Document:

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

             STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE--NET
                (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1.     Basic Provisions ("Basic Provisions")
      1.1 Parties:  This Lease  ("Lease")  dated for  reference  purposes  only
January  19,  2001  is made by and  between  Morton  La  Kretz,  Trustee  of the
Crossroads  Trust  UTD  4/28/82   ("Lessor")  and   Laser-Pacific   Media  Corp.
("Lessee"), (collectively the "Parties," or individually a "Party").
      1.2   Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 807 N. Cahuenga Blvd. & 814 N. Cole Ave. located  in the  County  of
Los  Angeles,  State  of  California  and  generally
described as (describe briefly the nature of the property and, if applicable,
the "Project",  if the property is located  within a Project) 2 Abutting  "M--2"
bldgs,Portions  of  lots 14 & 15 and  Portions  of  lots 9 & 10  block J  Sececa
Heights Tract (.M.B16-72), Approximately 100' x 247.5' in size and including the
improvements  thereon, and a subterranean  parking area ("Premises").  (See also
Paragraph 2)
      1.3   Term: 5 years and 0 months ("Original Term") commencing 3/01/01
("Commencement Date") and ending 2/28/06 ("Expiration Date").
(See also Paragraph 3)
      1.4    Early Possession:N/A    ("Early Possession Date").
(See also Paragraphs 3.2 and 3.3)
      1.5    Base Rent: $ 22,250.00 per month ("Base Rent"), payable on the 1st
day of each month commencing 3/1/01 (See also Paragraph 4)
x If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted.
      1.6    Base Rent Paid Upon Execution: $27,800.00 as Base Rent for the
period 3/1/01 to 3/31/01  plus $5550.00 add'l security deposit.
      1.7    Security Deposit: $ 22,250.00 ("Security Deposit")
(See also Paragraph 5)
      1.8    Agreed Use: General Office Use, Television & Production Use, and
related uses (See also Paragraph 6)
      1.9  Insuring Party. Lessor is the "Insuring Party" unless otherwise
stated herein. (See also Paragraph 8)
      1.10 Real Estate Brokers: (See also Paragraph 15)
             (a)Representation: The following real estate brokers (collectively,
the  "Brokers") and brokerage  relationships  exist in this  transaction  (check
applicable boxes): N/A represents Lessor exclusively  ("Lessor's  Broker");
N/A represents Lessee exclusively  ("Lessee's  Broker");  or N/A  represents
both  Lessor and Lessee ("Dual Agency")
             (b)Payment to Brokers: Upon execution and delivery of this Lease by
both Parties,  Lessor shall pay to the Broke the fee agreed to in their separate
written  agreement (or if there is no such agreement,  the sum of --0-- % of the
total Base Rent for the brokerage services rendered by said Broker).
      1.11  Guarantor.  The  obligations  of the Lessee under this Lease are to
be guaranteed by  N/A("Guarantor") See also Paragraph 37)
      1.12  Addenda  and  Exhibits.  Attached  hereto is an Addendum or Addenda
consisting of  Paragraphs  50 through 56 all of which  constitute a part of this
Lease.
 2.   Premises.
      2.1 Letting.  Lessor  hereby  leases to Lessee,  and Lessee hereby leases
from Lessor,  the  Premises,  for the term,  at the rental,  and upon all of the
terms,  covenants  and  conditions  set forth in this  Lease.  Unless  otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating  rental, is an approximation which the Parties agree is
reasonable  and the rental based  thereon is not subject to revision  whether or
not the actual size is more or less.
      2.2  Condition.  Lessor shall  deliver the Premises to Lessee broom clean
and free of  debris  on the  Commencement  Date or the Earl y  Possession  Date,
whichever  first occurs  ("Start  Date),  and, so long as the  required  service
contracts  described  in Paragraph  7.1(b)  below are obtained by Lessee  within
thirty  (30)  days  following  the  Start  Date,   warrants  that  the  existing
electrical,  plumbing, fire sprinkler,  lighting,  heating,  ventilating and air
conditioning  systems  ("HVAC"),  loading  doors,  if any,  and all  other  such
elements in the Premises,  other than those  constructed by Lessee,  shall be in
good operating  condition on said date and that the  structural  elements of the
roof,  bearing  walls and  foundation  of any  buildings  on the  Premises  (the
"Building')  shall be tree of material  defects.  If a non-compliance  with said
warranty exists as of the Start Date,  Lessor shall, as Lessor's sole obligation
with  respect  to such  matter,  except as  otherwise  provided  in this  Lease,
promptly  after  receipt  of  written  notice  from  Lessee  setting  forth with
specificity  the  nature  and  extent of such  non-compliance,  rectify  same at
Lessor's expense.  If, after the Start Date, Lessee does not give Lessor written
notice of any  non-compliance  with this warranty within: (i) one year as to the
surface of the roof and the  structural  portions of the roof,  foundations  and
bearing  walls,  (ii) six (6) months as to the HVAC  systems,  (iii) thirty (30)
days as to the remaining systems and other elements of the Building,  correction
of such  non-compliance  shall be the obligation of Lessee at Lessee's sole cost
and expense.
      2.3  Compliance.  Lessor  warrants that the  improvements on the Premises
comply with all applicable laws,  covenants or restrictions of record,  building
codes,  regulations and ordinances ("Applicable  Requirements") in effect on the
Start Date. Said warranty does not apply to the use to which Lessee will put the
Premises or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a))  made  or  to be  made  by  Lessee.  NOTE:  Lessee  is  responsible  for
determining  whether or not the zoning is appropriate for Lessee's intended use,
and acknowledges that past uses of the Premises may no longer be allowed. If the
Premises do not comply with said  warranty,  Lessor  shall,  except as otherwise
provided,  promptly  after receipt of written  notice from Lessee  setting forth
with specificity the nature and extent of such non-compliance,  rectify the same
at  Lessor's  expense.  If  Lessee  does not give  Lessor  written  notice  of a
non-compliance  with this  warranty  Within six (6) months  following  the Start
Date,  correction of that  non-compliance  shall be the  obligation of Lessee at
Lessee's sole cost and expense.  If the  Applicable  Requirements  are hereafter
changed (as opposed to being in existence at the Start Dale,  which is addressed
in Paragraph  6.21e)  below) so as to require  during the term of this Lease the
construction of an addition to or an alteration of the Building, the remediation
of any Hazardous Substance,  or the reinforcement or other physical modification
of the Building  ("Capital  Expenditure"),  Lessor and Lessee shall allocate the
cost of such work as follows;

                                     PAGE 1

            (a) Subject to Paragraph 2.3(c) below, if such Capital  Expenditures
are  required  as a result of the  specific  and unique use of the  Premises  by
Lessee as  compared  with uses by  tenants  in  general,  Lessee  shall be fully
responsible  for the  cost  thereof,  provided,  however  that  if such  Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof  exceeds six (6) months' Base Rent,  Lessee may instead  terminate  this
Lease unless  Lessor  notifies  Lessee,  in writing,  within ten (10) days after
receipt of  Lessee's  termination  notice  that  Lessor  has  elected to pay the
difference  between  the actual  cost  thereof  and the amount  equal to six (6)
months' Base Rent. If Lessee elects termination,  Lessee shall immediately cease
the use of the Premises which requires such Capital  Expenditure  and deliver to
Lessor  written notice  specifying a termination  date at least ninety (90) days
thereafter.  Such termination date shall,  however,  in no event be earlier than
the last day that Lessee Could legally utilize the Premises  without  commencing
such Capital Expenditure.
            (b) If such  Capital  Expenditure  is not the result of the specific
and unique  use of the  Premises  by Lessee  (such as,  governmentally  mandated
seismic modifications),  then Lessor and Lessee shall allocate the obligation to
pay for such costs  pursuant to the  provisions of Paragraph  7.1(c);  provided,
however,  that if such Capital Expenditure is required during the last two years
of this Lease or if Lessor  reasonably  determines  that it is not  economically
feasible to pay its share  thereof,  Lessor  shall have the option to  terminate
this Lease upon ninety (90) days prior  written  notice to Lessee  unless Lessee
notifies  Lessor,  in  writing,  within ten (10) days after  receipt of Lessor's
termination notice that Lessee will pay for such Capital Expenditure.  If Lessor
does not elect to  terminate,  and fails to tender its share of any such Capital
Expenditure,  Lessee may advance such funds and deduct same, with Interest, from
Rent until  Lessor's  share of such costs  have been  fully  paid.  If Lessee is
unable to finance  Lessor's share, or if the balance of the Rent due and payable
for the remainder of this Lease is not sufficient to fully  reimburse  Lessee on
an offset basis, Lessee shall have the right to terminate this Lease upon thirty
(30) days written notice to Lessor.
            (c)  Notwithstanding  the above, the provisions  concerning Capital.
Expenditures are intended to apply only to  non-voluntary,  unexpected,  and new
Applicable  Requirements.  If the Capital  Expenditures are instead triggered by
Lessee as a result of an actual or proposed  change in use,  change in intensity
of use, or modification `to the Premises then, and n that event, Lessee shall be
fully  responsible for the cost thereof,  and Lessee shall not have any right to
terminate this Lease.
      2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by
Lessor  and/or  Brokers to satisfy  itself with respect to the  condition of the
Premises  (including but not limited to the electrical,  HVAC and fire sprinkler
systems,  security,   environmental  aspects,  and  compliance  with  Applicable
Requirements),  and their  suitability for Lessee's intended use, (b) Lessee has
made such investigation as it deems necessary with reference to such matters and
assumes alt  responsibility  therefor as the same relate to its occupancy of the
Premises,  and (c) neither Lessor,  Lessor's agents, nor any Broker has made any
oral or written representations or warranties with respect to said matters other
than as set forth in this Lease.  In addition,  Lessor  acknowledges  that:  (a)
Broker has made no representations,  promises or warranties  concerning Lessee's
ability to honor the Lease or suitability to occupy the Premises,  and (b) it is
Lessor's sole  responsibility  to investigate  the financial  capability  and/or
suitability of alt proposed tenants.
      2.5  Lessee  as Prior  Owner/Occupant.  The  warranties  made by Lessor in
Paragraph  2 shall be of no force or  effect if  immediately  prior to the Start
Date  Lessee was the owner or occupant of the  Premises.  In such event,  Lessee
shall be responsible for any necessary corrective work.
 3.   Term.
      3.1   Term.  The  Commencement  Date,  Expiration  Date and  Original
Term of this  Lease are as  specified  in Paragraph 1.3.
      3.2 Early Possession, It Lessee totally or partially occupies the Premises
prior to the Commencement  Date, the obligation to pay Base Rent shall be abated
for the  period  of  such  early  possession.  All  other  terms  of this  Lease
(including  but not limited to the  obligations  to pay Real Property  Taxes and
insurance  premiums and to maintain the Premises) shall,  however,  be in effect
during such period.  Any such early  possession  shall not affect the Expiration
Date.
      3.3  Delay In  Possession.  Lessor  agrees  to use its  best  commercially
reasonable  efforts  to  deliver  possession  of the  Premises  to Lessee by the
Commencement  Date.  If,  despite  said  efforts,  Lessor is  unable to  deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be  obligated  to pay Rent or perform  its other  obligations  until it receives
possession  of the Premises.  If  possession is not delivered  within sixty (60)
days after the  Commencement  Date,  Lessee  may,  at its  option,  by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease,  in which event the Parties shall be discharged from all obligations
hereunder, If such written notice is hot received by Lessor within said ten (10)
day  period.  Lessee's  right to cancel  shall  terminate.  Except as  otherwise
provided,  if  possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease,  as a4oresaid,  any period of rent abatement that
Lessee  would  otherwise  have  enjoyed  shall run from the date of  delivery of
possession and continue for a period equal to what Lessee would  otherwise `have
enjoyed under the terms  hereof,  but minus any days of delay caused by the acts
or omissions of Lessee.  If possession  of the Premises is not delivered  within
four (4) months after the  Commencement  Date, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.
      3.4 Lessee Compliance.  Lessor shall not be required to tender possession
of the Premises to Lessee until Lessee  complies with its  obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform  all of its  obligations  under this Lease from and
after the Start Date,  including the payment of Rent,  notwithstanding  Lessor's
election to withhold  possession  pending  receipt of such evidence of insurance
Further,  if Lessee is  required  to perform  any other  conditions  prior to or
concurrent  with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.
4.    Rent.
      4.1.  Rent Defined.  All monetary  obligations of Lessee to Lessor under
the terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").
      4.2 Payment.  Lessee shall cause  payment of Rent to be received by Lessor
in lawful money of the United  States,  without  offset or deduction  (except as
specifically  permitted in this Lease), on or before the day on which it is due.
Rent for any period  during the term hereof  which is for less than one (1) full
calendar  month shall be prorated  based upon the actual  number of days of said
month.  Payment of Rent shall be made to Lessor at its address  stated herein or
to such  other  persons or place as Lessor  may from time to time  designate  in
writing.  Acceptance  of a payment which is less than the amount then `due shall
not be `a waiver of Lessor's  rights to the balance of such Rent,  regardless of
Lessor's endorsement of any check so stating.
5. Security Deposit.  Lessee shall deposit with Lessor upon execution hereof the
Security  Deposit  as  security  for  Lessee's   faithful   performance  of  its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this  Lease,  Lessor may use,  apply or retain all or any  portion of said
Security  Deposit  for the payment of any amount due Lessor or to  reimburse  or
compensate  Lessor for any liability,  expense,  loss or damage which Lessor may
suffer or incur by reason thereof.  If Lessor uses or applies all or any portion
of said  Security  Deposit,  Lessee  shall  within ten (10) days  after  written
request therefor deposit monies with Lessor  sufficient to restore said Security
Deposit to the full amount  required by this Lease.  If the Base Rent  increases
during the term of this Lease,  Lessee shall,  upon written request from Lessor,
deposit  additional  moneys with Lessor so that the total amount of the Security
Deposit shall at all times bear the same  proportion to tee increased  Base Rent
as the initial Security Deposit bore to the initial Base Rent. Should the Agreed
Use be amended to accommodate a material  change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase tee
Security Deposit to the extent necessary,  in Lessor's reasonable  judgment,  to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such  change  tee  financial  condition  of Lessee  is, in  Lessor's  reasonable
judgment,  significantly  reduced.  Lessee shall deposit such additional  monies
with  Lessor as shall be  sufficient  to cause the  Security  Deposit to be at a
commercially  reasonable  level  based on said  change in  financial  condition.
Lessor  shall not be required to keep the  Security  Deposit  separate  from its
general accounts.  Within fourteen (14) days after the expiration or termination
of this Lease,  it Lessor  elects to apply the  Security  Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to  Paragraph  7.4(c)  below,  Lessor  shall return that portion of the
Security Deposit not used or applied by Lessor.  No part of the Security Deposit
shall be  considered  to be held in trust,  to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.

                                     PAGE 2

      6.1 Use.  Lessee  shall use and occupy the  Premises  only for the Agreed
Use, or any other legal use which is reasonably  comparable thereto,  and for no
other  purpose.  Lessee  shall not use or permit  the use of the  Premises  in a
manner that is unlawful,  creates damage, waste or a nuisance,  or that disturbs
owners and/or occupants of, or causes damage to neighboring  properties.  Lessor
shall not unreasonably  withhold or delay its consent to any written request for
a  modification  of the  Agreed  Use,  so long as the same will not  impair  the
structural  integrity of the  improvements  on the Premises or the mechanical or
electrical  systems  therein,  is  not  significantly  more  burdensome  to  the
Premises.  If Lessor  elects to withhold  consent,  Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.
      6.2   Hazardous Substances.
            (a)Reportable Uses Require Consent. The term "Hazardous  Substance"
as used in this  Lease  shall  mean  any  product,  substance,  or  waste  whose
presence,  use, manufacture,  disposal,  transportation,  or release,  either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially  injurious to the public health,  safety or welfare, the
environment  or the Premises,  (ii)  regulated or monitored by any  governmental
authority,   or  (iii)  a  basis  tar  potential  liability  of  Lessor  to  any
governmental  agency or third party under any  applicable  statute or common law
theory. Hazardous Substances shall include, but not be limited to. Hydrocarbons,
petroleum,  gasoline, and/or crude oil or any products, by-products or fractions
thereat.  Lessee shall not engage in any  activity in or on the  Premises  which
constitutes a Reportable Use of Hazardous  Substances  without the express prior
written consent at Lessor and timely  compliance (at Lessee's  expense) with all
Applicable Requirements.  "Reportable Use shall mean (i) the installation or use
of any above or below ground  storage  tank,  (ii) the  generation,  possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit  from,  or with  respect  to which a report,  notice,  registration  or
business plan is required to be filed with, any governmental  authority,  and/or
(iii) the  presence at the  Premises of a Hazardous  Substance  with  respect to
which any  Applicable  Requirements  requires  that a notice be given to persons
entering or occupying the Premises or  neighboring  properties.  Notwithstanding
the foregoing,  Lessee may use any ordinary and customary  materials  reasonably
required to be used in the normal  course of the Agreed Use, so long as such use
is in compliance with alt Applicable Requirements,  is not a Reportable Use, and
does not expose the Premises or neighboring  property to any meaningful  risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may  condition  its consent to any  Reportable  Use upon  receiving  such
additional  assurances as Lessor  reasonably  deems necessary to protect itself,
the public, the Premises and/or the environment  against damage,  contamination,
injury and/or  liability,  including,  but not limited to, the installation (and
removal  on  or  before  Lease   expiration   or   termination)   of  protective
modifications  (such as concrete  encasements)  and/or  increasing  the Security
Deposit.
            (b) Duty to Inform Lessor.  If Lessee knows, or has reasonable cause
to believe,  that a Hazardous  Substance has come to be located in, on, under or
about the  Premises,  other than as  previously  consented to by Lessor,  Lessee
shall immediately give written notice of such tact to Lessor, and provide Lessor
with a copy of any report,  notice,  claim or other  documentation  which it has
concerning the presence of such Hazardous Substance.
            (c) Lessee  Remediation.  Lessee  shall  not  cause  or  permit  any
Hazardous  Substance  to be spilled or  released  in,  on,  under,  or about the
Premises  (including  through the plumbing or sanitary  sewer  system) and shall
promptly,  at Lessees  expense,  take all  investigatory  and/or remedial action
reasonably  recommended,  whether or not formally  ordered or required,  for the
cleanup  of any  contamination  of,  and for the  maintenance,  security  and/or
monitoring  of the  Premises  or  neighboring  properties,  that was  caused  or
materially contributed to by Lessee, or pertaining to or involving any Hazardous
Substance  brought  onto the Premises  during the term of this Lease,  by or for
Lessee, or any third party.
            (d) Lessee Indemnification.  Lessee shall indemnity, defend and hold
Lessor, its agents, employees,  tenders and ground lessor, it any, harmless from
and against any and all loss of rents and/or  damages,  liabilities,  judgments,
claims, expenses,  penalties, and attorneys and consultants' tees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability under
this Lease with  respect to  underground  migration of any  Hazardous  Substance
under  the  Premises  from  adjacent  properties).  Lessee's  obligations  shall
include,  but not be limited to, the effects of any  contamination  or injury to
person,  property or the environment created or suffered by Lessee, and the cost
of investigation,  removal, remediation, restoration and/or abatement, and shall
survive  the  expiration  or  termination   of  this  Lease.   No   termination,
cancellation  or release  agreement  entered  into by Lessor  and  Lessee  shall
release Lessee from its  obligations  under this Lease with respect to Hazardous
Substances,  unless  specifically  so agreed by Lessor in writing at the time of
such agreement.
            (e) Lessor  Indemnification.  Lessor and its successors and assigns
shall indemnify,  defend,  reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages,  including the cost
of  remediation,  which  existed  as a result  of  Hazardous  Substances  on the
Premises  prior to the Start ate or which are caused by the gross  negligence or
willful misconduct of Lessor, its agents or employees.  Lessor's obligations, as
and when required by the  Applicable  Requirements,  shall  include,  but not be
limited to, the cost of investigation, removal, remedial ion, restoration and/or
abatement, and shall survive the expiration and termination of this Lease.
            (f)  Investigations  and  Remediations.   Lessor  shall  retain  the
responsibility and pay for any  investigations or remediation  measures required
by governmental  entities having  jurisdiction  with respect to the existence of
Hazardous  Substances  on the  Premises  prior to the Start  Date,  unless  such
remediation  measure  is  required  as  a  result  of  Lessee's  use  (including
Alterations",  as defined in paragraph  7.3(a) below) of the Premises,  in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor,  including  allowing Lessor and
Lessor's agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor's investigative and remedial responsibilities.
            (g) Lessor Termination  Option. If a Hazardous  Substance Condition
occurs  during the term of this  Lease,  unless  Lessee is  legally  responsible
therefor  (in which case Lessee  shall make the  investigation  and  remediation
thereof required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and
Paragraph  13),  Lessor may,  at Lessor's  option,  either (i)  investigate  and
remediate such Hazardous Substance Condition, if required, as soon as reasonably
possible at Lessor's  expense,  in which event this Lease shall continue in full
force and effect,  or (ii) if the  estimated  cost to remediate  such  condition
exceeds  twelve (121 times the then monthly Base Rent or $100,000,  whichever is
greater, give written notice to Lessee, within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance Condition,  of
Lessor's desire to terminate this Lease as of the date sixty (60) days following
the date of such  notice.  In the  event  Lessor  elects  to give a  termination
notice,  Lessee may,  within ten (10) days  thereafter,  give written  notice to
Lessor  of  Lessees  commitment  to pay the  amount  by  which  the  cost of the
remediation of such  Hazardous  Substance  Condition  exceeds an amount equal to
twelve (12) times the then monthly Base Rent or S100,000,  whichever is greater.
Lessee shall provide Lessor with said funds or  satisfactory  assurance  thereof
within thirty (30) days following  such  commitment.  In such event,  this Lease
shall  continue in full force and effect,  and Lessor shall proceed to make such
remediation  as soon  as  reasonably  possible  alter  the  required  funds  are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time provided, this Lease shall terminate as of the
date specified in Lessor's notice of termination.
      6.3 Lessee's Compliance with Applicable Requirements.  Except as otherwise
provided  in  this  Lease,  Lessee  shall,  at  Lessee's  sole  expense,  fully,
diligently  and in a  timely  manner,  materially  comply  with  all  Applicable
Requirements,  the requirements of any applicable fire insurance  underwriter or
rating bureau, and the  recommendations of Lessor's engineers and/or consultants
which  relate in any manner to the  Premises,  without  regard to  whether  said
requirements are now in effect or become effective after the Start Date.  Lessee
shall,  within ten (10) days after receipt of Lessor's written request,  provide
Lessor with copies of all permits  and other  documents,  and other  information
evidencing  Lessee's  compliance with any Applicable  Requirements  specified by
Lessor,  and shall  immediately  upon  receipt,  notify  Lessor in writing (with
copies of any documents  involved) of any  threatened  or actual claim,  notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.
      6.4 Inspection;  Compliance.  Lessor and Lessor's  "Lender" (as defined in
Paragraph 30 below) and consultants  shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of  inspecting  the  condition  of the  Premises  and for  verifying
compliance by Lessee with this Lease. The cost of any such inspections  shall be
paid  by  Lessor,   unless  a  violation  of  Applicable   Requirements,   or  a
contamination is found to exist or be imminent,  or the, inspection is requested
or ordered by a governmental  authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection is
reasonably related to the violation or contamination.

