10.3

                                  OFFICE LEASE

19.   Parties.  This is a Lease for office space in the building  located at 377
      Route 17 South,  Hasbrouck Heights, New Jersey between Satnick Development
      Corporation,  a corporation  organized  under the laws of the State of New
      Jersey,   as  Landlord  and,  Perma  Grass   Corporation,   a  New  Jersey
      corporation, as Tenant.

20.   Definitions.  As used in this Lease,  the  following  terms shall have the
      indicated meanings:

      2.1.  "Affiliate of Landlord"  shall mean any person,  firm or corporation
            which controls or is controlled by Landlord.

      2.2.  "Building"  shall mean the office  building  located at 377 Route 17
            South,  Hasbrouck Heights, New Jersey,  commonly known as Airport 17
            Office Centre.

      2.3.  "Bulding Hours" shall mean the time between 8:00 a.m. and 6:00 p.m.,
            Mondays  through  Fridays,  and  from  8:00  a.m.  to 1:00  p.m.  on
            Saturdays, excluding Holidays.

      2.4.  "Commencement  Date"  shall  mean the date  determined  pursuant  to
            Article 7 as the date on which the Term commences.

      2.5.  "Common Facilities" shall mean the stairwells,  elevators, hallways,
            restrooms  nad lobbies in the Building and the driveways and parking
            lots on the Property.

      2.6.  "Force Majeure" shall mean fire, catastrophe,  casualty,, strikes or
            labor  trouble,  civil  commotion,  acts of God or the public enemy,
            governmental prohibitions or regulations, or inability or difficulty
            in obtaining  materials,  or any other causes beyond the  Landlord's
            control.

      2.7.  "Landlord"  or "Lessor"  shall mean  initially  Satnick  Development
            Corporation, a New Jersey corporation;  however, the term "Landlord"
            shall  only  refer to the  holder or holders of the fee title to the
            Property  or the lessee or lessees  of the entire  interest  of such
            holder  or  holders,  so that  upon  any  transfer  of  title to the
            Property,  the term shall refer only to the party holding title, and
            no prior  holder of title or lessee of such  entire  interest  shall
            have  any  further  liability  or  obligation  with  respect  to the
            performance  of any  obligation  on the part of the  Landlord  to be
            performed under this Lease,  except as may be specifically  provided
            herein.  A lease of the entire  interest  of any  Landlord  shall be
            deemed a transfer of title for

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            the purposes of this Lease, and the Lessee under such lease shall be
            deemed to hold  title to the  Property  within  the  meaning of this
            Lease.

      2.8.  "Mortgagee" shall mean the lessor of any present or future ground or
            underlying  leases affecting all or any part of the Property and the
            holder of any  mortgage  which may now or  hereafter be placed on or
            affect  such  leases  or all  or any  part  of the  Property  or any
            interest therein, and each of them.

      2.9.  "Premises" or "Demised Premises" shall mean the rentable square feet
            located on the lobby level of the building  commonly  known as Suite
            116 (which is  subject  to  adjustment  in the event  Tenant  leases
            additional space in the Building, as hereinafter provided).

      2.10. "Property"  shall mean the tract of land in Hasbrouck  Heights,  New
            Jersey on which the Building is located,  including the Building and
            any other improvements thereon.

      2.11. "Tenant" or "Lessee" shall mean Perma Grass Corporation.

      2.12. "Term"  shall  mean the  Initial  Term of this Lease as set forth in
            Article 4, as the same may be renewed.

21.   Leasing of the  Premises.  Landlord  hereby leases the Premises to Tenant,
      and Tenant  hereby  rents the  Premises  from  Landlord,  on the terms and
      conditions contained in this Lease.

      3.1.  Tenant and Tenant's agents, employees,  licensees and invitees shall
            also have the right,  during the Term, to the  reasonable use of the
            Common  Facilities,  together  with  Landlord  and other  lessees of
            portions of the  Building,  their  invitees,  licensees,  agents and
            employees.  Landlord  reserves  the right to grant to the owners and
            lesses of office buildings which hereafter may be constructed in the
            vicinity of the Building and to their  invitees,  licensees,  agents
            and employees the right to use the driveways located on the Property
            together  with lessees of the Building,  and to grant  easements and
            other rights  therein for such  purpose,  provided  that same do not
            materially  interfere  or  otherwise  materially  diminish  the use,
            occupation  and enjoyment of the  Premises,  Common  Facilities  and
            appurtenances  thereto by the Tenant or its employees,  invitees and
            guests.

22.   Initial Term. The Premises are leased to the Tenant for an initial term of
      thirty-seven   (37)  months  (the  "Initial  Term"),   commencing  on  the
      Commencement Date, February 1, 1998.

23.   Basic Rent.

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      5.1.  Basic Rent shall be payable in monthly installments,  in advance, on
            the first day of each calendar  month during the term of this Lease,
            except that a  proportionately  lesser sum may be paid for the first
            and last months of the ter of this Lease if the Commencement Date is
            other than the first day of the month. The annual basic rent payable
            by Tenant to Landlord during the term hereof shall be as follows:

            (a)   The Tenant shall pay to the  Landlord  during the Initial Term
                  Basic Rent in the amount of Seventy-Six Thousand Eight Hundred
                  Dollars  ($76,800.00),   at  an  annual  rate  of  Twenty-five
                  Thousand Six Hundred Dollars ($25,600.00),  which shall accrue
                  at the rate of Two Thousand One Hundred  Thirty-three  Dollars
                  and Thirty-three Cents ($2,133.33),  per month. (First month's
                  rent to commence March 1, 1998).

            (b)   Tenant shall pay basic rent and any  additional  rent required
                  to be paid  under  this  Lease in lawful  money of the  United
                  States to  landlord  at  Landlord's  address  set forth in the
                  section of this Lease  captioned  "Notices",  or at such other
                  place as Landlord may designate in writing, without demand and
                  without counterclaim, deduction or setoff, except as otherwise
                  provided herein.

            (c)   If Tenant shall fail to pay any basic rent or any
                  additional rent, within three (3) days of the date when the
                  same is due and payable, Tenant shall pay upon demand by
                  Landlord, an additional rent hereunder, interest at the
                  rate of eighteen (18%) percent per annum, on all such late
                  payments of rent due hereunder; provided, however, that in
                  no event shall the interest rate exceed the maximum
                  permitted by law.

24.   Security  Deposit.  Tenant has  deposited  with  Landlord  the sum of Four
      Thousand Six Hundred Twenty-six Dollars and Sixty-six Cents ($4,626.66) as
      security  for the full and faithful  performance  by the Tenant of all the
      terms, covenants and conditions of this Lease upon the Tenant's part to be
      performed,  which  said  sum  shall  be  returned  to the  Tenant  without
      interest,  after the expiration of the Term (including any Renewal Terms),
      provided  that  Tenant has fully and  faithfully  carried  out all of said
      terms, covenants and conditions on Tenant's part to be performed. Landlord
      shall have the right to apply any part of the security deposit to cure any
      default of Tenant, and if Landlord does so, Tenant shall,  within ten (10)
      days after written  demand,  deposit with  Landlord the amount  applied so
      that Landlord  shall have the full deposit on hand at all times during the
      term of this  Lease.  In the  event the  annual  basic  rent is  increased
      pursuant  to  Article 24 of this Lease or as  otherwise  provided  herein,
      Tenant  shall  deposit  with  Landlord  on  each  anniversary  date of the
      Commencement  Date such  additional sums required to increase the Security
      Deposit  then held by Landlord to an amount  equal to two (2) months basic
      rent. In the event of a sale or lease of the Building, and Tenant electric
      subject to this Lease, the Landlord shall thereupon be considered released
      by the Tenant from all  liability  for the return of the security  deposit
      and the Tenant shall look solely to the new

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      Landlord for the return  thereof.  It is agreed that the  foregoing  shall
      apply  to every  transfer  or  assignment  made of the  security  to a new
      Landlord.  The security deposited under this Lease shall not be mortgaged,
      assigned  or  encumbered  by Tenant  without  the  written  consent of the
      Landlord,  and any attempt to do so shall be void.  Landlord shall provide
      notice to Tenant of all such  transfers  of the  security  deposit  within
      seven (7) days  after  said  transfer.  No trust  relationship  is created
      between Landlord and Tenant as said security deposit.

25.   Commencement of Term; Estimated Commencement Date.

      7.1.  The  parties  intend  that  the  Commencement  Date  be on or  about
            February 1, 1998 (the "Estimated Commencement Date"), but the actual
            Commencement  Date shall be fixed and ascertained as hereinafter set
            forth. The actual Commencement Date shall be the date upon which the
            Demised Premises shall be "substantially completed".  "Substantially
            Completed"  for the  purposes of this Lease,  and to fix the Tenants
            liability  for the  payment of the rents  payable  under this Lease,
            shall  be the  earlier  of (a) the  date on  which  the  Tenant  has
            procured,  if required by law, a temporary or permanent  Certificate
            of Occupancy, which ever is first obtained,  permitting occupancy of
            the Demised  Premises by the Tenant,  or the date on which  Landlord
            obtains such Certificate of Occupancy,  if Landlord elects to obtain
            same,  or  (b)  the  date  upon  which  Landlord  has  substantially
            completed the work required to be performed by Landlord  pursuant to
            the Work Letter and any Extras of Change Orders executed pursuant to
            Section 14.1., as determined by landlord in its reasonable judgment.
            The work to be done by landlord shall be deemed to be  substantially
            completed even though minor details of work or adjustments remain to
            be done,  provided  they  shall not  materially  interfere  with the
            Tenant's use of the Premises.

      7.2.  After the Commencement Date, Landlord and Tenant,  promptly upon the
            request of either of them,  will execute and deliver to each other a
            certificate in recordable form setting forth the Commencement Date.

      7.3.  If Prior to the Commencement  Date,  Tenant shall enter the Premises
            with Landlord's  prior written consent to make any  installations of
            its  equipment,  fixtures and  furnishings,  Landlord  shall have no
            liability or  obligation  for the care or  preservation  of Tenant's
            property.

      7.4.  Landlord agrees to provide access to the Premises to permit Tenant's
            installation  of  telephones  provided  same  shall  not in any  way
            interfere with the work to be performed by Landlord  hereunder.  The
            parties  agree,  however,  that  failure to complete  the  telephone
            installation  and to  provide  service on the  Commencement  Date or
            Tenant's  failure  to  timely  supply  Landlord  with the  plans and
            specifications  required under the Landlord's  Work Letter  (Exhibit
            "B") in accordance  with Section 11.1,  shall not delay or defer the
            Commencement Date.

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      7.5.  Anything contained in this Lease to the contrary notwithstanding, if
            for any  reason  the  Premises  are not ready for  occupancy  on the
            Estimated  Commencement Date, this Lease shall nevertheless continue
            in full  force  and  effect;  and the  Commencement  Date  shall  be
            determined as set forth in Section 7.1 above.

      7.6.  Real Estate Tax Escalation.

            (a)   For the purpose of this Article:

                  (i)   The term "Taxes"  shall mean (a) the real estate  taxes,
                        water  and  sewer  rents  and  assessments  and  special
                        assessments imposed upon the Building and/or the land on
                        which the building is erected by and governmental bodies
                        or authorities and (2) any expenses incurred by Landlord
                        in  contesting  the same. If at any time during the term
                        of this Lease the methods of taxation  prevailing on the
                        date  hereof  shall be altered so that in lieu of, or as
                        in addition to, or as a substitute for, the whole or any
                        part of such real  estate  taxes,  water and sewer rents
                        and assessments  and special  assessments now imposed on
                        real estate, there shall be levied, assessed and imposed
                        (x) a tax, assessment, levy, imposition,  license fee or
                        charge  wholly  or  partially  as  a  capital  levy,  or
                        otherwise on the rents  received  therefrom,  or (y) any
                        other  additional or substitute tax,  assessment,  levy,
                        imposition,   fee  or  charge,   then  all  such  taxes,
                        assessments,  levies, impositions, fees or charges shall
                        be deemed to be included within the term "Taxes" for the
                        purposes hereof.

                  (ii)  The term "Base Tax Year"  shall mean the Tax Year ending
                        June 30, 1998.

                  (iii) The term  "Base  Tax"  shall mean the taxes for the Base
                        Tax Year.

                  (iv)  The term "Tax Year" shall mean the period of twelve (12)
                        calendar months beginning January 1st.

                  (v)   The term "Tenant's  Share" shall mean one and six-tenths
                        (1 1/6%) percent.

            (b)   IF the taxes for any Tax Year  during  the term of this  Lease
                  commencing  after the Base Tax Year shall exceed the Base Tax,
                  Tenant  shall pay, as  additional  rent,  for such Tax year an
                  amount ("Tax Payment") equal to Tenant's Share of such excess.
                  If a Tax Year ends after the  expiration or Termination of the
                  term of this Lease, the Tax Payment therefor shall be prorated
                  to  correspond  to that  portion  of such Tax  Year  occurring
                  within the term of this Lease.  If the real estate  fiscal tax
                  year in the  Municipality

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                  where the Building is located shall be changed during the term
                  of this Lease,  any Taxes for a real estate fiscal tax year, a
                  part of which is  included  within a  particular  Tax year and
                  part of which is not so included,  shall be apportioned on the
                  basis of the number of days in the real estate fiscal tax year
                  included in the  particular Tax Year for the purpose of making
                  the computation under this Article.

            (c)   The Tax  Payment  shall be payable  by Tenant  within ten (10)
                  days after receipt of a demand from Landlord.  Notwithstanding
                  the foregoing,  at Landlord's  option,  to be exercised at any
                  time  during  the term of this  Lease  upon  notice to Tenant,
                  Tenant shall pay on the first day of each month, on account of
                  the Tax  Payment,  an amount equal to  one-twelfth  of the Tax
                  Payment for the preceding Tax Year. If Landlord shall exercise
                  such option for the first Tax year following the Base Tax Year
                  and  the   Taxes   for  the  first  Tax  Year  have  not  been
                  established,  then  for  such  first  Tax  Year  said  monthly
                  payments shall be based on the Base Tax of the first Tax Year.
                  If the aggregate payments on account of the Tax Payment in any
                  Tax Year shall  exceed the Tax  Payment of that Tax Year,  the
                  excess shall, at Landlord's option, either be credited against
                  subsequent payments under this Article or promptly refunded to
                  Tenant;  and if the Tax Payment for any Tax Year shall  exceed
                  the  aggregate  payments  on account of the Tax  Payment,  the
                  excess shall be promptly paid by Tenant.

            (d)   If the  Base Tax is  reduced  as a  result  of an  appropriate
                  proceeding or otherwise,  Landlord  shall adjust the amount of
                  each Tax payment  previously  made,  and Tenant  shall pay the
                  amount of the  adjustment  on the next rent  installment  date
                  immediately  following  receipt  of  a  demand  therefor  from
                  Landlord setting forth the amount of the adjustment.

            (e)   If  Landlord  shall  receive a refund of the Taxes for any Tax
                  Year, Landlord shall pay to Tenant,  Tenant's Share of the net
                  refund (after  deducting  from such total refund the costs and
                  expenses of obtaining same);  provided,  however, such payment
                  to  Tenant  shall  in no event  exceed  Tenant's  Tax  Payment
                  actually paid for such Tax Year.

