Document:

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                                                                   Exhibit 10.68

                        SETTLEMENT AGREEMENT AND RELEASE

     AGREEMENT ("Agreement") entered into this 31 day of December,  2002, by and
between ELECTRIC FUEL CORPORATION,  a Delaware  corporation ("EFC") and ELECTRIC
FUEL (E.F.L.) LTD., an Israeli  corporation  ("EFL" and,  together with EFC, the
"Company"),  and YEHUDA HARATS, an individual  residing at 45 HaShayarot Street,
Jerusalem 92544, Israel (the "Employee").

                              W I T N E S S E T H :

     WHEREAS,  the Company and  Employee  are parties to an amended and restated
employment  agreement dated as of January 1, 2000 (the "Employment  Agreement");
and

     WHEREAS,   the  Company  and  the  Employee,   through   their   respective
representatives,   have  held  certain  discussions  concerning  the  facts  and
circumstances  surrounding the termination of the Employee's employment with the
Company; and

     WHEREAS,  both  parties  realize  the  uncertainty  of  litigation  and the
time-consuming and costly nature thereof; and

     WHEREAS,  the Company and the Employee  desire to settle and resolve  fully
and finally any and all claims,  potential claims,  controversies or differences
between  them;  and as more  specifically  set forth below and solely  under the
terms and conditions of this Settlement Agreement and Release; and

     WHEREAS,  the  Company  and the  Employee  desire to dismiss all the claims
connected  to or derived  from Motion No.  2977/02  filed by the Employee in the
labor court of Jerusalem and from the lawsuit  filed by the Company  against the
Employee at the New-York State Supreme Court;

     NOW, THEREFORE,  in consideration of the premises and the mutual agreements
hereinafter contained, the parties hereby agree as follows:

     1. Employment Termination.

     (a) The Company and  Employee  agree that the  employment  of the  Employee
shall be deemed to have ceased as of December 31, 2002.

     (b) Subject to fulfillment of all the terms of this Agreement, the Employee
represents  and  warrants  that  he has  received  full  salary  and  any  other
compensation or benefit to which he is entitled from the Company.

     (c) For the avoidance of doubt,  it is agreed that the Employee will not be
entitled  to any other  compensation  or  benefit  for his  employment  with the
Company.

     (d) Until  January 15, 2003,  the Employee  will return to the Company (and
will not keep in his possession, recreate or deliver to anyone else) any and all
devices, Company property including without limitations,  , palm pilot, cellular
telephone sets, records,  data, notes,  correspondence  developed or received by
the Employee  pursuant to  Employee's  employment  with the Company or otherwise
belonging to the Company.

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     2. Payments.

     (a) In place of whatever  amounts to which the  Employee may be entitled by
law or by contract,  and as full settlement of all mutual claims of the parties,
the  Employee  agrees to accept a payment of US  $640,000  (which  payments  and
benefits are in  substitution  for those required by any and all applicable laws
of any and all jurisdictions and/or the terms of the Employment Agreement).

     (b) US $178,579  of the amount of US  $640,000  above is a return of a loan
given by the Employee to the Company.

     (c) US $50,000 of the amount of US $640,000  above is  statutory  severance
payment.  under the Israeli Severance Pay Law-1963 for the Employee's employment
during a period of over 22 years (since July 15th, 1980).

     (d) US  $411,421 of the amount of US  $640,000  above is special  severance
payment..

     (e) Subject to  fulfillment of all the terms of this  Agreement,  the above
payment of US $640,000 shall be paid according to the following schedule:

          (i) Beginning in January 2nd 2003 and continuing through and including
     December 2005, the Company will pay the Employee,  by direct deposit to the
     Employee's bank account at Bank Igud, Main Branch Jerusalem 013 Account No.
     013433/65  (or as will be  instructed by the employee from time to time, in
     writing),  on a  monthly  basis,  a  total  of 36  monthly  payments  of US
     $7,777.77.

          (ii) Prior to January  15,  2003,  the Company  shall  transfer to the
     Employee the amount of US $35,000, by direct deposit to the Employee's bank
     account  provided above (or as will be instructed by the employee from time
     to time, in writing).