                                     PAGE 3

      7.1  Lessee's Obligations.
            (a) In   General.  Subject  to  the   provisions  of  Paragraph  2.2
(Condition),   2.3  (Compliance),   6.3  (Lessee's  Compliance  with  Applicable
Requirements),  7.2 (Lessor's  Obligations),  9 (Damage or Destruction),  and 14
(Condemnation),  Lessee  shall,  at Lessee's  sole  expense,  keep the Premises,
Utility  Installations,  and  Alterations  in good order,  condition  and repair
(whether or not the portion of the Premises requiring  repairs.  or the means of
repairing the same, are reasonably or readily  accessible to Lessee, and whether
or not the need for such repairs  occurs as a result of Lessee's  use, any prior
use, the elements or the age of such portion of the  Premises),  including,  but
not  limited  to,  all  equipment  or  facilities,  such as  plumbing,  heating,
ventilating,   air-conditioning,   electrical,   lighting  facilities,  boilers,
pressure  vessels,  fire  protection  system,   fixtures,  walls  (interior  and
exterior),  foundations,  ceilings,  roofs, floors, windows, doors, plate glass,
skylights, landscaping, driveways, parking lots, fences, retaining walls, signs,
sidewalks and parkways located in, on, or adjacent to the Premises.  Lessee,  in
keeping the Premises in good order,  condition  and repair,  shall  exercise and
perform good maintenance  practices,  specifically including the procurement and
maintenance  of the  service  contracts  required  by  Paragraph  7.1(b)  below.
Lessee's obligations shall include  restorations,  replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. Lessee shall, during the term of this
Lease, keep the exterior appearance of the Building in a first-class'  condition
consistent  with  the  exterior   appearance  of  other  similar  facilities  of
comparable age and size in the vicinity, including, when necessary, the exterior
repainting of the Building.
            (b)Service Contracts. Lessee shall, at Lessees sole expense, procure
and maintain,  contracts, with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in the maintenance of the
following  equipment and improvements  (`Basic  Elements"),  if any, if and when
installed  on the  Premises:  (i) HVAC  equipment,  (ii)  boiler,  and  pressure
vessels,  (iii) fire  extinguishing  systems,  including fire alarm and/or smoke
detection,  (iv)  landscaping  and  irrigation  systems,  (v) root  covering and
drains,  (vi) driveways and parking lots, (vii) clarifiers  (viii) basic utility
feed to the  perimeter  of the  Building,  and  (ix)  any  other  equipment,  if
reasonably required by Lessor.
            (c)Replacement. Subject to Lessee's indemnification of Lessor as set
forth in  Paragraph  8.7  below,  and  without  relieving  Lessee  of  liability
resulting  from  Lessee's  failure to  exercise  and  perform  good  maintenance
practices,  if the  Basic  Elements  described  in  Paragraph  7.1(b)  cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such Basic Elements,  then such Basic Elements shall be replaced by Lessor,  and
the cost thereof shall be prorated  between the Parties and Lessee shall only be
obligated to pay, each month during the remainder of the term of this Lease,  on
the  date  on  which  Base  Rent is due,  an  amount  equal  to the  product  of
multiplying the cost of such  replacement by a fraction,  the numerator of which
is one, and the  denominator of which is the number of months of the useful life
of such replacement as such useful life is specified  pursuant to Federal income
tax regulations or guidelines' for depreciation  thereof (including  interest on
the unamortized  balance as is then  commercially  reasonable in the judgment of
Lessor's accountants),  with Lessee reserving the right to prepay its obligation
at any time.
      7.2   Lessor's  Obligations.  Subject to the  provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance), 9 (Damage or Destruction)
and 14 (Condemnation),  it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, or
the equipment  therein,  all of which obligations are intended to be that of the
Lessee.  It is the  intention of the Parties that the terms of this Lease govern
the respective  obligations  of the Parties as to maintenance  and repair of the
Premises,  and they expressly  waive the benefit of any statute now or hereafter
in effect to the extent it is inconsistent with the terms of this Lease.
      7.3   Utility Installations; Trade Fixtures; Alterations.
            (a) Definitions; Consent Required. The term "Utility  Installations"
refers to all floor and window coverings,  air lines,  power panels,  electrical
distribution,  security  and fire  protection  systems,  communication  systems,
lighting fixtures, HVAC equipment,  plumbing, and fencing in or on the Premises.
The term "Trade  Fixtures" shall mean Lessee's  machinery and equipment that can
be removed without doing material damage to the Premises, The term "Alterations"
shall  mean  any   modification   of  the   improvements,   other  than  Utility
Installations or Trade Fixtures,  whether by addition or deletion. "Lessee Owned
Alterations  and/or Utility  Installations"  are defined as  Alterations  and/or
Utility  Installations  made by Lessee that are not yet owned by Lessor pursuant
to  Paragraph  7.4(a).   Lessee  shall  not  make  any  Alterations  or  Utility
Installations to the Premises  without  Lessor's prior written  consent.  Lessee
may, however,  make non-structural  Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
tong as they  are not  visible  from the  outside,  do not  involve  puncturing,
relocating or removing the roof or any existing  walls,  and the cumulative cost
thereof  during this Lease as extended does not exceed  S50,000 in the aggregate
or $10,000 in any one year.
            (b) Consent. Any  Alterations or Utility  Installations  that Lessee
shall  desire to make and which  require  the  consent  of the  Lessor  shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's:  (I) acquiring all applicable  governmental  permits,
(ii)  furnishing  Lessor  with  copies  of both the  permits  and the  plans and
specifications  prior to commencement of the work, and (iii) compliance with all
conditions  of said permits and other  Applicable  Requirements  in a prompt and
expeditious manner. Any Alterations or Utility  Installations shall be performed
in a  workmanlike  manner  with  good and  sufficient  materials.  Lessee  shall
promptly upon completion furnish Lessor with as-built plans and  specifications.
For work which costs an amount equal to the greater of one month's Base Rent, or
$10,000,  Lessor may  condition  its consent  upon  Lessee  providing a lien and
completion  bond in an amount equal to one and one-half times the estimated cost
of such  Alteration  or Utility  Installation  and/or upon  Lessee's  posting an
additional Security Deposit with Lessor.
            (c) Indemnification.  Lessee  shall pay,  when due,  all claims for
labor or materials  furnished or alleged to have been furnished to or for Lessee
at or  for  use on toe  Premises,  which  claims  are or may be  secured  by any
mechanic's or materialmen's  lien against the Premises or any interest  therein.
Lessee  shall  give  Lessor  not less than ten (10)  days'  notice  prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post  notices of  non-responsibility.  If  Lessee'  shall  contest  the
validity  of any such lien,  claim or demand,  then  Lessee  shall,  at its sole
expense defend and protect itself,  Lessor and the Premises against the same and
shah pay and  satisfy any such  adverse  judgment  that may be rendered  thereon
before the enforcement thereof. If Lessor shall require,  Lessee shall furnish a
surety  bond in an amount  equal to one and  one-half  times the  amount of such
contested lien, claim or demand,  indemnifying  Lessor against liability for the
same.  If Lessor  elects to  participate  in any such  action,  Lessee shall pay
Lessor's attorneys' fees and costs.
      7.4  Ownership; Removal; Surrender; and Restoration.
            (a) Ownership. Subject to Lessor's right to require removal or elect
ownership as hereinafter  provided,  all Alterations  and Utility  Installations
made by Lessee  shall be the  property of Lessee,  but  considered a part of the
Premises,  Lessor may,  at any time,  elect in writing to be the owner of all or
any specified part of the Lessee Owned  Alterations  and Utility  Installations.
Unless  otherwise  instructed  per  Paragraph.7.4(b)  hereof,  all Lessee  Owned
Alterations and Utility Installations shall, at the expiration or termination of
this Lease,  become the property of Lessor and be surrendered by Lessee with the
Premises.
            (b) Removal. By delivery to Lessee of written notice from Lessor not
earlier than ninety (90) and not later than thirty (30) days prior to the end of
the  term of this  Lease,  Lessor  may  require  that  any or all  Lessee  Owned
Alterations or Utility Installations be removed by the expiration or termination
of this Lease.  Lessor may require the removal at any time of all or any part of
any Lessee Owned Alterations or Utility  Installations made without the required
consent.
            (c) Surrender/Restoration.  Lessee shall  surrender the Premises by
the  Expiration  Date  or  any  earlier   termination  date,  with  all  of  the
improvements,  parts and surfaces thereof broom clean and free of debris, and in
good  operating  order,  condition  and state of repair,  ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Lessee shall repair
any  damage  occasioned  by the  installation,  maintenance  or removal of Trade
Fixtures,  Lessee Owned Alterations and/or Utility  Installations,  furnishings,
and  equipment  as well as the removal of any storage  tank  installed by or for
Lessee, and the removal,  replacement,  or remediation of any soil,  material or
groundwater  contaminated by Lessee. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee.  The  failure by Lessee to timely  vacate
the  Premises  pursuant to this  Paragraph  7.4(c)  without the express  written
consent of Lessor shall  constitute a holdover under the provisions of Paragraph
26 below.

                                     PAGE 4

 8.    Insurance; Indemnity.
      8.1 Payment For  Insurance.  Lessee shall pay for all insurance  required
under  Paragraph 8 except to the extent of the cost  attributable  to  liability
insurance  carried by Lessor under Paragraph  8.2(b) in excess of $2,000,000 per
occurrence.  Premiums for policy periods commencing prior to or extending beyond
the Lease term shall be prorated to correspond to the Lease term.  Payment shall
be made by  Lessee to  Lessor  within  ten (10)  days  following  receipt  of an
invoice.
      8.2  Liability Insurance.
            (a)  Carried  by  Lessee.  Lessee  shall  obtain and keep in force a
Commercial  General  Liability Policy of Insurance  protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership,  use,  occupancy or maintenance of the Premises
and all areas  appurtenant  thereto.  Such  insurance  shall be on an occurrence
basis providing  single limit coverage in an amount not less than S2.000.000 per
occurrence  with  an  "Additional   Insured-Managers   or  Lessors  of  Premises
Endorsement" and contain the "Amendment of the Pollution Exclusion  Endorsement"
for damage caused by heat,  smoke or fumes from a hostile fire. The Policy shall
not  contain  any  intra-insured   exclusions  as  between  insured  persons  or
organizations, but shall include coverage for liability assumed under this Lease
as an "insured contract" for the performance of Lessee's  indemnity  obligations
under this Lease.  The limits of said insurance  shall not,  however,  limit the
liability  of  Lessee  nor  relieve  Lessee  of any  obligation  hereunder.  All
insurance  carried by Lessee shall be primary 10 and not  contributory  with any
similar insurance carried by Lessor,  whose insurance shall be considered excess
insurance only.
            (b) Carried by Lessor.  Lessor shall maintain liability insurance as
described in Paragraph  8.2(a), in addition to, and not in lieu of, he insurance
required to be maintained by Lessee.  Lessee shall not be named as an additional
insured heron.
      8.3  Property Insurance-- Building, Improvements and Rental Value.
            (a) Building and  Improvements.  The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor,  with loss  payable to
Lessor,  any groundlessor,  and to any Lender(s)  insuring loss or damage to the
Premises.  The amount of such insurance  shall be equal to the full  replacement
cost of the  Premises,  as the same shall exist from time to time, or the amount
required by any Lenders,  but in no event more than the commercially  reasonable
and available insurable value thereof. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations, Trade Fixtures; and Lessee's
personal  property shall be insured by Lessee under Paragraph 0.4 rather than by
Lessor, If the coverage is available and commercially  appropriate,  such policy
or policies  shall insure  against all risks of direct  physical  loss or damage
(except  the perils of flood  and/or  earthquake  unless  required by a Lender),
including  coverage for debris  removal and the  enforcement  of any  Applicable
Requirements requiring the upgrading, demolition,  reconstruction or replacement
of any portion of the Premises as the result of a covered  loss.  Said policy or
policies  shall  also  contain  an  agreed  valuation  provision  in lieu of any
coinsurance  clause,  waiver of  subrogation,  and  inflation  guard  protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S.  Department of Labor Consumer Price index for
All Urban  Consumers for the city nearest to where the Premises are located.  If
such insurance coverage has a deductible clause, the deductible amount shall not
exceed  $1,000 per  occurrence,  and Lessee shall be liable for such  deductible
amount in the event of an Insured Loss.
            (b) Rental Value.  The Insuring Party shall obtain and keep in force
a policy or policies  in the name of Lessor with loss  payable to Lessor and any
Lender,  insuring  the loss of the full  Rent for one (1) year.  Said  insurance
shall  provide that in the event the Lease is terminated by reason of an insured
loss,  the period of indemnity  for such coverage  shall be extended  beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full  year's  loss of Rent from the date of any such  loss.  Said  insurance
shall contain an agreed valuation  provision in lieu of any coinsurance  clause,
add the amount of coverage  shall be adjusted  annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period.  Lessee
shall be liable for any deductible amount in the event of such loss.
            (c)  Adjacent  Premises.  If  the  Premises  are  part  of a  larger
building,  or of a group of buildings  owned by Lessor which are adjacent to the
Premises, the Lessee shall pay for any increase in the premiums for the property
insurance of such  building or buildings if said  increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.
      8.4  Lessee's Property/Business Interruption Insurance.
            (a) Property  Damage.  Lessee  shall  obtain and maintain  insurance
coverage on all of Lessee's personal property,  Trade Fixtures, and Lessee Owned
Alterations and Utility Installations.  Such insurance shall be full replacement
cost  coverage with a deductible  of not to exceed  $1,000 per  occurrence.  The
proceeds from any such insurance  shall be used by Lessee for the replacement of
personal  property,  Trade  Fixtures  and Lessee Owned  Alterations  and Utility
Installations.  Lessee  shall  provide  Lessor with written  evidence  that such
insurance is in force.
            (b) Business  Interruption.  Lessee shall obtain an maintain loss of
income and extra  expense  insurance  in amounts  as will  reimburse  Lessee for
direct or indirect loss of earnings  attributable to all perils commonly insured
against  by  prudent  lessees  in the  business  of  Lessee or  attributable  to
prevention of access to the Premises as a result of such perils.
            (c) No  Representation  of  Adequate  Coverage.   Lessor  makes  no
representation  that the  limits or forms of  coverage  of  insurance  specified
herein  are  adequate  to  cover  Lessee's  property,   business  operations  or
obligations under this Lease.
       8.5 Insurance  Policies.  Insurance required herein shall be by companies
duly  licensed or admitted to transact  business in the state where the Premises
are located,  and  maintaining  during the policy term a "General  Policyholders
Rating"  of at least B-, V. as set forth in the most  current  issue of  "Best's
Insurance  Guide",  or such other rating as may be required by a Lender.  Lessee
shall  not do or permit  to be done  anything  which  invalidates  the  required
insurance  policies.  Lessee shall,  prior to the Start Date,  deliver to Lessor
certified  copies of policies of such insurance or  certificates  evidencing the
existence  and  amounts  of the  required  insurance.  No such  policy  shall be
cancelable  or subject  to  modification  except  after  thirty  (30) days prior
written notice to Lessor.  Lessee shall,  at least thirty (30) days prior to the
expiration  of such  policies,  furnish  Lessor  with  evidence  of  renewals or
"insurance  binders"  evidencing  renewal  thereof,  or Lessor  may  order  such
insurance  and charge the cost thereof to Lessee,  which amount shall be payable
by Lessee to Lessor upon demand.  Such policies  shall be for a term of at least
one year, or the length of the remaining term of this Lease,  whichever is less.
If either Party shall fail to procure and maintain the insurance  required to be
carried by it, the other Party may,  but shall not be required  to,  procure and
maintain the same.
      8.6  Waiver  of  Subrogation.  Without  affecting  any  other  rights  or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages  against the other,  for loss of or damage
to its property  arising Out of or incident to the perils required to be insured
against  herein.  The effect of such  releases and waivers is not limited by the
amount of  insurance  carried  or  required,  or by any  deductibles  applicable
hereto.  The Parties agree t~ have their  respective  property damage  insurance
carriers  waive any right to  subrogation  that such  companies may have against
Lessor  or  Lessee,  as the  case  may  be,  so  long  as the  insurance  is not
invalidated thereby.
      8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct,
Lessee shall indemnify,  protect, defend and hold harmless the Premises,  Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims,  loss of rents  and/or  damages,  liens,  judgments,
penalties, attorneys' and consultants' fees, expenses and/or liabilities arising
out of,  involving,  or in  connection  with,  the use and/or  occupancy  of the
Premises by Lessee.  If any action or  proceeding is brought  against  Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the same
at  Lessee's  expense by counsel  reasonably  satisfactory  to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be defended or indemnified.
       8.8  Exemption of Lessor from  Liability.  Lessor shall not be liable for
injuryor damage to the person or goods, wares, merchandise or other property of
Lessee,  Lessee's  employees,  contractors,  invitees,  customers,  or any other
person in or about the  Premises,  whether such damage or injury is caused by or
results from tire, steam, electricity, gas, water or rain, or from the breakage,
leakage,  obstruction  or  other  defects  of  pipes,  fire  sprinklers,  wires,
appliances,  plumbing,  HVAC or  lighting  fixtures,  or from any  other  cause,
whether the said  injury or damage  results  from  conditions  arising  upon the
Premises or upon other  portions of the  Building  of which the  Premises  are a
part,  or from  other  sources  or  places.  Lessor  shall not be liable for any
damages  arising  from  any  act or  neglect  of any  other  tenant  of  Lessor,
Notwithstanding  Lessor's negligence or breach of this Lease, Lessor shall under
no  circumstances  be liable for injury to Lessee's  business or for any loss of
income or profit therefrom.
 9.    Damage or Destruction.
      9.1  Definitions.
            (a)"Premises Partial Damage" shall mean damage or destruction to the
improvements  on the Premises,  other than Lessee Owned  Alterations and Utility
Installations,  which can  reasonably be repaired in six (6) months or less from
the date of the damage or destruction.

                                     PAGE 5

Lessor shall notify  Lessee in writing  within thirty (30) days from the date of
the damage or destruction as to whether or not the damage is Partial or Total.
            (b) Premises Total  Destruction" shall mean damage or destruction to
the Premises,  other than Lessee Owned Alterations and Utility Installations and
Trade  Fixtures,  which cannot  reasonably be repaired in six (6) months or less
from the date of the  damage  or  destruction.  Lessor  shall  notify  Lessee in
writing within thirty (30) days tram the date of the damage or destruction as to
whether or not the damage is Partial or Total.
            (c) "Insured Loss" shall mean damage or destruction to  improvements
on the Premises,  other than Lessee Owned Alterations and Utility  Installations
and Trade  Fixtures,  which was caused by an event required to be coveted by the
insurance described in Paragraph 8.3(a),  irrespective of any deductible amounts
or coverage limits involved.
            (d) "Replacement  Cost" shall mean the cost to repair or rebuild the
improvements  owned by Lessor at the time of the  occurrence to their  condition
existing  immediately prior thereto,  including  demolition,  debris removal and
upgrading  required by the  operation of  Applicable  Requirements,  and without
deduction for depreciation.
            (e)  "Hazardous  Substance  Condition"  shall mean the occurrence or
discovery of a condition  involving  the presence of, or a  contamination  by, a
Hazardous  Substance  as  defined  in  Paragraph  6.2(a),  in,  on, or under the
Premises.
      9.2 Partial Damage - Insured Loss. It a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense,  repair such damage
(but not  Lessee's  Trade  Fixtures  or Lessee  Owned  Alterations  and  Utility
Installations)  as soon as reasonably  possible and this Lease shall continue in
full force and  effect:  provided,  however,  that  Lessee  shall,  at  Lessor's
election,  make the repair of any damage or destruction the total cost to repair
of  which  is  $10,000  or less,  and,  in such  event,  Lessor  shall  make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose.  Notwithstanding  the foregoing,  if the required  insurance was not in
force or the insurance  proceeds are not  sufficient to effect such repair,  the
Insuring Patty shall promptly  contribute the shortage in proceeds (except as to
the  deductible  which  is  Lessee's  responsibility)  as and when  required  to
complete said repairs. In the event,  however, such shortage was due to the fact
that, by reason of the unique nature of the improvements,  full replacement cost
insurance coverage was not commercially  reasonable and available,  Lessor shall
have no  obligation  to pay for the shortage in  insurance  proceeds or to fully
restore the unique aspects of the Premises  unless Lessee  provides  Lessor with
the funds to cover same,  or adequate  assurance  thereof,  within ten (10) days
following  receipt of written notice of such shortage and request  therefor.  If
Lessor  receives said funds or adequate  assurance  thereof within said ten (10)
day period,  the party responsible for making the repairs shall complete them as
soon as  reasonably  possible  and this  Lease  shall  remain in full  force and
effect.  If such funds or assurance  are not received,  Lessor may  nevertheless
elect by written  notice to Lessee within ten (10) days  thereafter to: (i) make
such restoration and repair as is commercially reasonable with Lessor paying any
shortage in  proceeds,  in which case this Lease shall  remain in full force and
effect;  or (ii) have this Lease terminate thirty (30) days  thereafter.  Lessee
shall not be entitled to  reimbursement  of any funds  contributed  by Lessee to
repair any such damage or destruction.  Premises  Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3,  notwithstanding that there may be
some insurance  coverage,  but the net proceeds of any such  insurance  shall be
made available for the repairs if made by either Party.
      9.3 Partial Damage - Uninsured Loss. If a Premises  Partial Damage that is
not an Insured  Loss  occurs,  unless  caused by a  negligent  or willful act of
Lessee (in which  event  Lessee  shall make the  repairs at  Lessee's  expense),
Lessor may  either:  (i) repair such  damage as soon as  reasonably  possible at
Lessor's  expense,  in which event this Lease  shall  continue in full force and
effect,  or (ii)  terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the  occurrence of such
damage.  Such termination  shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
nave the right within ten (10) days after receipt of the  termination  notice to
give written  notice to Lessor of Lessee's  commitment  to pay for the repair of
such damage without  reimbursement from Lessor. Lessee shall provide Lessor with
said funds or  satisfactory  assurance  thereof  within  thirty  (30) days after
making such  commitment.  In such event this Lease shall  continue in full force
and effect;  and Lessor shall proceed to make such repairs as soon as reasonably
possible  after the required  funds are  available.  If Lessee does not make the
required commitment,  this Lease shall terminate as of the date specified in the
termination notice.
      9.4 Total  Destruction.  Notwithstanding  any other provision hereof, if a
Premises Total  Destruction  occurs,  this Lease shall terminate sixty (60) days
following such Destruction, If the damage or destruction was caused by the gross
negligence  or  willful  misconduct  of Lessee,  Lessor  shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 3.6.
      9.5 Damage Near End of Term. If at any time during the last six (6) months
of this  Lease  there is damage  for which  the cost to repair  exceeds  one (1)
month's Base Rent,  whether or not an insured Loss,  Lessor may  terminate  this
Lease  effective sixty (60) days following the dale of occurrence of such damage
by giving a written  termination  notice to Lessee within thirty (30) days after
the date of occurrence of such damage.  Notwithstanding the foregoing, it Lessee
at that time has an  exercisable  option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b)  providing  Lessor with any  shortage in  insurance  proceeds  (or  adequate
assurance  thereof)  needed to make the  repairs on or before the earlier of (i)
the date which is ten days after  Lessee's  receipt of Lessor's  written  notice
purporting to terminate this Lease, or (ii) the day prior to the date upon which
such option expires. If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any shortage
in  insurance  proceeds,  Lessor  shall,  at  Lessor's  commercially  reasonable
expense,  repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect.  If Lessee fails to exercise such opt ion and
provide  such funds or  assurance  during  such  period,  then this Lease  shall
terminate on the date  specified in the  termination  notice and Lessees  option
shall be extinguished.
      9.6  Abatement of Rent; Lessee's Remedies.
            (a) Abatement.  In the event of Premises Partial  Damage or Premises
Total  Destruction  or a Hazardous  Substance  Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair,  remediation  or  restoration  of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired,  but
not to exceed the proceeds  received from the Rental Value insurance.  All other
obligations of Lessee  hereunder shall be performed by Lessee,  and Lessor shall
have no  liability  for any such  damage,  destruction,  remediation,  repair or
restoration except as provided herein.
            (b) Remedies.  It Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or  restoration  within  ninety (90) days after such  obligation  shall  accrue,
Lessee may, at any time prior to the commencement of such repair or restoration,
give  written  notice to Lessor and to any  Lenders  of which  Lessee has actual
notice,  of Lessee's  election to  terminate  this Lease on a date not less than
sixty (60) days following the giving of such notice. If Lessee gives such notice
and such  repair  or  re5toration  is not  commenced  within  thirty  (30)  days
thereafter,  this Lease shall terminate as of the date specified in said notice.
If the repair or  restoration  is commenced  within said thirty (30) days,  this
Lease shall continue in full force and effect.  "Commence" shall mean either the
unconditional  authorization  of the  preparation of the required  plans, or the
beginning of the actual work on the Premises, whichever first occurs.
      9.7 Termination-Advance  Payments. Upon termination of this Lease pursuant
to  Paragraph  6.2(g) or  Paragraph  9, an  equitable  adjustment  shall be made
concerning  advance Base Rent and any other  advance  payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor.
      9.8 Waive  Statutes.  Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or  destruction  of the  Premises  with
respect to the  termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
 10.   Real Property Taxes.
      10.1 Definition of "Real Property Taxes." As used herein,  the term "Real
Property  Taxes" shall  include any form of  assessment;  real estate,  general,
special,  ordinary  or  extraordinary,   or  rental  levy  or  tax  (other  than
inheritance,  personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable  interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of teasing,  by any  authority  having the direct or  indirect  power to tax and
where the funds are generated
                                     PAGE 6