26.   Use and  Occupancy.  Tenant  shall use and occupy the  Premises as general
      offices and for no other purpose.

27.   Repairs and Maintenance.

      9.1.  Except as otherwise provided in this Lease, Landlord at its cost and
            expense,  shall  keep in good  repair  the  structural  parts of the
            Building, including the walls, roof, floor, foundation, load bearing
            members, trusses and joists, as well as all plumbing,  utilities and
            facilities located within the walls, ceilings and floors and outside
            of the  Premises,  which serve the  Premises,  except for repairs or

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            maintenance  occasioned  by the  negligence  or  intentional  act of
            Tenant or Tenant's  agents,  employees,  licensees or invitees.  Any
            repairs or  maintenance  occasioned by the negligence or intentional
            act of Tenant's  agents,  employees,  licensees or invitees shall be
            repaired at the cost and expense of Tenant.

      9.2.  Except as otherwise  provided in this Lease, the Landlord shall take
            good  care  of  and  maintain  and  repair  the  lawns,   shrubbery,
            driveways,  sidewalks,  and entranceways,  foyers, curbs and parking
            lot on the Property, and the Landlord shall provide for snow removal
            and window cleaning.

      9.3.  Tenant  covenants  and agrees  that it shall not cause or permit any
            waste or damage to the Premises or any  overloading of the floors of
            the Premises. Tenant shall at the expiration of the Term, deliver up
            the Premises in good order and condition, ordinary wear and tear and
            damage by fire or other casualty excepted.

      9.4.  Except as  specifically  provided in Section  13.2 and Article 14 of
            this Lease,  there shall be no  abatement  of rent or  allowance  to
            Tenant for any  diminution  of rental  value and no liability on the
            part of Landlord by reason of inconvenience,  annoyance or injury to
            business  resulting from  Landlord's,  Tenant's or other's making or
            failing to make any repairs, alterations,  additions or improvements
            in or to any  portion  of the  Property  or the  Premises  or to the
            fixtures, appurtenances or equipment thereof. The provisions of this
            Article 9 with  respect to the making of repairs  shall not apply in
            the case of fire or other  casualty,  which is dealt with in Article
            13 hereof.

      9.5.  Tenant shall  throughout  the term of this Lease,  take good care of
            the  Premises,  the fixtures,  glass and  equipment  therein and the
            plumbing,  electrical and other utility system on the Premises,  and
            at Tenant's sole cost and expense,  make all repairs  thereto as and
            when needed to preserve all of the  foregoing in good working  order
            and  condition.  Tenant shall also repair all damage to the Building
            caused by the moving of Tenant's fixtures,  furniture and equipment.
            In addition, throughout the Term, Tenant shall take good care of any
            additions, alterations, improvements and installations made by or at
            the request of Tenant in  accordance  with Article 11 of this Lease,
            and at  Tenant's  sole  cost and  expense,  shall  make all  repairs
            thereto as and when needed to preserve  same in good  working  order
            and condition. All repairs required to be made by Tenant shall be of
            quality or class  equal to the  original  work or  construction.  If
            Tenant  fails  after  ten  (10)  days  notice  to  proceed  with due
            diligence  to make  repairs  required  to be made  by  Tenant,  such
            repairs  may be made by the  Landlord  at the  cost and  expense  of
            Tenant and the cost and expense  thereof  incurred by Landlord shall
            be collectable as additional rent  immediately upon demand therefor.
            Tenant shall give Landlord prompt notice of any defective  condition
            in any  plumbing,  heating  system or  electrical  lines located in,
            servicing or passing through the Premises.

28.   Window Cleaning.  Tenant will not clean nor require or allow any window in
      the

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      Premises to be cleaned from the outside  except by parties  authorized  by
      Landlord.

29.   Alterations - As presently constructed and decorated.

      11.1. Annexed hereto as Exhibit __ is "Landlord's  Building  Standard Work
            Letter" (the "Work Letter").  Tenant agrees that it shall provide to
            Landlord, on or before __________,  such plans and specifications as
            are  required  under  the Work  Letter  and  such  other  plans  and
            specifications  as  may  reasonably  be  required  by  Landlord  for
            Tenant's  layout,  partitioning,   electrical,   ceiling  and  other
            installations,  subject to the approval and  acceptance of Landlord.
            Landlord shall furnish and install in accordance with such drawings,
            so much of the work  required by Tenant as is allowed by  Landlord's
            Work Letter,  at no additional cost to Tenant.  To the extent Tenant
            requires work, the cost of which is not included in the Work Letter,
            the same shall be  reduced  to an  "Extra"  or "Change  Order" to be
            executed by both the Landlord and Tenant,  which shall  indicate the
            work required,  the cost thereof to Tenant,  and the additional time
            required,  if any,  for  completion.  Any such Extra or Change Order
            shall be paid by Tenant in advance of Landlord performing such work.
            Tenant  shall  be  responsible  for any  delays  in  completing  the
            Premises  by reason of its  failure  to  furnish  Landlord  with the
            requisite  plans  and  specifications  by the date set forth in this
            Section 11.1.

      11.2. Tenant   shall   make   no   alterations,   permanent   decorations,
            installations, substitutions, or improvements in or to the Premises,
            including  but not  limited to the  removal or  installation  of any
            partitions, doors, electrical installations, plumbing installations,
            water  coolers,   air-conditioning   or  cooling  systems,   or  any
            apparatus,  whether  structural or  nonstructural  (hereinafter  the
            "Tenant Changes")  without  Landlord's prior written consent in each
            instance, and only upon complying with all of the provisions of this
            Section 11.2.

          11.2.1. Prior to commencing any Tenant Changes,  Tenant, at its sole
                  cost and expense  shall  obtain and deliver to  Landlord,  for
                  Landlord's prior written consent, all of the following:

                  11.2.1.1.   Detailed  architect's  plans  and  specifications,
                              showing the proposed Tenant Changes;

                  11.2.1.2.   A certificate  evidencing  that Tenant or Tenant's
                              contractors  have  procured  and paid for worker's
                              compensation   insurance   covering   all  persons
                              employed in connection  with the Tenant Changes or
                              who might asset claims for death or bodily  injury
                              against Landlord, Tenant, or the Property;

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                  11.2.1.3.   A certificate  evidencing such additional personal
                              injury and  property  damage  insurance  (over and
                              above the  insurance  required  to be  carried  by
                              Tenant  pursuant to the  provisions  of Article 31
                              hereof)  as  Landlord  may  reasonably  require in
                              connection with the Tenant Changes;

                  11.2.1.4.   Copies of all contracts and  subcontracts  for the
                              completion  of the Tenant  Changes  together  with
                              Tenant's written certification as to the estimated
                              total cost of the Tenant Changes;

                  11.2.1.5.   If  Landlord's  estimate  of the total cost of the
                              Tenant Changes is in excess of $10,000.00, then at
                              Landlord's  option,  Tenant shall furnish Landlord
                              with a surety company performance bond in form and
                              substance  satisfactory  to Landlord,  procured at
                              Tenant's cost and expense,  and issued by a surety
                              company acceptable to Landlord, in an amount equal
                              to at least  120% of the  estimated  total cost of
                              the Tenant  Changes,  guaranteeing to Landlord and
                              Mortgagee  the  completion   thereof  and  payment
                              therefor within a reasonable  time, free and clear
                              of all liens,  encumbrances,  security  interests,
                              and  other  charges,  and in  accordance  with the
                              plans and specifications and any modifications and
                              amendments thereto approved by Landlord.

                  11.2.1.6.   Such permits, authorizations or consents as may be
                              required by any  applicable  law,  rule,  order or
                              requirement of any  governmental  authority having
                              jurisdiction thereof,  provided,  however, that no
                              plans,  specifications  or  applications  (or  any
                              modifications  or  amendments  thereto)  shall  be
                              filed by Tenant  with any  governmental  authority
                              without first obtaining  Landlord's  prior written
                              consent in each instance.

      11.3. If  Landlord  determines  that  the  prior  written  consent  of the
            Mortgagee is required,  Tenant shall obtain and deliver such consent
            to  Landlord,  at  Tenant's  sole  cost  and  expense,  prior to the
            commencement  of the Tenant  Changes,  and Tenant shall comply fully
            with the  requirements of the Mortgagee,  also at Tenant's sole cost
            and expense.

      11.4. In no event shall any material or equipment be incorporated in or to
            the Premises in connection  with any Tenant Changes which is subject
            to any lien,  encumbrance,  security  interest or charge of any kind
            whatsoever,  or  subject  to  any  title  retention  agreement.  Any
            mechanic's  or  materialman's  lien filed against all

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            or any part of the Premises or the Property or  Landlord's  interest
            therein, for work claimed to have been done for Tenant, or materials
            claimed to have been  furnished to Tenant,  shall be  discharged  by
            Tenant  within  ten  (10)  days  thereafter,  at  Tenant's  cost and
            expense,  by filing any bond  required by law or  otherwise.  Tenant
            shall defend,  indemnify and save Landlord harmless from and against
            any such  liens  and all costs and  expenses  (including  reasonable
            attorney's fees) incurred by Landlord in connection therewith.

      11.5. Tenant shall cause all Tenant  Changes to be  performed  promptly at
            its sole cost and expense;

            11.5.1.     Only pursuant to written  contracts with contractors and
                        mechanics that have been approved in advance by Landlord
                        in writing;

            11.5.2.     In a good and  workmanlike  manner,  using prime quality
                        new materials and  equipment,  at least equal in quality
                        and class to the original Building installations;

            11.5.3.     in compliance  with all applicable  laws, and government
                        rules, permits,  authorizations,  licenses,  regulations
                        and orders;

            11.5.4.     In compliance with all insurance  policies affecting the
                        Premises and the Building;

            11.5.5.     So as not to disturb or interfere with or delay Landlord
                        in the  operation  of the  Building or the  provision of
                        services thereto or to any other lessees of the Building
                        or  any  of  their  employees,   agents,   licensees  or
                        invitees;

            11.5.6.     So as not to obstruct  or cause to  obstruct  any of the
                        Common Facilities;

            11.5.7.     So as not to cause any damage or injury to the  Building
                        or to the  Property of  Landlord or any other  lessee of
                        the  Building,  or  any  of  their  employees,   agents,
                        licensees or invitees;

            11.5.8.     So as not to result in any cost or expense to
                        Landlord whatsoever.

      11.6. Tenant  shall  not  exercise  any  of  its  rights  pursuant  to the
            provisions  of this  Article 11 in a manner  which would  create any
            work  stoppage,  picketing,  labor  disruption  or dispute,  violate
            Landlord's union contracts affecting the Property, or interfere with
            the  business  of  Landlord  or any other  lessee or occupant of the
            Building.

      11.7. When furnished by or at the expense of Tenant (except when same is a
            replacement  of an item  theretofore  furnished  and paid for by the
            Landlord or

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<PAGE>

            against which Tenant has received a credit),  all movable  property,
            furniture,  furnishings and trade fixtures, other than those affixed
            so that they cannot be removed without damage to the Building or the
            Property ("Tenant's  Property") shall remain the property of Tenant,
            and may be removed by Tenant prior to the expiration of the Term. In
            case  Tenant  shall  decide  not to  remove  any or all of  Tenant's
            Property,  Tenant  shall notify  Landlord in writing,  not less than
            sixty (60) days prior to the expiration of the Term,  specifying the
            items of property which Tenant has decided not to remove. If, within
            thirty  (30) days  after  receipt  of such  notice,  Landlord  shall
            request Tenant to remove any or all of such  property,  Tenant shall
            remove such property,  at Tenant's cost and expense,  at or prior to
            the expiration of the Term. At the  expiration of other  termination
            of this Lease, Tenant shall restore the Premises and the Property to
            the  same  good  order  and   condition  as  they  were  in  on  the
            Commencement Date hereof, normal wear and tear excepted,  and tenant
            shall repair any damage caused in connection with the removal of any
            of Tenant's Property  therefrom.  If Tenant shall fail to remove any
            or all of Tenant's property,  Landlord may remove any or all of such
            property,  and dispose of it or place it in storage, and restore the
            Premises to good order and condition as herein provided,  and Tenant
            shall reimburse Landlord for all of Landlord's costs and expenses in
            connection  therewith as additional rent, within ten (10) days after
            Landlord gives Tenant written notice as to the amount hereof. Any of
            Tenant's  Property  not  removed  by  Tenant,  at  the  election  of
            Landlord,  shall be deemed to be abandoned  by Tenant,  and Landlord
            may retain or dispose of such  property  as  Landlord  shall  elect,
            without  accountability  to Tenant but at Tenant's cost and expense.
            The  provisions  of this Section 11.7 shall survive  termination  of
            this Lease.

      11.8. Unless  Landlord elects  otherwise  (which election shall be made by
            written  notice  not  less  than  thirty  (30)  days  prior  to  the
            expiration  or other  termination  of this  Lease) all  alterations,
            decorations,  partitions,  installations,  additions or improvements
            upon or to the  Property or in the  Premises,  made by either  party
            subsequent to the Commencement  Date and not easily removable by the
            Tenant without material damage,  including,  but not limited to, all
            wall-to-wall carpeting,  paneling, railings and the like, affixed to
            the  Property,  or for which  Tenant has  received  a credit,  shall
            become the  property of the  Landlord  and shall  remain upon and be
            surrendered  with the Premises at the end of the Term.  In the event
            the Landlord shall exercise such  election,  then such  alterations,
            decorations,  installations,  additions,  or  improvements  made  by
            Tenant  upon the  Property  or in the  Premises  as  Landlord  shall
            designate in such notice shall be removed by Tenant and Tenant shall
            restore  the  Property  and the  Premises  to its  condition  on the
            Commencement  Date,  reasonable wear and tear excepted,  at Tenant's
            cost and expense, at or prior to the expiration or other termination
            of the Term.  If  Tenant  fails to remove  any  fixture,  equipment,
            improvement installation or appurtenances which, as herein provided,
            are  required  to be  removed  by  Tenant,  within  the  time  above
            specified  therefor,  then  Landlord  (in addition to all rights and
            remedies to which  Landlord may be entitled at any time) may, at its
            election,  deem  that  the

                                       36
<PAGE>

            same has been abandoned by Tenant and Landlord may retain or dispose
            of such  property and restore the  Property to its  condition on the
            Commencement  Date without  accountability to Tenant and at Tenant's
            cost and expense. Tenant shall reimburse Landlord for such costs and
            expenses,  as  additional  rent,  within ten (10) days after written
            notice to Tenant of the amount thereof.

      11.9. Notwithstanding   the  right  of  Landlord  to  approve  any  matter
            described in the Article,  Landlord shall have no  responsibility or
            liability  for the  performance  or  quality  of  work or  materials
            furnished by any contractor,  subcontractor,  agent or consultant of
            Tenant. The approval by Landlord,  whether expressed or implied,  of
            any  Tenant  Changes  shall in no way  affect  Landlord's  rights or
            Tenant's obligations relating to the restoration of the Property and
            Premises at the expiration or other termination of the Term.

30.   Compliance with Rules and Regulations; Compliance with Law.

      12.1. Tenant  shall  observe  and  comply  with the rules and  regulations
            hereinafter  set forth in Exhibit "A" attached  hereto and with such
            further  reasonable rules and regulations as Landlord may prescribe,
            on  written  notice  to  the  Tenant,  for  the  safety,   care  and
            cleanliness   of  the  Property  or  for  the  comfort,   quiet  and
            convenience of the other occupants of the Building.