          (iii) The Company  shall pay the  Employee,  by direct  deposit to the
     Employee's  bank account  provided  above (or as will be  instructed by the
     employee from time to time, in writing), an aggregate amount of $325,000 in
     ten equal installments of US $32,500. One such installment shall be due and
     payable by the last day of each of the  months of  September  and  December
     2003, March, June,  September and December 2004, and March, June, September
     and December  2005. The Employee shall be entitled to inform the Company by
     December 31, 2002, that he elects, at his sole discretion, to receive on or
     prior to December  31,  2002,  the above  amount of US $325,000 or any part
     thereof  by  check  paid in the  United  States  that  will be  immediately
     endorsed by the Employee over to the order of EFC as a loan  ("Loan").  The
     Loan shall be evidenced  by a  promissory  note and shall be payable by the
     Company to the Employee  according to the ten equal  installments  provided
     above. The Loan shall bear no interest.

          (iv) Of the above specified amounts, the first US $ 50,000 paid to the
     Employee  will be  considered  as  statutory  severance  payment  under the
     Israeli Severance Pay Law-1963 for the Employee's employment referred to in
     sub section 2 (c). The next US $ 178,579 will be  considered as a return of
     the above loan given by the  Employee  to the  Company  referred  to in Sub
     Section 2(b).

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     (e) The Employee  shall  provide the Company with a receipt for each of the
payments provided on Sub-Section (d) above.

     (f) The  Employee  acknowledges  that he is  responsible  for,  and he does
hereby  indemnify  the Company and its  shareholders,  directors,  officers  and
employees  from and  against,  the  payment  of any and all  federal  and state,
including without limitations in Israel,  income and like taxes, social security
payments or any other withholding which may be or become payable with respect to
any and all payment or any other consideration provided in this Agreement.  With
respect to any of the  payments  provided  above,  the Company  shall deduct all
statutory  withholdings under any applicable law, including without  limitations
income tax and social security  payments.  If the company will deduct any sum of
the above payments it will submit to the Employee all  documentation  concerning
such deduction.

     (g) In  addition  to the  foregoing,  the  Company  will also  release  the
Employee's  manager's  insurance  fund and study fund. The Company will take all
steps reasonably necessary to release the above funds to the Employee, including
but not limited to the prompt execution of any necessary paperwork.  The Company
declares that it does not have any rights whatsoever in the above funds and will
not have any demands in regard with those funds.

     3. Tax Refund.

     The  Employee  presently  has a petition  for a tax refund  relating to the
execution of 131,655  options in February  9th,  2000 (the  "Petition")  pending
before the Israeli tax  authorities  (the "Israeli  IRS").  With respect to such
Petition, the parties agree as follows:

          (i) The Employee  shall notify the Company  within three business days
     of receipt of any  communication  from the Israeli IRS with  respect to the
     Petition, including a copy of such communication,  if in writing (including
     e-mail), or a written summary of such communication, if not in writing.

          (ii) In the event that the  Employee  shall  actually  receive any tax
     refund,  of any size, in connection with the Petition (an "Actual Refund"),
     he shall  immediately  notify the Company both orally and in writing of the
     amount of such Actual  Refund.,  the parties  agree that an amount of money
     equal to 10% of the amount of an Actual Refund (the "Refund  Credit") shall
     be credited  against the  remaining  amount that the Company  shall owe the
     Employee at such time under Section  2(d)(iii) above. In the event that the
     Refund  Credit shall be in excess of such  remaining  amount,  the Employee
     shall immediately pay the Company any and all such excess Refund Credit.

          (iii) In the event that the Employee  shall receive any  communication
     from the Israel IRS indicating  that his petition for a tax refund has been
     granted,  in whole or in part,  but shall not yet have  received  an Actual
     Refund by the time any of the last two  payments  under  Section  2(d)(iii)
     above shall have become due,  the Company  shall make such  payments (up to
     the maximum amount of the Refund Credit) into an escrow account  maintained
     by the law  firm of Dr.  J.  Segev & Co.  (the  "Escrow")  pending  a final
     determination of the status of the Actual Refund.

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     To the extent that, prior to or  contemporaneously  with the Company having
     received  notice of an Actual  Refund,  the Company shall have paid amounts
     into Escrow, an amount of money equal to the amount paid into Escrow or the
     amount of the Refund  Credit,  whichever  is the lesser,  shall be released
     from the Escrow and returned to the Company. Should the Israeli IRS reverse
     its determination and irrevocably decide that it will not give the Employee
     a refund, then these sums shall be released to the Employee.

          (iv) The Company shall use its commercially reasonable best efforts to
     assist the Employee with  obtaining a refund under the Petition  (including
     but not  limited  to the  prompt  execution  of any  necessary  paperwork),
     provided  that such  assistance  is  approved  in advance by the  Company's
     accountants.