with  reference to the Building  address and whore the proceeds so generated are
to be  applied  by the  city,  county  or  other  local  taxing  authority  of a
jurisdiction  within which the Premises  are  located.  The term `Real  Property
Taxes" shall also  include any tax,  fee,  levy,  assessment  or charge,  or any
increase therein,  imposed by reason of events occurring during the term of this
Lease, including but not limited to, a change in the ownership of the Premises.
      10.2
            (a)  Payment  of Taxes.  Lessee  shall pay the Real  Property  Taxes
applicable to the Premises  during the term of this Lease.  Subject to Paragraph
10.2(b),  all such  payments  shall be made at least ten (10) days  prior to any
delinquency  date.  Lessee  shall  promptly  furnish  Lessor  with  satisfactory
evidence  that such  taxes have been paid.  If any such  taxes  shall  cover any
period of time prior to or after the  expiration or  termination  of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any  overpayment.  If Lessee shall fail to pay any required
Real  Property  Taxes,  Lessor shall have the right to pay the same,  and Lessee
shall reimburse Lessor therefor upon demand.
            (b) Advance Payment. In the event Lessee incurs a late charge on any
Rent payment, Lessor may, at Lessor's option, estimate the current Real Property
Taxes,  and  require  that such  taxes be paid in  advance  to Lessor by Lessee,
either:  (i) in a lump sum amount equal to the installment  due, at least twenty
(20) days prior to the applicable  delinquency  date, or (Ii) monthly in advance
with the payment of the Base Rent. If Lessor elects to require  payment  monthly
in advance,  the monthly  payment  shall be an amount equal to the amount of the
estimated  installment of taxes divided by the number of months remaining before
the month in which said installment becomes  delinquent.  When the actual amount
of the  applicable tax bill is known,  the amount of such equal monthly  advance
payments  shall be adjusted  as required to provide the funds  needed to pay the
applicable  taxes. If the amount collected by Lessor is insufficient to pay such
Real  Property  Taxes when due,  Lessee  shall pay  Lessor,  upon  demand,  such
additional  sums as are  necessary t~ pay such  obligations.  All moneys paid to
Lessor under this Paragraph may be intermingled  with other moneys of Lessor and
shall not bear interest.  In the event of a Breach by Lessee in the  performance
of its  obligations  under this Lease,  then any balance of funds paid to Lessor
under the provisions of this  Paragraph may at the option of Lessor,  be treated
as an additional Security Deposit.
      10.3 Joint  Assessment.  If the  Premises  are not  separately  assessed,
Lessee's,  liability shall be an equitable proportion of the Real Property Taxes
for all of the land and  improvements  included within the tax parcel  assessed,
such  proportion to be  conclusively  determined  by Lessor from the  respective
valuations  assigned in the assessor's work sheets or such other  information as
may be reasonably available.
      10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all
taxes  assessed  against  and levied  upon  Lessee  Owned  Alterations,  Utility
Installations.  Trade Fixtures, furnishings, equipment and all personal property
of Lessee.  When  possible,  Lessee shall cause such property to be assessed and
billed  separately  from the real  property of Lessor,  If any of Lessee's  said
personal  property shall be assessed with Lessor's real  property,  Lessee shall
pay Lessor the taxes  attributable  to  Lessee's  property  within ten (10) days
after receipt of a written statement.
11.  Utilities.  Lessee  shall  pay for  all  water,  gas,  heat  light,  power,
telephone,  trash  disposal and other  utilities  and  services  supplied to the
Premises,  together  with  any  taxes  thereon.  If any  such  services  are not
separately  metered to Lessee,  Lessee shall pay a reasonable  proportion  to be
determined by Lessor, of all charges jointly metered.
12.    Assignment and Subletting.
      12.1 Lessor's Consent Required.
            (a) Lessee  shall not  voluntarily  or by  operation  of law assign,
transfer, mortgage or encumber (collectively,  "assign or assignment") or sublet
all or any part of Lessees  interest  in this Lease 6r in the  Premises  without
Lessor's prior written consent.
            (c) The involvement of Lessee or its assets in any  transaction,  or
series  of  transactions  (by  way  of  merger.  sale,  acquisition,  financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation  of this Lease or Lessees  assets  occurs,  which  results or will
result in a  reduction  of the Net Worth of  Lessee  by an amount  greater  than
twenty-five  percent (25~~) of such Net Worth as it was  represented at the time
of the  execution of this Lease or at the time of the most recent  assignment to
which  Lessor  has  consented,  or  as  it  exists  immediately  prior  to  said
transaction or transactions  constituting  such  reduction,  whichever was or is
greater,  shall be  considered  an  assignment of this Lease to which Lessor may
withhold its consent.  "Net Worth of Lessee"  shall mean the net worth of Lessee
(excluding any  guarantors)  established  under  generally  accepted  accounting
principles.
            (d) An assignment or subletting  without  consent shall, at Lessor's
option, be Default curable after notice per Paragraph  13.1(c),  or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects to
treat such unapproved  assignment or subletting as a noncurable  Breach,  Lessor
may either:  (i)  terminate  this Lease,  or (ii) upon thirty (30) days  written
notice,  increase  the monthly Base Rent to one hundred ten percent (1 100/o) of
the Base Rent then in effect.  Further,  in the event of such  Breach and rental
adjustment.  (i) the purchase  price of any option to purchase the Premises held
by Lessee  shall be subject to similar  adjustment  to one  hundred  ten percent
(110%) of the  price  previously  in  effect,  and (ii) all fixed and  non-fixed
rental  adjustments  scheduled  during the  remainder of the Lease term shall be
increased to One Hundred Ten Percent (110%) of the scheduled adjusted rent.
            (e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall
be limited to compensatory damages and/or injunctive relief.
      12.2 Terms and Conditions Applicable to Assignment and Subletting.
            (a)  Regardless of Lessor's  consent,  any  assignment or subletting
shall not:  (i) be  effective  without the express  written  assumption  by such
assignee or  sublessee  of the  obligations  of Lessee  under this  Lease,  (ii)
release  Lessee  of any  obligations  hereunder,  or  (iii)  alter  the  primary
liability of Lessee for the payment of Rent or for the  performance of any other
obligations to be performed by Lessee.
            (b) Lessor may accept Rent or  performance  of Lessee's  obligations
from any  person  other  than  Lessee  pending  approval  or  disapproval  of an
assignment.  Neither a delay in the approval or disapproval  of such  assignment
nor the acceptance of Rent or performance  shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach.
            (c) Lessor's  consent to any  assignment  or  subletting  shall  not
constitute consent to any subsequent assignment or subletting.
            (d) In the event of any  Default or Breach  by  Lessee,  Lessor  may
proceed directly  against Lessee,  any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or  sublessee,  without first  exhausting  Lessor's  remedies  against any other
person or entity  responsible  therefore  to  Lessor,  or any  security  held by
Lessor.
            (e) Each request for consent to an assignment or subletting shall be
in writing,  accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or  sublessee,  including  but not limited to the  intended  use and/or
required  modification of the Premises, if any, together with a fee of $1,000 or
ten percent (10%) of the current  monthly Base Rent applicable to the portion of
the  Premises  which is the  subject of the  proposed  assignment  or  sublease,
whichever is greater,  as consideration for Lessor's  considering and processing
said  request.  Lessee  agrees to provide  Lessor with such other or  additional
information and/or documentation as may be reasonably requested.
            (f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting  such  assignment  or entering into such sublease be deemed to have
assumed and agreed to conform  and comply  with each and every  term,  covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent  with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.
       12.3 Additional  Terms and  Conditions  Applicable to.  Subletting.  The
following  terms and conditions  shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all sublease's under
this Lease whether or not expressly incorporated therein:
            (a) Lessee  hereby  assigns and  transfers to Lessor all of Lessee's
interest in all Rent payable on any  sublease,  and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided,  however,
that until a Breach  shall occur in the  performance  of  Lessee's  obligations,
Lessee may collect said Rent.  Lessor  shall not, by reason of the  foregoing or
any  assignment of such  sublease,  nor by reason of the  collection of Rent, be
deemed  liable to the  sublessee for any failure of Lessee to perform and comply
with any of Lessee's  obligations to such sublessee.  Lessee hereby  irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice

                                     PAGE 7

from  Lessor  stating  that a  Breach  exists  in  the  performance  of  Lessees
obligations  under this  Lease,  to pay to Lessor all Rent due and to become due
under the  sublease.  Sublessee  shall rely upon any such notice from Lessor and
shall pay all Rents to Lessor  without any  obligation or right to inquire as to
whether  such  Breach  exists,  notwithstanding  any  claim  from  Lessee to the
contrary.
            (b) In the event of a Breach by Lessee;  Lessor  may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations  of the sublessor  under such sublease from the time of the exercise
of said option to the expiration of such  sublease:  provided,  however,  Lessor
shall not be liable  for any  prepaid  rents or  security  deposit  paid by such
sublessee  to such  sublessor  or for any prior  Defaults  or  Breaches  of such
sublessor.
            (c) Any  matter  requiring  the  consent  of the  sublessor  under a
sublease shall also require the consent of Lessor.
            (d) No sublessee  shall further  assign or sublet all or any part of
the Premises without Lessor's prior written consent.
            (e)Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee,  who shall have the right to cure the Default of Lessee
within the grace period, if any,  specified in such notice.  The sublessee shall
have a right of  reimbursement  and offset from and against  Lessee for any such
Defaults cured by the sublessee.
 13.   Default; Breach; Remedies.
      13.1 Default; Breach. A "Default is defined as a failure by the Lessee to
comply with or perform any of the terms,  covenants,  conditions  or rules under
this  Lease.  A  `Breach'  is defined  as the  occurrence  of one or more of the
following  Defaults,  and the failure of Lessee to cure such Default  within any
applicable grace period:
            (a) The abandonment of the Premises: or the vacating of the Premises
without  providing a  commercially  reasonable  level of security,  or where the
coverage of the property insurance  described in Paragraph 8.3 is jeopardized as
a result  thereof,  or  without  providing  reasonable  assurances  to  minimize
potential vandalism.
            (b)The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable  evidence of insurance or surety bond, or
to fulfill any obligation  under this Lease which endangers or threatens life or
property,  where such failure  continues for a period of three (3) business days
following written notice to Lessee.
            (c) The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable  Requirements,  (ii) the service contracts,  (iii)
the  rescission of an  unauthorized  assignment or  subletting,  (iv) a Estoppel
Certificate,  (v)  a  requested  subordination,  (vi)  evidence  concerning  any
guaranty  and/or  Guarantor,  (vii) any document  requested  under  Paragraph 42
(easements),  or (viii) any other  documentation or information which Lessor may
reasonably  require  of Lessee  under the  terms of this  Lease,  where any such
failure  continues  for a period of ten (10) days  following  written  notice to
Lessee
            (d) A Default by Lessee as to the terms,  covenants,  conditions  or
provisions of this Lease,  or of the rules  adopted  under  Paragraph 40 hereof,
other than those described in subparagraphs  13.1(a),  (b) or (c), above,  where
such Default  continues for a period of thirty (30) days after  written  notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty  (30) days are  reasonably  required  for its cure,  then it shall not be
deemed to be a Breach if Lessee  commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.
            e) The occurrence of any of the following events:  (i) the making of
any general arrangement or assignment for the benefit of creditors; (ii becoming
a "debtor"  as defined in 11 U.S.C.  ss. 101 or any  successor  statute  thereto
(unless,  in the case of a petition  filed against  Lessee,  e same is dismissed
within sixty (60) days);  (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets located at the Premises or of
Lessee's  interest in this Lease,  where  possession  is not  restored to Lessee
within thirty (30) days;  or (iv) the  attachment,  execution or other  judicial
seizure of  substantially  all of Lessee's  assets located at the Premises or of
Lessee's  interest in this Lease,  where such seizure is not  discharged  within
thirty (30) days;  provided,  however,  in the event that any  provision of this
subparagraph  (e) is contrary to any applicable  law, such provision shall be of
no force or effect, and not affect the validity of the remaining provisions.
            (f) The discovery  that any financial  statement of Lessee or of any
Guarantor given to Lessor was materially false.
            (g) If the  performance of Lessee's  obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance  with the terms of
such  guaranty,  (iii) a  Guarantor's  becoming  insolvent  or the  subject of a
bankruptcy filing,  (iv) a Guarantor's  refusal to honor the guaranty,  or (v) a
Guarantor's  breach of its guaranty  obligation on an  anticipatory  basis,  and
Lessee's  failure,  within sixty (60) days following  written notice of any such
event, to provide written alternative assurance or security, which, when coupled
with the then  existing  resources  of Lessee,  equals or exceeds  the  combined
financial  resources  of Lessee and the  Guarantors  that existed at the time of
execution of this Lease.
      13.2 Remedies.  If Lessee fails to perform any of its affirmative  duties
or  obligations,  within  ten (10) days after  written  notice (or in case of an
emergency,  without  notice),  Lessor may, at its option,  perform  such duty or
obligation  on Lessee's  behalf,  including  but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals.  The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice  therefor.  If any check given
to Lessor by Lessee  shall not be  honored  by the bank upon  which it is drawn,
Lessor,  at its option,  may require all future payments to be made by Lessee to
be by cashier's  check.  In the event of a Breach,  Lessor may,  with or without
further  notice or demand,  and without  limiting  Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:
            (a)  Terminate  Lessee's  right to possession of the Premises by any
lawful  means,  in which  case this  Lease  shall  terminate  and  Lessee  shall
immediately  surrender  possession  to  Lessor.  In such event  Lessor  shall be
entitled to recover  from  Lessee:  (i) the unpaid Rent which had been earned at
the time of  termination;  (ii) the worth at the time of award 6f the  amount by
which the unpaid rent which would have been earned after  termination  until the
time of award  exceeds  the amount of such  rental  loss that the Lessee  proves
could have been reasonably avoided;  (iii) the worth at the time of award of the
amount by which the  unpaid  rent for the  balance of the term after the time of
award  exceeds the amount of such rental  loss that the Lessee  proves  could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the  detriment  proximately  caused by the  Lessee's  failure to perform its
obligations  under this Lease or which in the ordinary course of things would be
likely to result therefrom,  including but not limited to the cost of recovering
possession  of  the  Premises,   expenses  of  reletting,   including  necessary
renovation and alteration of the Premises,  reasonable attorneys' fees, and that
portion of any leasing  commission  paid by Lessor in connection with this Lease
applicable to the unexpired  term of this Lease.  The worth at the time of award
of the  amount  referred  to in  provision  (iii) of the  immediately  preceding
sentence  shall be computed by  discounting  such amount at the discount rate of
the Federal  Reserve Bank of the District  within which the Premises are located
at the time of award  plus one  percent  (1%).  Efforts  by Lessor  to  mitigate
damages  caused by Lessee's  Breach of this Lease shall not waive Lessor's right
to recover  damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such  proceeding  any unpaid Rent and  damages as are  recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period  required  under  Paragraph 13.1 was
not previously  given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful  defamer  statute shall also  constitute the notice
required by Paragraph  13.1. In such case, the applicable  grace period required
by Paragraph 13.1 and the unlawful defamer statute shall run  concurrently,  and
the  failure of Lessee to cure the  Default  within the  greater of the two such
grace periods  shall  constitute  both an unlawful  defamer and a Breach of this
Lease entitling Lessor to the remedies  provided for n this Lease and/or by said
statute.
            (b) Continue the Lease and Lessee's  right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign,  subject
only to reasonable  limitations.  Acts of maintenance,  efforts to relet, and/or
the  appointment  of a receiver to protect  the  Lessor's  interests,  shall not
constitute a termination of the Lessee's right to possession.
            (c) Pursue any other  remedy now or  hereafter  available  under the
laws or judicial  decisions of the state  wherein the Premises are located.  The
expiration or termination of this Lease and/or the termination of Lessee's right
to possession shall not relieve Lessee from liability

                                     PAGE 8

under any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.
      13.3 Inducement Recapture. Any agreement for free or abated rent or other
charges,  or for the  giving or paying by Lessor to or for Lessee of any cash or
other bonus,  inducement or consideration for Lessee's entering into this Lease,
all of which concessions are hereinafter referred to as "Inducement Provisions,"
shall be deemed  conditioned upon Lessee's full and faithful  performance of all
of the terms,  covenants and conditions of this Lease. Upon Breach of this Lease
by Lessee, any such lnducement  Provision shall  automatically be deemed deleted
from this Lease and of no further force or effect,  and any rent,  other charge,
bonus,  inducement or consideration  theretofore abated, given or paid by Lessor
under such an  Inducement  Provision  shall be  immediately  due and  payable by
Lessee to Lessor,  notwithstanding any subsequent cure of said Breach by Lessee.
The  acceptance by Lessor of rent or the cure of the Breach which  initiated the
operation  of this  paragraph  shall  not be  deemed a waiver  by  Lessor of the
provisions of this paragraph unless  specifically so stated in writing by Lessor
at the time of such acceptance.
      13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
of Rent will cause  Lessor to incur costs not  contemplated  by this Lease,  the
exact  amount of which will be  extremely  difficult  to  ascertain.  Such costs
include,  but are not limited to,  processing and accounting  charges,  and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor  within five (5) days after such amount shall be
due, then,  without any  requirement  for notice to Lessee,  Lessee shall pay to
Lessor a one-time late charge equal to-fan percent  (100/o) of each such overdue
amount.  The parties  hereby  agree that such late charge  represents a fair and
reasonable  estimate  of the  costs  Lessor  will  incur by  reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessees  Default or Breach with  respect to such overdue  amount,  nor
prevent the exercise of any of the other rights and remedies granted  hereunder.
In the event that a late charge is payable hereunder,  whether or not collected,
for three (3) consecutive  installments of Base Rent, then  notwithstanding  any
provision of this Lease to the  contrary,  Base Rent shall,  at Lessors  option,
become due and payable quarterly in advance,
      13.5 Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor, when due as to Scheduled payments (such as Base
Rent) or  within  thirty  (30) days  following  the date on which it was due for
non-scheduled  payment,  shall  bear  interest  from the date  when  due,  as to
scheduled  payments,  or the  thirty-first  (31st)  day  after  if was due as to
non-scheduled  payments. The interest (`Interest") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when due plus four  percent  (4%),  but shall not exceed the  maximum  rate
allowed by law.  Interest is payable in addition  to the  potential  late charge
provided for in Paragraph 13.4.
      13.6 Breach by Lessor.
            (a) Notice of Breach.  Lessor  shall not be deemed in breach of this
Lease unless  Lessor fails  within a  reasonable  time to perform an  obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than  thirty  (30) days after  receipt by Lessor,
and any  Lender  whose name and  address  shall  have been  furnished  Lessee in
writing for such purpose,  of written notice specifying  wherein such obligation
of Lessor  has not been  performed;  provided,  however,  that if the  nature of
Lessor's  obligation  is such  that more than  thirty  (30) days are  reasonably
required for its performance,  then Lessor shall not be in breach if performance
is  commenced  within  such  thirty  (30) day period and  thereafter  diligently
pursued to completion.
            (b) Performance by Lessee on Behalf  of  Lessor.  In the event  that
neither  Lessor  nor Lender  cures said  breach  within  thirty  (30) days after
receipt of said notice,  or if having commenced said cure they do not diligently
pursue it to  completion,  then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount  equal to the greater of one month's Base
Rent  or the  Security  Deposit,  and to pay an  excess  of such  expense  under
protest,  reserving  Lessee's right to reimbursement  from Lessor.  Lessee shall
document the cost of said cure and supply said documentation to Lessor.
14.  Condemnation.  If the  Premises or any portion  thereof are taken under the
power of eminent  domain or sold under the threat of the  exercise of said power
(collectively  "Condemnation"),  this Lease shall terminate as to the part taken
as of the date the condemning  authority  takes title or  possession,  whichever
first occurs.  If more than ten percent  (100/o) of any building  portion of the
premises, or more than twenty-five percent (25%) of the land area portion of the
premises not occupied by any building, is taken by Condemnation,  Lessee may, at
Lessee's  option,  to be exercised in writing  within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice,  within ten (10) days after the  condemning  authority  shall have taken
possession)  terminate this Lease as of the date the condemning  authority takes
such possession.  If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the  reduction  in  utility  of the  Premises  caused  by such  Condemnation.
Condemnation  awards and/or  payments  shall be the property of Lessor,  whether
such  award  shall  be made as  compensation  for  diminution  in  value  of the
leasehold,  the value of the part taken,  or for  severance  damages;  provided,
however,  that  Lessee  shall  be  entitled  to any  compensation  for  Lessee's
relocation  expenses,  loss of business goodwill and/or Trade Fixtures,  without
regard to whether or not this Lease is terminated  pursuant to the provisions of
this Paragraph.  All Alterations and Utility  Installations made to the Premises
by Lessee,  for purposes of Condemnation  only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation  which is
payable  therefor.  In the event that this Lease is not  terminated by reason of
the Condemnation,  Lessor shall repair any damage to the Premises caused by such
Condemnation. 15. Brokers' Fee.
      15.1 Additional Commission.  In addition to the payments owed pursuant to
Paragraph  1.10  above,  and unless  Lessor and the Brokers  otherwise  agree in
writing,  Lessor agrees that: (a) if Lessee exercises any Option,  (b) if Lessee
acquires  any  rights to the  Premises  or other  premises  owned by Lessor  and
located within the same Project,  if any,  within which the Premises is located,
(c) if Lessee remains in possession of the Premises, with the consent of Lessor,
after the expiration of this Lease, or (d) if Base Rent is increased, whether by
agreement or operation of an escalation  clause herein,  then,  Lessor shall pay
Brokers a fee in  accordance  with the schedule of said Brokers in effect at the
time of the execution of this Lease.
      15.2  Assumption  of  Obligations.  Any buyer or  transferee  of Lessor's
interest  in this  Lease  shall be deemed to have  assumed  Lessor's  obligation
hereunder.  Each Broker shall be a third party  beneficiary of the provisions of
Paragraphs  1.10,  15, 22 and 31. If Lessor fails to pay to a Broker any amounts
due as and for commissions  pertaining to this Lease when due, then such amounts
shall  accrue  Interest.  In  addition,  if Lessor  fails to pay any  amounts to
Lessee's Broker when due,  Lessee's Broker may send written notice to Lessor and
Lessee of such failure and if Lessor  fails to pay such amounts  within ten (10)
days after said  notice,  Lessee  shall pay said monies to its Broker and offset
such amounts against Rent. In addition,  Lessee's Broker shall be deemed to be a
third party  beneficiary  of any  commission  agreement  entered  into by and/or
between Lessor and Lessor's Broker.
      15.3 Representations and Indemnities of Broker Relationships.  Lessee and
Lessor each  represent and warrant to the other that it has had no dealings with
any  person,  firm,  broker  or  finder  (other  than  the  Brokers,  if any) in
connection  with this  Lease,  and that no one other than said named  Brokers is
entitled to any  commission or finder's fee in connection  herewith,  Lessee and
Lessor do each hereby  agree to  indemnify,  protect,  defend and hold the other
harmless  from and against  liability for  compensation  or charges which may be
claimed by any such unnamed  broker,  finder or other similar party by reason of
any  dealings  or  actions  of the  indemnifying  Party,  including  any  costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
16.   Estoppel Certificates.
            (a) Each Party (as  "Responding  Party")  shall within ten (10) days
after  written  notice from the other Party (the  "Requesting  Party")  execute,
acknowledge  and deliver to the Requesting  Party a statement in writing in form
similar to the then most current  "Estoppel  Certificate"  form published by the
American Industrial Real Estate Association,  plus such additional  information,
confirmation and/or statements as may be reasonably  requested by the Requesting
Party.
            (b)If the  Responding  Party  shall fail to  execute or deliver  the
Estoppel  Certificate  within  such ten day  period,  the  Requesting  Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect  without  modification  except as may be  represented  by the  Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting  Party, not more than one month's rent has
been paid in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting  Party's  Estoppel  Certificate,  and the  Responding  Party shall be
estopped from denying the truth of the facts contained in said Certificate.