      12.2. Tenant  shall  not  place a load  upon  any  floor  of the  Premises
            exceeding  the floor load per square foot area which it was designed
            to carry and which is allowed by law. Landlord reserves the right to
            prescribe  the weight and position of all safes,  business  machines
            and mechanical  equipment.  Such  installations  shall be placed and
            maintained by Tenant, at Tenant's expense,  in settings  sufficient,
            in Landlord's judgment,  to absorb and prevent vibration,  noise and
            annoyance.

      12.3. Lessee shall,  at its expense,  comply  promptly with all applicable
            statues,  ordinances,  rules, regulations,  orders,  restrictions of
            record,  and  requirements  in effect during the Term or any part of
            the Term hereof  regulating  or relating to the use by Lessee of the
            Premises.  Lessee  shall  neither  use  nor  permit  the  use of the
            Premises in any manner that will tend to create waste,  nuisance, or
            damage to the Building.

      12.4. Lessee hereby accepts the Demised Premises subject to all applicable
            zoning, municipal,  county and state laws, ordinances,  covenants of
            record,  and  regulations  governing and  regulating  the use of the
            Premises,  and accepts this Lease subject thereto and to all matters
            disclosed  thereby and by any  exhibits  attached  hereto.  Landlord
            makes  no  representations  as  to  any  permissive  use  of  zoning
            ordinance  interpretation.  Tenant,  or Landlord at its sole option,
            shall be responsible for obtaining,  at Tenant's cost and expense, a
            temporary and/or permanent Certificate of Occupancy for the Premises
            from the Borough of Hasbrouck Heights

                                       37
<PAGE>

            permitting  Tenant's  use of the  Property  as provided  herein,  if
            required by applicable law. Provide however,  the Commencement  Date
            set  forth in  Paragraph  7.1  shall  not be  delayed  or  otherwise
            extended by reason of Tenant's  failure to obtain a  Certificate  of
            Occupancy on or before the Commencement Date, except if such failure
            results from Landlord's  failure to complete any work required to be
            performed by Landlord hereunder.

      12.5. Lessee  represents  and  warrants  that it has reviewed the Standard
            Industrial   Classification   Manual   prepared  by  the  Office  of
            Management and Budget of the U.S. and that the S.I.C. number for the
            operations  to be conducted by Tenant at the Premises is  _________.
            Lessee  shall  advise  Lessor  immediately  in the event its  S.I.C.
            number should change.

            Lessee represents and warrants that the business operations which it
            shall conduct at the Premises do not  constitute the operation of an
            industrial establishment as defined in the Environmental Cleanup and
            Responsibility Act (hereinafter  "ECRA"),  or, on the other hand, if
            it is or at any time shall become such an industrial  establishment,
            Tenant will comply with all ECRA requirements  during operations and
            at the time of closing, terminating or transferring the operations.

            Lessee  represents and warrants that no use to be undertaken  shall,
            in addition to the additional warranties and restrictions  contained
            herein,   violate   any  rules,   regulations   or  statute  of  the
            Occupational  Safety and Health  Administration or any other similar
            enactment.

            If at any time during the original  term or any renewal or extension
            of  this  Lease,  Lessor  shall  reasonably  believe  that  Lessee's
            operation violates ECRA or ay other environmental law or regulation,
            or for other good cause, including the planned closing,  termination
            or  transferring  of the operation at, or ownership of, the Premises
            or the  Property,  upon sixty (60) days written  notice Lessee shall
            submit to Lessor at  Lessee's  sole cost and  expense,  either (1) a
            letter of  non-applicability  or a Negative  Declaration approved by
            the New Jersey  Department  of  Environmental  Protection,  or (2) a
            Cleanup  Plan  and  a  surety  bond  or  other  financial   security
            guaranteeing   performance   of  the  Cleanup   Plan,   meeting  the
            requirements   of  the  New  Jersey   Department  of   Environmental
            Protection.

31.   Damages to Building; Waiver of Subrogation.

      13.1. If the Building is damaged by fire or any other cause to such extent
            that the cost of restoration,  as reasonably  estimated by Landlord,
            will equal or exceed  twenty-five  (25%) percent of the  replacement
            value of the Building  (exclusive of foundations)  just prior to the
            occurrence  of the  damage  then  Landlord  may,  no later  than the
            sixtieth  (60th) day  following  the damage,  given Tenant notice of
            election to  terminate  this Lease,  or, if the cost of  restoration
            will exceed fifty (50%) percent of such replacement value and if the
            substantial  portion of the

                                       38
<PAGE>

            Premises  are  damaged  therefrom   rendering  the  Premises  wholly
            untenantable or unfit for occupancy,  then Tenant may, no later than
            the sixtieth  (60th) day  following  the casualty or loss,  give the
            Landlord  notice of election to terminate this Lease;  provided that
            Tenant shall not have the right to terminate  this Lease in any such
            event if the  damage is caused  by  Tenant  or  Tenant's  employees,
            agents,  licensees or invitees. If such election is exercised,  this
            Lease shall be deemed to terminate on the fifteenth (15th) day after
            the giving of such notice.  The basic rent, and any additional rent,
            shall be apportioned as of the date of such termination. If the cost
            of  restoration  as estimated by Landlord  shall amount to less than
            twenty-five  (25%) percent of the replacement value of the Building,
            or if,  despite  the  cost,  Landlord  or  Tenant  does not elect to
            terminate this Lease as provided  above,  Landlord shall restore the
            Building and the Premises  with  reasonable  promptness,  subject to
            Force  Majeure,  and the partes  shall have  waived  their  right to
            terminate  this Lease.  Landlord shall have no duty or obligation to
            restore Tenant's  Property,  equipment,  fixtures or Tenant Changes.
            The words  "restoration"  and  "restore" are used in this Article 13
            shall include repairs.

      13.2  In any case in which  Tenant's use of the Premises is materially and
            adversely  affected by any damage to the  Building or  appurtenances
            thereto,  the rent  accrued and  accruing  shall not cease but there
            shall be either an abatement of an equitable reduction in basic rent
            and additional rent depending on the period for which and the extend
            to which the Premiss are not reasonably  usable for the purposes for
            which they are leased  hereunder.  IF the  damage  results  from the
            fault of the Tenant,  or Tenant's  agents,  employees  or  invitees,
            Tenant shall not be entitled to any  abatement or reduction in basic
            rent or additional rent.

      13.3  Notwithstanding  the provisions of this Article 13 of this Lease, in
            any event of loss or  damage  to the  Property,  the  Building,  the
            Premises  and/or any  contents,  each party  shall look first to any
            insurance  in its favor  before  making any claim  against the other
            party,  and, to the extent possible  without  additional  cost, each
            party  shall  obtain,  for  each  policy  of  insurance,  provisions
            permitting  waiver of any claim  against the other party for loss or
            damage within the scope of such  insurance,  and each party, to such
            extent permitted, for itself and its insurers hereby waives all such
            claims against the other party.

32.   Eminent  Domain.  If  Tenant's  use  of the  Premises  is  materially  and
      adversely  affected due to the taking by eminent  domain of part or all of
      the  Premises or any other part of the Building or  appurtenances  thereto
      including  the parking  lot,  this Lease shall  terminate on the date when
      title vests  pursuant to such taking.  The basic rent,  and any additional
      rent,  shall be apportioned as of the  termination  date and any basic and
      additional rent paid for any period beyond the  termination  date shall be
      repaid to Tenant.  Tenant  shall not be  entitled to any part of the award
      for such  taking or any  payment  in lieu  thereof,  but Tenant may file a
      separate claim for any taking of fixtures and improvements owned by Tenant
      which have not become the Landlord's  property,  and for moving  expenses,

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<PAGE>

      provided the same shall in no way affect or diminish  Landlord's award. In
      the event of a partial  taking which does not affect a termination of this
      Lease but does  deprive  Tenant of the use of a portion  of the  Premises,
      there shall be an  equitable  reduction  of the basic rent and  additional
      rent,  depending  on the  period  for  which  and the  extent to which the
      Premises  are not  reasonably  usable for the  purpose  for which they are
      leased hereunder.

33.   Assignment, Subletting.

      15.1. If the  Tenant  shall  desire to sublet  all or any  portion  of the
            Premises, it shall first submit in writing to the Landlord;

            15.1.1.     The name and address of the proposed subtenant;

            15.1.2.     The terms and conditions of the proposed subletting;

            15.1.3.     The nature and character of the business of the proposed
                        subtenant;

            15.1.4.     Banking, financial and other credit information relating
                        to  the  proposed  subtenant  reasonably  sufficient  to
                        enable  Landlord to determine  the proposed  subtenant's
                        financial responsibility; and

            15.1.5.     Plans and specifications  for the layout,  partitioning,
                        HVAC and electrical installations,  if any, required for
                        the Premises to be sublet.

      15.2. If the  nature  and  character  of  the  business  of  the  proposed
            subtenant, and the proposed use and occupancy of the Premises by the
            proposed  subtenant,  is in keeping and compatible  with the dignity
            and  character  of  the  Building,   then  Landlord  agrees  not  to
            unreasonably  withhold  or delay its  consent  to any such  proposed
            subletting,  providing  that Tenant  shall,  by notice in writing as
            described in Article 15.1 above, advise Landlord of its intention to
            sublease all or any part of the Premises, on and after a stated date
            (which  shall not be less  than  sixty  (60) days  after the date on
            which Tenant's  notice is given).  Landlord shall thereupon have the
            right,  to be exercised by giving  written  notice to Tenant  within
            thirty (30) days after  Landlord's  receipt of Tenant's  notice,  to
            recapture  the Premises.  Such  recapture  notice  shall,  if given,
            cancel and  terminate  this Lease with respect to the space  therein
            described  as of the date  thirty (30) days  following  the date set
            forth in Tenant's  notice,  or thirty (30) days after  Tenant  shall
            have  surrendered  possession of the  Premises,  whichever is later,
            with no further obligation due by Tenant with respect to such space.
            In the event less than all of the Premises are sublet or  recapture,
            Tenant or any  permitted  sublessee  shall be obligated to construct
            and erect such  partitioning  and means of ingress and egress as may
            be  required  to sever the space  retained  by tenant from the space
            recaptured or sublet, all in accordance with requirements of Article
            11 hereof.

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<PAGE>

      15.3. If this Lease should be  cancelled  pursuant to the  foregoing  with
            respect  to less  than  the  entire  Premises,  the  basic  rent and
            additional rent shall be proportionately  adjusted,  and this Lease,
            as so amended, shall continue thereafter in full force and effect.

      15.4. In addition to the foregoing requirements, no sublease shall be
            made if:

            15.4.1      Such sublease  shall result in occupancy of the Premises
                        by more  than  two (2)  tenants,  including  the  Tenant
                        hereunder, or

            15.4.2      The  sublease  shall be for a term of less  than two (2)
                        years,  unless the unexpired term of this Lease shall be
                        less than (2) years, or

            15.4.3.     The proposed  subtenant  shall be an existing  tenant of
                        the Building, or any other building owned by Landlord or
                        any Affiliate of Landlord, or

            15.4.4.     Tenant  shall be in  default  under  any of the terms or
                        conditions  of this  Lease at the time of any  notice or
                        request for consent  under the terms of this  Article or
                        at the effective date of such subletting.

      15.5. Any subletting  which is not recaptured by Landlord shall not in any
            event release or discharge Tenant of or from any liability,  whether
            past,  present or future,  under this Lease, and Tenant shall remain
            liable  hereunder  with  respect to the entire  Premises,  except as
            otherwise  provided herein or by law. The subtenant shall also agree
            in writing,  to assume,  comply with, and bound by all of the terms,
            covenants,  conditions,  provisions  and agreements of this Lease to
            the extent of the space sublet; and Tenant shall deliver to Landlord
            promptly after  execution,  an executed  duplicate  original copy of
            such sublease and an agreement of assumption by the subtenant.

      15.6. The sublease must provide that it is subject to all of the terms and
            conditions  of this Lease and the sublease  must provide that in the
            event of the  expiration or other  termination of this Lease for any
            reason whatsoever whether voluntary,  involuntary or by operation of
            law,  prior to the expiration  date of such  sublease,  the proposed
            subtenant  agrees,  but only if  requested  by and at the  option of
            Landlord,  to make full and complete  attornment to Landlord for the
            balance  of the  term of the  sublease.  Such  attornment  shall  be
            evidenced  by an  agreement in form and  substance  satisfactory  to
            Landlord, which the proposed subtenant agrees to execute and deliver
            at any time within five (5) days after  requested  of  Landlord,  it
            successors  and  assigns,  and the  proposed  subtenant  waives  the
            provisions  of any law now or hereafter in effect which may give the
            proposed  subtenant  any right of election to terminate the sublease
            or to  surrender  possession

                                       41
<PAGE>

            of the premises in the event any  proceeding  is brought by Landlord
            under this Lease to terminate this Lease.

      15.7. Tenant shall be responsible  for obtaining all permits and approvals
            required by any  governmental  or  quasigovernmental  agency for any
            work,  or as  otherwise  required in  connection  with the  proposed
            sublease of the Premises.  Tenant shall also be responsible  for and
            is  required to  reimburse  Landlord  for all costs  which  Landlord
            incurs  in  reviewing  the  proposed  sublease,  including  a charge
            payable to Landlord in the sum of Five  Hundred  Dollars  ($500.00),
            and for the cost of any permits,  approvals and applications for the
            construction or alteration of the subleased premises.

      15.8. The Tenant shall not assign this Lease.

34.   Activities  Increasing Fire Insurance Rates. Tenant shall not do or suffer
      anything to be done in the Premises  which will  increase the rate of fire
      insurance on the Building.

35.   Right to Inspect and Repair.  Landlord may enter the  Premises,  but shall
      not be obligated to do so (except as required by an specific  provision of
      this Lease); at any reasonable time on reasonable notice to Tenant (except
      that no notice  need be given in case of  emergency)  for the  purpose  of
      inspection or the making of such repairs,  replacements of additions,  in,
      to, and about the Premises or the Property, as Landlord deems necessary or
      desirable,   provided  Landlord  shall  not  unreasonably  interfere  with
      Tenant's business  operations at the Property.  Landlord shall restore the
      Premises  to  their  pre-existing  condition  if  any  damage  results  in
      connection  with such repairs,  replacements  or additions by Landlord and
      Landlord shall repair any other  property  damaged in the course of making
      such repairs,  replacements or additions,  the cost f such restoration and
      repair to be at  landlord's  expense.  In no event  shall  Tenant have any
      claims  against  Landlord for necessary and  reasonable  interruptions  of
      Tenant's  business,  or for any other  consequential  damages sustained by
      Tenant in the course of such repairs, replacements or restoration, however
      occurring,  including those resulting from the negligence of Landlord, its
      agents or employees.

36.   No Liability of Landlord.

      18.1. Landlord and its agents, and employees,  shall not be liable for any
            loss of or damage to any of Tenant's Property or Tenant's Changes or
            to property of others any of which is  entrusted  to any employee of
            the Building,  nor shall Landlord, its agents or employees be liable
            for any injury or damage to persons or property resulting from fire,
            explosion, falling plaster, steam, gas, electricity,  water, rain or
            snow or  leaks  from  any part of the  Building  or from the  pipes,
            appliances or plumbing works or from the roof, street or sub-surface
            or from any other  place or by  dampness  or by any  other  cause of
            whatsoever  nature,  unless  caused by and due to the  negligence or
            wilful misconduct of Landlord,  its agents or employees.