     4. Car.

     The  Employee  shall be  entitled to continue  and hold the  Company's  car
(VOLVO S-80, registration plate # 74-526-35) currently in his possession ("Car")
as security for the Company  payments under this  agreement.  The Employee shall
return the Car to the Company by December 31, 2005. It is hereby agreed that the
Employee  may use the Car and he  shall  bear  any and all  expenses  and  taxes
related  to the Car.  The  Employee  shall  maintain  the Car in good  condition
consistent with past practice and shall maintain an insurance  policy on the Car
at all times.  To avoid doubt,  holding the Car as security will not  constitute
any employment status or other relationship between the parties.

     5. Standstill; Options.

     (a) The Employee agrees that from the date hereof until September 30, 2003,
neither he nor any member of his  family  shall,  directly  or  indirectly,  (i)
offer,  pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell,  grant any option,  right or warrant to
purchase, lend or otherwise transfer or dispose of, directly or indirectly,  any
of the shares of common stock or other  securities  of EFC  ("Shares")  nor (ii)
enter into any swap or other arrangement that transfers to another,  in whole or
in part,  any of the  economic  consequences  of ownership of any of the Shares,
whether  any such  transaction  described  in clause  (i) or (ii) above is to be
settled by delivery of Shares, in cash or otherwise.

     (b) In  consideration  for this  standstill  agreement,  the Company  shall
extend the term of the  Employee's  existing  vested stock  options to expire on
September  30,  2005.  Options  granted to the  employee in lieu of salary shall
continue to have a ten-year limitation on their term.

     (c) The parties  acknowledge  that any and all of Employee's  stock options
that shall not have vested by December 31, 2002, shall expire on that date.

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     (d)  Any   violation  of  the   provisions  of  Section  5(a)  above  shall
automatically  result in the  immediate  cancellation  of all of the  Employee's
vested and outstanding options.

     (e) The parties agree that the all the  outstanding  options and shares for
which no share  certificate  has been issued in the name of the  Employee on the
date hereof are listed on EXHIBIT A attached hereto.

     (f) Prior to September 30, 2003, the Company will. comply with the terms of
Section 16 of the Employment Agreement, provided that the Employee shall fulfill
in a timely fashion all of his obligations  under the terms of Section 16 of the
Employment Agreement

     6. Release of Claims.

     (a) The Employee, subject to the release provided on Sub Section (b) below,
for  himself,  his heirs,  executors,  administrators,  successors  and assigns,
hereby fully and unconditionally waives,  releases, and forever discharges,  the
Company,   its  subsidiary   companies,   related  and   affiliated   companies,
predecessors,   successors,  assigns  and  its  present  and  former  directors,
officers,  agents and employees,  from any and all suits,  causes of action, and
claims of any nature whatsoever,  known or unknown,  which the Employee may have
against the  Company and the other  parties  released  hereby,  which he and his
heirs, executors,  administrators,  successors and assigns ever had, now have or
hereafter can, shall or may have,  for, upon, or by reason of any matter,  cause
or thing  whatsoever  from the  beginning of the world to the day of the date of
this  release,  including  without  limitation  any  and all  claims  in any way
resulting  from,  arising  out  of or  connected  with  his  employment  or  its
termination or pursuant to any Israeli common law, statute,  regulation or other
requirement, including without limitation (i) the Severance Payment Law of 1963,
Annual  Vacation Law of 1951,  Protection of Wages Law of 1958, Sick Payment Law
of 1976,  Prior  Notice for  Dismisal and  Resignation  Law of 2001,  recreation
payment  (Dmei  Havra'a  payment)  and any and all claims  under any  collective
bargaining  agreement  or  extension  thereof;  (ii) any other  compensation  or
consideration as a result of employment relations or end of employment relations
including without  limitation,  Bituach  Menahalim,  Keren  Hishtalmut,  pension
compensation,  and/or any  compensation  and  consideration  resulting from such
relations, or arising out of or connected with his position as a director of the
Company  and/or as a principal in the Company  and/or  connected with any act or
vote of the Company's board of directors, whether by virtue of his position as a
director,  officer, employee or shareholder,  all pursuant to any Israeli common
law,  statute,   order,  regulation  or  other  requirement  (including  without
limitation  the Companies  Ordinance [New Version] of 1983, the Companies Law of
1999, the Securities  Law of 1968,  the Torts  Ordinance [New Version],  each as
amended  from  time to time,  infliction  of any tort,  or  breach of  contract,
whether  actual or  implied,  or  whether  oral or  written)  including  without
limitation  any United  States  federal,  state or local  common  law,  statute,
regulation  or other  requirement  (including  without  limitation  the  General
Corporation  Law of the State of Delaware,  the United States  Securities Act of
1933, and the United States  Securities  Exchange Act of 1934,  Title VII of the
Civil  Rights  Act of  1964,  the Age  Discrimination  in  Employment  Act,  the
Americans with Disabilities Act, the fair employment practices laws of the state
or states in which the  Employee  have been  employed  by the  Company,  each as
amended  from  time to time,  infliction  of any tort,  or  breach of  contract,
whether actual or implied, or whether oral or written).