                                     PAGE 9

            (c) If Lessor desires to finance,  refinance,  or sell the Premises,
or any part thereof,  Lessee and alt  Guarantors  shall deliver to any potential
tender or purchaser  designated  by Lessor such  financial  statements as may be
reasonably  required by such tender or  purchaser,  including but not limited to
Lessee's  financial  statements for the past three (3) years. All such financial
statements  shall  be  received  by  Lessor  and such  lender  or  purchaser  in
confidence and shall be used only for the purposes herein set forth.
17. Definition of Lessor.  The term "Lessor' as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises,  or, if this
is a sublease,  of the Lessee's  interest in the prior lease.  In the event of a
transfer of Lessor's  title on  interest in the  Premises or this Lease,  Lessor
shall  deliver to the  transferee  or assignee (in cash or by credit) any unused
Security  Deposit held by Lessor.  Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit,  as aforesaid,  the
prior Lessor shall be relieved of all liability with respect to the  obligations
and/or  covenants  under this Lease  thereafter  to be  performed by the Lessor.
Subject to the foregoing,  the obligations  and/or covenants in this Lease to be
performed  by the Lessor  shall be binding  only upon the Lessor as  hereinabove
defined.  Notwithstanding  the above, and subject to the provisions of Paragraph
20 below,  the original Lessor under this Lease,  and all subsequent  holders of
the Lessor's  interest in this Lease shall remain  liable and  responsible  with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6 above.
18.    Severability.  The  invalidity  of any  provision  of  this  Lease,  as
determined  by a  count of  competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19.   Days.  Unless  otherwise  specifically  indicated to the  contrary,  the
word "days" as used in this Lease shall mean and refer to calendar days.
20.  Limitation on Liability.  Subject to the  provisions of Paragraph 17 above,
the  obligations  of Lessor  under  this  Lease  shall not  constitute  personal
obligations  of  Lessor,  the  individual  partners  of  Lessor  or its or their
individual partners, directors, officers or shareholders,  and Lessee shall took
to the Premises,  and to no other assets of Lessor,  for the satisfaction of any
liability  of Lessor  with  respect to this Lease,  and shall not seek  recourse
against the individual partners of Lessor, or ifs or their individual  partners,
directors,  officers or  shareholders,  or any of their personal assets for such
satisfaction,  21. Time of Essence.  Time is of the essence  with respect to the
performance of all  obligations to be performed or observed by the Parties under
this Lease.  22. No Prior or Other  Agreements;  Broker  Disclaimer.  This Lease
contains all agreements between the Parties with respect to any matter mentioned
herein, and no other prior or contemporaneous  agreement or understanding  shall
be effective. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease
and as to the nature,  quality and  character of the  Premises.  Brokers have no
responsibility  with  respect  thereto or with  respect to any default or breach
hereof by either Party.  The  liability  (including  court costs and  Attorneys'
fees),  of any  Broker  with  respect to  negotiation,  execution,  delivery  or
performance  by either  Lessor or Lessee  under this Lease or any  amendment  or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided,  however, that the foregoing limitation
on each Broker's  liability  shall not be applicable to any gross  negligence on
willful misconduct of such Broker. 23. Notices.
      23.1 Notice Requirements.  All notices required or permitted by this Lease
shall be in writing  and may be  delivered  in person (by hand or by courier) or
may be sent by regular,  certified or  registered  mail or U.S.  Postal  Service
Express Mail, with postage prepaid, or by facsimile  transmission,  and shall be
deemed  sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's  signature on this Lease shall be that
Party's address for delivery or mailing of notices.  Either Party may by written
notice to the other  specify a different  address  for notice,  except that upon
Lessee's  taking  possession  of the  Premises,  the Premises  shall  constitute
Lessee's  address  for  notice.  A copy  of  all  notices  to  Lessor  shall  be
concurrently  transmitted  to such party or parties at such  addresses as Lessor
may from time to time hereafter designate in writing.
       23.2 Date of Notice.  Any notice sent by  registered  or certified  mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed  given  forty-eight  (48) hours after
the same is  addressed  as  required  herein and mailed  with  postage  prepaid.
Notices  delivered  by United  States  Express  Mail or  overnight  courier that
guarantee next day delivery shall be deemed given  twenty-four  (24) hours after
delivery of the same to the Postal  Service or courier.  Notices  transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail,
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received  on the next  business  day.  24.  Waivers.  No waiver by Lessor of the
Default or Breach of any term, covenant or condition hereof by Lessee,  shall be
deemed a waiver of any other  term,  covenant  or  condition  hereof,  or of any
subsequent  Default  or  Breach  by  Lessee  of the same or of any  other  term,
covenant or condition hereof. Lessor's consent to, or approval of, any act shall
not be deemed to render  unnecessary  the  obtaining of Lessor's  consent to, or
approval  of, any  subsequent  or similar act by Lessee,  or be construed as the
basis of an  estoppel  to enforce  the  provision  or  provisions  of this Lease
requiring  such consent.  The acceptance of Rent by Lessor shall not be a waiver
of any  Default or Breach by Lessee.  Any  payment by Lessee may be  accepted by
Lessor  on  account  of  moneys  or  damages  due  Lessor,  notwithstanding  any
qualifying  statements  or conditions  made by Lessee in  connection  therewith,
which  such  statements  and/or  conditions  shall  be of  no  force  or  effect
whatsoever unless  specifically  agreed to in writing by Lessor at or before the
time of deposit of such payment.
25.    Recording.  Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form  memorandum  of this
Lease for  recording  purposes.  The Party  requesting  recordation  shall be
responsible for payment of any tees applicable thereto.
26.  No Right To  Holdover.  Lessee  has no right to  retain  possession  of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee  holds over,  then the Base Rent shall be  increased to
one hundred fifty percent (1500/c) of the Base Rent applicable  during the month
immediately  preceding the expiration or termination.  Nothing  contained herein
shall be construed as consent by Lessor to any holding over by Lessee.
27.  Cumulative  Remedies.  No  remedy  or  election  hereunder  shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity. 28. Covenants and Conditions;  Construction of Agreement.  All
provisions  of this  Lease  to be  observed  or  performed  by  Lessee  are both
covenants and conditions.  In construing this Lease, all headings and titles are
for the  convenience  of the parties only and shall not be  considered a part of
this Lease.  Whenever  required by the context,  the singular  shall include the
plural and vice versa.  This Lease shall not be  construed as if prepared by one
of the parties,  but rather according to its fair meaning as a whole, as if both
parties had prepared it. 29. Binding Effect;  Choice of Law. This Lease shall be
binding upon the parties, their personal representatives, successors and assigns
and be governed by the laws of the State in which the Premises are located.  Any
litigation  between the Parties hereto  concerning this Lease shall be initiated
in the county in which the Premises are located.
30.      Subordination; Attornment; Non-Disturbance.
      30.1  Subordination.  This Lease and any Option  granted  hereby shall be
subject and subordinate to any ground tease,  mortgage,  deed of trust, or other
hypothecation  or  security  device  (collectively,  Security  Device"),  now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof,  and to all renewals,  modifications,  and extensions  thereof.  Lessee
agrees that the  holders of any such  Security  Devices (in this Lease  together
referred to as "Lender") shall have no liability or obligation to perform any of
the  obligations  of Lessor under this Lease.  Any Lender may elect to have this
Lease  and/or any Option  granted  hereby  superior to the lien of its  Security
Device by giving written notice thereof to Lessee, whereupon this Lease and such
Options  shall be deemed  prior to such  Security  Device,  notwithstanding  the
relative dates of the documentation or recordation thereof.
     30.2 Attornment.  Subject to the  non-disturbance  provisions of Paragraph
30.3,  Lessee  agrees to attorn  to a Lender  or any  other  party who  acquires
ownership of the Premises by reason of a foreclosure of a Security  Device,  and
that in the event of such foreclosure, such new

                                     PAGE 10

owner shall not:  (i) be liable for any act or  omission of any prior  lessor or
with respect to events  occurring  prior to  acquisition  of ownership;  (ii) be
subject to any offsets or defenses  which  Lessee  might have  against any prior
lessor, or (iii) be bound by prepayment of more than one (1) months rent.
       30.3  Non-Disturbance.  With respect to Security  Devices entered into by
Lessor after the execution of this Lease,  Lessees  subordination  of this Lease
shall  be  subject  to  receiving  a  commercially  reasonable   non-disturbance
agreement (a "Non-Disturbance  Agreement") from the Lender which Non-Disturbance
Agreement  provides  that Lessee's  possession of the Premises,  and this Lease,
including  any options to extend the term hereof,  will not be disturbed so long
as  Lessee  is not in Breach  hereof  and  attorns  to the  record  owner of the
Premises.  Further,  within  sixty (60) days after the  execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any  pre-existing  Security Device which is secured
by  the   Premises.   In  the  event  that  Lessor  is  unable  to  provide  the
Non-Disturbance  Agreement  within  said sixty (60) days,  then  Lessee  may, at
Lessee's  option,  directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.
       30.4 Self-Executing.  The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents;  provided, however,
that,  upon written  request from Lessor or a Lender in connection  with a sate,
financing or refinancing  of the Premises,  Lessee and Lessor shall execute such
further  writings as may be  reasonably  required  to  separately  document  any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31.  Attorneys'  Fees,  If any  Party or Broker  brings an action or  proceeding
involving  the  Premises  to  enforce  the  terms  hereof or to  declare  rights
hereunder,  the Prevailing Party (as hereafter  defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' tees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or  proceeding  is pursued to decision  or  judgment.  The term,
"Prevailing  Party" shall  include,  without  limitation,  a Party or Broker who
substantially  obtains or defeats the relief sought, as the case may be, whether
by compromise,  settlement,  judgment,  or the abandonment by the other Party or
Broker of its claim or defense.  The attorneys' fees award shall not be computed
in  accordance  with  any  court  fee  schedule,  but  shall be such as to fully
reimburse all attorneys' tees reasonably incurred. In addition,  Lessor shall be
entitled to attorneys fees,  costs and expenses  incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently  commenced in connection with such Default
or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time,  in the case of an  emergency,
and  otherwise  at  reasonable  times for the  purpose  of  showing  the same to
prospective  purchasers,  lenders,  or  lessees,  and making  such  alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All such activities  shall be without  abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises  any ordinary  "For Sale" signs and
Lessor  may  during  the last six (6)  months  of the term  hereof  place on the
Premises  any  ordinary  "For Lease"  signs.  Lessee may at any time place on or
about the Premises any ordinary "For Sublease" sign.
33.   Auctions.  Lessee shall not conduct, nor permit to be conducted,  any
auction upon the Premises without Lessor's prior  written  consent.  Lessor
shall not be obligated to exercise  any  standard of  reasonableness  in
determining whether to permit an auction.
34. Signs.  Except for ordinary "For Sublease" signs, Lessee shall not place any
sign upon the Premises without  Lessor's prior written  consent.  All signs must
comply  with  all  Applicable  Requirements.  35.  Termination;  Merger.  Unless
specifically  stated  otherwise  in writing by Lessor,  the  voluntary  or other
surrender  of this  Lease by  Lessee,  the mutual  termination  or  cancellation
hereof,  or  a  termination  hereof  by  Lessor  for  Breach  by  Lessee,  shall
automatically terminate any sublease or lesser estate in the Premises; provided,
however, that Lessor may elect to continue any one or all existing subtenancies.
Lessor's  failure  within ten (10) days following any such event to elect to the
contrary  by written  notice to the holder of any such  lesser  interest,  shall
constitute  Lessor's  election to have such event  constitute the termination of
such interest.  36. Consents.  Except as otherwise provided herein,  wherever in
this  Lease the  consent  of a Party is  required  to an act by or for the other
Party,  such consent  shall not be  unreasonably  withheld or delayed.  Lessor's
actual reasonable costs and expenses  (including but not limited to architects',
attorneys',   engineers'   and  other   consultants'   fees)   incurred  in  the
consideration  of, or response  to, a request by Lessee for any Lessor  consent,
including  but not limited to consents to an  assignment,  a  subletting  or the
presence or use of a Hazardous  Substance,  shall be paid by Lessee upon receipt
of an invoice and supporting  documentation  therefor.  Lessor's  consent to any
act,  assignment or subletting  shall not constitute an  acknowledgment  that no
Default or Breach by Lessee of this  Lease  exists,  nor shall  such  consent be
deemed a  waiver  of any then  existing  Default  or  Breach,  except  as may be
otherwise  specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular condition to Lessor's consent shall
not preclude the  imposition by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the particular  matter
for which consent is being given.  In the event that either Party disagrees with
any  determination  made by the other  hereunder  and  reasonably  requests  the
reasons for such determination,  the determining party shall furnish its reasons
in writing and in reasonable detail within ten (10) business days following such
request.
37. Guarantor.
      37.1 Execution.  The Guarantors,  if any, shall each execute a guaranty in
the  form  most  recently  published  by the  American  Industrial  Real  Estate
Association,  and each such Guarantor shall have the same  obligations as Lessee
under this Lease.
      37.2  Default.  It  shall  constitute  a  Default  of the  Lessee  if any
Guarantor  fails or  refuses,  upon  request to  provide:  (a)  evidence  of the
execution of the  guaranty,  including  the  authority  of the party  signing on
Guarantor's  behalf  to  obligate  Guarantor,  and in the  case  of a  corporate
Guarantor,  a  certified  copy  of  a  resolution  of  its  board  of  directors
authorizing the making of such guaranty, (b) current financial statements, (c) a
Estoppel Certificate,  or (d) written confirmation that the guaranty is still in
effect.
38. Quiet  Possession.  Subject to payment by Lessee of the Rent and performance
of all of the  covenants,  conditions  and  provisions  on  Lessee's  part to be
observed and performed under this Lease,  Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.
 39.  Options.
      39.1 Definition. "Option" shall mean: (a) the right to extend the term of
or renew  this  Lease or to extend or renew any lease  that  Lessee has on other
property  of  Lessor;  (b) the right of first  refusal  or first  offer to lease
either the  Premises or other  property of Lessor;  (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
      39.2 Options Personal To Original Lessee. Each Option granted to Lessee in
this  Lease is  personal  to the  original  Lessee,  and cannot be  assigned  or
exercised by anyone other than said original  Lessee and only while the original
Lessee is in full  possession of the Premises and, if requested by Lessor,  with
Lessee  certifying  that Lessee has no  intention  of  thereafter  assigning  or
subletting.
      39.3 Multiple Options.  In the event that Lessee has any multiple Options
to extend or renew this Lease,  a later Option  cannot be  exercised  unless the
prior Options have been validly exercised.
      39.4 Effect of Default on Options.
            (a)Lessee shall have no right to exercise an Option:  (i) during the
period  commencing with the giving of any notice of Default and continuing until
said  Default  is  cured,  (ii)  during  the  period  of time any Rent is unpaid
(without  regard to whether notice  thereof is given  Lessee),  (iii) during the
time  Lessee is in Breach of this  Lease,  or (iv) in the event that  Lessee has
been given  three (3) or more  notices of separate  Default,  whether or not the
Defaults are cured,  during the twelve (12) month period  immediately  preceding
the exercise of the Option.
            (b) The period of time within which an Option may be exercised shall
not be  extended or  enlarged  by reason of  Lessee's  inability  to exercise an
Option because of the provisions of Paragraph 39.4(a).
            (c) An Option shall  terminate and be of no further force or effect,
notwithstanding  Lessee's due and timely exercise of the Option,  it, after such
exercise and prior to the commencement of the extended term, (i) Lessee fails to
pay Rent for a period of thirty (30) days after such Rent  becomes due  (without
any  necessity  of Lessor to give notice  thereof),  (ii) Lessor gives to Lessee
three (3) or more  notices of  separate  Default  during  any twelve  (12) month
period,  whether or not the  Defaults  are cured,  or (iii) if Lessee  commits a
Breach of this Lease.  40. Multiple  Buildings.  If the Premises are a part of a
group of buildings controlled by Lessor,  Lessee agrees that it will observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, and care of said properties, including

                                     PAGE 11

the care and  cleanliness of the grounds and including the parking,  loading and
unloading  of  vehicles,  and that  Lessee  will pay its  fair  share of  common
expenses incurred in connection therewith. 41. Security Measures.  Lessee hereby
acknowledges  that the rental  payable to Lessor  hereunder does not include the
cost of guard service or other security measures,  and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all responsibility for the
protection of the Premises,  Lessee,  its agents and invitees and their property
from the acts of third parties.
42.  Reservations.  Lessor  reserves to itself the right,  from time to lime, to
grant,  without the  consent or joinder of Lessee,  such  easements,  rights and
dedications that Lessor deems necessary,  and to cause the recordation of parcel
maps and restrictions,  so long as such easements, rights, dedications, maps and
restrictions  do not  unreasonably  interfere  with the use of the  Premises  by
Lessee.  Lessee agrees to sign any documents  reasonably  requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43.  Performance  Under Protest,  If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make  payment  "under  protest and such  payment  shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to  institute  suit for recovery of such sum, If it shall be adjudged
that there was no legal  obligation on the part of said Party to pay such sum or
any part  thereof,  said Party shall be entitled to recover  such sum or so much
thereof as it was not legally  required to pay. 44.  Authority.  if either Party
hereto is a corporation,  trust,  limited  liability  company,  partnership,  or
similar entity,  each  individual  executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver
this  Lease on its  behalf.  Each party  shall,  within  thirty  (30) days after
request, deliver to the other party satisfactory evidence of such authority.
45.   Conflict.  Any  conflict  between  the  printed  provisions of this Lease
and the  typewritten  or  handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46.   Offer.  Preparation  of this Lease by either  Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other  Party.  This Lease is not  intended to be binding  until  executed
and delivered by alt Parties hereto.
47.  Amendments.  This  Lease may be  modified  only in  writing,  signed by the
Parties  in  interest  at the time of the  modification.  As tong as they do not
materially  change Lessee's  obligations  hereunder,  Lessee agrees to make such
reasonable  non-monetary  modifications  to  this  Lease  as may  be  reasonably
required by a Lender in  connection  with the  obtaining of normal  financing or
refinancing of the Promises.
48.  Multiple  Parties,  If more than one  person  or entity is named  herein as
either  Lessor or Lessee,  such  multiple  Parties  shall have joint and several
responsibility  to  comply  with the  terms of this  Lease.  49.  Mediation  and
Arbitration  of  Disputes.  An  Addendum  requiring  the  Mediation  and/or  the
Arbitration of all disputes  between the Parties  and/or Brokers  arising out of
this Lease is not attached to this Lease.

LESSOR AND LESSEE HAVE  CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION  CONTAINED  HEREIN.  AND BY THE  EXECUTION  OF THIS  LEASE  SHOW THEIR
INFORMED AND VOLUNTARY  CONSENT  THERETO.  THE PARTIES HEREBY AGREE THAT. AT THE
TIME THIS LEASE IS EXECUTED. THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND  EFFECTUATE  THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

ATTENTION:   NO  RESPRESENTATION  OR  RECOMMENDTION  IS  MADE  BY  THE  AMERICAN
INDUSTRIAL REAL ESTATE ASSOCOATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT,  OR TAX  CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

1.   SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2.   RETAIN APPROPRIATE CONSULTANT TO REVIEW AND INVESTIGATE THE CONDITION OF
     THE PREMISES.  SAID  INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO:
     THE POSSIBLE PRESENCE OF HAZRDOUS  SUBSTANCES,  THE ZONING OF THE PREMISES,
     THE STRUCTURAL  INTEGRITY,  THE CONDITION OF THE ROOF AND OPERATING
     SYSTEMS,  AND THESUITABLILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING:  IF THE PREMISES IS LOCATED IN A STATE OTHER THAN  CALIFORNIA,  CERTAIN
PROVISIONS  OF THE LEASE MAY NEED TO BE REVISED  TO COMPLY  WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.

<PAGE>

    The parties  hereto have  executed  this Lease at the place and on the dates
specified above their respective signatures.

   Executed at: Los Angeles, California         Executed at:
   On:                                          On:
   By: LESSOR:                                  By: LESSEE:
   Crossroads Trust                             Laser Pacific Media Corp.

   By: /s/ Morton La Kretz                       By:/s/ Robert McClain
   Name Printed: Morton La Kretz                 Name Printed: Robert McClain
   Title: Trustee                                Title: Chief Financial Officer

NOTE:  These forms are often modified to meet changing  requirements  of law and
industry  needs.  Always write or call to make sure you are  utilizing  the most
current  form:  AMERICAN  INDUSTRIAL  REAL ESTATE  ASSOCIATION,  700 So.  Flower
Street, Suite 600, Los Angeles,  California 90017. (213) 687-8777. Fax No. (213)
687-8616

                                     PAGE 12
<PAGE>

                                   ADDENDUM TO
      STANDARD INDUSTRIAL/COMMERICAL SINGLE-TENANT LEASE-NET DATED 1/19/01
                                     BETWEEN

LESSOR:           Crossroads Trust - Morton La Kretz Trustee

LESSEE:           Laser-Pacific Media Corp.

PREMISES:         807 N. Cahuenga & 814 N. Cole Ave. L.A. Ca.

     50. OPTION: One (2) year as follows:  1st. year 3/1/06 CPI 3% minimum to 6%
maximum OR at Market  Rate which ever is higher.  2nd.  year  3/1/07 with CPI 3%
minimum to 6% maximum but in no event will either be lower than previous  ending
year.

     51. RENTAL INCREASES:  CPI Annually on 3/1/02,  3/1/03, 3/1/04, 3/l/05 with
minimum 3% -maximum 6%.

     52. CPI  ADJUSTMENTS:  The base rent shall be adjusted using the difference
between March 2001 and March 2002 and annually thereafter in accordance with the
Consumer    Price   Index   ("CPI")   for   All   Urban    Consumers   for   Los
Angeles/Riverside/Orange Co.

     53.  SECURITY  DEPOSIT;  Lessor  currently  holds  $16,700.00  prior to the
execution  of this  lease.  Lessee  shall  therefore,  be  required  to pay only
$5,550.00  additional  security  deposit upon execution of this lease.  ALSO SEE
ITEM # 5. OF LEASE.

     54.  MAINTENANCE:  Lessee  shall be  responsible  for all  maintenance  and
repairs with the exception of any structural  portions of the premises including
Exterior  Walls  (except  paint),  Roofs,  and  Foundation  which  shall  be the
responsibility of the Lessor.

     55.  Lessor  shall not  unreasonably  withhold  consent  to Lessee  for any
requested  leasehold  improvements,  alterations or utility  installations on or
about the premises.  Lessee at Lessee's option may choose to leave  improvements
at lease end, or may remove  improvements and agrees to repair any damage to the
premises caused by such removal.  Any improvement not removed upon expiration of
lease and surrender of premises shall be considered the property of the Lessor.