                                       42
<PAGE>

            Nothing in this section 18.1 contained  shall be deemed to impose on
            the  Tenant  liability  for any of the  foregoing  unless  caused by
            Tenant.

      18.2. Tenant agrees if Tenant, its contractors,  agents or employees shall
            be negligent, to indemnify,  defend and save harmless,  Landlord and
            its partners, officers, directors, contractors, agents and employees
            from and against any  property  damage and bodily  injury  liability
            (statutory  or  otherwise),   claims,   suits,   demands,   damages,
            judgments,   costs,   fines,   penalties,   interest   and  expenses
            (including, but not limited to, reasonable attorney's fees) to which
            landlord or any such partner, officer, director,  contractor,  agent
            or employee  may be subject or suffer by any  liability or claim for
            any  injury to, or death of, any  person,  for  persons or damage to
            property  (including  any loss of use thereof) or otherwise  arising
            from or in  connection  with the  negligent use and occupancy of the
            Premises or the Property,  or from, any work;  installation or thing
            whatsoever   done  or  omitted   (other  than  by  Landlord  or  its
            contractors or the agents or employees of either) in the Premises or
            on the  Property  during the Term and during the period of time,  if
            any, prior to the Commencement  Date that Tenant may have been given
            access to the Premises, or arising from any default by Tenant in the
            performance  of  Tenant's  obligations  under this Lease or from any
            negligent  act or  omission  of  Tenant or any of  Tenant's  agents,
            contractors, employees, subtenants, licensees, or invitees.

      18.3. Tenant shall  reimburse and compensate  Landlord as additional  rent
            within  five  (5)  days  after  rendition  of a  statement  for  all
            expenditures  made by or  losses,  damages  or  fines  sustained  or
            incurred by  Landlord  (including,  but not  limited to,  reasonable
            attorney's  fees)  due  to  the  operation  of  this  Article  18 or
            non-performance  or  non-compliance  with or  breach or  failure  by
            Tenant to observe any term, covenant or condition of this Lease.

37.   Services to be Provided by Landlord; Landlord's Exculpation.  While Tenant
      is not in default  under any of the  provisions  of this  Lease,  Landlord
      agrees to furnish during Building Hours, except on Holidays,  the cleaning
      services  set  forth  on  Exhibit  "C"  attached  hereto,  subject  to the
      conditions   therein   stated;    heating,    ventilating   and   ordinary
      air-conditioning  ("HVAC"),  as  appropriate  for the  season;  and Common
      Facilities cleaning, maintenance and lighting.

      19.1  Notwithstanding  the  requirements  of any  provision of this Lease,
            Lessor  shall  not be  liable  for  failure  to  furnish  any of the
            aforesaid  services  when  such  failure  is due to  Force  Majeure.
            Landlord  shall not be liable,  under any  circumstances,  including
            negligence of Landlord,  its agents and  employees,  for loss of, or
            injury  to,  Tenant  or  Tenant's   business  or  property   however
            occurring,  through  or in  connection  with  or  incidental  to the
            furnishing of, or failure to furnish, any of the aforesaid services.

      19.2. Lessee's  use of HVAC in excess of Building  Hours shall result in a
            direct charge to Tenant to reflect such additional  consumption,  as
            determined by Landlord's

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<PAGE>

            independent electrical consultant,  which charge shall be payable by
            Tenant to Landlord within ten (10) days after demand by Landlord.

      19.3. This Lease and  obligations  of Tenant to pay rent  hereunder and to
            perform all of the other  covenant and  agreements  hereunder on the
            part of Tenant to be performed shall in no way be affected, impaired
            or  excused  if  Landlord  is  unable to  supply  or is  delayed  in
            supplying  any service  expressly  or impliedly to be supplied or is
            unable  to  make,  or  is  delayed  in  making  repairs,  additions,
            alterations  or  decorations or is unable to supply or is delayed in
            supplying any equipment or fixtures.

      19.4. Landlord  reserves  the right,  without  being  liable to Tenant and
            without  abatement or diminution in rent, to suspend,  delay or stop
            any of Building  services to be  furnished  and provided by Landlord
            under this Lease whenever  necessary by reason of Force majeure,  or
            for emergency, or for inspection,  cleaning, repairs,  replacements,
            alterations,   improvements   or  renewals   which,   in  Landlord's
            reasonable judgment, are desirable or necessary to be made. Landlord
            agrees,  however,  to use its best  efforts  and to act with all due
            diligence  to restore or have  restored  any  services  which may be
            suspended, delayed or stopped.

38.   Electricity.  The cost of  electrical  current  which shall be supplied by
      Landlord for use by Tenant in the Demised Premises, other than for heating
      or air-conditioning purposes, shall be reimbursed to Landlord by Tenant at
      terms,  classifications and rates normally charged by the public utilities
      corporation  serving that part of the  municipality  where the Property is
      located.  In the event Landlord does not install a separate electric meter
      or meters for the Demised  Premises or any other part of the Property used
      exclusively by Tenant, the provisions of Section 20.1 shall be applicable.

      20.1. Tenant agrees that  Landlord's  independent  electrical  engineering
            consultant shall make a survey of the electrical power demand of the
            electric lighting fixtures and the electric equipment used by Tenant
            at  the  Property  to  determine   the  average   monthly   electric
            consumption  thereof.  The  findings  of said  consultant  as to the
            average  monthly  electric   consumption  of  Tenant  shall,  unless
            objected to by Tenant within thirty (30) days after notice to Tenant
            of said findings,  be conclusive and binding on Landlord and Tenant.
            After  Landlord's  consultant  has submitted its report to Landlord,
            Tenant  shall pay to  Landlord  as  additional  monthly  rent of One
            Hundred Eighty Dollars  ($180.00)  which is a fixed  additional rate
            that shall not be  diminished,  reduced or  mitigated as a result of
            Tenant's  failure to use electricity in subject  premises,  Tenant's
            abandonment  of  subject  premises  or  Tenant's  vacator of subject
            premises,  within ten (10) days after demand  therefore by Landlord,
            the  amount  (based  on  the  monthly   consumption  found  by  such
            consultant  and the  applicable  utility  rates)  determined by said
            consultant  as owing from the  Commencement  Date,  through the then
            expired  months of the Term,  to  include  the then  current  month.
            Thereafter,  on the first day of every  month,  in  advance,  Tenant
            shall pay the amount set forth as the

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<PAGE>

            monthly   consumption   in  said   report,   as   additional   rent.
            Proportionate  sums shall be payable for periods of less than a full
            month if the Term  commences  on any day other than the first day of
            the  month.  If  Tenant  objects  to  said  findings,  Tenant  shall
            nevertheless  pay and  continue  to pay  the  amount  determined  by
            Landlord's consultant. Upon objection by Tenant, Tenant shall retain
            a qualified  consultant and if landlord's  and Tenant's  consultants
            cannot  agree as to  Tenant's  consumption  within  ten (10) days of
            Tenant's  consultant's  findings,  either  Landlord  or  Tenant  may
            request the American Arbitration  Association to appoint a qualified
            electrical  engineering consultant whose decision shall be final and
            binding on  Landlord  and  Tenant,  and whose  costs shall be shared
            equally.  Upon the issue being finally  resolved and any overpayment
            made by Tenant shall be refunded by Landlord,  and any  underpayment
            shall be paid by Tenant as additional rent.

      20.2. In the event that there shall be an increase or decrease in the rate
            schedule (including surcharge or demand adjustments),  of the public
            utility  service to the Building,  or the imposition of any tax with
            respect to such  service or increase in any such tax  following  the
            Lease Term's  commencement,  the additional  rent payable under this
            Article 20 shall be adjusted  equitably  to reflect the  increase or
            decrease in rate or imposition or increase in the aforesaid tax. All
            computation shall be made on the basis of Tenant's surveyed usage as
            if a meter  measuring such usage to the Premises  exclusively was in
            place.

      20.3. Tenant  covenants  that it shall  not  introduce  any  equipment  or
            lighting  material  different  from  that  on  the  Property  as  of
            Landlord's  electrical  survey  or  in  addition  to  the  aforesaid
            equipment  or  lighting on the  Property  as of said survey  without
            Landlord's prior written consent.  In no event shall Tenant's use of
            electricity  in the  Premises at any time exceed the capacity of any
            electrical  conductors  and  equipment in or  otherwise  serving the
            Premises.  The  introduction  of any new or  different  equipment or
            lighting  approved by Landlord  shall be cause for a resurveying  of
            the   Premises  at  Tenant's   expense  by   Landlord's   electrical
            consultant,  subject to Tenant's rights and obligations as contained
            in Section 20.1.  above.  Landlord reserves the right to inspect the
            Premises to insure compliance with this provision.

      20.4. Landlord  shall not be liable  in any way to  Tenant,  for any loss,
            damage or expense  which  Tenant may sustain or incur as a result of
            any  failure,  defect or  change in the  quantity  or  character  of
            electrical  energy available for  redistribution to the Premises nor
            for any  interruption in the supply of electricity and Tenant agrees
            that  such  supply  may  be  interrupted  for  inspection,  repairs,
            replacement and in emergencies. In no event shall Landlord be liable
            for any business interruption suffered by Tenant.

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<PAGE>

      20.5. Tenant shall  furnish and install all  replacement  lighting  tubes,
            lamps,  ballasts  and bulbs  required in the  premises,  at Tenant's
            expense,   and  at  Landlord's  option,  shall  purchase  same  from
            Landlord.

      20.6. Lessee's use of electrical  service as contemplated  herein shall be
            during Building Hours,  and any use in excess of said Building Hours
            shall result in an adjustment  computed as set forth in Section 20.1
            above to reflect such additional consumption.

39.   Bankruptcy of Tenant.

      21.1. Upon the filing of a petition  by or against  Tenant  under the U.S.
            Bankruptcy  Act of 1978,  as amended or under any other law relating
            to bankruptcy, Tenant, as debtor or as debtor in possession, and any
            trustee  who may be  appointed,  agree to  perform  each  and  every
            obligation  of Tenant under this Lease until such time as this Lease
            is  either  rejected  or  assumed  by  order  of  the  Court  having
            jurisdiction  thereof; to pay monthly in advance on the first day of
            each month as reasonable  compensation  for use and occupancy of the
            Demised  Premises  an  amount  equal to all rent and  other  charges
            otherwise due pursuant to this Lease; to reject or assume this Lease
            within sixty (60) days of the filing of such petition  under Chapter
            7 of the  Bankruptcy Act or within one hundred twenty (120) days (or
            such  shorter  term as  Landlord  in its sole  discretion,  may deem
            reasonable  so long as notice of such period is given) of the filing
            of a petition  under any other  Chapter;  to give  Landlord at least
            forty-five (45) days prior written notice of any proceeding relating
            to any  assumption of this Lease;  to give at least thirty (30) days
            prior written notice of any  abandonment  of the Premises,  any such
            abandonment to be deemed a rejection of this Lease;  to do all other
            things  of  benefit  to  Landlord   otherwise   required  under  the
            Bankruptcy  Act;  to be deemed to have  rejected  this  Lease in the
            event of the  failure to comply  with any of the above;  and to have
            consented to the entry of an order by an  appropriate  United States
            Bankruptcy  Court  providing  all of the above,  waiving  notice and
            hearing of the entry of same.

      21.2. No default under this Lease by Tenant, either prior to or subsequent
            to the  filing  of such a  petition,  shall be  deemed  to have been
            waived unless expressly done so in writing by Landlord.

40.   Defaults.

      22.1  In the event that:

            22.1.1.     Tenant  defaults in the payment of any basic rent or any
                        additional rent and such default continues for three (3)
                        days after the same has become due;

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<PAGE>

            22.1.2.     Tenant  defaults in  fulfilling  any of the  covenant or
                        agreements  of  this  Lease  on its  part  to be kept or
                        performed  and such default is not cured within  fifteen
                        (15) days after  written  notice  from  Landlord  or its
                        agent  or if  such  default  is of such  nature  that it
                        cannot be completed  cured  within such  period,  Tenant
                        does not commence such curing  within  fifteen (15) days
                        and  thereafter  fails to proceed with due diligence and
                        in good faith to cure such default; or

            22.1.3.     This Lease is  transferred  to or  dissolves  by merger,
                        consolidation  or operation of law upon person,  firm or
                        corporation   other  than  Tenant,   except  as  may  be
                        specifically permitted by this Lease;

            22.1.4.     A receiver is  appointed  to take  possession  of all or
                        substantially all of the Tenant's assets or Tenant makes
                        a general  assignment  for the benefit of  creditors  or
                        Tenant  takes  any  action  or  suffers  to be taken any
                        action under any insolvency or bankruptcy act; or

            22.1.5.     Tenant  abandons  the  Premises or Tenant  fails to take
                        possession  of the  Premises  within ten (10) days after
                        the  Commencement  Date; then and in any of such events,
                        Landlord or its agent,  may give Tenant  written  notice
                        specifying a day not less than five (5) days  thereafter
                        whereupon  if the  default  is not cured the Term  shall
                        end, and on the day  specified  the Term shall expire as
                        if that day were the day herein fixed for the expiration
                        of the Term,  and Tenant  shall then quit and  surrender
                        the Premises to Landlord and Tenant shall remain  liable
                        as herein provided.

      22.2  Upon the occurrence of any of the events  specified in Section 22.1,
            and after the  expiration of any applicable  grace period,  Landlord
            may re-enter the Premises and remove  Tenant by summary  proceedings
            or otherwise.  In case of any such re-entry,  expiration of the Term
            and/or  dispossess by summary  proceedings  or otherwise,  the basic
            rent and additional rent shall become due and payable up to the time
            of such re-entry,  dispossess and/or expiration,  together with such
            reasonable expenses as Landlord may incur in obtaining possession of
            the Premises (including,  but not limited to, reasonable  attorneys'
            fees, brokerage fees and/or the cost of putting the Premises in good
            order,  and for preparing the same for  re-rental)  but Tenant shall
            not  be  responsible  for  substantial  "build  to  suit"  types  of
            expenses.

            Landlord may relet the Premises or any part or parts thereof,  for a
            term or terms which may at Landlord's  option be less than or exceed
            the period which may otherwise have  constituted  the balance of the
            Term and may grant reasonable  concessions,  or free rent and Tenant
            shall  not  be   credited   therewith;   and  Tenant  or  the  legal
            representatives  of Tenant  shall also pay  Landlord  as  liquidated
            damages

                                       48
<PAGE>

            for the  failure  of Tenant to observe  and  perform  said  Tenant's
            covenants herein  contained,  any deficiency  between all basic rent
            and additional rent hereby reserved and/or covenanted to be paid and
            the net amount,  if any, of the basic and additional rents collected
            on account of the Lease of the  Premises  for the period which would
            otherwise  have  constituted  the  balance  of the  Term.  Any  such
            liquidated  damages shall be paid in monthly  installments by Tenant
            on the rent days  specified in the Lease,  until  Landlord or Tenant
            shall elect to accelerate the payment of such liquidated  damages in
            which event  Tenant shall pay  Landlord,  within ten (10) days after
            Landlord's   demand,  an  amount  equal  to  such  deficiency  above
            discounted to present value by allowing interest at the rate of four
            (4%)  percent per annum.  Any suit  brought to collect the amount of
            such  deficiency  for any month shall not  prejudice  in any way the
            rights of  Landlord  to collect the  deficiency  for any  subsequent
            month by a similar  proceeding.  Landlord  shall  not be liable  for
            inability to relet the Demised  Premises.  The words  "re-enter"  or
            "re-entry"  as used in this Lease shall not be  restricted  to their
            technical legal meaning. Tenant shall not be entitled to any surplus
            accruing  to  Landlord  as a  result  of any  reletting  and no such
            reletting  shall  constitute a surrender and acceptance or be deemed
            evidence  thereof.  Tenant hereby waives all rights of redemption to
            which Tenant or any person under Tenant might be entitled by any law
            now or hereafter in force.