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     (b) The Company,  subject to the release provided on Sub Section (a) below,
for  itself,  its  subsidiary  companies,   related  and  affiliated  companies,
predecessors,   successors,  assigns  and  its  present  and  former  directors,
officers,  agents  and  employees,  hereby  fully  and  unconditionally  waives,
releases,  and  forever  discharges,   the  Employee,   his  heirs,   executors,
administrators,  successors  and  assigns,  from any and all  suits,  causes  of
action, and claims of any nature whatsoever, known or unknown, which the Company
may have against the Employee and the other parties  released  hereby,  which it
and its subsidiary companies,  related and affiliated  companies,  predecessors,
successors,  assigns and its present and former directors,  officers, agents and
employees, ever had, now have or hereafter can, shall or may have, for, upon, or
by reason of any matter,  cause or thing  whatsoever  from the  beginning of the
world to the day of the date of this release,  including without  limitation any
and all claims in any way resulting  from,  arising out of or connected with his
employment or its  termination  or arising out of or connected with his position
as a  director  of the  Company  and/or as a  principal  in the  Company  and/or
connected with any act or vote of the Employee in the board of directors, and/or
connected  with any act of the  Employee as a  shareholder,  all pursuant to any
Israeli common law, statute,  order,  regulation or other requirement (including
without limitation the Companies  Ordinance [New Version] of 1983, the Companies
Law of 1999, the Securities Law of 1968, the Torts Ordinance [New Version], each
as amended  from time to time,  infliction  of any tort,  or breach of contract,
whether  actual or  implied,  or  whether  oral or  written)  including  without
limitation  any United  States  federal,  state or local  common  law,  statute,
regulation or other  requirement  (including  without  limitation all Securities
acts,  laws  and  regulations,  the  General  Corporation  Law of the  State  of
Delaware,  the United  States  Securities  Act of 1933,  and the  United  States
Securities  Exchange Act of 1934, Title VII of the Civil Rights Act of 1964, the
Age  Discrimination  in Employment Act, the Americans with Disabilities Act, the
fair  employment  practices  laws of the states in which the Employee  have been
employed by the Company,  each as amended from time to time,  infliction  of any
tort,  or breach of  contract,  whether  actual or implied,  or whether  oral or
written).

     (c) The Employee has carefully read this Agreement, knows its contents, and
freely and voluntarily  agrees to all of its terms and conditions.  The Employee
acknowledges  that he has had  reasonable  time to  consider  and  discuss  this
Agreement  with  his  attorney.   By  signing  this   Agreement,   the  Employee
specifically acknowledges that he has read it; he understands it and knows he is
giving up important  rights; he agrees with everything in it; he is aware of his
right to consult an  attorney  of his own choice  before  signing it; and he has
signed it knowingly and voluntarily.

     (d) This  Agreement also  constitutes a compromise  agreement and notice of
final  clearance in according  with Article 29 of the  Severance  Payment Law of
1963.

     (e) Subject to the  registration of the lien according to section 10 below,
the parties  shall submit to the labor court of Jerusalem a petition in the form
attached  hereto as EXHIBIT  B1, to strike out Motion No.  2977/02  filed by the
Employee.

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     (f) Immediately upon execution of this Agreement,  the parties shall submit
to the labor court of Jerusalem the executed petition attached hereto as EXHIBIT
B2,  requesting  the  release of the  Company's  holdings  in M.D.T.  Protective
Industries  Ltd.  from any  limitation  or ant other  obligation  undertaken  in
connection with Motion No. 2977/02 filed by the Employee.

     (g) The Company will withdraw the lawsuit filed by it in the New York State
Supreme  Court,  County of New York,  and/or any other lawsuit  and/or  petition
filed by it against the  Employee,  within 5 working days and will submit to the
Employee a copy of such  petition to dismiss the  lawsuit  immediately  upon its
submission.

     7. Surviving Terms of Employment  Agreement.  The Employee acknowledges and
agrees that he shall  continue to be bound by and comply with the  provisions of
Section 8 of the Employment  Agreement (entitled  "Confidentiality;  Proprietary
Rights; Competitive Activity").