     56. Lessee is and has been prior occupant since 10/18/78. SEE ITEM # 2.5 OF
LEASE.

     57. Lessor grants Lessee the right of 1st offer to purchase property In the
event Lessor decides to sell the real property.
<PAGE>

                                                                       Pg. 2

AGREED AND ACCEPTED

/s/ Morton La Kretz                        2/7/01
Morton La Kretz, Trustee                   Date
Crossroads Trust

/s/ Robert McClain                         2/7/01
Robert McClain, Chief Financial Officer    Date
Laser-Pacific Media Corp.AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

            STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET
                (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

     1.  Basic Provisions (Basic Provisions).
         1.1 Parties:  This Lease (Lease'),  dated for reference  purposes only,
March 1, 2001 is made by and between NTA Partners ("Lessor) and Laser Pacific
Media Corporation ("Lessee"), (collectively the "Parties," or individually a
"Party").
           1.2  Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and  commonly
known as 856-861 Seward  Street, located in the County of Los  Angeles,  State
of CA and generally  described  as (describe briefly the nature of the property
and, if  applicable, the  "Project",  if the  property  is  located  within a
Project) two-story office and production facility comprised of approximately
16,000 square feet together with parking lot across the street ("Premises").
(See also Paragraph 2)
           1.3  Term: Five (5) years and 0 months ("Original Term") commencing
April 1, 2001 ("Commencement Date") and ending February 28, 2006
("Expiration Date"). (See also paragraph 3)
           1.4  Early Possession: March 5, 2001 ("Early Possession Date").
(See also Paragraphs 3.2 and 3.3)
           1.5  Base Rent: $See Addn. per month ("Base Rent"), payable on the
First day of each month commencing April 1, 2001 X If this box is checked,
there are provisions in this Lease, for the Base Rent to be adjusted.
           1.6  Base Rent Paid Upon Execution: $28, 000 as Base Rent for the
period April 1, 2001-April 30, 2001
           1.7  Security Deposit:$56,000.00 (See Addendum)("Security Deposit").
(See also Paragraph 5)
           1.8  Agreed Use: General multimedia and office uses in compliance
with applicable law  (See also Paragraph 6)
           1.9  Insuring Party: Lessor is the "Insuring Party" unless otherwise
stated herein. (See also Paragraph 8)
           1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 50 through 57 and Exhibits, all of which constitute a
part of this Lease.
 2.        Premises.
           2.1 Letting. Lessor hereby leases to Lessee; and Lessee hereby leases
from Lessor,  the Premises,  for the term, at the rental,  and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided  herein,  any statement of size set forth in this Lease,  or that may
have been used in calculating  rental,  is an approximation  which the Parties
agree is  reasonable  and the rental based  thereon is not subject to revision
whether or not the actual size is more or less.
           2.2  Condition.  Lessor  shall  deliver the  Premises to Lessee in an
`AS-IS' condition,  subject to Lessor's express obligations hereunder,  on the
Commencement Date or the Early Possession Date, whichever first occurs ("Start
Date"),  and, so long as the required service contracts described in Paragraph
7.1(b)  below are obtained by Lessee  within  thirty (30) days  following  the
Start  Date,  warrants  to  the  best  of  its  knowledge  that  the  existing
electrical,  plumbing, fire sprinkler,  lighting, heating, ventilating and air
conditioning  systems  ("HVAC"),  loading  doors,  if any,  and all other such
elements in the Premises,  other than those constructed by Lessee, shall be in
good operating  condition on said date and that the structural elements of the
roof,  bearing  walls and  foundation  of any  buildings on the Premises  (the
"Building") shall be free of material defects.  If a non-compliance  with said
warranty  exists  as of  the  Start  Date,  Lessor  shall,  as  Lessor's  sole
obligation with respect to such matter,  except as otherwise  provided in this
Lease, promptly after receipt of written notice from Lessee setting forth with
specificity  the  nature and extent of such  non-compliance,  rectify  same at
Lessor's  expense.  If,  after the Start  Date,  Lessee  does not give  Lessor
written notice of any  non-compliance  with this warranty within: (i) one year
as to the  surface  of the  roof  and the  structural  portions  of the  roof,
foundations  and bearing  walls,  (ii) six (6) months as to the HVAC  systems,
(iii) thirty (30) days as to the remaining  systems and other  elements of the
Building,  correction of such non-compliance shall be the obligation of Lessee
at Lessee's sole cost and expense.
           2.3 Compliance. Lessor warrants that the improvements on the Premises
comply with all applicable laws, covenants or restrictions of record, building
codes, regulations and ordinances ("Applicable Requirements") in effect on the
Start Date.  Said  warranty does not apply to the use to which Lessee will put
the Premises or to any  Alterations  or Utility  Installations  (as defined in
Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible at
its sole cost and expense for determining  whether or not the zoning,  parking
and other  applicable  laws are  appropriate  for Lessee's  intended  use, and
acknowledges  that past uses of the Premises may no longer be allowed.  If the
Premises  do not  comply  with said  warranty  (as  limited  by the  preceding
sentence),  Lessor shall, except as otherwise provided, promptly after receipt
of written  notice from Lessee setting forth with  specificity  the nature and
extent of such non-compliance, rectify the same at Lessor's expense. lf Lessee
does not give Lessor  written  notice of a  non-compliance  with this warranty
within  six  (6)  months   following  the  Start  Date,   correction  of  that
non-compliance  shall be the  obligation  of Lessee at Lessee's  sole cost and
expense.  If the Applicable  Requirements are hereafter changed (as opposed to
being in existence at the Start Date,  which is addressed in Paragraph  6.2(e)
below) so as to require during the term of this Lease the  construction  of an
addition to or an alteration of the Building, the remediation of any Hazardous
Substance, or the reinforcement or other physical modification of the Building
("Capital  Expenditure"),  Lessor and Lessee  shall  allocate the cost of such
work as follows:
           (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the

                                  Page 1 of 12

premises by Lessee,  Lessee shall be fully  responsible  for the cost thereof,
provided, however that if such Capital Expenditure is required during the last
one (1) year of this Lease and the cost  thereof  exceeds six (6) months' Base
Rent,  Lessee may instead  terminate this Lease unless Lessor notifies Lessee,
in writing;  within ten (10) days after receipt of Lessee's termination notice
that Lessor has elected to pay the difference  between the actual cost thereof
and  the  amount  equal  to six  (6)  months'  Base  Rent.  If  Lessee  elects
termination,  Lessee shall  immediately  cease the use of the  Premises  which
requires  such  Capital  Expenditure  and  deliver  to Lessor  written  notice
specifying  a  termination  date at least  ninety (90) days  thereafter.  Such
termination  date shall,  however,  in no event be earlier than the,  last day
that Lessee could legally utilize the Premises without commencing such Capital
Expenditure.
                (b)If such Capital Expenditure is not the result of the specific
and unique  use of the  Premises  by Lessee  (such as,  governmentally  mandated
seismic modifications),  then Lessor and Lessee shall allocate the obligation to
pay for such costs  pursuant to the  provisions of Paragraph  7.1(c);  provided,
however,  that if such Capital Expenditure is required during the last two years
of this Lease or if Lessor  reasonably  determines  that it is not  economically
feasible to pay its share  thereof,  Lessor shall:  have the option to terminate
this Lease upon ninety (90) days prior  written  notice to Lessee  unless Lessee
notifies  Lessor,  in  writing,  within ten (10) days after  receipt of Lessor's
termination notice that Lessee will pay for such Capital Expenditure.  If Lessor
does not elect to  terminate,  and fails to tender its share of any such Capital
Expenditure,  Lessee may advance such funds and deduct same, with Interest, from
Rent until  Lessor's  share of such costs  have been  fully  paid.  If Lessee is
unable to finance  Lessors share,  or if the balance of the Rent due and payable
for the remainder of this Lease is not sufficient to fully  reimburse  Lessee on
an offset basis, Lessee shall have the right to terminate this Lease upon thirty
(30) days written notice to Lessor.
               (c) Notwithstanding  the above, the provisions concerning Capital
Expenditures are intended to apply only to  non-voluntary,  unexpected,  and new
Applicable  Requirements.  If the Capital  Expenditures are instead triggered by
Lessee as a result of an actual or proposed  change in use,  change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully  responsible for the cost thereof,  and Lessee shall not have any right to
terminate this Lease.
         2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised
by Lessor and/or  Brokers to satisfy itself with respect to the condition of the
Premises  (including but not limited to the electrical,  HVAC and fire sprinkler
systems,  security,   environmental  aspects,  and  compliance  with  Applicable
Requirements,  available  parking),  and their suitability for Lessee's intended
use; (b) Lessee has made such investigation as it deems necessary with reference
to such  matters and assumes all  responsibility  therefor as the same relate to
its occupancy of the Premises; and (c) neither Lessor,  Lessor's agents, nor any
Broker has made any oral or written  representations  or warranties with respect
to said  matters  other than as set forth in this  Lease.  In  addition,  Lessor
acknowledges  that:  (a)  Broker  has  made  no  representations,   promises  or
warranties  concerning  Lessee's  ability to honor the Lease or  suitability  to
occupy the Premises;  and (b) it is Lessor's sole  responsibility to investigate
the financial capability and/or suitability of all proposed tenants. 3. Term.
         3.1 Term.  The  Commencement  Date,  Expiration  Date and Original
Term of this Lease are as specified in Paragraph 1.3.
         3.2 Early  Possession.  If Lessee  totally or  partially  occupies  the
Premises  prior to the  Commencement  Date,  the obligation to pay Base Rent and
Real Estate Taxes shall be abated for the period of such early  possession.  All
other terms of this Lease (including, but not limited to, the obligations to pay
utilities and insurance  premiums and to maintain the Premises) shall,  however,
be in effect during such period.  Any such early possession shall not affect the
Expiration Date.
         3.3 Delay In  Possession.  Lessor  agrees to use its best  commercially
reasonable  efforts  to  deliver  possession  of the  Premises  to Lessee by the
Commencement  Date.  If,  despite  said  efforts,  Lessor is  unable to  deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be  obligated  to pay Rent or perform  its other  obligations  until it receives
possession  of the Premises.  If  possession is not delivered  within sixty (60)
days after the  Commencement  Date,  Lessee  may,  at its  option,  by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which. event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten (10)
day  period,  Lessee's  right to cancel  shall  terminate.  Except as  otherwise
provided,  if  possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease,  as aforesaid,  any period of rent abatement that
Lessee  would  otherwise  have  enjoyed  shall run from the date of  delivery of
possession  and continue for a period equal to what Lessee would  otherwise have
enjoyed under the terms  hereof,  but minus any days of delay caused by the acts
or omissions of Lessee.
         3.4  Lessee  Compliance.   Lessor  shall  not  be  required  to  tender
possession of the Premises to Lessee until Lessee  complies with its  obligation
to provide  evidence of  insurance  (Paragraph  8.5).  Pending  delivery of such
evidence,  Lessee shall be required to perform all of its obligations under this
Lease  from  and  after  the  Start  Date,   including   the  payment  of  Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such
evidence  of  insurance.  Further,  if Lessee is  required  to perform any other
conditions  prior to or  concurrent  with the Start  Date,  the Start Date shall
occur but Lessor may elect to  withhold  possession  until such  conditions  are
satisfied.
4.       Rent.
         4.1. Rent  Defined.  All  monetary  obligations  of Lessee to Lessor
under the terms of this Lease  (except for the Security Deposit) are deemed to
be rent ("Rent").
         4.2  Payment.  Lessee  shall  cause  payment of Rent to be  received by
Lessor in lawful money of the United States, without offset or deduction (except
as  specifically  permitted in this Lease),  on or before the day on which it is
due.  Rent for any period  during the term hereof which is for less than one (1)
full calendar  month shall be prorated  based upon a month  consisting of thirty
(30) days.  Payment of Rent shall be made to Lessor at its address stated herein
or to such other  persons or place as Lessor may from time to time  designate in
writing.  Acceptance  of a payment  which is less than the amount then due shall
not be a waiver of Lessor's  rights to the balance of such Rent,  regardless  of
Lessor's endorsement of any check so stating.
5. Security Deposit.  Lessee shall deposit with Lessor upon execution hereof the
Security  Deposit  as  security  for  Lessee's   faithful   performance  of  its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this  Lease,  Lessor may use,  apply or retain all or any  portion of said
Security  Deposit  for the payment of any amount due Lessor or to  reimburse  or
compensate  Lessor for any liability,  expense,  loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies `all or any portion
of said  Security  Deposit,  Lessee  shall  within ten (10) days  after  written
request therefor deposit monies with Lessor  sufficient to restore said Security
Deposit to the full amount  required by this Lease.  If the Base Rent  increases
during the term of this Lease,  Lessee shall,  upon written request from Lessor,
deposit  additional  monies with Lessor so that the total amount of the Security
Deposit shall at all times bear the same  proportion to the increased  Base Rent
as the initial Security Deposit bore to the initial Base Rent. Should the Agreed
Use be amended to accommodate a material  change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary,  in Lessor's reasonable  judgment,  to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such  change  the  financial  condition  of Lessee  is, in  Lessor's  reasonable
judgment,  significantly  reduced,  Lessee shall deposit such additional  monies
with  Lessor as shall be  sufficient  to cause the  Security  Deposit to be at a
commercially  reasonable  level  based on said  change in  financial  condition.
Lessor  shall not be required to keep the  Security  Deposit  separate  from its
general accounts.  Within fourteen (14) days after the expiration or termination
of this Lease,  if Lessor  elects to apply the  Security  Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to  Paragraph  7.4(c)  below,  Lessor  shall return that portion of the
Security Deposit not used or applied by Lessor.  No part of the Security Deposit
shall be  considered  to be held in trust,  to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.
6.       Use.
         6.1 Use.  Lessee shall use and occupy the Premises  only for the Agreed
Use,  or any  other  legal  use which is  incidental  thereto,  and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs owners and/or
occupants  of, or causes  damage to  neighboring  properties.  Lessor  shall not
unreasonably  withhold  or  delay  its  consent  to any  written  request  for a
modification  of the  Agreed  Use,  so long as the  same  will  not  impair  the
structural  integrity of the  improvements  on the Premises or the mechanical or
electrical  systems  therein,  is  not  significantly  more  burdensome  to  the
Premises,  If Lessor  elects to withhold  consent,  Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.
         6.2  Hazardous Substances.

                                  Page 2 of 12

                 (a)  Reportable  Uses  Require  Consent.   The  term  Hazardous
Substance"  as used in this Lease shall mean any  product,  substance,  or waste
whose presence, use, manufacture, disposal, transportation or release, either by
itself or in combination with other materials expected to be on the Premises, Is
either: (I) potentially  injurious to the public health, safety or welfare, the'
environment or the Premises,  (ii)  regulated `or monitored by any  governmental
authority,   or  (iii)  a  basis  for  potential  liability  of  Lessor  to  any
governmental  agency or third party under any  applicable  statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum,  gasoline, and/or crude oil or any products, by-products or fractions
thereof.  Lessee shall not engage in any  activity `in or on the Premises  which
constitutes a Reportable Use of Hazardous  Substances  without the express prior
written consent of Lessor and timely  compliance (at Lessee's  expense) with all
Applicable Requirements.  Reportable Use" shall mean (i) the installation or use
of any above or below ground  storage  tank,  (ii) the  generation,  possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit  from,  or with  respect  to which a report,  notice,  registration  or
business plan is required to be filed with, any governmental  authority,  and/or
(iii) the  presence at the  Premises of a Hazardous  Substance  with  respect to
which any  Applicable  Requirements  requires  that a notice be given to persons
entering or occupying the Premises or  neighboring  properties.  Notwithstanding
the foregoing,  Lessee may use any ordinary and customary  materials  reasonably
required to be used in the normal  course of the Agreed Use, so long as such use
is in compliance with all Applicable Requirements,  is not a Reportable Use, and
does not expose the Premises or neighboring  property to any meaningful  risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may  condition  its consent to any  Reportable  Use upon  receiving  such
additional  assurances as Lessor  reasonably  deems necessary to protect itself,
the public, the Premises and/or the environment  against damage,  contamination,
injury and/or  liability,  including,  but not limited to, the installation (and
removal  on  or  before  Lease   expiration   or   termination)   of  protective
modifications  (such as concrete  encasements)  and/or  increasing  the Security
Deposit.
                (b) Duty to Inform  Lessor.  If Lessee knows,  or has reasonable
cause to  believe,  that a  Hazardous  Substance  has come to be located in, on,
under or about the Premises,  other than as  previously  consented to by Lessor,
Lessee shall immediately give written notice of such fact to Lessor, and provide
Lessor with a copy of any report,  notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.
                (c)  Lessee  Remediation.  Lessee  shall not cause or permit any
Hazardous  Substance to be uses. spilled or released in, on, under, or about the
Premises  (including  through the plumbing or sanitary  sewer  system) and shall
promptly,  at Lessees  expense,  take all  investigatory  and/or remedial action
reasonably  required by Lessor,  its Iender or by law , whether or not  formally
ordered  or  required,  for the  cleanup  of any  contamination  of, and for the
maintenance,   security  and/or   monitoring  of  the  Premises  or  neighboring
properties,  that  was  caused  or  materially  contributed  to  by  Lessee,  or
pertaining  to or involving any  Hazardous  Substance  brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.
                (d) Lessee indemnification.  Lessee shall indemnify,  defend and
hold Lessor, its agents, employees,  lenders and ground lessor, if any, harmless
from  and  against  any  and all  loss of  rents  and/or  damages,  liabilities,
judgments,'  claims,  expenses,  penalties,  and attorneys and consultants  fees
arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee, or any third party (provided,  however, that Lessee shall have no
liability  under  this  Lease  with  respect  to  underground  migration  of any
Hazardous  Substance  under the Premises  from  adjacent  properties).  Lessee's
obligations  shall  include,   but  not  be  limited  to,  the  effects  of  any
contamination  or injury to  person,  property  or the  environment  created  or
suffered  by  Lessee,  and the  cost  of  investigation,  removal,  remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination,  cancellation or release  agreement  entered into by
Lessor and Lessee shall  release  Lessee from its  obligations  under this Lease
with respect to Hazardous  Substances,  unless  specifically so agreed by Lessor
`in writing at the time of such agreement.
                (e)Lessor indemnification. Lessor and its successors and assigns
shall indemnify,  defend,  reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages,  including the cost
of  remediation,  which  existed  as a result  of  Hazardous  Substances  on the
Premises prior to the Start Date or which are caused by the gross  negligence or
willful misconduct of Lessor, its agents or employees.  Lessor's obligations, as
and when required by the  Applicable  Requirements,  shall  include,  but not be
limited to, the cost of investigation,  removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.
                (f)  Investigations  and  Remediations.  Lessor shall retain the
responsibility and pay for any  investigations or remediation  measures required
by governmental  entities having  jurisdiction  with respect to the existence of
Hazardous  Substances  on the  Premises  prior to the Start  Date,  unless  such
remediation  measure  is  required  as  a  result  of  Lessee's  use  (including
"Alterations":  as defined in Paragraph 7.3(a) below) of the Premises,  in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor,  including  allowing Lessor and
Lessors agents to have reasonable  access to the Premises at reasonable times in
order to carry out Lessor's investigative and remedial responsibilities.
                (g)  Lessor  Termination   Option.  If  a  Hazardous   Substance
Condition  occurs  during  the term of this  Lease,  unless  Lessee  is  legally
responsible  therefor  (in which case Lessee  shall make the  investigation  and
remediation thereof required by the Applicable Requirements and this Lease shall
continue  in full  force and  effect,  but  subject  to  Lessor's  rights  under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's  option,  either (i)
investigate and remediate such Hazardous Substance  Condition,  if required,  as
soon as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect,  or (ii) if the  estimated  cost to remediate
such condition  exceeds $100,000,  give written notice to Lessee,  within thirty
(30) days  after  receipt  by  Lessor of  knowledge  of the  occurrence  of such
Hazardous Substance Condition,  of Lessor's desire to terminate this Lease as of
the date sixty (60) days following the date of such notice.  In the event Lessor
elects  to  give  a  termination  notice,  Lessee  may,  within  ten  (10)  days
thereafter,  give  written  notice to Lessor of Lessee's  commitment  to pay the
amount  by  which  the  cost  of the  remediation  of such  Hazardous  Substance
Condition  exceeds  $100,000.  Lessee  shall  provide  Lessor with said funds or
satisfactory   assurance   thereof   within  thirty  (30)  days  following  such
commitment.  In such event,  this Lease shall continue in full force and effect,
and Lessor shall proceed to make such remediation as soon as reasonably possible
after the required funds are available.  If Lessee does not give such notice and
provide the required funds or assurance  thereof within the time provided,  this
Lease  shall   terminate  as  of  the  date  specified  in  Lessor's  notice  of
termination.
         6.3  Lessee's  Compliance  with  Applicable  Requirements.   Except  as
otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently  and in a  timely  manner,  materially  comply  with  all  Applicable
Requirements,  the requirements of any applicable fire insurance  underwriter or
rating bureau, and the  recommendations of Lessor's engineers and/or consultants
which  relate in any manner to the  Premises,  without  regard to  whether  said
requirements are now in effect or become effective after the Start Date.  Lessee
shall,  within ten (10) days after receipt of Lessor's written request,  provide
Lessor with copies of all permits  and other  documents,  and other  information
evidencing  Lessee's  compliance with any Applicable  Requirements  specified by
Lessor,  and shall  immediately  upon  receipt,  notify  Lessor in writing (with
copies of any documents  involved) of any  threatened  or actual claim,  notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.
         6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in
Paragraph 30 below).and  consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of  inspecting  the  condition  of the  Premises  and for  verifying
compliance by Lessee with this Lease. The cost of any such inspections  shall be
paid by Lessor,  unless a violation by Lessee of Applicable  Requirements,  or a
contamination  caused  by  Lessee  is  found to  exist  or be  imminent,  or the
`inspection is requested or ordered by a governmental  authority.  In such ease,
Lessee shall upon request reimburse Lessor for the cost of such inspections,  so
long as such inspection is reasonably related to the violation or contamination.
7.  Maintenance; Repairs, Utility installations; Trade Fixtures and Alterations.
         7.1    Lessees Obligations.
                (a) In  General.  Subject to the  provisions  of  Paragraph  2.2
(Condition),   2.3  (Compliance),   6.3  (Lessee's  Compliance  with  Applicable
Requirements),  7.2 (Lessor's  Obligations),  9 (Damage or Destruction),  and 14
(Condemnation),  Lessee  shall,  at Lessee's  sole  expense,  keep the Premises,
Utility  Installations,  and  Alterations  in good order,  condition  and repair
(whether or not the portion of the Premises requiring  repairs,  or the means of
repairing the same, are reasonably or readily  accessible to Lessee, and whether
or not the need for such repairs  occurs as a result of Lessee's  use, any prior
use, the elements or the age of such portion of the  Premises),  including,  but
not  limited  to,  all  equipment  or  facilities,  such as  plumbing,  heating,
ventilating,   air-conditioning,   electrical,   lighting  facilities,  boilers,
pressure  vessels,  fire  protection  system,   fixtures,  walls  (interior  and
exterior),  foundations,  ceilings,  roofs, floors, windows, doors, plate glass,
skylights, landscaping, driveways, parking lots, fences, retaining walls, signs,
sidewalks and parkways located in, on, or adjacent to the Premises.  Lessee,  in
keeping the Premises in good order,  condition  and repair,  shall  exercise and
perform good maintenance  practices,  specifically including the procurement and
maintenance  of the  service  contracts  required  by  Paragraph  7.1(b)  below.
Lessee's obligations shall include  restorations,  replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. Lessee shall, during the term of this
Lease, keep the exterior  appearance of the Building in a first-class  condition
consistent  with exterior  appearance of other similar  facilities of comparable
age and size in the vicinity, including, when necessary, the exterior repainting
of the Building.