      22.3. In the  event of a breach or  threatened  breach by Tenant of any of
            the covenants or provisions of this Lease,  Landlord  shall have the
            right of  injunction  and the right to invoke any remedy  allowed at
            law or in  equity  as if  re-entry,  summary  proceedings  and other
            remedies were not herein provided for.  Mention in this Lease of any
            particular remedy shall not preclude Landlord from any other remedy,
            in law or in equity.

      22.4. If  Tenant  shall  default  in the  performance  of  any  provision,
            covenant or condition on its part to be performed  under this Lease,
            Landlord may, at its option, perform the same for the account and at
            the expense of Tenant. If Landlord at any time shall be compelled to
            pay or elects  to pay any sum of money or do any act which  requires
            the  payment  of any sum of money by  reason of the  failure  of the
            Tenant to comply with any  provision  of this Lease,  or if Landlord
            incurs  any  expense   including   reasonable   attorneys   fees  in
            prosecuting  or defending  any action or proceeding by reason of any
            default of Tenant  under this Lease,  the sums so paid by  Landlord,
            with  interest at the lesser of the rate of eighteen  (18%)  percent
            per annum or the maximum rate permitted by law,  together with costs
            and  damages  shall be due from and be paid by Tenant to Landlord on
            demand as additional rent hereunder.

41.   Excavations.  If an excavation or other  construction  shall be undertaken
      with Landlord's approval upon land adjacent to the Building,  Tenant shall
      afford to the party  performing  such work  permission  to enter  upon the
      Premises  for the purpose of doing such work as such part deems  necessary
      to  preserve  any wall,  or the  Building,  from  injury or damage

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<PAGE>

      and  to  support  the  same  by  proper  foundations,   without  the  same
      constituting  an eviction of Tenant,  in whole or in part, and without any
      claim  for  damages  or  indemnity  against  Landlord,  or  diminution  or
      abatement of rent.  The party  performing  such work shall use  reasonable
      efforts to  minimize  interference  with,  or  interruption  of,  Tenant's
      business  operations,  and shall expeditiously repair any damage caused to
      the Premises as a result of such work.

42.   Adjustments  to Basic Rent.  The annual basic rent  reserved in this Lease
      and payable hereunder shall be adjusted, as of the times and in the manner
      set forth in this Article.

      (a)   Definitions:  For  the  purposes  of  this  Article,  the  following
            definitions shall apply:

            (i)   The term "Price Index" shall mean the  "Consumer  Price Index"
                  for All Urban  Consumers  as  published by the Bureau of Labor
                  Statistics of the U.S.  Department of Labor from time to time,
                  New  York,  New  York-Northeastern,   New  Jersey,  all  items
                  (1982-84  =  100),   or  a  successor  or   substitute   index
                  appropriately adjusted.

            (ii)  The term  "Initial  Price Index" shall mean the Price Index in
                  effect during the month in which this lease is executed by the
                  parties.

      (b)   Effective  as of the  basic  rent  payment  due on the  first day of
            January  following  the  Commencement  Date, or if said date is less
            than six (6) months after the  Commencement  Date, then effective as
            of the first day of July following the Commencement  Date, and every
            January and July  thereafter  during the Term of this  Lease,  there
            shall be made a cost of living  adjustment  in the annual basic rent
            payable  hereunder  (it being the  intention of the parties that the
            basic rent  adjustment  provided for in this  Article  shall be made
            every six (6) months  after,  the first  adjustment  is made).  Each
            adjustment shall be based on the percentage  difference  between the
            Price  Index in  effect  for the  month  immediately  preceding  the
            applicable adjustment period and the Initial Price Index.

            (i)   In the  event  the  Price  Index  for  the  month  immediately
                  preceding  the period for which the  adjustment  is to be made
                  reflects an increase  over the Initial  Price Index,  than the
                  annual basic rent to be paid pursuant to Article 5.1(a) hereof
                  (unchanged by any  adjustments  under this  Article)  shall be
                  multiplied  by the  percentage  difference  between  the Price
                  Index for such  immediately  preceding  month and the  Initial
                  Price  Index,  and the  resulting  sum  shall be added to such
                  annual basic rent,  effective as of the adjustment  date. Said
                  adjusted  annual  basic  rent  shall   thereafter  be  payable
                  hereunder,   in  equal  monthly  installments,   until  it  is
                  readjusted  pursuant to the terms of this  Lease.  In no event
                  shall  the  annual  basic  rent   payable   during  the  first
                  adjustment  period be less than the annual  basic rent payable
                  pursuant to the provisions of Article 5.1(a) of this Lease. In
                  no event  shall the  annual  basic  rent  payable  during  any
                  subsequent

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<PAGE>

                  adjustment  period be less than the annual  basic rent payable
                  during the immediately preceding adjustment period.

                  The following illustrates the intentions of the parties hereto
                  as to the  computation  of the  aforementioned  cost of living
                  adjustment in the annual basic rent payable hereunder:

                  If the  Lease  is  fully  executed  on  March,  1989,  and the
                  Commencement  Date is June 1, the first basic rent  adjustment
                  would be  effective  on  January 1,  1990.  Assuming  that the
                  annual  basic rent is  initially  $10,000.00,  and the Initial
                  Price  Index was  102.0,  if the Price  Index for the month of
                  December,  1989, was 105.0, then the percentage  increase thus
                  reflected,  e.g.,  2.949%  (3.0/102.0)  would be multiplied by
                  $10,000.00,  and the annual  basic rent would be  increased by
                  $249.10, and effective as of January 1, the monthly payment of
                  basic rent would be  increased  from  $833.33 to $854.09.  The
                  annual basic rent would be adjusted  again on July 1, 1990, by
                  comparing the Initial Price Index and the Price Index for June
                  of such calendar year, and the percentage  increase  reflected
                  would be multiplied by $10,000.00 to determine the  applicable
                  increase in the annual  basic rent.  Adjustments  to the basic
                  annual  rent  would  continue  to be made every six (6) months
                  during the Term.

                  In the above example,  if the Commencement  Date was August 1,
                  1989,  the first  adjustment to the annual basic rent would be
                  made for the six (6) month period  commencing on July 1, 1990.
                  Subsequent  adjustments  would be made  every  six (6)  months
                  thereafter.

                  In the event that the Price Index  ceases to use 1982-84 = 100
                  as the basis of calculation or if a substantial change is made
                  in the terms or number of items  contained in the Price Index,
                  then the Price  Index  shall be  adjusted  to the figure  that
                  would have been  arrived at had the  manner of  computing  the
                  Price  Index  in  effect  at the date of this  Lease  not been
                  altered.  In the even  such  Price  Index (or a  successor  or
                  substitute index) is not available, a reliable governmental or
                  other  non-partisan  publication  evaluating  the  information
                  theretofore  use din  determining the Price Index, as selected
                  by Landlord in its reasonable judgment shall be used.

                  No adjustment  or  recomputations,  retroactive  or otherwise,
                  shall be made due to any  revision  which may later be made in
                  the first published of the Price Index for any month.

            (c)   Landlord  will  cause  statements  of the cost of  living  and
                  adjustments  provided  for in  subparagraph  (b)  above  to be
                  prepared in reasonable detail and delivered to Tenant.

                                       51
<PAGE>

            (d)   Any delay or failure of Landlord,  in computing or billing for
                  the  rent   adjustments   hereinabove   provided,   shall  not
                  constitute  a waiver of or in any way  impair  the  continuing
                  obligation of Tenant to pay such rent adjustment hereunder and
                  Tenant shall pay the rent adjustment for the expired months of
                  the  applicable  adjustment  period within ten (10) days after
                  Tenant's receipt of notice of the adjustment from Landlord.

            (e)   Notwithstanding  any  expiration or  termination of this Lease
                  prior to the lease  expiration  date  (except in the case of a
                  cancellation by mutual agreement)  Tenant's  obligation to pay
                  rent as adjusted  under this Article shall  continue and shall
                  cover all periods up to the Lease  expiration  date, and shall
                  survive any expiration or termination of this Lease.

43.   Partial  Invalidity.  If any  provision  of this Lease or any  application
      thereof to any person or circumstance shall be determined to be invalid or
      unenforceable,  the remaining  provisions of this Lease or the application
      of such provision to persons or circumstances other than those to which it
      is held invalid or  unenforceable  shall not be affected thereby and shall
      be valid and enforceable to the fullest extent permitted by law.

44.   Estoppel  Certificate.  Tenant agrees, at any time, and from time to time,
      upon not less than ten (10) days prior  notice by  Landlord,  to  execute,
      acknowledge and deliver to Landlord, a statement, in writing, addressed to
      Landlord and to any mortgagee,  prospective  mortgage,  or any other party
      specified by Landlord,  certifying  that this Lease is  unmodified  and in
      full force and effect  (or, if there have been  modifications,  describing
      them), the improvements required pursuant to Article 11 have been made and
      completed (if applicable) and stating that Tenant has accepted possession;
      the dates to which base rent,  additional rent and other charges have been
      paid,  the  date on which  the Term of the  Lease  commenced  and  stating
      whether or not to the best  knowledge  of the signer of such  certificate,
      there  exists  any  default  by  either  party in the  performance  of any
      covenant, agreement, term, provision or condition contained in this Lease,
      and,  if so,  specifying  each such  default  of which the signer may have
      knowledge,  and stating any other fact or certifying  any other  condition
      reasonably  requested by Landlord or reasonably required by any mortgagee,
      prospective  mortgagee or  purchaser or assignees of such  mortgagee or of
      Landlord,  it being  intended that any such statement  delivered  pursuant
      hereto  may be  relied  upon by  Landlord  or a  purchaser  of  Landlord's
      interest and by any  mortgagee or  prospective  mortgagee.  Tenant  hereby
      agrees to deliver an  Estoppel  Certificate  to  Landlord on or before the
      Commencement Date of this Lease.

45.   Holding  Over.  In the event that Tenant  shall remain in occupancy of the
      Premises for any period beyond the expiration of the Term of this Lease or
      any renewals or extensions thereof, such occupancy shall be deemed to be a
      month-to-month  tenancy at a monthly  rental equal to twice the sum of the
      basic rent and additional rent payable for the last month of the Term, and
      Tenant shall be liable for any  additional  damages that might be suffered
      by  Landlord as a result of Tenant's  failure to vacate the  Premises  and
      deliver  possession  thereof to Landlord  as  required by this Lease.  The
      acceptance  of rent by

                                       52
<PAGE>

      Landlord  shall not be deemed to create a new or additional  tenancy other
      than as aforesaid.

46.   Landlord's Right to Enter. Landlord shall have the right to enter upon the
      Premises at all reasonable hours for the following purposes: to inspect or
      protect the same; to effect  compliance  with any law, order or regulation
      of any governmental authority having jurisdiction;  to exhibit the same to
      prospective purchasers,  lenders or lessees; to make or supervise repairs,
      additions or alterations to the Premises or the Building,  and to take all
      required materials into the Premises for such purposes;  to erect, use and
      maintain  pipes and  conduits in and through the  Premises;  and to alter,
      decorate or otherwise  prepare the Premises for reoccupancy but only after
      Tenant has vacated the same or shall have removed substantially all of its
      property  therefrom  provided that all of the above is done in conjunction
      with  Tenant so as to  minimize  any  interruption  of  Tenant's  business
      activity  so as to  meet  the  objectives  of  both  parties.  None of the
      foregoing shall constitute an actual or constructive eviction of Tenant or
      a  deprivation  of its rights,  not subject  Landlord to any  liability or
      impose  upon  Landlord  any   obligation,   responsibility   or  liability
      whatsoever,  for the care,  supervision or repair of the Building of which
      the  Premises  are a part,  or any  part  thereof,  other  than as  herein
      specifically provided, or entitle Tenant to any compensation or diminution
      or abatement of the rent reserved.

47.   No Waiver; Entire Agreement; No Surrender.

      29.1. The failure of Landlord or Tenant to seek redress for  violation of,
            or to insist upon the strict performance of any covenant, agreement,
            term,  provision or condition  of this Lease,  or any of  Landlord's
            Rules and  Regulations  shall not  constitute  a waiver  thereof and
            Landlord shall have all remedies  provided  herein and by applicable
            law with respect to any act, which would have originally constituted
            a default  by  Tenant.  The  receipt  by  Landlord  of basic rent or
            additional  rent  with  knowledge  of the  breach  of any  covenant,
            agreement,  term,  provision or condition of this Lease shall not be
            deemed a waiver of such  breach.  The failure of Landlord to bill or
            collect rent in a timely  fashion shall not be construed as a waiver
            of  Landlord's  right to collect rent at any time during the Term or
            any time thereafter.

      29.2. This Lease with the schedules,  riders and exhibits, if any, annexed
            hereto contains the entire  agreement  between  Landlord and Tenant,
            and any agreement  hereafter made between  Landlord and Tenant shall
            be  ineffective  to  change,  modify,  waiver,  release,  discharge,
            terminate or effect a surrender  or  abandonment  of this Lease,  in
            whole or in part,  unless such agreement is in writing and signed by
            the party against whom  enforcement is sought.  If Tenant shall have
            any right to an  extension  or renewal of the Term,  or any right to
            lease other space from  Landlord or any  Affiliate of the  Landlord,
            Landlord's  exercise of  Landlord's  right to  terminate  this Lease
            shall operate automatically and without any further action or notice
            on the part of Landlord to  terminate  such  renewal,  extension  or
            other right, whether or not theretofore exercised by Tenant.

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<PAGE>

      29.3. No employee of Landlord or of Landlord's agents shall have any power
            to accept the keys of the Demised  Premises prior to the termination
            of the Lease. The delivery of keys to any employee of Landlord or of
            Landlord's agents shall not operate as a termination of the Lease or
            a  surrender  of the  Premises.  In the  event of Tenant at any time
            desiring to have Landlord sublet the Premises for Tenant's  account,
            Landlord or Landlord's agents are authorized to receive the keys for
            such purposes  without  releasing Tenant from any of the obligations
            under this Lease.  Tenant hereby relieves  Landlord of any liability
            for loss or damage to any of  Tenant's  effects in  connection  with
            such subletting.

48.   Landlord's  Covenants of Quiet  Enjoyment.  Landlord  covenants and agrees
      that if and so long as Tenant pays the rent herein reserved,  and performs
      and observes the covenants, conditions and agreements hereof upon the part
      of the Tenant to be performed and observed,  Landlord  shall do nothing to
      affect  Tenant's  right to peaceably and quietly have,  hold and enjoy the
      Premises for the term herein mentioned,  subject to the provisions of this
      Lease.