                                  Page 3 of 12

                (b)Service  Contracts.  Lessee  shall,  at Lessees sole expense,
procure and maintain  contracts,  with copies to Lessor,  in customary  form and
substance  for,  and  with  contractors  specializing  and  experienced  in  the
maintenance  of the following  equipment and  improvements,  if any, if and when
installed  on the  Premises:  (i) HVAC  equipment,  (ii)  boiler,  and  pressure
vessels,  (iii) fire  extinguishing  systems,  including fire alarm and/or smoke
detection,  (iv)  landscaping  and  irrigation  systems,  (v) roof  covering and
drains,  (vi) driveways and parking lots, (vii) clarifiers  (viii) basic utility
feed to the  perimeter  of the  Building,  and  (ix)  any  other  equipment,  if
reasonably required by Lessor.
                (c)Replacement. Subject to Lessee's indemnification of Lessor as
set forth in  Paragraph  8.7 below,  and without  relieving  Lessee of liability
resulting  from  Lessee's  failure to  exercise  and  perform  good  maintenance
practices,  if the  Basic  Elements  described  in  Paragraph  7.1(b)  cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such Basic  Elements as determined by Lessor,  then such Basic Elements shall be
replaced by Lessor,  and the cost thereof shall be prorated  between the Parties
and Lessee shall only be obligated  to pay,  each month during the  remainder of
the term of this Lease,  on the date on which Base Rent is due, an amount  equal
to the product of multiplying  the cost of such  replacement by a fraction,  the
numerator of which is one, and the  denominator of which is the number of months
of the useful life of such replacement as such useful life is specified pursuant
to  Federal  income tax  regulations  or  guidelines  for  depreciation  thereof
(including   interest  on  the  unamortized  balance  as  is  then  commercially
reasonable in the judgment of Lessors  accountants),  with Lessee  reserving the
right to prepay its obligation at any time.
         7.2 Lessor's  Obligations.  Subject to the provisions of Paragraphs 2.2
(Condition),  2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation),
It is  intended by the Parties  hereto  that Lessor have no  obligation,  in any
manner  whatsoever,  to repair  and  maintain  the  Premises,  or the  equipment
therein,  all of which  obligations are intended to be that of the Lessee. It is
the intention of the Parties that the terms of this Lease govern the  respective
obligations  of the Parties as to  maintenance  and repair of the Premises,  and
they  expressly  waive the benefit of any statute now or  hereafter in effect to
the extent it is inconsistent with the terms of this Lease.
         7.3    Utility Installations; Trade Fixtures; Alterations.
                (a)Definitions;    Consent    Required.    The   term   "Utility
Installations"  refers to all floor  and  window  coverings,  air  lines,  power
panels,   electrical   distribution,   security  and  fire  protection  systems,
communication systems, lighting fixtures, HVAC equipment,  plumbing, and fencing
in or on the Premises.  The term "Trade Fixtures" shall mean Lessee's  machinery
and equipment that can be removed without doing material damage to the Premises.
The term  "Alterations"  shall mean any modification of the improvements,  other
than Utility  Installations or Trade Fixtures,  whether by addition or deletion.
"Lessee  Owned  Alterations  and  or  Utility   Installations"  are  defined  as
Alterations  and/or Utility  Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
Utility  Installations  to the Premises  without Lessors prior written  consent.
Lessee may, however,  make non-structural  Utility Installations to the interior
of the  Premises  (excluding  the roof)  without such consent but upon notice to
Lessor,  as long as they  are not  visible  from  the  outside,  do not  involve
puncturing,  relocating  or removing  the roof or any  existing  walls,  and the
cumulative cost thereof during this Lease as extended does not exceed $50,000 in
the aggregate or $10,000 in any one year.
                (b)Consent. Any Alterations or Utility Installations that Lessee
shall  desire to make and which  require  the  consent  of the  Lessor  shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's:  (i) acquiring all applicable  governmental  permits,
(ii)  furnishing  Lessor  with  copies  of both the  permits  and the  plans and
specifications  prior to commencement of the work, and (iii) compliance with all
conditions  of said permits and other  Applicable  Requirements  in a prompt and
expeditious manner. Any Alterations or Utility  Installations shall be performed
in a  workmanlike  manner  with  good and  sufficient  materials.  Lessee  shall
promptly upon completion furnish Lessor with as-built plans and  specifications.
For work which costs greater than $10,000, Lessor may condition its consent upon
Lessee  providing  a lien  and  completion  bond in an  amount  equal to one and
one-half  times the estimated  cost of such  Alteration or Utility  Installation
and/or upon Lessees posting an additional Security Deposit with Lessor.
                (c) Indemnification.  Lessee shall pay, when due, all claims for
labor or materials  furnished or alleged to have been furnished to or for Lessee
at or  for  use on the  Premises,  which  claims  are or may be  secured  by any
mechanic's or materialmen's  lien against the Premises or any interest  therein.
Lessee  shall  give  Lessor  not less  than ten (10)  days  notice  prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post  notices  of  non-responsibility.  If  Lessee  shall  contest  the
validity  of any such lien,  claim or demand,  then  Lessee  shall,  at its sole
expense defend and protect itself,  Lessor and the Premises against the same and
shall pay and satisfy any such  adverse  judgment  that may be rendered  thereon
before the enforcement thereof. If Lessor shall require,  Lessee shall furnish a
surety  bond in an amount  equal to one and  one-half  times the  amount of such
contested lien, claim or demand,  indemnifying Lessor, against liability for the
same.  If Lessor  elects to  participate  in any such  action,  Lessee shall pay
Lessors attorneys' fees and costs.
         7.4    Ownership; Removal; Surrender; and Restoration.
                (a) Ownership. Subject to Lessor's  right to require  removal or
elect   ownership  as  hereinafter   provided,   all   Alterations  and  Utility
Installations  made by Lessee shall be the property of Lessee,  but considered a
part of the Premises.  Lessor may, at any time, elect in writing to be the owner
of all or any  specified  part  of the  Lessee  Owned  Alterations  and  Utility
Installations.  Unless  otherwise  instructed per Paragraph  7.4(b) hereof,  all
Lessee Owned Alterations and Utility  Installations  shall, at the expiration or
termination  of this Lease,  become the property of Lessor and be surrendered by
Lessee with the Premises.
                (b) Removal. By delivery to Lessee of written notice from Lessor
not  earlier  than  ninety (90) and not later than thirty (30) days prior to the
end of the term of this Lease,  Lessor may require  that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or termination
of this Lease.  Lessor may require the removal at any time of all or any part of
any Lessee Owned Alterations or Utility  Installations made without the required
consent.
                (c)Surrender/Restoration. Lessee shall surrender the Premises by
the  Expiration  Date  or  any  earlier   termination  date,  with  all  of  the
improvements,  parts and surfaces thereof broom clean and free of debris, and in
good  operating  order,  condition  and state of repair,  ordinary wear and tear
excepted.  Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Lessee shall repair
any  damage  occasioned  by the  installation,  maintenance  or removal of Trade
Fixtures,  Lessee Owned Alterations and/or Utility  Installations,  furnishings,
and  equipment  as well as the removal of any storage  tank  installed by or for
Lessee, and the removal,  replacement,  or remediation of any soil,  material or
groundwater  contaminated by Lessee. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee.  The  failure by Lessee to timely  vacate
the  Premises  pursuant to this  Paragraph  7.4(c)  without the express  written
consent of Lessor shall  constitute a holdover under the provisions of Paragraph
28 below.
8.       Insurance; Indemnity.
         8.1 Payment For Insurance.  Lessee shall pay for all insurance required
under  Paragraph 8 except to the extent of the cost  attributable  to  liability
insurance  carried by Lessor under Paragraph  8.2(b) in excess of $2,000,000 per
occurrence.  Premiums for policy periods commencing prior to or extending beyond
the Lease term shall be prorated to correspond to the Lease term.  Payment shall
be made by  Lessee to  Lessor  within  ten (10)  days  following  receipt  of an
invoice.
         8.2    Liability Insurance.
                (a)Carried  by Lessee.  Lessee  shall obtain and keep in force a
Commercial  General  Liability Policy of Insurance  protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership,  use,  occupancy or maintenance of the Premises
and all areas  appurtenant  thereto.  Such  insurance  shall be on an occurrence
basis providing  single limit coverage in an amount not less than $2,000,000 per
occurrence  with  an  "Additional   Insured-Managers   or  Lessors  of  Premises
Endorsement" and contain the "Amendment of the Pollution Exclusion  Endorsement"
for damage caused by heat,  smoke or fumes from a hostile fire. The Policy shall
not  contain  any  intra-insured   exclusions  as  between  insured  persons  or
organizations, but shall include coverage for liability assumed under this Lease
as an `insured contract' for the performance of Lessee's  indemnity  obligations
under this Lease.  The limits of said insurance  shall not,  however,  limit the
liability  of  Lessee  nor  relieve  Lessee  of any  obligation  hereunder.  All
insurance  carried by Lessee shall be primary to and not  contributory  with any
similar insurance carried by Lessor,  whose insurance shall be considered excess
insurance only.
                (b)Carried by Lessor. Lessor may maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required to be maintained by Lessee.  Lessee shall not be named as an additional
insured therein.
         8.3    Property Insurance - Building, Improvements and Rental Value.
                (a) Building and  Improvements.  The Insuring Party shall obtain
and keep in force a policy or policies in the name of Lessor,  with loss payable
to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the
Premises.  The amount of such insurance  shall be equal to the full  replacement
cost of the  Premises,  as the same shall exist from time to time, or the amount
required by any Lenders,  but in no event more1than the commercially  reasonable
and available insurable value thereof. Lessee Owned Alterations and Utility

                                  Page 4 of 12

Installations,  Trade Fixtures,  and Lessee's personal property shall be insured
by Lessee under  Paragraph  8.4. If the coverage is available  and  commercially
appropriate,  such policy or policies  shall insure  against all risks of direct
physical  loss or damage  (except the perils of flood and/or  earthquake  unless
required by a Lender), including coverage for debris removal and the enforcement
of  any   Applicable   Requirements   requiring   the   upgrading,   demolition,
reconstruction  or replacement of any portion of the Premises as the result of a
covered  loss.  Said policy or policies  shall also contain an agreed  valuation
provision  in  lieu  of any  coinsurance  clause,  waiver  of  subrogation,  and
inflation guard protection  causing an increase in the annual property insurance
coverage  amount by a factor of not less than the adjusted  U.S.  Department  of
Labor Consumer Price Index for All Urban Consumers (1984-100 Los Angeles Anaheim
Riverside Area).
                (b) Rental  Value.  The Insuring  Party shall obtain and keep in
force a policy or policies in the name of Lessor with loss payable to Lessor and
any Lender,  insuring the loss of the full Rent for one (1) year. Said insurance
shall  provide that in the event the Lease is terminated by reason of an insured
loss,  the period of indemnity  for such coverage  shall be extended  beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full years loss of Rent from the date of any such loss. Said insurance shall
contain an agreed valuation provision in lieu of any coinsurance clause, and the
amount of coverage  shall be adjusted  annually  to reflect the  projected  Rent
otherwise payable by Lessee, for the next twelve (12) month period. Lessee shall
be liable for any deductible amount in the event of such loss.
         8.4    Lessee's Property Business Interruption Insurance.
                (a)Property  Damage.  Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property,  Trade Fixtures, and Lessee Owned
Alterations and Utility Installations.  Such insurance shall be full replacement
cost  coverage with a deductible  of not to exceed  $1,000 per  occurrence.  The
proceeds from any such insurance  shall be used by Lessee for the replacement of
personal  property,  Trade  Fixtures  and Lessee Owned  Alterations  and Utility
Installations.  Lessee  shall  provide  Lessor with written  evidence  that such
insurance is in force.
                (b)Business Interruption.  Lessee shall obtain and maintain loss
of income and extra expense  insurance in amounts as will  reimburse  Lessee for
direct or indirect loss of earnings  attributable to all perils commonly insured
against  by  prudent  lessees  in the  business  of  Lessee or  attributable  to
prevention of access to the Premises as a result of such perils.
                (c) No  Representation  of Adequate  Coverage.  Lessor  makes no
representation  that the  limits or forms of  coverage  of  insurance  specified
herein  are  adequate  to  cover  Lessee's  property,   business  operations  or
obligations under this Lease.
         8.5 Insurance Policies. Insurance required herein shall be by companies
duly  licensed or admitted to transact  business in the state where the Premises
are  located,  and  maintaining  during the policy term a General  Policyholders
Rating"  of at least B+, V, as set forth in the most  current  issue of  `Best's
Insurance  Guide",  or such other rating as may be required by a Lender.  Lessee
shall  not do or permit  to be done  anything  which  invalidates  the  required
insurance  policies.  Lessee shall,  prior to the Start Date,  deliver to Lessor
certified  copies of policies of such insurance or  certificates  evidencing the
existence  and  amounts  of the  required  insurance.  No such  policy  shall be
cancelable  or subject  to  modification  except  after  thirty  (30) days prior
written notice to Lessor.  Lessee shall,  at least thirty (30) days prior to the
expiration  of such  policies,  furnish  Lessor  with  evidence  of  renewals or
"insurance  binders"  evidencing  renewal  thereof,  or Lessor  may  order  such
insurance  and charge the cost thereof to Lessee,  which amount shall be payable
by Lessee to Lessor upon demand.  Such policies  shall be for a term of at least
one year, or the length of the remaining term of this Lease,  whichever is less.
If either Party shall fail to procure and maintain the insurance  required to be
carried by it, the other Party may,  but shall not be required  to,  procure and
maintain the same.
         8.6  Waiver of  Subrogation.  Without  affecting  any  other  rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages  against the other,  for loss of or damage
to its property  arising out of or incident to the perils required to be insured
against  herein.  The effect of such  releases and waivers is not limited by the
amount of  insurance  carried  or  required,  or by any  deductibles  applicable
hereto.  The Parties agree to have their  respective  property damage  insurance
carriers  waive any right to  subrogation  that such  companies may have against
Lessor  or  Lessee,  as the  case  may  be,  so  long  as the  insurance  is not
invalidated thereby.
         8.7  Indemnity.   Except  for  Lessor's  gross  negligence  or  willful
misconduct,  Lessee  shall  indemnify,  protect,  defend and hold  harmless  the
Premises,  Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders,  from and  against any and all claims,  loss of rents  and/or  damages,
liens, judgments,  penalties,  attorneys' and consultants' fees, expenses and/or
liabilities  arising out of,  involving,  or in connection  with, the use and/or
occupancy  of the  Premises by Lessee.  If any action or  proceeding  is brought
against  Lessor by reason of any of the  foregoing  matters,  Lessee  shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall  cooperate with Lessee in such defense.  Lessor need not
have first paid any such claim in order to be defended or indemnified.
         8.8 Exemption of Lessor from Liability.  Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee,  Lessee's  employees,  contractors,  invitees,  customers,  or any other
person in or about the  Premises,  whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage,  obstruction  or  other  defects  of  pipes,  fire  sprinklers,  wires,
appliances,  plumbing,  HVAC or  lighting  fixtures,  or from any  other  cause,
whether the said  injury or damage  results  from  conditions  arising  upon the
Premises or upon other  portions of the  Building  of which the  Premises  are a
part,  or from  other  sources  or  places.  Lessor  shall not be liable for any
damages  arising  from  any  act or  neglect  of any  other  tenant  of  Lessor.
Notwithstanding  Lessors negligence or breach of this Lease,  Lessor shall under
no  circumstances  be liable for injury to Lessee's  business or for any loss of
income or profit therefrom.
9.       Damage or Destruction.
         9.1    Definitions.
                (a)"Premises Partial Damage" shall mean damage or destruction to
the  improvements  on the  Premises,  other than Lessee  Owned  Alterations  and
Utility  Installations,  which can  reasonably  be repaired in six (6) months or
less from the date of the damage or  destruction.  Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
                (b)"Premises Total Destruction" shall mean damage or destruction
to the Premises,  other than Lessee Owned Alterations and Utility  Installations
and Trade  Fixtures,  which cannot  reasonably  be repaired in six (6) months or
less from the date of the damage or  destruction.  Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
                (c)  "Insured   Loss"  shall  mean  damage  or   destruction  to
improvements  on the Premises,  other than Lessee Owned  Alterations and Utility
Installations  and Trade  Fixtures,  which was caused by an event required to be
covered by the  insurance  described in Paragraph  8.3(a),  irrespective  of any
deductible amounts or coverage limits involved.
                (d)"Replacement  Cost"  shall mean the cost to repair or rebuild
the  improvements  owned  by  Lessor  at the  time of the  occurrence  to  their
condition  existing  immediately  prior thereto,  including  demolition,  debris
removal and upgrading required by the operation of Applicable Requirements,  and
without deduction for depreciation.
                (e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition  involving  the presence of, or a  contamination  by, a
Hazardous  Substance  as  defined  in  Paragraph  6.2(a),  in,  on, or under the
Premises.
         9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is
an Insured Loss  occurs,  then Lessor  shall,  at Lessors  expense,  repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned  Alterations and Utility
Installations)  as soon as reasonably  possible and this Lease shall continue in
full force and  effect;  provided,  however,  that  Lessee  shall,  at  Lessor's
election,  make the repair of any damage or destruction the total cost to repair
of  which  is  $10,000  or less,  and,  in such  event,  Lessor  shall  make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose.  Notwithstanding  the foregoing,  if the required  insurance was not in
force or the insurance  proceeds are not  sufficient to effect such repair,  the
Insuring Party shall promptly  contribute the shortage in proceeds  except as to
the  deductible  which  is  Lessee's  responsibility)  as and when  required  to
complete said repairs. In the event,  however, such shortage was due to the fact
that, by reason of the unique nature of the improvements,  full replacement cost
insurance coverage was not commercially  reasonable and available,  Lessor shall
have no  obligation  to pay for the shortage in  insurance  proceeds or to fully
restore the unique aspects of the Premises  unless Lessee  provides  Lessor with
the funds to cover same,  or adequate  assurance  thereof,  within ten (10) days
following  receipt of written notice of such shortage and request  therefor.  If
Lessor  receives said funds or adequate  assurance  thereof within said ten (10)
day period,  the party responsible for making the repairs shall complete them as
soon as  reasonably  possible  and this  Lease  shall  remain in full  force and
effect.  If such funds or assurance  are not received,  Lessor may  nevertheless
elect by written  notice to Lessee within ten (10) days  thereafter to: (i) make
such restoration and repair as is commercially reasonable with Lessor paying any
shortage in  proceeds,  in which case this Lease shall  remain in full force and
effect,  or have this Lease terminate thirty (30) days thereafter.  Lessee shall
not be entitled to  reimbursement  of any funds  contributed by Lessee to repair
any

                                  Page 5 of 12

such damage or destruction.  Premises  Partial Damage due to flood or earthquake
shall be  subject  to  Paragraph  9.3,  notwithstanding  that  there may be some
insurance  coverage,  but the net proceeds of any such  insurance  shall be made
available for the repairs if made by either Party.
         9.3 Partial Damage - Uninsured Loss. If a Premises  Partial Damage that
is not an Insured  Loss occurs,  unless  caused by a negligent or willful act of
Lessee (in which  event  Lessee  shall make the  repairs at  Lessee's  expense),
Lessor may  either:  (I) repair such  damage as soon as  reasonably  possible at
Lessors  expense,  in which  event this Lease  shall  continue in full force and
effect,  or (ii)  terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the  occurrence of such
damage.  Such termination  shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within ten (10) days after receipt of the  termination  notice to
give written  notice to Lessor of Lessee's  commitment  to pay for the repair of
such damage without  reimbursement from Lessor. Lessee shall provide Lessor with
said funds or  satisfactory  assurance  thereof  within  thirty  (30) days after
making such  commitment.  In such event this Lease shall  continue in full force
and effect,  and Lessor shall proceed to make such repairs as soon as reasonably
possible  after the required  funds are  available.  If Lessee does not make the
required commitment,  this Lease shall terminate as of the date specified in the
termination notice.
         9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total  Destruction  occurs,  this Lease shall terminate sixty (60) days
following such Destruction. If the damage or destruction was caused by the gross
negligence  or  willful  misconduct  of Lessee,  Lessor  shall have the right to
recover Lessors damages from Lessee, except as provided in Paragraph 8.6.
         9.5  Damage  Near End of Term.  If at any time  during the last six (6)
months of this Lease  there is damage for which the cost to repair  exceeds  one
(1) month's Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease  effective sixty (60) days following the date of occurrence of such damage
by giving a written  termination  notice to Lessee within thirty (30) days after
the date of occurrence of such damage.  Notwithstanding the foregoing, if Lessee
at that time has an  exercisable  option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b)  providing  Lessor with any  shortage in  insurance  proceeds  (or  adequate
assurance  thereof)  needed to make the  repairs on or before the earlier of (i)
the date which is ten days after  Lessee's  receipt of Lessor's  written  notice
purporting to terminate this Lease, or (ii) the day prior to the date upon which
such option expires. If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any shortage
in insurance proceeds, Lessor shall, at Lessors commercially reasonable expense,
repair such damage as soon as reasonably  possible and this Lease shall continue
in full force and effect.  If Lessee  fails to exercise  such option and provide
such funds or assurance  during such period,  then this Lease shall terminate on
the date  specified  in the  termination  notice and  Lessee's  option  shall be
extinguished.
         9.6    Abatement of Rent; Lessees Remedies.
                (a)Abatement.  In  the  event  of  Premises  Partial  Damage  or
Premises Total Destruction or a Hazardous  Substance  Condition for which Lessee
is not responsible  under this Lease,  the Rent payable by Lessee for the period
required  for the repair,  remediation  or  restoration  of such damage shall be
abated in  proportion  to the degree to which  Lessee's  use of the  Premises is
impaired,  but not to  exceed  the  proceeds  received  from  the  Rental  Value
insurance.  All other  obligations  of Lessee  hereunder  shall be  performed by
Lessee,  and Lessor  shall have no liability  for any such damage,  destruction,
remediation, repair or restoration except as provided herein.
                (b)Remedies.  If Lessor  shall be obligated to repair or restore
the Premises and does not commence,  in a substantial  and meaningful  way, such
repair or  restoration  within  ninety  (90) days  after such  obligation  shall
accrue,  Lessee  may,  at any time prior to the  commencement  of such repair or
restoration,  give  written  notice to Lessor and to any Lenders of which Lessee
has actual  notice,  of Lessee's  election to terminate this Lease on a date not
less than sixty (60) days  following the giving of such notice.  If Lessee gives
such notice and such repair or restoration  is not commenced  within thirty (30)
days  thereafter,  this Lease shall  terminate as of the date  specified in said
notice.  If the repair or restoration is commenced within said thirty (30) days,
this Lease shall Continue in full force and effect.  "Commence shall mean either
the  unconditional  authorization  of the preparation of the required plans, the
application  for any  entitlement,  or the  beginning  of the actual work on the
Premises, whichever first occurs.
         9.7  Termination - Advance  Payments.  Upon  termination  of this Lease
pursuant to Paragraph  6.2(g) or Paragraph 9, an equitable  adjustment  shall be
made concerning  advance Base Rent and any other advance payments made by Lessee
to Lessor.  Lessor  shall,  in  addition,  return to Lessee so much of  Lessee's
Security Deposit as has not been, or is not then required to be, used by Lessor.
         9.8 Waive  Statutes.  Lessor  and  Lessee  agree that the terms of this
Lease shall  govern the effect of any damage to or  destruction  of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.
10.       Real Property Taxes.
         10.1  Definition of "Real  Property  Taxes." As used herein,  the term
"Real  Property  Taxes"  shall  include  any form of  assessment;  real  estate,
general, special,  ordinary or extraordinary,  or rental levy or tax (other than
inheritance,  personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable  interest of Lessor in
the Premises,  Lessor's right to other income therefrom, and/or Lessors business
of leasing,  by any  authority  having the direct or  indirect  power to tax and
where the funds are generated with  reference to the Building  address and where
the proceeds so generated  are to be applied by the city,  county or other local
taxing  authority of a jurisdiction  within which the Premises are located.  The
term "Real Property Taxes" shall also include any tax, fee, levy,  assessment or
charge,  or any increase  therein,  imposed by reason of events occurring during
the term of this Lease,  including but not limited to, a change in the ownership
of the Premises.
         10.2
                (a)Payment of Taxes.  Lessee shall pay the Real  Property  Taxes
applicable to the Premises  during the term of this Lease.  Subject to Paragraph
10.2(b),  all such payments shall be made at least thirty (30) days prior to any
delinquency  date.  Lessee  shall  promptly  furnish  Lessor  with  satisfactory
evidence  that such  taxes have been paid.  If any such  taxes  shall  cover any
period of time prior to or after the  expiration or  termination  of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any  overpayment.  If Lessee shall fail to pay any required
Real  Property  Taxes,  Lessor shall have the right to pay the same,  and Lessee
shall reimburse Lessor therefor upon demand. See Addendum.
                (b)Advance  Payment. In the event Lessee incurs a late-charge on
any Rent  payment,  Lessor may, at Lessor's  option,  estimate  the current Real
Property  Taxes,  and  require  that such  taxes be paid in advance to Lessor by
Lessee,  either: (i) in a lump sum amount equal to the installment due, at least
twenty (20) days prior to the  applicable  delinquency  date, or (ii) monthly in
advance with the payment of the Base Rent. If Lessor  elects to require  payment
monthly in advance,  the monthly  payment shall be an amount equal to the amount
of the estimated  installment of taxes divided by the number of months remaining
before the month in which said installment becomes  delinquent.  When the actual
amount of the  applicable  tax bill is known,  the amount of such equal  monthly
advance  payments  shall be adjusted as required to provide the funds  needed to
pay the applicable  taxes. If the amount  collected by Lessor is insufficient to
pay such Real  Property  Taxes when due,  Lessee shall pay Lessor,  upon demand,
such additional sums as are necessary to pay such  obligations.  All monies paid
to Lessor under this Paragraph may be  intermingled  with other monies of Lessor
and  shall  not  bear  interest.  In the  event  of a Breach  by  Lessee  in the
performance of its obligations  under this Lease, then any balance of funds paid
to Lessor under the  provisions of this  Paragraph may, at the option of Lessor,
be treated as an additional Security Deposit.
         10.3 Joint  Assessment.  If the Premises are not separately  assessed,
Lessee's  liability shall be an equitable  proportion of the Real Property Taxes
for all of the land and  improvements  included within the tax parcel  assessed,
such  proportion to be  conclusively  determined  by Lessor from the  respective
valuations  assigned in the assessor's work sheets or such other  information as
may be reasonably available.
         10.4 Personal Property Taxes.  Lessee shall pay, prior to delinquency,
all taxes  assessed  against and levied upon Lessee Owned  Alterations,  Utility
Installations,  Trade Fixtures, furnishings, equipment and all personal property
of Lessee.  When  possible,  Lessee shall cause such property to be assessed and
billed  separately  from the real  property of Lessor.  If any of Lessee's  said
personal  property shall be assessed with Lessor's real  property,  Lessee shall
pay Lessor the taxes  attributable  to  Lessee's  property  within ten (10) days
after receipt of a written statement.  11. Utilities.  Lessee shall contract and
pay for all water, gas, heat, light, power, telephone,  trash disposal and other
utilities  and  services  supplied  to the  Premises,  together  with any  taxes
thereon. If any such services are not separately metered to Lessee, Lessee shall
pay a reasonable proportion,  to be determined by Lessor, of all charges jointly
metered.
 12.      Assignment and Subletting.
         12.1  Lessors Consent Required.
                (a)Lessee  shall not  voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively,  "assign or assignment") or sublet
all or any part of Lessee's  interest in this Lease or in the  Premises  without
Lessor's prior written consent.
                 (c)The involvement of Lessee or its assets in any transaction,
or series of transactions (by way of merger, sale, acquisition, financining,

                                  Page 6 of 12

transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation  of this Lease or Lessee's  assets  occurs,  which results or will
result in a  reduction  of the Net Worth of  Lessee  by an amount  greater  than
twenty-five percent (25%) of such Net Worth as it was represented at the time of
the  execution  of this Lease or at the time of the most  recent  assignment  to
which  Lessor  has  consented,  or  as  it  exists  immediately  prior  to  said
transaction or transactions  constituting  such  reduction,  whichever was or is
greater,  shall be  considered  an  assignment of this Lease to which Lessor may
withhold its consent.  `Net Worth of Lessee"  shall mean the net worth of Lessee
(excluding any  guarantors)  established  under  generally  accepted  accounting
principles.
                (d) An  assignment  or  subletting  without  consent  shall,  at
Lessor's option, be a Default curable after notice per Paragraph  13.1(c),  or a
noncurable  Breach  without the  necessity  of any notice and grace  period.  If
Lessor elects to treat such unapproved  assignment or subletting as a noncurable
Breach,  Lessor may either:  (i) terminate this Lease,  or (ii) upon thirty (30)
days written  notice,  increase the monthly Base Rent to one hundred ten percent
(110%) of the Base Rent then in effect. Further, in the event of such Breach and
rental adjustment, (i) the purchase price of any option to purchase the Premises
held by Lessee shall be subject to similar adjustment to one hundred ten percent
(110%) of the  price  previously  in  effect,  and (ii) all fixed and  non-fixed
rental  adjustments  scheduled  during the  remainder of the Lease term shall be
increased to One Hundred Ten Percent (110%) of the scheduled adjusted rent.
                (e) Lessee's  remedy for any breach of Paragraph  12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
         12.2   Terms and Conditions Applicable to Assignment and Subletting.
See Addendum.
                (a)Regardless of Lessors  consent,  any assignment or subletting
shall not:  (i) be  effective  without the express  written  assumption  by such
assignee or  sublessee  of the  obligations  of Lessee  under this  Lease;  (ii)
release  Lessee  of any  obligations  hereunder;  or  (iii)  alter  the  primary
liability of Lessee for the payment of Rent or for the  performance of any other
obligations to be performed by Lessee.
                (b)Lessor may accept Rent or performance of Lessees  obligations
from any  person  other  than  Lessee  pending  approval  or  disapproval  of an
assignment.  Neither a delay in the approval or disapproval  of such  assignment
nor the acceptance of Rent or performance  shall constitute a waiver or estoppel
of Lessors right to exercise its remedies for Lessee's Default or Breach.
                (c)Lessors  consent to any  assignment or  subletting  shall not
constitute a consent to any subsequent assignment or subletting.
                (d)In the event of any  Default or Breach by Lessee,  Lessor may
proceed directly  against Lessee,  any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or  sublessee,  without first  exhausting  Lessor's  remedies  against any other
person or entity  responsible  therefore  to  Lessor,  or any  security  held by
Lessor.
                (e)Each request for consent to an assignment or subletting shall
be in writing,  accompanied by information relevant to Lessors  determination as
to the financial  and  operational  responsibility  and  appropriateness  of the
proposed  assignee or  sublessee,  including but not limited to the intended use
and/or  required  modification of the Premises,  if any,  together with a fee of
$1,000 or ten percent (10%) of the current  monthly Base Rent  applicable to the
portion of the  Premises  which is the  subject of the  proposed  assignment  or
sublease,  whichever is greater,  as consideration for Lessor's  considering and
processing  said  request.  Lessee  agrees to provide  Lessor with such other or
additional information and/or documentation as may be reasonably requested.
                (f) Any assignee of, or sublessee  under,  this Lease shall,  by
reason of accepting such assignment or entering into such sublease, be deemed to
have  assumed  and  agreed to  conform  and  comply  with  each and every  term,
covenant,  condition and obligation herein to be observed or performed by Lessee
during the term of said assignment or sublease,  other than such  obligations as
are contrary to or inconsistent  with provisions of an assignment or sublease to
which Lessor has specifically consented to in writing.
         12.3  Additional  Terms and Conditions  Applicable to  Subletting.  The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises  and shall be deemed  included in all  subleases  under
this Lease whether or not expressly incorporated therein:
                (a)Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any  sublease,  and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided,  however,
that until a Breach  shall occur in the  performance  of  Lessee's  obligations,
Lessee may collect said Rent.  Lessor  shall not, by reason of the  foregoing or
any  assignment of such  sublease,  nor by reason of the  collection of Rent, be
deemed  liable to the  sublessee for any failure of Lessee to perform and comply
 .with any of Lessee's  obligations to such sublessee.  Lessee hereby irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice from
Lessor stating that a Breach exists in the  performance of Lessee's  obligations
under  this  Lease,  to pay to Lessor  all Rent due and to become  due under the
sublease.  Sublessee  shall rely upon any such  notice from Lessor and shall pay
all Rents to Lessor  without  any  obligation  or right to inquire as to whether
such Breach exists, notwithstanding any claim from Lessee to the contrary.
                (b)In  the  event of a Breach  by  Lessee,  Lessor  may,  at its
option,  require  sublessee  to attorn to Lessor,  in which event  Lessor  shall
undertake the  obligations of the sublessor under such sublease from the time of
the  exercise  of.said  option to the  expiration  of such  sublease;  provided,
however,  Lessor shall not be liable for any prepaid  rents or security  deposit
paid by such  sublessee to such  sublessor or for any prior Defaults or Breaches
of such sublessor.
                (c)Any matter  requiring  the consent of the  sublessor  under a
sublease shall also require the consent of Lessor.
                (d)No  sublessee  shall further assign or sublet all or any part
of the Premises without Lessors prior written consent.
                (e)Lessor  shall  deliver a copy of any  notice of Default  or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice.  The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.
13.      Default; Breach; Remedies.
         13.1 Default; Breach. A "Default" is defined as a failure by the Lessee
to comply with or perform any of the terms, covenants, conditions or rules under
this  Lease.  A  "Breach"  is defined  as the  occurrence  of one or more of the
following  Defaults,  and the failure of Lessee to cure such Default  within any
applicable grace period:
                (a) The  abandonment  of the  Premises;  or the  vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 is jeopardized
as a result  thereof,  or without  providing  reasonable  assurances to minimize
potential vandalism.
                (b)The  failure  of  Lessee to make any  payment  of Rent or any
Security Deposit required to be made by Lessee  hereunder,  whether to Lessor or
to a third  party,  when due, to provide  reasonable  evidence of  insurance  or
surety bond, or to fulfill any  obligation  under this Lease which  endangers or
threatens life or property,  where such failure  continues for a period of three
(3) business days following written notice to Lessee.
                (c)The  failure  by Lessee to  provide  (i)  reasonable  written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii)  the  rescission  of an  unauthorized  assignment  or  subletting,  (iv) a
Estoppel Certificate,  (v) a requested  subordination,  (vi) evidence concerning
any guaranty and/or Guarantor,  (vii) any document  requested under Paragraph 42
(easements),  or (viii) any other  documentation or information which Lessor may
reasonably  require  of Lessee  under the  terms of this  Lease,  where any such
failure  continues  for a period of ten (10) days  following  written  notice to
Lessee.
                (d) A Default by Lessee as to the terms,  covenants,  conditions
or provisions of this Lease,  or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs  13.1(a),  (b) or (c), above,  where
such Default  continues for a period of thirty (30) days after  written  notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty  (30) days are  reasonably  required  for its cure,  then it shall not be
deemed to be a Breach if Lessee  commences  such cure  within  said  thirty (30)
dayperiod and thereafter diligently prosecutes such cure to completion.
                (e)  The  occurrence  of any of the  following  events:  (i) the
making of any general  arrangement  or assignment  for the benefit of creditors;
(ii)  becoming a  "debtor"  as  defined  in 11 U.S.C.  ss. 101 or any  successor
statute thereto  (unless,  in the case of a petition filed against  Lessee,  the
same is dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of  substantially  all of Lessee's assets located at
the  Premises or of Lessee's  interest in this Lease,  where  possession  is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial  seizure of  substantially  all of Lessee's assets located at the
Premises  or of  Lessee's  interest  in this  Lease,  where such  seizure is not
discharged  within thirty (30) days;  provided,  however,  in the event that any
provision of this  subparagraph 13.1 (e) is contrary to any applicable law, such
provision  shall be of no force or effect,  and not affect the  validity  of the
remaining provisions.
                (f)The  discovery  that any  financial  statement of Lessee or
of any  Guarantor  given to Lessor  was materially false.
                (g)If the performance of Lessee's  obligations under this Lease
is  guaranteed:
                (i)  the  death  of a  Guarantor;  (ii)  the  termination  of a
Guarantors  liability  with respect to this Lease other than in accordance  with
the  terms of such  guaranty;  (iii) a  Guarantor's  becoming  insolvent  or the
subject of a bankruptcy filing; (iv) a Guarantors refusal to honor the guaranty;
or (v) a Guarantor's breach of its guaranty obligation on an anticipatory basis,
and Lessee's  failure,  within sixty (60) days  following  written notice of any
such event, to provide written  alternative  assurance or security,  which, when
coupled  with the then  existing  resources  of Lessee,  equals or  exceeds  the
combined  financial  resources of Lessee and the Guarantors  that existed at the
time of execution of this Lease.

                                  Page 7 of 12

         13.2 Remedies. If Lessee fails to perform any of its affirmative duties
or  obligations,  within  ten (10) days after  written  notice (or in case of an
emergency,  without  notice),  Lessor may, at its option,  perform  such duty or
obligation  on Lessee's  behalf,  including  but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals.  The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice  therefor.  If any check given
to Lessor by Lessee  shall not be  honored  by the bank upon  which it is drawn,
Lessor,  at its option,  may require all future payments to be made by Lessee to
be by cashiers  check.  In the event of a Breach,  Lessor  may,  with or without
further  notice or demand,  and without  limiting  Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:
                (a)Terminate  Lessees right to possession of the Premises by any
lawful  means,  in which  case this  Lease  shall  terminate  and  Lessee  shall
immediately  surrender  possession  to  Lessor.  In such event  Lessor  shall be
entitled to recover  from  Lessee:  (i) the unpaid Rent which had been earned at
the time of  termination;  (ii) the worth at the time of award of the  amount by
which the unpaid rent which would have been earned after  termination  until the
time of award  exceeds  the amount of such  rental  loss that the Lessee  proves
could have been reasonably avoided;  (iii) the worth at the time of award of the
amount by which the  unpaid  rent for the  balance of the term after the time of
award  exceeds the amount of such rental  loss that the Lessee  proves  could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the  detriment  proximately  caused by the  Lessees  failure to perform  its
obligations  under this Lease or which in the ordinary course of things would be
likely to result therefrom,  including but not limited to the cost of recovering
possession  of  the  Premises,   expenses  of  reletting,   including  necessary
renovation and alteration of the Premises,  reasonable attorneys' fees, and that
portion of any leasing  commission  paid by Lessor in connection with this Lease
applicable to the unexpired  term of this Lease.  The worth at the time of award
of the  amount  referred  to in  provision  (iii) of the  immediately  preceding
sentence  shall be computed by  discounting  such amount at the discount rate of
the Federal  Reserve Bank of the District  within which the Premises are located
at the time of award  plus one  percent  (1%).  Efforts  by Lessor  to  mitigate
damages caused by Lessee's Breach of this Lease shall not waive Lessors right to
recover  damages under  Paragraph 12. If  termination  of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such  proceeding  any unpaid Rent and  damages as are  recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit, If a notice and grace period  required  under  Paragraph 13.1 was
not previously  given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful  detainer  statute shall also constitute the notice
required by Paragraph  13.1. In such case, the applicable  grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently,  and
the  failure of Lessee to cure the  Default  within the  greater of the two such
grace periods shall  constitute  both an unlawful  detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
                 (b)  Continue the Lease and Lessee's  right to  possession  and
recover the Rent as it becomes  due, in which event Lessee may sublet or assign,
subject only to reasonable limitations.  Acts of maintenance,  efforts to relet,
and/or the  appointment of a receiver to protect the Lessor's  interests,  shall
not constitute a termination of the Lessee's right to possession.
                (c) Pursue any other remedy now or hereafter available under the
laws or judicial  decisions of the state  wherein the Premises are located.  The
expiration or termination of this Lease and/or the termination of Lessee's right
to  possession  shall not relieve  Lessee  from  liability  under any  indemnity
provisions  of this Lease as to matters  occurring  or accruing  during the term
hereof or by reason of Lessee's occupancy of the Premises.
         13.3  Inducement  Recapture.  Any  agreement for free or abated rent or
other  charges,  or for the  giving or paying by Lessor to or for  Lessee of any
cash or other bonus, inducement or consideration for Lessee's entering into this
Lease,  all of which  concessions  are  hereinafter  referred to as  `Inducement
Provisions,"  shall be  deemed  conditioned  upon  Lessee's  full  and  faithful
performance of all of the terms,  covenants and  conditions of this Lease.  Upon
Breach  of  this  Lease  by  Lessee,   any  such   Inducement   Provision  shall
automatically  be deemed  deleted  from this  Lease and of no  further  force or
effect,  and  any  rent,  other  charge,  bonus,   inducement  or  consideration
theretofore abated,  given or paid by Lessor under such an Inducement  Provision
shall be immediately  due and payable by Lessee to Lessor,  notwithstanding  any
subsequent  cure of said Breach by Lessee.  The  acceptance by Lessor of Rent or
the cure of the Breach which initiated the operation of this paragraph shall not
be  deemed a  waiver  by  Lessor  of the  provisions  of this  paragraph  unless
specifically so stated in writing by Lessor at the time of such acceptance.
         13.4 Late  Charges.  Lessee  hereby  acknowledges  that late payment by
Lessee of Rent will cause Lessor to incur costs not  contemplated by this Lease,
the exact amount of which will be extremely  difficult to ascertain.  Such costs
include,  but are not limited to,  processing and accounting  charges,  and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor  within five (5) days after such amount shall be
due, then,  without any  requirement  for notice to Lessee,  Lessee shall pay to
Lessor a one-time  late charge  equal to ten percent  (10%) of each such overdue
amount.  The Parties  hereby  agree that such late charge  represents a fair and
reasonable  estimate  of the  costs  Lessor  will  incur by  reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessees  Default or Breach with  respect to such overdue  amount,  nor
prevent the exercise of any of the other rights and remedies granted  hereunder.
In the event that a late charge is payable hereunder,  whether or not collected,
for three (3) consecutive  installments of Base Rent, then  notwithstanding  any
provision of this Lease to the  contrary,  Base Rent shall,  at Lessors  option,
become due and payable quarterly in advance.
         13.5 Interest.  Any monetary payment due Lessor  hereunder,  other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within thirty (30) days following the date on which it was due for
non-scheduled  payment,  shall  bear  interest  from the date  when  due,  as to
scheduled  payments,  or the  thirty-first  (31st)  day  after  it was due as to
non-scheduled  payments. The interest ("Interest') charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when due plus four  percent  (4%),  but shall not exceed the  maximum  rate
allowed  bylaw.  Interest is payable in addition  to the  potential  late charge
provided for in Paragraph 13.4.
         13.6   Breach by Lessor.
                (a) Notice  of  Breach.  Lessor shall not be deemed in breach of
this Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than  thirty  (30) days after  receipt by Lessor,
and any  Lender  whose name and  address  shall  have been  furnished  Lessee in
writing for such purpose,  of written notice specifying  wherein such obligation
of Lessor  has not been  performed;  provided,  however,  that if the  nature of
Lessor's  obligation  is such  that more than  thirty  (30) days are  reasonably
required for its performance,  then Lessor shall not be in breach if performance
is  commenced  within  such  thirty  (30) day period and  thereafter  diligently
pursued to completion.
                (b) Performance by Lessee on Behalf of Lessor. In the event that
neither  Lessor  nor Lender  cures said  breach  within  thirty  (30) days after
receipt of said notice,  or if having commenced said cure they do not diligently
pursue it to  completion,  then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount  equal to the greater of one month's Base
Rent  or the  Security  Deposit,  and to pay an  excess  of such  expense  under
protest,  reserving  Lessee's right to reimbursement  from Lessor.  Lessee shall
document  the cost of said cure and supply  said  documentation  to Lessor.  14.
CondemnatIon.  If the Premises or any portion  thereof are taken under the power
of  eminent  domain or sold  under  the  threat of the  exercise  of said  power
(collectively  "Condemnation"),  this Lease shall terminate as to the part taken
as of the date the condemning  authority  takes title or  possession,  whichever
first  occurs.  If more than ten percent  (10%) of any  building  portion of the
Premises, or more than twenty-five percent (25%) of the land area portion of the
Premises not occupied by any building, is taken by Condemnation,  Lessee may, at
Lessee's  option,  to be exercised in writing  within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice,  within ten (10) days after the  condemning  authority  shall have taken
possession)  terminate this Lease as of the date the condemning  authority takes
such possession.  If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the  reduction  in  utility  of the  Premises  caused  by such  Condemnation.
Condemnation  awards and/or  payments  shall be the property of Lessor,  whether
such  award  shall  be made as  compensation  for  diminution  in  value  of the
leasehold,  the value of the part taken,  or for  severance  damages;  provided,
however,  that  Lessee  shall  be  entitled  to any  compensation  for  Lessee's
relocation  expenses,  loss of business goodwill and/or Trade Fixtures,  without
regard to whether or not this Lease is terminated  pursuant to the provisions of
this Paragraph.  All Alterations and Utility  Installations made to the Premises
by Lessee,  for purposes of Condemnation  only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation  which is
payable  therefor.  In the event that this Lease is not  terminated by reason of
the Condemnation,  Lessor shall repair any damage to the Premises caused by such
Condemnation.

                                  Page 8 of 12

                  Estoppel Certificates.
                (a)Each Party (as "Responding  Party) shall within ten (10) days
after  written  notice from the other  Party (the  "Requesting  Party)  execute,
acknowledge  and deliver to the Requesting  Party a statement in writing in form
similar to the then most current  "Estoppel  Certificate'  form published by the
American Industrial Real Estate Association,  plus such additional  information,
confirmation and/or statements as may be reasonably  requested by the Requesting
Party.
                (b)If the Responding  Party shall fail to execute or deliver the
Estoppel  Certificate  within  such ten day  period,  the  Requesting  Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect  without  modification  except as may be  represented  by the  Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting  Party, not more than one month's Rent has
been paid in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting  Party's  Estoppel  Certificate,  and the  Responding  Party shall be
estopped from denying the truth of the facts contained in said Certificate.
                (c)If  Lessor  desires  to  finance,   refinance,  or  sell  the
Premises,  or any part thereof,  Lessee and all Guarantors  shall deliver to any
potential lender or purchaser  designated by Lessor such financial statements as
may be  reasonably  required by such  lender or  purchaser,  including,  but not
limited to, Lessee's financial statements for the past three (3) years. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. Definition of Lessor.  The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises,  or, if this
is a sublease,  of the Lessee's  interest in the prior lease.  In the event of a
transfer of Lessor's  title or  interest in the  Premises or this Lease,  Lessor
shall  deliver to the  transferee  or assignee (in cash or by credit) any unused
Security  Deposit held by Lessor.  Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit,  as aforesaid,  the
prior Lessor shall be relieved of all liability with respect to the  obligations
and/or  covenants  under this Lease  thereafter  to be  performed by the Lessor.
Subject to the foregoing,  the obligations  and/or covenants in this Lease to be
performed  by the Lessor  shall be binding  only upon the Lessor as  hereinabove
defined.  Notwithstanding  the above, and subject to the provisions of Paragraph
20 below,  the original Lessor under this Lease,  and all subsequent  holders of
the Lessors  interest in this Lease shall  remain  liable and  responsible  with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6 above. 18. SeverabIlity. The invalidity of
any provision of this Lease, as determined by a court of competent jurisdiction,
shall in no way affect the validity of any other provision hereof.
19.      Days. Unless otherwise  specifically  indicated to the contrary,  the
word "days" as used in this Lease shall mean and refer to calendar days.
20.      Limitation on Liability.  Subject to the provisions of Paragraph 17
above,  the obligations of Lessor under this Lease shall not constitute
personal  obligations of Lessor, the individual  partners of Lessor or its or
their individual  partners, directors,  officers  or  shareholders, and  Lessee
shall look to the  Premises,  and to no other  assets of Lessor,  for the
satisfaction  of any  liability  of Lessor  with  respect to this Lease,  and
shall not seek  recourse  against the  individual partners of Lessor, or its or
their individual partners, directors, officers or shareholders, or any of their
personal assets for such satisfaction.
21. Time of Essence.  Time is of the essence with respect to the  performance of
all obligations to be performed or observed by the Parties under this Lease. 22.
No Prior  or Other  Agreements;  Broker  Disclaimer.  This  Lease  contains  all
agreements  between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each  represents and warrants to the Brokers that it has made,
and is relying solely upon,  its own  investigation  as to the nature,  quality,
character and financial  responsibility  of the other Party to this Lease and as
to  the  nature,  quality  and  character  of  the  Premises.  Brokers  have  no
responsibility  with  respect  thereto or with  respect to any default or breach
hereof by either Party.  The  liability  (including  court costs and  Attorneys'
fees),  of any  Broker  with  respect to  negotiation,  execution,  delivery  or
performance  by either  Lessor or Lessee  under this Lease or any  amendment  or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided,  however, that the foregoing limitation
on each Brokers  liability  shall not be applicable  to any gross  negligence or
willful misconduct of such Broker.
 23.     Notices.
         23.1 Notice  Requirements.  All notices  required or  permitted by this
Lease shall be in writing and may be delivered in person (by hand or by courier)
or may be sent by regular,  certified or registered  mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile  transmission,  and shall be
deemed  sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's  signature on this Lease shall be that
Party's address for delivery or mailing of notices.  Either Party may by written
notice to the other  specify a different  address  for notice,  except that upon
Lessee's  taking  possession  of the  Premises,  the Premises  shall  constitute
Lessee's  address  for  notice.  A copy  of  all  notices  to  Lessor  shall  be
concurrently  transmitted  to such party or parties at such  addresses as Lessor
may from time to time hereafter designate in writing.
         23.2 Date of Notice.  Any notice sent by registered or certified  mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed  given  forty-eight  (48) hours after
the same is  addressed  as  required  herein and mailed  with  postage  prepaid.
Notices  delivered  by United  States  Express  Mail or  overnight  courier that
guarantee next day delivery shall be deemed given  twenty-four  (24) hours after
delivery of the same to the Postal  Service or courier.  Notices  transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.
24. Waivers.  No waiver by Lessor of the Default or Breach of any term, covenant
or  condition  hereof by  Lessee,  shall be  deemed a waiver of any other  term,
covenant or condition hereof,  or of any subsequent  Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof.  Lessors consent
to, or  approval  of,  any act shall  not be  deemed to render  unnecessary  the
obtaining of Lessor's  consent to, or approval of, any subsequent or similar act
by Lessee,  or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease  requiring  such consent.  The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee.  Any payment by
Lessee may be  accepted  by Lessor on account of monies or damages  due  Lessor,
notwithstanding  any  qualifying  statements  or  conditions  made by  Lessee in
connection  therewith,  which such statements  and/or  conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
25.      Recording.  Either Lessor or Lessee shall, upon request of the other,
execute,  acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes.  The Party requesting  recordation shall be
responsible for payment of any fees applicable thereto.
26.      No Right To  Holdover.  Lessee has no right to retain  possession  of
the  Premises  or any part  thereof  beyond the expiration  or  termination  of
this Lease.  In the event that Lessee holds over,  then the Base Rent shall be
increased to one hundred  fifty  percent (150%) of the Base  Rent  applicable
during  the  month  immediately  preceding  the  expiration  or termination.
Nothing contained herein shall be construed as consent by Lessor to any holding
over by Lessee.
27.      Cumulative  Remedies.  No remedy or election hereunder shall be deemed
exclusive but shall,  wherever possible,  be cumulative with all other remedies
at law or in equity.
28.      Covenants and Conditions; Construction of Agreement. All provisions of
this Lease to be observed or performed by Lessee are both  covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall  not be  construed  as if  prepared  by one of
the  Parties,  but  rather according to its fair meaning as a whole, as if both
Parties had prepared it.
29.      BindIng Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located.  Any litigation
between the Parties hereto  concerning  this Lease shall be initiated in the
county in which the Premises are located.
 30.     Subordination; Attornment; Non-Disturbance.
         30.1   Subordination.  This Lease and any Option granted hereby shall
be subject and  subordinate to any ground lease, mortgage, deed of trust,