49.   Indemnity and Tenant's Insurance.

      31.1. Tenant shall  indemnify  and hold harmless  Landlord,  its invitees,
            employees  or assigns  from and against  any and all claims  arising
            from Tenant's  negligence or intentional acts (A) in Tenant's use of
            the  Premises  and any other part of the  Property,  or (B) from the
            conduct  of  Tenant's  business  of (C) from any  activity,  work or
            things  done,  permitted  or  suffered  by  Tenant  in or about  the
            Premsies or elsewhere, and shall further indemnify and hold harmless
            Landlord from and against any and all claims arising from any breach
            or default in the  performance of any obligation on Tenant's part to
            the be performed  under the Terms of this Lease, or arising from any
            negligence of the Tenant, or any of Tenant's  employees and from and
            against  all  costs,   reasonable   attorneys  fees,   expenses  and
            liabilities  incurred in the defense of any such claim or any action
            or proceeding brought thereon;  and in case any action or proceeding
            be brought  against  Landlord by reason of any such  claim,  Tenant,
            upon notice from Landlord, shall defend the same at Tenant's expense
            by counsel reasonably satisfactory to Landlord.  Provided,  however,
            Tenant  shall  not be  obligated  to  indemnify  Landlord  from  any
            liability  caused by or resulting from the negligence or intentional
            act of Landlord, its invitees,  contractors, agents or employees, or
            from the act of any third party not associated with Tenant.

      31.2. Tenant shall pay,  provide and keep in force during the Term hereof,
            Comprehensive  General Liability Insurance against claims for bodily
            injury,  death or  property  damage  occurring  on,  in or about the
            Premises  or any  appurtenances  thereto,  arising  out of  Tenant's
            negligence  or  intentional  act in the operation and control of the
            Premises,  including,  but not limited to, any liability of Landlord
            to

                                       54
<PAGE>

            third  parties  arising out of the negligent or  intentional  act of
            Tenant  or  its  employees,   in  total  limits  of  not  less  than
            $1,000,000.00  in  respect  to  bodily  injury  or  death to any one
            person,  and $300,000.00 in respect to any one occurrence,  accident
            or  disaster,  and  property  damage  with  limits  of not less than
            $500,000.00  or  such  other  amounts  as may  from  time to time be
            reasonably  required  by  Landlord,  or  the  holder  of  the  first
            mortgage.  Tenant shall cause Landlord and any mortgagee to be named
            as an additional insureds on said liability insurance.

      31.3. Tenant   covenants  and  represents,   said   representation   being
            specifically designed to induce Landlord to execute this Lease, that
            Tenant's   personal   property,   fixtures  and  all   improvements,
            alterations and additions made by Tenant,  and any other items which
            Tenant may bring to the  Premises  which may be subject to any claim
            for damages or  destruction  due to Landlord's  negligence  shall be
            fully  insured by a policy of  insurance  covering all risks of loss
            with no deductible which such policy shall specifically  provide for
            a waiver of  subrogation  for Landlord  without regard to whether or
            not  same  shall  cost an  additional  premium  and  notwithstanding
            anything to the contrary contained in this Lease.

      31.4. Tenant shall, at its expense, provide and keep in full force for the
            benefit of Landlord and Tenant, rent insurance in an amount at least
            equal to the then  annual  basic rent  payable  hereunder,  plus the
            additional  rent  payable by Tenant for the  proceeding  twelve (12)
            month  period,  and the cost of the annual  premiums  required to be
            paid for the  coverages  provided  for under  this  Article.  Tenant
            hereby assigns to lessor all of its right, title and interest in and
            to the rent insurance  proceeds to be held by lessor as security for
            the payment of the rent and  additional  rents due  hereunder  until
            restoration of the Demised Premises or expiration of the Term.

      31.5. Tenant shall  provide and keep in force such other  insurance and in
            such amounts as may, from time to time,  be  reasonably  required by
            Landlord,  or  any  mortgagee,  wherein  Landlord  is  named  as  an
            additional named insured,  or by the holder of any mortgage to which
            this Lease is subject,  against such other  insurable  hazards as at
            the time are normally insured against in cases of premises similarly
            situated and similarly used.

      31.6. All insurance required to be provided by Tenant by the provisions of
            this Article shall be carried in favor of Landlord,  Tenant, and any
            mortgagee,  as  their  respective  interests  may  appear,  in  such
            responsible  companies  and in such  form  as  shall  be  reasonable
            satisfactory  to Landlord and to the holder of any mortgage to which
            this Lease is subject and subordinate.

      31.7. Cancellation of Insurance.  All policies referred to hereunder,  and
            required to be  procured by Tenant,  shall be paid for by Tenant and
            shall be  non-assessable  and shall  require  thirty (30) days prior
            notice by the insurer by  registered  mail to

                                       55
<PAGE>

            landlord,  and to the holder of any  mortgage to which this Lease is
            subject  and  subordinated,  of any  cancellation  thereof or change
            therein affecting the coverage hereunder.

      31.8. Landlord  to Insure.  If Tenant  fails to procure the  insurance  as
            required  hereunder,  Landlord reserves the unqualified right at any
            time,  after ten (10) days notice,  to secure any insurance  that is
            required  of Tenant  at  Tenant's  expense.  On  Landlord's  demand,
            reimbursement shall be made by Tenant, as additional rent.

      31.9  Evidence of Insurance.  Tenant shall  procure  policies for all said
            insurance  for  periods  of not less  than  one (1)  year and  shall
            deliver to  Landlord  evidence  of  insurance  and of the payment of
            premiums  thereon  within ten (10) days after the date  hereof,  and
            shall  procure  renewals  thereof  from  time  to  time,  delivering
            certificates  of said  renewals to the Landlord at least thirty (30)
            days before the expiration  thereof,  together with such evidence of
            payment as is provided by the insurance carrier.

      31.10.Waiver  of   Subrogation.   Subject  to  their   ability  to  obtain
            appropriate  endorsements from their respective  insurance carriers,
            Tenant and lessor each waive any and all rights of recovery  against
            the  other  and  against  the  officers,   employees,   agents,  and
            representatives  of the  other,  for loss or damage,  etc.,  to such
            waiving  party or its  property or the  property of others under its
            control  where  such  loss or damage is  insured  against  under any
            insurance  policy  in force at the time of such loss or  damage.  In
            obtaining policies of insurance  required by this Lease,  lessor and
            Tenant  shall  obtain  a waiver  of  subrogation  endorsement  or an
            express  provision in the policy  having that  effect.  In the event
            that  any   insurer   imposes  a  charge  for  making   such  waiver
            endorsement,  the charge shall be paid by the respective party; and,
            in the  event  that  either  party  fails  to  obtain  such a waiver
            endorsement from its insurer, then the other party shall be likewise
            relieved  from its  obligation to do so.  Nothing in this  paragraph
            shall be  construed  as a waiver of  recovery  rights with regard to
            damages not compensated by insurance.

50.   Attorney's  Fees.  Tenant  agrees  to  pay to  Landlord  upon  demand,  as
      additional  rent,  a sum  equal  to  all  costs  and  expenses  (including
      reasonable  attorney's fees) incurred by Landlord during or after the Term
      in enforcing all or any of Landlord's rights under this Lease because of a
      breach by Tenant, whether or not an action or proceeding is commenced,  or
      levying and collecting on any judgment in Landlord's favor.

51.   Broker. Tenant and Landlord warrant and represent to each other that there
      are no brokers who negotiated or brought about this transaction other than
      DJM Group. Tenant and Landlord shall indemnify, defend and hold each other
      harmless  from any and all claims for any brokerage  commissions  or other
      compensation  asserted by any other  broker or person in  connection  with
      this Lease,  arising from the respective  acts of Tenant or Landlord,  and
      their respective expenses (including  reasonable  attorney's fees) related

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<PAGE>

      thereto.  Landlord  agrees to pay a broker's  commission to DJM Group with
      respect to this Lease, pursuant to separate agreement.

52.   Execution  by  Landlord.  The  submission  of  this  Lease  Agreement  for
      examination  does  not  constitute  a  reservation  of or  option  for the
      Premises and this Lease shall be of no force and effect  whatsoever unless
      it shall have been executed by the Landlord.

53.   Recordation.  Tenant covenants not to place this Lease or the Commencement
      Date certificate  referred to in Section 7.2 on record.  At the request of
      Landlord, Tenant will execute a memorandum of Lease for recording purposes
      containing references to such provisions of this Lease as Landlord, in its
      sole discretion, shall deem necessary.

54.   Subordination.

      36.1. This Lease,  any  amendments,  extensions,  options (if any) and any
            other  rights  granted  to Tenant  hereunder  shall be  subject  and
            subordinate at all times in lien and priority to any and all present
            and future ground and underlying leases affecting all or any part of
            the Property or Building and to any and all mortgages  which may now
            or hereafter be placed on or affect such leases, and/or the Property
            or Building, and to all renewals, modifications, consolidations, and
            extensions thereof,  without the necessity of any further instrument
            or act on the part of Tenant.  Tenant shall execute and deliver upon
            demand  any  further   instrument  or  instruments   confirming  the
            subordination  of this Lease to the lien of any such  ground  and/or
            underlying lease or mortgage if requested to do so by Landlord,  and
            any further  instrument or  instruments  of  attornment  that may be
            reasonably desired by any such lessee, mortgagee or Landlord. Tenant
            hereby irrevocably appoints Landlord attorney-in-fact to execute and
            deliver any such  instrument for Tenant in the event Tenant fails to
            execute  and  deliver  same  within  five (5) days  after  demand by
            Landlord.  Notwithstanding  the foregoing,  any mortgagee may at any
            time  subordinate  its  mortgage  to  this  Lease  without  Tenant's
            consent,  by giving notice in writing to Tenant,  and thereupon this
            Lease shall be deemed prior to such mortgage without regard to their
            respective dates of execution and delivery,  and in that event, such
            mortgagee  shall have the same rights with  respect to this Lease as
            though  this  Lease had been  executed  prior to the  execution  and
            delivery of the mortgage and had been assigned to such mortgagee. If
            requested  by  Tenant,  Landlord  agrees to use its best  efforts to
            obtain a  nondisturbance  agreement  from any  Mortgagee  which  has
            agreed to provide same, in form reasonably  satisfactory to any such
            Mortgagee.

      36.2. In the event of any act or  omission  by  Landlord  or Tenant  which
            would  give the other  party the right to  terminate  this  Lease or
            claim a partial or total eviction, or claim against Landlord for the
            payment of money,  Tenant will not exercise  such right until it has
            given  written  notice of such act or omission  to Landlord  and the
            mortgagee and a reasonable period for remedying such act or omission
            shall have  elapsed  following  the giving of such  notices,  during
            which period of time the

                                       57
<PAGE>

            Landlord or the Mortgagee or any of them, with reasonable  diligence
            following the giving of such notice, has not commenced and continued
            diligently to remedy such act or omission.  Nothing herein contained
            shall be deemed  to create  any  rights in Tenant  not  specifically
            granted in this Lease or under any applicable  provision of law, nor
            any  obligation  on the part of the  Mortgagee  to remedy any act or
            omission of Landlord.

55.   Notices.  Any notice,  request or demand permitted or required to be given
      by the terms and provisions of this Lease,  or by any law or  governmental
      regulation,  either by Landlord to Tenant or the Tenant to landlord, shall
      be in  writing,  and shall be  delivered  by hand or courier  service,  or
      mailed  by  registered  or  certified  mail,  return  receipt   requested,
      addressed  if to  Tenant,  to  Attention:  Patrick  McLaren,  Perma  Grass
      Corporation,  377 Route 17 South, Suite 116, Hasbrouck Heights, New Jersey
      07604 and if to Landlord,  Satnick Development Corporation at 377 Route 17
      South, Hasbrouck Heights, New Jersey 07604, with a copy to:

      Such  notice,  request  or demand  shall be  deemed  given  when  actually
      delivered or if mailed, when received by the addressee as evidenced by the
      return  receipt,  or if  refused,  the date on which  delivery  was  first
      attempted as evidenced by the postal  records.  Either party may from time
      to time,  by  notice as  aforesaid,  designate  a  different  address  for
      notices, requests or demand.

56.   Personal  Property  Taxes.  Tenant  agrees to pay all taxes imposed on the
      Property of Tenant for its use and occupancy of the Premises,  and to hold
      Landlord harmless therefrom.

57.   Property  Changes.  This Lease  shall not be  affected  or impaired by any
      change to, or easements or other rights granted in, any lawns,  sidewalks,
      driveways, curb cuts or streets adjacent to or around the Property, except
      as provided in the provisions of this Lease dealing with condemnation.

58.   Persons Bound. The covenants, agreements, terms, provisions and conditions
      of this Lease shall bind and inure to the benefit of the respective heirs,
      distributees,  executors,  administrators,  successors,  assigns and legal
      representatives of the parties hereto with the same effect as if mentioned
      in each instance where a party hereto is named or referred to, but nothing
      herein  contained  shall be  construed  to give Tenant the right to assign
      this Lease.  The covenants and  obligations  on the part of Landlord under
      this Lease shall not be binding upon Landlord herein named with respect to
      any period subsequent to the transfer of its interest in the Building,  by
      operation of law or  otherwise,  and in the event of such  transfer or any
      subsequent transfer, Tenant agrees to look solely to the transferee fr the
      performance of Landlord's covenants and obligations, but only with respect
      to the period  beginning  with such  transfer and ending with a subsequent
      transfer of such interest,  and all acts,  covenants or obligations due on
      the  part of  Landlord  during  its  ownership  shall  survive  any act of
      transfer of the fee title to or leasehold interest in the Property.

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<PAGE>

59.   Miscellaneous Conditions.

      41.1. This Lease is expressly  conditioned  upon  Landlord  receiving  the
            consent  and  approval  of  Landlord's  mortgagee  to its  terms and
            provisions  not later than sixty (60) days after its  execution  and
            delivery by both parties,  failing  which,  Landlord may cancel this
            Lease  and  Tenant's  deposit  and any rent paid  shall be  returned
            without further obligation of the parties. To enable the Landlord to
            satisfy the requirements of any present or future mortgagee,  if any
            mortgagee  requires   modifications  to  this  Lese,  provided  such
            modifications  do  not  materially  alter  the  approved  plans  and
            specifications  of Tenant and do not increase the rent or materially
            and adversely affect any other rights of Tenant hereunder,  Landlord
            shall submit to Tenant a written  amendment of this Lease containing
            such required  modifications.  If Tenant fails to execute and return
            such  amendment  within ten (10) days after the  amendment  has been
            received  by Tenant,  Landlord  shall have the right to cancel  this
            Lease upon  written  notice to Tenant,  whereupon  this Lease  shall
            immediately  be  cancelled  and  terminated,  any money or  security
            deposited  by Tenant with  Landlord  shall be returned to Tenant and
            both  Landlord and Tenant shall  thereupon be relieved  from any and
            all further liability or obligation hereunder.

60.   Miscellaneous.

      42.1. Tenant  agrees  that  neither  Landlord,   nor  Landlord's   agents,
            employees  or  representatives  nor any other  party  has made,  and
            Tenant does not rely on, any representations, warranties or promises
            with respect to the  Building,  the  Property,  the Premises or this
            Lease, except as herein expressly set forth.