                                  Page 9 of 12

or other hypothecation or security device (collectively, "Security Device"), now
or  hereafter  placed upon the  Premises,  to any and all  advances  made on the
security thereof,  and to all renewals,  modifications,  and extensions thereof.
Lessee  agrees  that the  holders of any such  Security  Devices  (in this Lease
together  referred to as "Lessor's Lender) shall have no liability or obligation
to perform any of the  obligations  of Lessor  under this Lease.  Any Lender may
elect to have this Lease and/or any Option granted  hereby  superior to the lien
of its Security  Device by giving written  notice  thereof to Lessee,  whereupon
this  Lease and such  Options  shall be deemed  prior to such  Security  Device,
notwithstanding the relative dates of the documentation or recordation thereof.
         30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3,  Lessee  agrees to attorn  to a Lender  or any  other  party who  acquires
ownership of the Premises by reason of a foreclosure of a Security  Device,  and
that in the event of such  foreclosure,  such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events  occurring
prior to  acquisition  of ownership;  (ii) be subject to any offsets or defenses
which  Lessee  might  have  against  any  prior  lessor;  or  (iii)  be bound by
prepayment of more than one (1) month's rent.
         30.3 Non-Disturbance.  With respect to Security Devices entered into by
Lessor after the execution of this Lease,  Lessee's  subordination of this Lease
shall  be  subject  to  receiving  a  commercially  reasonable   non-disturbance
agreement (a "Non-Disturbance  Agreement') from the Lender which Non-Disturbance
Agreement  provides  that Lessee's  possession of the Premises,  and this Lease,
including  any options to extend the term hereof,  will not be disturbed so long
as  Lessee  is not in Breach  hereof  and  attorns  to the  record  owner of the
Premises.  Further,  within  sixty (60) days after the  execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any  pre-existing  Security Device which is secured
by  the   Premises.   In  the  event  that  Lessor  is  unable  to  provide  the
Non-Disturbance  Agreement  within  said sixty (60) days,  then  Lessee  may, at
Lessee's  option,  directly  contact Lessors lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.
         30.4  Self-Executing.  The  agreements  contained in this  Paragraph 30
shall be effective  without the  execution of any further  documents;  provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises,  Lessee and Lessor shall execute
such further writings as may be reasonably  required to separately  document any
subordination,  attornment and/or Non-Disturbance Agreement provided for herein.
31.  Attorneys'  Fees.  If any  Party or Broker  brings an action or  proceeding
involving  the  Premises  to  enforce  the  terms  hereof or to  declare  rights
hereunder,  the Prevailing Party (as hereafter  defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or  proceeding  is pursued to decision  or  judgment.  The term,
"Prevailing  Party" shall  include,  without  limitation,  a Party or Broker who
substantially  obtains or defeats the relief sought, as the case may be, whether
by compromise,  settlement,  judgment,  or the abandonment by the other Party or
Broker of its claim or defense.  The attorneys' fees award shall not be computed
in  accordance  with  any  court  fee  schedule,  but  shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition,  Lessor shall be
entitled to attorneys' fees, costs and expenses  incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently  commenced in connection with such Default
or resulting Breach. 32. Lessors Access; Showing Premises;  Repairs.  Lessor and
Lessors  agents shall have the right to enter the  Premises at any time,  in the
case of an  emergency,  and  otherwise  at  reasonable  times for the purpose of
showing the same to prospective purchasers, lenders, or lessees, and making such
alterations,  repairs,  improvements  or additions to the Premises as Lessor may
deem  necessary.  All such  activities  shall be  without  abatement  of rent or
liability  to Lessee.  Lessor may at any time place on the Premises any ordinary
"For  Sale"  signs and  Lessor  may  during  the last six (6) months of the term
hereof,  or  following  Lessees  breach of the Lease,  place on the Premises any
ordinary "For Lease signs. Lessee may at any time place on or about the Premises
any ordinary "For Sublease" sign.
33.      Auctions.  Lessee shall not conduct, nor permit to be conducted,  any
auction upon the Premises without Lessor's prior written consent.  Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.
34. Signs.  Except for ordinary "For Sublease" signs, Lessee shall not place any
sign upon the Premises  without  Lessors prior written  consent.  All signs must
comply  with  all  Applicable  Requirements.  35.  Termination;  Merger.  Unless
specifically  stated  otherwise  in writing by Lessor,  the  voluntary  or other
surrender  of this  Lease by  Lessee,  the mutual  termination  or  cancellation
hereof,  or  a  termination  hereof  by  Lessor  for  Breach  by  Lessee,  shall
automatically terminate any sublease or lesser estate in the Premises; provided,
however, that Lessor may elect to continue any one or all existing subtenancies.
Lessors  failure  within ten (10) days  following any such event to elect to the
contrary  by written  notice to the holder of any such  lesser  interest,  shall
constitute  Lessors  election to have such event  constitute the  termination of
such interest.
36. Consents.  Except as otherwise  provided herein,  wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed.  Lessor's actual reasonable costs
and expenses (including, but not limited to, architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request  by Lessee  for any  Lessor  consent,  including,  but not  limited  to,
consents to an  assignment,  a subletting  or the presence or use of a Hazardous
Substance,  shall be paid by Lessee upon  receipt of an invoice  and  supporting
documentation  therefor.  Lessors  consent to any act,  assignment or subletting
shall not  constitute an  acknowledgment  that no Default or Breach by Lessee of
this  Lease  exists,  nor  shall  such  consent  be  deemed a waiver of any then
existing Default or Breach,  except as may be otherwise  specifically  stated in
writing by Lessor at the time of such consent. The failure to specify herein any
particular  condition to Lessors  consent  shall not preclude the  imposition by
Lessor at the time of consent of such  further or other  conditions  as are then
reasonable  with reference to the  particular  matter for which consent is being
given. In the event that either Party disagrees with any  determination  made by
the other hereunder and reasonably  requests the reasons for such determination,
the  determining  party shall  furnish its reasons in writing and in  reasonable
detail within ten (10) business days following such request.
37.      Guarantor.
         37.1   Execution. The Guarantors, if any, shall each execute a guaranty
in the form most recently  published by the American  Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.
         37.2  Default.  It shall  constitute  a  Default  of the  Lessee if any
Guarantor  fails or  refuses,  upon  request to  provide:  (a)  evidence  of the
execution of the  guaranty,  including  the  authority  of the party  signing on
Guarantor's  behalf  to  obligate  Guarantor,  and in the  case  of a  corporate
Guarantor,  a  certified  copy  of  a  resolution  of  its  board  of  directors
authorizing the making of such guaranty, (b) current financial statements, (c) a
Tenancy  Statement,  or (d) written  confirmation  that the guaranty is still in
effect.
38.      Quiet  Possession.  Subject to payment by Lessee of the Rent and
performance of all of the covenants,  conditions and provisions  on Lessee's
part to be observed  and  performed  under this Lease,  Lessee shall have quiet
possession  and quiet enjoyment of the Premises during the term hereof.
 39.     Options.  See Addendum.
         39.1 Definition.  "Option'"shall mean: (a) the right to extend the term
of or renew this Lease or to extend or renew any lease that  Lessee has on other
property  of  Lessor;  (b) the right of first  refusal  or first  offer to lease
either the  Premises or other  property of Lessor;  (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
         39.2 Options Personal To Original Lessee. Each Option granted to Lessee
in this Lease is  personal  to the  original  Lessee,  and cannot be assigned or
exercised by anyone other than said original  Lessee and only while the original
Lessee is in full  possession of the Premises and, if requested by Lessor,  with
Lessee  certifying  that Lessee has no  intention  of  thereafter  assigning  or
subletting.
         39.3  Multiple  Options.  In the event  that  Lessee  has any  multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options have been validly exercised.
         39.4   Effect of Default on Options.
                (a)Lessee shall have no right to exercise an Option:  (i) during
the period  commencing  with the giving of any notice of Default and  continuing
until said  Default is cured,  (ii) during the period of time any Rent is unpaid
(without  regard to whether notice  thereof is given  Lessee),  (iii) during the
time  Lessee is in Breach of this  Lease,  or (iv) in the event that  Lessee has
been given  three (3) or more  notices of separate  Default,  whether or not the
Defaults are cured,  during the twelve (12) month period  immediately  preceding
the exercise of the Option.
                (b) The period of time within  which an Option may be  exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
                (c) An Option  shall  terminate  and be of no  further  force or
effect,  notwithstanding  Lessee's  due and timely  exercise of the Option,  if,
after such  exercise and prior to the  commencement  of the extended  term,  (i)
Lessee  fails to pay Rent for a period  of  thirty  (30)  days  after  such Rent
becomes due  (without  any  necessity  of Lessor to give notice  thereof),  (ii)
Lessor gives to Lessee three (3) or more notices of separate  Default during any
twelve (12) month  period,  whether or not the Defaults  are cured,  or (iii) if
Lessee commits a Breach of this Lease.

                                  Page 10 of 12

41. Security  Measures.  Lessee hereby  acknowledges  that the rental payable to
Lessor  hereunder  does not include the cost of guard service or other  security
measures,  and that Lessor shall have no obligation  whatsoever to provide same.
Lessee assumes all  responsibility  for the protection of the Premises,  Lessee,
its agents and invitees and their property from the acts of third parties.
42. Reservations.  Lessor  reserves to itself the right,  from time to time, to
grant,  without the  consent or joinder of Lessee,  such  easements,  rights and
dedications that Lessor deems necessary,  and to cause the recordation of parcel
maps and restrictions,  so long as such easements, rights, dedications, maps and
restrictions  do not  unreasonably  interfere  with the use of the  Premises  by
Lessee.  Lessee agrees to sign any documents  reasonably  requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43.  Performance  Under Protest.  If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment  "under  protest"  and such payment  shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to  institute  suit for recovery of such sum. If it shall be adjudged
that there was no legal  obligation on the part of said Party to pay such sum or
any part  thereof,  said Party shall be entitled to recover  such sum or so much
thereof as it was not legally required to pay.
44. Authority. If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each individual executing this Lease on
behalf of such entity  represents and warrants that he or she is duly authorized
to execute and deliver this Lease on its behalf. Each Party shall, within thirty
(30) days after  request,  deliver to the other Party  satisfactory  evidence of
such authority.
45.      Conflict.  Any conflict  between the printed  provisions of this Lease
and the  typewritten or handwritten  provisions shall be controlled by the
typewritten or handwritten provisions.
46.      Offer.  Preparation  of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party.  This Lease is not intended to be binding  until  executed and
delivered by all Parties hereto.
47.  Amendments.  This  Lease may be  modified  only in  writing,  signed by the
Parties  in  interest  at the time of the  modification.  As long as they do not
materially  change Lessee's  obligations  hereunder,  Lessee agrees to make such
reasonable  non-monetary  modifications  to  this  Lease  as may  be  reasonably
required by a Lender in  connection  with the  obtaining of normal  financing or
refinancing of the Premises.
48.  Multiple  Parties.  If more than one  person  or entity is named  herein as
either  Lessor or Lessee,  such  multiple  Parties  shall have joint and several
responsibility  to  comply  with the  terms of this  Lease.
49.  Mediation  and Arbitration  of  Disputes.  An  Addendum  requiring  the
Mediation  and/or  the Arbitration of all disputes  between the Parties  and/or
Brokers  arising out of this Lease is not attached to this Lease.

LESSOR AND LESSEE HAVE  CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION  CONTAINED  HEREIN,  AND BY THE  EXECUTION  OF THIS  LEASE  SHOW THEIR
INFORMED AND VOLUNTARY  CONSENT  THERETO.  THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND  EFFECTUATE  THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

ATTENTION:   NO  RESPRESENTATION  OR  RECOMMENDTION  IS  MADE  BY  THE  AMERICAN
INDUSTRIAL REAL ESTATE ASSOCOATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT,  OR TAX  CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

1.  SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2.  RETAIN  APPROPRIATE  CONSULTANT TO REVIEW AND INVESTIGATE  THE CONDITION OF
THE PREMISES.  SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS  SUBSTANCES,  THE ZONING OF THE PREMISES,  THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABLILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING:  IF THE PREMISES IS LOCATED IN A STATE OTHER THAN  CALIFORNIA,  CERTAIN
PROVISIONS  OF THE LEASE MAY NEED TO BE REVISED  TO COMPLY  WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.

<PAGE>

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Executed at: Los Angeles, California            Executed at:
on:                                             on:
By LESSOR:                                      By LESSEE:
NTA Partners                                    Laser Pacific Media Corporation

By: /s/ Benjamin Schulman                       By: /s/ Robert McClain
Name Printed: Benjamin Schulman                 Name Printed: Robert McClain
Title: General Partner                          Title: Chief Financial Officer

                                  Page 11 of 12

     NOTE:  These forms are often modified to meet the changing  requirements of
law and industry needs.  Always write or call to make sure you are utilizing the
most current form: AMERICAN  INDUSTRIAL REAL ESTATE ASSOCIATION,  700 So. Flower
Street, Suite 600, Los Angeles,  California 90017. (213) 687-8777. Fax No. (213)
687-8616

                                  Page 12 of 12

<PAGE>

                                    ADDENDUM

          This  Addendum  is made and entered  into by and between NTA  PARTNERS
(`Lessor")  and  LASER  PACIFIC  MEDIA  CORPORATION,   a  Delaware   corporation
("Lessee"),  as of the day and year of the Lease between  Lessor;  to which this
Addendum is  attached.  Lessor and Lessee  hereby  agree that,  notwithstanding,
anything contained in the Lease to the contrary,  the provisions set forth below
shall be part of the Lease and shall  supersede any  inconsistent  provisions of
the printed Lease.  All references in the Lease and in the Addendum to the Lease
shall be  construed to mean the Lease (and all exhibits  attached  thereto),  as
amended and  supplemented by this Addendum.  Capitalized  terms in this Addendum
shall have the same meaning as set forth in the Lease.

 50.      Rent Commencement Date: Rent Escalations.

          (a) Beginning with the Commencement Date, monthly Base Rent will be
          as follows:

          Months 1 -12, inclusive                     $28,000.00
          Months 13-24, inclusive                     $28,840.00
          Months 25-36, inclusive                     $29,705.00
          Months 37-48, inclusive                     $30,299.00
          Months 49-60, inclusive                     $31,208.00

 51.      Extension of Term.

          (a) Option Right. Lessor hereby grants Lessee one (1) option to extend
the  initial  term of the Lease for a period of five (5) years  (the  "Extension
Term"),  which option shall be exercisable  only by written  Exercise Notice (as
defined below)  delivered by Lessee to Lessor as provided  below;  provided that
such option  shall only exist if, as of the date of  delivery  of such  Exercise
Notice,  (i) Lessee is not in default  under the Lease,  and (ii) there have not
been more than three (3) Defaults,  whether cured or not, during the term of the
Lease.  Upon the proper exercise of such option to extend,  subject to the above
limitations, the term of the Lease shall be extended for the Extension Term.

          (b)  Extension  Rent.  The initial  annual Base Rent payable by Lessee
during the first twelve (12) months of the Extension Term (the "Extension Rent")
shall be equal to the "Fair Market  Rent,"  which for purposes  hereof means the
annual Base Rent at which lessees, as of the commencement of the Extension Term,
are leasing  non-sublease space comparable in size,  location and quality to the
Premises  for a  comparable  term,  taking  into  account  all  concessions  and
inducements generally being granted at such time; provided,  however, that in no
event shall the initial  Extension  Rent be less than one hundred  three percent
(103%) of the Base Rent in effect  immediately  preceding  the  beginning of the
Extension  Term. The Extension  Rent shall  thereafter be increased on an annual
basis by three percent (3%) of the then current Extension Rent on the thirteenth
(13th), twenty-fifth (25th), thirty-seventh (37th) and forty-

                                      - 1 -

<PAGE>

ninth (49th) months of the Extension Term. All other terms and conditions of the
Lease shall apply throughout the Extension Term. Lessee shall, in no event, have
any option to further extend the term of the Lease beyond the Extension Term.

          (c)  Exercise of Option.  The option  contained  in this  Paragraph 51
shall be exercised  by Lessee,  if at all,  only in the  following  manner:  (i)
Lessee shall  deliver  written  notice to Lessor not more than ten (10) nor less
than nine (9) months  prior to the  expiration  of the initial term of the Lease
stating that Lessee may be  interested in  exercising  its option;  (ii) Lessor,
after receipt of notice,  shall deliver notice (the  "Extension Rent Notice") to
Lessee not less than one month later setting forth the Extension Rent; and (iii)
if Lessee  wishes to exercise such option,  Lessee shall,  on or before the date
(the  "Exercise  Date") which is one month after receipt of the  Extension  Rent
Notice,  exercise by delivering  written notice  ("Exercise  Notice") thereof to
Lessor, and upon, and concurrent with such exercise,  Lessee may, at its option,
object to  Lessor's  determination  of the Fair  Market  Rent  contained  in the
Extension Rent Notice,  in which case the parties shall follow the procedure and
the Fair Market Rent shall be determined as set forth in Paragraph  51(d) below.
Lessee's  failure to deliver the Exercise  Notice on or before the Exercise Date
shall be deemed to constitute Lessee's waiver of its extension right hereunder.

          (d)  Determination  of Option  Rent.  In the event  Lessee  timely and
appropriately objects in writing to the Fair Market Rent initially determined by
Lessor,  Lessor and Lessee  shall  attempt to agree upon the Fair  Market  Rent,
using  their  best  good-faith  efforts.  If  Lessor  and  Lessee  fail to reach
agreement within ten (10) business days following Lessee's objection to the Fair
Market Rent (the "Outside Agreement Date"),  then each party shall submit to the
other party a separate written  determination of the Fair Market Rent within ten
business days after the Outside Agreement Date, and such determinations shall be
submitted to  arbitration  in accordance  with Sections (i) through (vii) below.
Failure of Lessee or Lessor to submit a written determination of the Fair Market
Rent within such ten (10) business day period shall conclusively be deemed to be
the  non-determining  party's  approval of the Fair Market Rent submitted within
such ten (10) business day period by the other party.

                   (i) Lessor and Lessee shall each appoint one  arbitrator  who
shall by profession be an  independent  real estate  appraiser who shall have no
financial  interest  in Lessee or Lessor and who shall have been active over the
five (5) year period ending on the date of such appointment in the appraisal for
leasing purposes of rentals of space in buildings located in the vicinity of the
Premises.  The  determination of the arbitrators  shall be limited solely to the
issue of whether Lessor's or Lessee's  submitted Fair Market Rent is the closest
to the actual Fair Market Rent as  determined  by the  arbitrators,  taking into
account the  requirements  of Paragraph  51(b).  Each such  arbitrator  shall be
appointed within ten (10) days after the Outside Agreement Date.

                   (ii) The two (2)  arbitrators so appointed  shall within five
(5) days of the date of the appointment of the last appointed  arbitrator  agree
upon and appoint a third arbitrator

                                      - 2 -

<PAGE>

who shall be  qualified  under the same  criteria as set forth  hereinabove  for
qualification of the initial two (2) arbitrators.

                   (iii) The three (3)  arbitrators  shall  within five (5) days
after  appointment  of the  third  arbitrator  reach a  decision  as to  whether
Lessor's  or  Lessee's  submitted  Fair Market Rate is the closest to the actual
Fair Market Rental Rate,  and shall use the Lessor's or Lessee's  submitted Fair
Market  Rent as the Fair Market Rate for  purposes  of  calculating  the initial
Extension Rent, and shall notify Lessor and Lessee thereof.

                   (iv)  The   decision  of  the   majority  of  the  three  (3)
arbitrators shall be binding upon Lessor and Lessee.

                   (v) If either Lessor or Lessee fails to appoint an arbitrator
within ten (10) days after the Outside Agreement Date, the arbitrator  appointed
by one shall  reach a  decision,  notify  Lessor  and Lessee  thereof,  and such
arbitrator's decision is binding upon Lessor and Lessee.
                   (vi) If the two  (2)  arbitrators  fail  to  agree  upon  and
appoint a third  arbitrator  within the time  period  provided  in Section  (ii)
above,  then the parties shall mutually select the third  arbitrator.  If Lessor
and Lessee are unable to agree upon the  arbitrator  within ten (10) days,  then
either party may,  upon at least five (5) days' prior notice to the other party,
request the Presiding  Judge of the Los Angeles County  Superior Court acting in
his private and nonjudicial capacity, to appoint the third arbitrator. Following
appointment  of the third  arbitrator,  the panel of  arbitrators  shall  within
thirty (30) days reach a decision as to whether  Lessor's or Lessee's  submitted
Fair Market Rate shall be used and shall notify Lessor and Lessee thereof.

                   (vii) The cost of the arbitration shall be paid by the
non-prevailing party.

52. Security  Deposit.  Upon execution and delivery of this Lease,  Lessee shall
make a cash payment of the Security  Deposit.  Such cash security deposit may be
replaced by a security  deposit in the form of an irrevocable  standby letter of
credit in favor of Lessor in the amount of $56,000, which letter of credit shall
(i) be reasonably  acceptable to Lessor in all regards, (ii) be drawn on Bank of
America, (iii) provide that the Bank will immediately release to Lessor, without
Lessee's  instructions  or  authorization,  the amount demanded by Lessor in the
event of the  occurrence  of any event,  as determined  solely by Lessor,  under
Paragraph 5 hereof  which allows  Lessor to use or apply the  Security  Deposit,
(iv) require Lessee to bear any and all costs and/or  expenses  associated  with
either its issuance or negotiation, (v) shall automatically renew until the date
which is two (2)  weeks  following  the  expiration  of the  term of the  Lease,
together with any extensions,  and Lessee's surrender of the Premises to Lessor,
and (vi) shall be  transferable,  at Lessee's  cost, to Lessor's  successors and
assigns.  In  addition,  in the  event of a draw down on the  letter of  credit,
Lessee shall  immediately  replenish  the Security  Deposit to its full original
amount by either  restoring  the  letter  of credit or by paying  the  necessary
amount in cash to Lessor.

                                      - 3 -

<PAGE>

53. Allocation of Assignment/Sublease  Rent Proceeds.  With respect to any Lease
Assignment or Sublease  approved in accordance with the Lease,  Lessee shall pay
to Lessor as  additional  rent under the Lease an amount equal to fifty  percent
(50%) of the "net"  amounts  payable to Lessee by any assignee or sublessee  for
any of the  Premises in excess of the rent Lessor is being paid for the Premises
or portion  thereof.  For purposes of this  section,  "net"  amounts  payable to
Lessee shall reflect deduction for actual additional expenses incurred by Lessee
directly  associated with the Lease  Assignment or Sublease,  including  leasing
commissions,  and leasehold  improvements  (amortized over the remaining term of
the Lease).

54. Signage. Subject to (i) Lessee's receipt of the approval of all governmental
authorities having  jurisdiction over the Premises and (ii) Lessor's  reasonable
approval as to use, location, size, style, number, content and color, Lessee may
install,  at its sole cost and expense,  monument signage at the entrance of the
Premises and other  signage in the parking  area.  Within thirty (30) days after
the date of the Lease, the parties will attach to the Lease a diagram  depicting
the actual locations of the signage determined in accordance with this section.

55.  Compliance  with Law. At its sole cost and expense,  Lessee shall  promptly
comply  with all said  governmental  measures  including,  but not  limited  to,
structural  changes or changes to the Building's life safety system,  whether or
not related to or affected by the alterations,  additions, improvements or acts,
omissions or  negligence of Lessee or any person  claiming by,  through or under
Lessee, or any of their employees,  contractors,  agents, invitees or licensees,
or by the use or  occupancy  by  Lessee  or any  such  person  and any  required
improvements,  additions  or  which  are or could be  categorized  as a  capital
expense.

56. Property Taxes.  Notwithstanding  Section  10.2(a),  during the initial five
year Term of the Lease only,  which shall  expressly  not include any  extension
periods,  Real Estate  Taxes shall not include .any  increase in real,  property
taxes  or the  like  resulting  from  or  occasioned  by the  sale,  assignment,
transfer, conveyance or other disposition of the Premises or any portion thereof
or any  interest  therein (a  "Change in  Ownership")  at any time  during  such
initial five year Term; nor will it include any increase in real properfy taxes,
or the like,  resulting  from the  restructure or change of structure of Lessor,
including,  but not  limited to (i)  corporate  reorganization  by Lessor,  (ii)
transfer  of shares or assets  by Lessor to a  subsidiary,  parent  corporation,
sister corporation, partnership of corporations or affiliate(s) of Lessor during
the initial Term (excluding extension periods). Following such initial five year
Term, Real Estate taxes shall include any and all Real Estate Taxes attributable
to the  Premises  pursuant  to Section  10.2,  regardless  of when and whether a
Change in Ownership occurred.

57.       Time. Time is of the essence with respect to the performance of each
of the covenants and agreements contained in this Lease.

58.       Lessee Improvements. Lessor agrees that it shall reimburse the Lessee
an amount not to exceed Fifty-Six Thousand Dollars ($56,000.00) for the actual
costs incurred by the Lessee

                                      - 4 -

<PAGE>

in making tenant  improvements  to the Premises.  To qualify for such allowance,
with respect to any particular item to be reimbursed, (a) Lessor must have given
its prior written consent to architectural drawings and specifications detailing
and  depicting  the work,  (b) the items must  relate to a hard cost and be of a
permanent nature,  not reasonably  capable of being and not to be removed at the
expiration of the Term (unless Lessor's consent to such Alteration is predicated
on its  removal  by  Lessee  at the  expiration  of the  Term),  (c) the item is
supported  by evidence of payment by Lessee not later than March 31,  2002,  and
detailed  billings or  invoices  from the third party  contractor  or  tradesman
performing  the work, and (d) be part of Lessee's  initial tenant  improvements,
not subsequent renovations/Alterations. Lessee agrees to perform all of its work
on the Premises in a good and workman like manner.

59.  Use of  Premises  by  Lessor.  For up to  ninety  (90) days  following  the
Commencement Date, Lessor,  its agents,  employees,  etc., shall be permitted to
remain in and utilize certain portions of the Premises described as the building
located on the parking lot; provided, however, that such use does not materially
interfere  with Lessee's  overall use and  enjoyment of the  Premises.  Lessor's
rights pursuant to this Section shall be on a no-charge basis.

                                      - 5 -

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