      42.2. The  Article  headings  of this Lease are for  convenience  only and
            shall  not  limit or define  the  meaning  or  content  hereof.  All
            pronouns and any variations  thereof shall be deemed to refer to the
            masculine,  feminine, neuter, singular or plural, as the identity of
            the person or persons may require.

      42.3. Anything  elsewhere  to the contrary  notwithstanding,  Tenant shall
            look  solely  to the  estate of  Landlord  in the  property  for the
            satisfaction  of each and every remedy of Tenant in the event of any
            default  or breach by  Landlord  with  respect  to any of the terms,
            covenants  and  conditions  of  this  Lease  to be  observed  and/or
            performed by Landlord,  and no other  property or assets of Landlord
            or any officer, director, shareholder or general partner of Landlord
            or their respective successors and assigns shall be subject to levy,
            execution or other  enforcement  procedure for the  satisfaction  of
            Tenant's remedies,  such exculpation of liability to be absolute and
            without any exceptions whatsoever.

      42.4. Except with  respect to the signage  provided for Tenant in the Work
            Letter,  Tenant  shall  not place  any sign on the  exterior  of the
            Building without Landlord's

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<PAGE>

            consent.  Any sign  placed on the  exterior  of the  Building  shall
            comply  with all  applicable  governmental  regulations  and be of a
            style and set in a location  which  would not,  in the option of the
            Landlord,  give the impression  that the Tenant is the only occupant
            of the Building.

      42.5. If Tenant is a corporation,  each individual executing this Lease on
            behalf os aid  corporation  represents  and warrants that he is duly
            authorized  to  execute  and  deliver  this  Lese 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
            By-Laws of said  corporation,  and that this  Lease is binding  upon
            said  corporation  in  accordance  with its  terms.  If  Tenant is a
            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.

      IN WITNESS  WHEREOF,  this Lease has been executed and delivered as of the
____ day of _________________, _____.

WITNESS:                                                      TENANT:

                                    Perma Grass Corporation

BY:                                 BY:
   ----------------------------        ---------------------------------

ATTESTED:                                                   LANDLORD:

                                    Satnick Development Corp. (Landlord)

BY:                                 BY:
   ----------------------------        ---------------------------------

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<PAGE>

                                   EXHIBIT "A"

                              RULES AND REGULATIONS

61.   The public and common sidewalks,  entrances,  passages, courts, elevators,
      vestibules,  stairways,  corridors,  or halls shall not be obstructed,  or
      encumbered  by any Tenant or used for any purpose  other than  ingress and
      egress to and from the premises.

62.   No awnings or other  projections shall be attached to the outside walls of
      the Building  without prior written consent of the Landlord.  No curtains,
      blinds,  shades,  or screens  shall be  attached to or hung in, or used in
      connection  with any  window or door of the  Premises,  without  the prior
      written  consent of the  Landlord.  Such awnings,  projections,  curtains,
      blinds,  shades,  screens or other fixtures must be a quality type, design
      and color, and attached in the manner approved by Landlord. All electrical
      fixtures  hung in offices or spaces  along the  perimeter  of the Premises
      must  be of a  quality,  type,  design  and  bulb  color  approved  by the
      Landlord.

63.   No sign,  advertisement,  notice or other  lettering  shall be  exhibited,
      inscribed,  painted or affixed by any Tenant or any part of the outside or
      inside of the Premiss or Building  without  prior  written  consent of the
      Landlord.  In the event of the  violation of the  foregoing by any Tenant,
      Landlord may remove same without any liability, and may charge the expense
      incurred  by such  removal to the Tenant or Tenants  violating  this rule.
      Interior signs on doors and directory  tablet shall be inscribed,  painted
      or affixes for each Tenant by the  landlord at the expense of such Tenant,
      and shall be of a size, color and style acceptable to the Landlord.

64.   The sashes, sash doors, skylights, windows and doors that reflect or admit
      light and air into the halls,  passage ways or other public  places in the
      Building  shall not be covered or obstructed by any Tenant,  nor shall any
      bottles, parcels, or other articles be placed on the windowsills.

65.   The water and wash closets and other  plumbing  fixtures shall not be used
      for any purposes other than those for which they were constructed,  and no
      sweepings,  rubbish, rags or other substances shall be thrown therein. All
      damages  resulting  from any misuse of the fixtures  shall be borne by the
      Tenant who, or whose servants,  employees,  agents, visitors or licensees,
      shall have caused the same.

66.   No Tenant shall mark, paint,  drill into, or in any way deface any part of
      the Premises or the Building of which they form a part. No boring, cutting
      or stringing of wires shall be  permitted,  except with the prior  written
      consent of the Landlord,  and as the Landlord may direct.  No Tenant shall
      lay linoleum or other similar floor covering,  so that the same shall come
      in direct contact with the floor of the Premises,  and if linoleum, rug or
      other similar floor  covering is desired to be used,  and  interlining  of
      builder's  deadening felt shall be first affixed to the floor,  by a paste
      or other  material,  soluble in water,  the use of

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<PAGE>

      cement or other similar adhesive material being expressly prohibited.

67.   No space in the Building shall be used for manufacturing,  for the storage
      of merchandise,  or for the sale of merchandise,  goods or property of any
      kind at auction.

68.   No Tenant shall make,  or permit to be made,  any  unseemly or  disturbing
      noises or disturb or  interfere  with other  occupants  of the Building or
      those  having  business  with  them  whether  by the  use  of any  musical
      instrument,  radio,  television set,  talking  machine,  unmusical  noise,
      whistling,  signing,  or in any other way. No Tenant shall throw  anything
      out of the doors, windows or skylights or down the passageways.

69.   No  additional  locks or bolts of any kind shall be placed upon any of the
      doors or windows by any Tenant,  nor shall any changes be made in existing
      locks or the mechanism thereof.  Each Tenant must, upon the termination of
      his  tenancy,  restore to the  Landlord  all keys of stores,  offices  and
      toilet rooms,  either furnished to, or otherwise procured by, such Tenant,
      and in the event of the loss of any keys, so furnished,  such Tenant shall
      pay to Landlord the cost thereof.

70.   All removals, or the carrying in or out of any safes,  freight,  furniture
      or bulky matter of any description  must take place during the hours which
      the Landlord or its agents may reasonably designate from time to time. The
      Landlord  reserves  the right to  exclude  from the  Building  all  safes,
      freight or other  bulky  articles  which  violate  any of these  Rules and
      Regulations are a part.

71.   No Tenant shall  occupy or permit any portion of the  Premises  demised to
      him to be occupied as an office for a public  stenographer or typist, or a
      small loan company or for the possession, storage, manufacture, or sale of
      liquor,  narcotics,  dope,  tobacco,  in any form, or as a barber,  beauty
      parlor,  or manicure  shop,  or as an employment  bureau.  No Tenant shall
      engage or pay any  employees on the  Premises,  nor advertise for laborers
      giving an address at said Premises.

72.   No Tenant shall purchase spring water, ice, towels, or other like service,
      from any company or persons not approved by the Landlord.

73.   The Landlord  reserves the right to exclude from the Building  between the
      hours of 6:00 p.m.  and 8:00 a.m.  on Monday  to  Friday,  inclusive,  and
      between the hours of 1:00 p.m. on Saturday and 8:00 a.m. on the  following
      Monday as well as on legal holidays, all persons who do not present a pass
      to the Building  signed by the Landlord.  The Landlord will furnish passes
      to executives for whom Tenant requests same in writing.  Each Tenant shall
      be  responsible  for all persons for whom it request such pass and key and
      shall be  liable  to the  Landlord  for all acts of such  persons.  At the
      option of the  Landlord,  Tenant  agrees to  purchase  from  Landlord  all
      passes, keys and locks, and to pay the cost thereof.

74.   Canvassing, soliciting and peddling in the Building is prohibited and each
      Tenant shall cooperate to prevent the same.

                                       62
<PAGE>

75.   There  shall  not be used in any  space,  or in the  public  halls  of any
      Building,  either by any Tenant or by jobbers or others in the delivery or
      receipt of merchandise, any hand trucks, except those equipped with rubber
      tires and side guards.

76.   Tenant shall not do any cooking,  conduct any restaurant,  luncheonette or
      cafeteria for the sale or service of food or beverages to its employees or
      to others,  or cause or permit any odors of cooking or other  processes or
      any unusual or  objectionable  odors to emanate from the premises.  Tenant
      shall not install or permit the installation or use of any food, beverage,
      cigarettes,  cigar or stamp dispensing  machine; or permit the delivery of
      any food or beverage to the  Premises,  except by such persons  delivering
      the same as shall be approved by Landlord.

77.   Tenant shall not use or permit the Premises to be used for any unlawful or
      illegal business or purpose or for lodging.

78.   Tenant shall not illegally sell or store upon the premises any spirituous,
      malt or vinous liquor or any narcotic drugs and shall not exhibit, sell or
      offer for sale on the premises of the Building anything  whatsoever except
      such as are essentially connected with the stated use of the Premises.

79.   Tenant  shall  not do or  permit  to be done  any act or  thing  upon  the
      Premises  which will  invalidate or be in conflict with any fire insurance
      policies or increase the rate of fire  insurance  covering the Building of
      which the  Premises  form a part and shall not do so permit to be done any
      act or thing upon the Premises  which shall or might  subject  landlord to
      any liability or responsibility  for injury to any person or persons or to
      property by means of any  business or  operation  being  carried on in the
      Premises  or for any other  reason.  In no event shall any  explosives  or
      flammable materials be taken into or retained in the Premises.

80.   Tenant  shall  not use or  permit  the  parking  areas  to be used for the
      parking,  loading  or  unloading  of trucks  exceeding  the  weight  limit
      established from time to time by Landlord.  Landlord to designate area for
      loading or unloading and hours for such use.

                                       63
<PAGE>

81.   Landlord  reserves the right, from time to time, to assign and reassign to
      Tenant and other Tenants of the Building,  specific  parking  spaces,  and
      Tenant agrees to be bound thereby.

                                    TENANT:

                                    Perma Grass Corporation

                                    BY:
                                       -----------------------------------

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

                                       64
<PAGE>

                                   EXHIBIT "B"

                              LANDLORD IMPROVEMENTS

82.   Replace ceiling tile as needed.

83.   Shampoo existing carpeting.

84.   Install five (5) handsets

85.   Paint office one color throughout.

                                       65
<PAGE>

                                   EXHIBIT "C"

                               JANITORIAL SERVICES

      Janitorial services provided to Tenant by Landlord,  five (5) evenings per
week, excluding weekends and holidays, as follows:

86.   Low dusting nightly.

87.   Carpeting vacuumed nightly.

88.   Refuse containers emptied nightly (with plastic liners changed regularly).

89.   Glass entryway doors cleaned nightly.

90.   Windows washed annually.

                                       66
<PAGE>

                                   EXHIBIT "D"

                                HOLIDAY SCHEDULE

                                  New Years Day

                                 President's Day

                                   Good Friday

                                  Memorial Day

                                Independence Day

                                    Labor Day

                        Thanksgiving Day [and day after]

                                  Christmas Day

                                       67
<PAGE>

                                    GUARANTY

      In consideration of, and as an inducement for the granting,  execution and
delivery of the foregoing lease ("Lease") at Airport 17 Office Centre, 377 Route
17 South, Hasbrouck Heights, New Jersey, Suite 116 on the lobby level by Satnick
Development  Corp.,  Landlord  therein  named  ("Landlord",  which term shall be
deemed to include the named  Landlord and its successors and assigns) to Patrick
McLaren, Tenant named ("Tenant", which term shall be deemed to include the named
Tenant and its successors and assigns),  and in further consideration of the sum
of One ($1.00) Dollar and other good and valuable consideration paid by Landlord
to  the   undersigned,   the  receipt  and   sufficiency  of  which  are  hereby
acknowledged, the undersigned Patrick McLaren ("Guarantor",  which term shall be
deemed to include the named  Guarantor and its successors  and assigns),  hereby
guarantees,  absolutely  and  unconditionally,  to Landlord  the full and prompt
payment of rent and other  charges  and sums for a period of  thirty-seven  (37)
months,  effective  February 1, 1998  through  February  28,  2001,  (including,
without limitation, Landlord's legal expenses and reasonable attorneys' fees and
disbursements)  payable by Tenant under the Lease, and hereby further guarantees
the full and timely  performance  and  observance of all the  covenants,  terms,
conditions  and  agreements  therein  provided to be  performed  and observed by
Tenant;  and Guarantor  hereby covenants and agrees to and with Landlord that if
default  shall at any time be made by tenant in the payment of any rent or other
charges and sums, or if Tenant should default in the  performance and observance
of any of the terms,  covenants and conditions contained in the Lease, Guarantor
shall and will  forthwith  pay rent and all other  charges and sums, to Landlord
and any arrears  thereof,  and shall and will forthwith  faithfully  perform and
fulfill all of such terms,  covenants and  conditions  and will forthwith pay to
Landlord  all  damages  that may arise in  consequence  of any default by Tenant
under the Lease, including,  without limitation, all reasonable attorneys' fees,
and  disbursements  incurred by  Landlord  or caused by any such  default or the
enforcement of this Guaranty.

      This  Guaranty is an absolute and  unconditional  guaranty of payment (and
not  of  collection)  and  of   performance.   The  liability  of  Guarantor  is
co-extensive with that of Tenant and this Guaranty shall be enforceable  against
Guarantor  without the necessity of any suit or proceeding on Landlord's part of
any kind or nature  whatsoever  against  Tenant and without the necessity of any
notice of non-payment,  non-performance  or  non-observance  or of any notice of
acceptance of this Guaranty or of any other notice or demand to which  Guarantor
might otherwise be entitled,  all of which Guarantor  hereby  expressly  waives.
Guarantor  hereby  expressly  agrees that the validity of this  Guaranty and the
obligations  of Guarantor  hereunder  shall in no way be  terminated,  affected,
diminished or impaired by reason of (a) the assertion or the failure to asset by
Landlord  against  Tenant of any of the rights or remedies  reserved to Landlord
pursuant  to the terms,  covenants  and  conditions  of this  Lease,  or (b) any
non-liability  of Tenant under the Lease,  whether by  insolvency,  discharge in
bankruptcy,  or any other defect or defense which may now or hereafter  exist in
favor of Tenant.

      This Guaranty shall be continuing guaranty, and the liability of Guarantor
hereunder  shall in no way be affected,  modified or diminished by reason of (a)
any assignment, renewal, modification,  amendment, or extension of the Lease, or
(b) any  modification or waiver of or change in any of the terms,  covenants and
conditions  of the Lease by Landlord  and Tenant,  or (c)

                                       68
<PAGE>

any  extension  of time that may be granted by  Landlord  to Tenant,  or (d) any
consent,  release,  indulgence or other action, inaction or omission under or in
respect of the Lease,  or (e) any  dealings or  transactions  or matter of thing
occurring  between  Landlord  and  Tenant,  or (f) any  bankruptcy,  insolvency,
reorganization,   liquidation,   arrangement,  assignment  for  the  benefit  of
creditors,  receivership,  trusteeship or similar  proceeding  affecting Tenant,
whether or not notice thereof or of any thereof is given to Guarantor.

      Should  Landlord be obligated by any  bankruptcy  or other law to repay to
Tenant or to  Guarantor or to any trustee,  receive or other  representative  of
either of them, any amounts  previously  paid, this Guaranty shall be reinstated
in the amount of such repayments.  Landlord shall not be required to litigate or
otherwise  dispute its  obligations to make such  repayments if it in good faith
believes that such obligation exists.

      No  delay  on the part of  Landlord  in  exercising  any  right,  power or
privilege under this Guaranty or failure to exercise the same shall operate as a
waiver of or otherwise affect any such right, power or privilege,  nor shall any
single or  partial  exercise  thereof  preclude  any other or  further  exercise
thereof or the exercise of any other right, power or privilege.

      No  waiver or  modification  of any  provision  of this  Guaranty  nor any
termination  of this Guaranty  shall be effective  unless in writing,  signed by
Landlord;  nor  shall  any such  waiver be  applicable  except  in the  specific
instance for which given.

      All of  Landlord's  rights  and  remedies  under the Lease and under  this
Guaranty,  now or  hereafter  existing  at law or in  equity  or by  statute  or
otherwise, are intended to be distinct,  separate and cumulative and no exercise
or partial  exercise of any such right or remedy therein or herein  mentioned is
intended to be in exclusion of or a waiver of any of the others.

      As further  inducement to Landlord to make and enter into the Lease and in
consideration  thereof,  Landlord and  Guarantor  covenant and agree that in any
action  or  proceeding  brought  on,  or under or by  virtue  of this  Guaranty,
Landlord and Guarantor  shall and do hereby waive trial by jury.  Without regard
to principles of conflicts of laws,  the validity,  interpretation,  performance
and  enforcement  of  this  Guaranty  shall  be  governed  by and  construed  in
accordance with the internal laws of the State of New Jersey.

      Guarantor further agrees to provide Landlord,  on the 15th day of January,
during  the  year of the  Lease  or  Leases  involved  herein,  with a  personal
financial   statement   detailing  with  specificity  all  personal  assets  and
liabilities  of the  Guarantor  as of the date said  statement  is  provided  to
Landlord,  including  but not  limited to bank  accounts,  investment  accounts,
details as to receivables,  securities,  property owned or leased, etc. A breach
by the  Guarantor  of this  provision  of this  Guaranty  shall be  considered a
material  breach of the Lease by the  Tenant,  and the  Landlord  shall have all
rights as set forth in said  Lease to take any and all  actions in  response  to
Tenant's material breach of said Lease.

                                    /S/ PATRICK MCLAREN
                                    -----------------------

                                       69
<PAGE>

STATE OF NEW JERSEY:
                   : ss.
COUNTY OF          :

      On  the   day  of   ___________,   ____,   before   me   personally   came
_____________________,  to me known to be the  individual  described  in and who
executed the foregoing instrument, and he acknowledged that he executed same.

                                    ------------------------
                                    NOTARY PUBLIC

                                       70<PAGE>   1
                                                                   EXHIBIT 10.35

                              AUSPEX SYSTEMS, INC.
                      CHANGE OF CONTROL SEVERANCE AGREEMENT

        This Change of Control Severance Agreement (the "Agreement") is made and
entered into by and between Hans H. Schwarz (the "Employee") and Auspex Systems,
Inc., a Delaware corporation (the "Company"), effective as 01/01, 2000 (the
"Effective Date").

                                    RECITALS

        A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee and can cause the Employee to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.

        B. The Board believes that it is in the best interests of the Company
and its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.

        C. The Board believes that it is imperative to provide the Employee with
certain severance benefits upon Employee's termination of employment following a
Change of Control which provides the Employee with enhanced financial security
and provides incentive and encouragement to the Employee to remain with the
Company notwithstanding the possibility of a Change of Control.

        D. Certain capitalized terms used in the Agreement are defined in
Section 6 below.

        The parties hereto agree as follows:

        1.      Term of Agreement. This Agreement shall terminate upon the date
that all obligations of the parties hereto with respect to this Agreement have
been satisfied.

        2.      At-Will Employment. The Company and the Employee acknowledge
that the Employee's employment is and shall continue to be at-will, as defined
under applicable law. If the Employee's employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
practices or pursuant to other agreements with the Company.

        3.      Severance Benefits.

<PAGE>   2
                (a)     Involuntary Termination Other than for Cause; Voluntary
Termination for Good Reason; Death; Permanent and Total Disability. If the
Employee's employment is (i) involuntarily terminated by the Company other than
for Cause (as defined herein), (ii) voluntarily terminated by Employee for Good
Reason (as defined herein), (iii) terminates due to Employee's death or
"permanent and total disability" (as such term is defined under Internal Revenue
Code Section 22(e)(3) or its successor provision), in any case within twelve
(12) months following a Change of Control (as defined herein), then, subject
Section 3(e) below, the Employee shall receive the following severance benefits
from the Company:

                        (1)     Severance Payments. Twelve equal monthly
payments yielding in aggregate an amount equal to one hundred percent (100%) of
the Employee's Annual Compensation (as defined herein);

                        (2)     Medical Benefits. Payment of Employee's
Consolidated Budget Reconciliation Act of 1985 ("COBRA") premiums (the
"Company-Paid Coverage"). If Employee's health insurance coverage included
Employee's dependents immediately prior to the Change-in Control, such
dependents shall also be covered at Company's expense. Company-Paid Coverage
shall continue until the earlier of (a) twelve (12) months after the date of
termination of Employee's employment or (b) the date Employee becomes eligible
for coverage under another employer's health insurance plan. For purposes of
Title X of COBRA, the date of the "qualifying event" for Employee and his or her
dependents shall be the date upon which Employee's employment terminates.

                (b)     Timing of Severance Payments. Any severance payments to
which Employee is entitled under Section 3(a)(1) shall be paid by the Company to
the Employee (or to the Employee's successors in interest, pursuant to Section
7(b)) in cash installments with each installment being paid on or before the end
of month-long period following the Termination Date (e.g. on each monthly
"anniversary" of the Termination Date).

                (c)     Voluntary Resignation other than for Good Reason,
Termination For Cause. If the Employee's employment terminates by reason of the
Employee's voluntary resignation other than for Good Reason, or if the Employee
is terminated involuntarily by the Company for Cause, then the Employee shall
not be entitled to receive severance or other benefits except for those (if any)
as may then be established under the Company's then existing severance and
benefits plans and practices or pursuant to other agreements with the Company.

                (d)     Termination Apart from Change of Control. In the event
the Employee's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the eighteen (18) month period
following a Change of Control, then the Employee shall be entitled to receive
severance and any other benefits only as may then be established under the
Company's existing severance and benefits plans and practices or pursuant to
other agreements with the Company.

                                      -2-

<PAGE>   3
                (e)     Contingent Obligations. The Company's obligation to pay
the severance payments, or any portion thereof remaining unpaid, set forth in
Section 3(a)(1) above and pay the Company-paid Coverage, set forth in Section
3(a)(2) above, shall terminate immediately in the event that Employee breaches
either of Employee's obligations set forth in Section 9 below.

        4.      Attorney Fees, Costs and Expenses. The Company shall promptly
reimburse Employee, on a monthly basis, for the reasonable attorney fees, costs
and expenses incurred by the Employee in connection with any action brought by
Employee to enforce his rights hereunder, regardless of the outcome of the
action.

        5.      Limitation on Payments. In the event that the severance and
other benefits provided for in this Agreement or otherwise payable to the
Employee (i) constitute "parachute payments" within the meaning of Section 28OG
(as it may be amended or replaced) of the Internal Revenue Code of 1986, as
amended or replaced (the "Code") and (ii) but for this Section 5, would be
subject to the excise tax imposed by Section 4999 (as it may be amended or
replaced) of the Code (the "Excise Tax"), then the Employee's severance benefits
hereunder Section 3 shall be either

               (a)   delivered in full, or

               (b)   delivered as to such lesser extent which would result in no
                     portion of such severance benefits being subject to the
                     Excise Tax,

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the Excise Tax, results in the receipt by the
Employee on an after-tax basis, of the greatest amount of severance benefits,
notwithstanding that all or some portion of such severance benefits may be
taxable under the Excise Tax. Unless the Company and the Employee otherwise
agree in writing, any determination required under this Section 5 shall be made
in writing in good faith by the accounting firm serving as the Company's
independent public accountants immediately prior to the Change of Control (the
"Accountants"). In the event of a reduction in benefits hereunder, the Employee
shall be given the choice of which benefits to reduce. For purposes of making
the calculations required by this Section 5, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of the Code.
The Company and the Employee shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a
determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 5.

        6.      Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:

                (a)     Annual Compensation. "Annual Compensation" means an
amount equal to the sum of Employee's (i) annual Company salary at the highest
rate in effect in the twelve months immediately preceding the Change of Control,
and (ii) 100% of the Employee's annual target bonus as in effect immediately
prior to the Change of Control.

                                      -3-

<PAGE>   4
                (b)     Cause. "Cause" shall mean either (i) any act of personal
dishonesty taken by the Employee in connection with his responsibilities as an
employee and intended to result in substantial personal enrichment of the
Employee, (ii) Employee's conviction of a felony, (iii) a willful act by the
Employee which constitutes gross misconduct and which is injurious to the
Company, or (iv) following delivery to the Employee of a written demand for
performance from the Company which describes the basis for the Company's belief
that the Employee has not substantially performed his duties, continued
substantial violations by the Employee of the Employee's obligations to the
Company which are demonstrably willful and deliberate on the Employee's part.

                (c)     Change of Control. "Change of Control" means the
occurrence of any of the following events:

                        (i)     Any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the
"beneficial owner" (as defined in Rule l3d-3 under said Act) ("Beneficial
Owner"), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Company's
then outstanding voting securities;

                        (ii)    A change in the composition of the Board
occurring within a two-year period, as a result of which fewer than a majority
of the directors are Incumbent Directors. "Incumbent Directors" shall mean
directors who either (A) are directors of the Company as of the date hereof, or
(B) are elected, or nominated for election, to the Board with the affirmative
vote of at least a majority of the Incumbent Directors at the time of such
election or nomination;

                        (iii)   The consummation of a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or the entity that controls the Company or controls such surviving entity) at
least fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or the entity that controls
the Company or controls such surviving entity outstanding immediately after such
merger or consolidation; or

                        (iv)    The consummation of the sale or disposition by
the Company at least fifty percent (50%) of the Company's assets.

                (d)     Good Reason. "Good Reason" shall mean (i) without the
Employee's express written consent, a material reduction of the Employee's
duties, title, authority or responsibilities, relative to the Employee's duties,
title, authority or responsibilities as in effect immediately prior to such
reduction, or the assignment to Employee of such reduced duties, title,
authority or responsibilities; provided, however, that a reduction in duties,
title, authority or responsibilities solely by virtue of the Company being
acquired and made part of a larger entity (as, for example, when the Chief
Financial Officer of Auspex remains as such following a Change of Control and is
not made the Chief Financial Officer of the acquiring corporation) shall not
constitute "Good

                                      -4-

<PAGE>   5

Reason;" (ii) without the Employee's express written consent, a material
reduction, without good business reasons, of the facilities and perquisites
(including office space and location) available to the Employee immediately
prior to such reduction; (iii) a reduction by the Company in the base salary of
the Employee as in effect immediately prior to such reduction; (iv) a material
reduction by the Company in the kind or level of employee benefits, including
bonuses, to which the Employee was entitled immediately prior to such reduction
with the result that the Employee's overall benefits package is materially
reduced; (v) the relocation of the Employee to a facility or a location more
than thirty (30) miles from the Employee's then present location, without the
Employee's express written consent; (vi) any purported termination of the
Employee by the Company which is not effected for Disability or for Cause, or
any purported termination for which the grounds relied upon are not valid; (vii)
the failure of the Company to obtain the assumption of this agreement by any
successors contemplated in Section 7(a) below; or (viii) any act or set of facts
or circumstances which would, under California case law or statute constitute a
constructive termination of the Employee.

                (e)     Termination Date. "Termination Date" shall mean (i) if
this Agreement is terminated by the Company for Disability, thirty (30) days
after notice of termination is given to the Employee (provided that the Employee
shall not have returned to the performance of the Employee's duties on a
full-time basis during such thirty (30)-day period), (ii) if the Employee's
employment is terminated by the Company for any other reason, the date on which
a notice of termination is given, provided that if within thirty (30) days after
the Company gives the Employee notice of termination, the Employee notifies the
Company that a dispute exists concerning the termination or the benefits due
pursuant to this Agreement, then the Termination Date shall be the date on which
such dispute is finally determined, either by mutual written agreement of the
parties, or a by final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal having
been perfected), or (iii) if the Agreement is terminated by the Employee, the
date on which the Employee delivers the notice of termination to the Company.

        7.      Successors.

                (a)     Company's Successors. Any successor to the Company
(whether direct or indirect and whether by purchase, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this Section
7(a) or which becomes bound by the terms of this Agreement by operation of law.

                (b)     Employee's Successors. The terms of this Agreement and
all rights of the Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

                                      -5-

<PAGE>   6
        8.      Notice.

                (a)     General. Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of the
Employee, mailed notices shall be addressed to him at the home address which he
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.

                (b)     Notice of Termination. Any termination by the Company
for Cause or by the Employee as a result of a voluntary resignation or an
Involuntary Termination shall be communicated by a notice of termination to the
other party hereto given in accordance with Section 8(a) of this Agreement. Such
notice shall indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated, and
shall specify the termination date (which shall be not more than 30 days after
the giving of such notice). The failure by the Employee to include in the notice
any fact or circumstance which contributes to a showing of Involuntary
Termination shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or circumstance in enforcing his rights
hereunder.

        9.      Employee Obligations. Notwithstanding any other obligations of
Employee to Company following his or her termination from the Company and
pursuant to any other agreements, Employee hereby agrees that he or she shall be
bound by the following restrictions for a period of one (1) year from the
Termination Date:

                (a)     Non-Solicitation. Employee agrees that he shall not
either directly or indirectly solicit, induce, attempt to hire, recruit,
encourage, take away, hire any employee of the Company or cause an employee to
leave their employment either for Employee or for any other entity; and

                (b)     Non Disparagement. The Employee agrees to refrain from
any defamation, libel or slander of the Company, or tortious interference with
the contracts and relationships of the Company.

        10.     Miscellaneous Provisions.

                (a)     No Duty to Mitigate. The Employee shall not be required
to mitigate the amount of any payment contemplated by this Agreement, nor shall
any such payment be reduced by any earnings that the Employee may receive from
any other source.

                (b)     Waiver. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Employee and by an authorized officer of
the Company (other than the Employee). No waiver by

                                      -6-

<PAGE>   7
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.

                (c)     Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement
represents the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior arrangements and understandings
regarding same.

                (d)     Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California.

                (e)     Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

                (f)     Withholding. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes to the extent required by law.

                (g)     Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.

                                      -7-

<PAGE>   8
        IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
set forth above.

COMPANY                             AUSPEX SYSTEMS, INC.
                                -------------------------------

                                /s/ BRUCE N. MOORE
                                -------------------------------------------
                                Bruce N. Moore, Chief Executive Officer

EMPLOYEE                        /s/ HANS H. SCHWARZ
                                -------------------------------------------

                                      -8-

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