     8.  Approval.  The Company  hereby  declares  that the  Company's  Board of
Directors  has approved this  Agreement,  and empowered Mr. Robert S. Ehrlich to
sign this  Agreement  in the name of EFL & EFC.  The  resolution  adopted by the
board and all its details and  provisions  and  authorizing  Mr. Ehrlich to sign
this Agreement is attached hereto as EXHIBIT C.

     9.  Attorney  Fees.  The  Company  shall  pay  directly  to the  Employee's
attorney,  Dr. J. Segev & Co.,  of 4  Wissozki  St.,  Tel Aviv,  an amount of US
$89,500, as follows:

     (a) An amount of US $34,500, on or prior to January 15, 2003.

     (b) An amount of US $55,000  in ten equal  installments  of US $5,500.  One
such installment  shall be due and payable by the last day of each of the months
of September and December 2003,  March,  June,  September and December 2004, and
March, June, September and December 2005.

     (c) The Company will add VAT (at the rate determined by law at the time any
payment  hereto) to all payments under this Section 9 and receive an invoice for
any such payment.

     (d) The  Company  will pay Dr. J. Segev & Co.,  all sums  setforth  in this
section by direct deposit to Dr. J. Segev & Co.'s bank account at Bank Hapoalim,
Pinkas Branch Tel-Aviv (754) Account No. 187772 (or as will be instructed by the
employee from time to time, in writing).

     (e) This Section 9 and Section 10 below shall  constitute  an agreement for
the benefit of third party.

     10. Security. Debts.

          (a)  The payments  provided in Sections 2 and 9 above shall be secured
               by a lien in favor of the  Employee  and/or  Dr. J.  Segev & Co.,
               that will be registered on those of the assets of EFL that relate
               exclusively  to EFL's  Water-Activated  Battery line (the "WAB"),
               the Instant Power consumer battery  business,  including  patents
               related exclusively thereto, and the Company's rights in the Car,
               a breakdown  of which is  provided  in EXHIBIT D attached

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               hereto  ("Lien").  For the  avoidance  of doubt,  it is expressly
               understood  that the Lien shall include only such items  provided
               on  EXHIBIT D and  shall not  include  any  shares  owned by EFL,
               including  without   limitations  shares  of  M.D.T.   Protective
               Industries  Ltd., and that the Lien shall not include any patents
               owned by EFC which  relate,  in whole or in part, to the field of
               batteries for military use or to electric  vehicles.  The Company
               shall be  empowered  to sell assets  subject to the Lien and take
               off the Lien,  and the Employee will make all necessary  steps to
               take  off the  Lien  including  but  not  limited  to the  prompt
               execution of any necessary documents,  provided that the proceeds
               from such sale are applied to reduction of the remaining  sums to
               be due at such  time  under  Section  2 and 9 above  and that the
               total consideration of such sale exceeds the remaining sums to be
               due at such time under Section 2 and 9 above.

          (b)  The Company shall maintain the WAB in good  condition  consistent
               with its current  practice and shall maintain an insurance policy
               on the WAB.

          (c)  During the year 2003 the Company shall maintain the Instant Power
               consumer battery  business in good condition  consistent with its
               current  practice.  However,  the  Company  may elect at any time
               during  the  year  2003 to stop  maintaining  the  Instant  Power
               consumer battery business.  In such event the company will notify
               in  writing  its  decision  not to  maintain  the  Instant  Power
               consumer  battery  business during or after 2003 and the Employee
               shall  have two  months  in which he may try to sell the  Instant
               Power  consumer  battery  business.  During  these two months the
               Company  shall  continue to maintain the Instant  Power  consumer
               battery business in its current condition.  In the event that the
               Employee is successful in selling,  the  consideration out of the
               selling will be taken off from the Company  payments in section 2
               and 9 above.  Subject  to full  maintenance  fee such as rent and
               salaries  which will be taken off from the  Company  Payments  in
               section 2 and 9 above the Employee may prolong in writing the two
               months in which he will try to sell the  Instant  Power  consumer
               battery business.

          (d)  In the event the Company  maintains  the Instant  Power  consumer
               battery business until October 30 2003 the Company, following the
               Employee written request, shall notify in writing its decision re
               the  maintenance of the Instant Power consumer  battery  business
               and in the event the  Company  decision  is not to  continue  the
               maintenance  of the Instant Power consumer  battery  business the
               Employee  shall  have two  months  in which he may try to sell it
               according to  subsection 10 c. To avoid any doubt in no event the
               employee  shall have more than two months to sell and the Company
               may elect not to maintain  the  Instant  Power  consumer  battery
               business  after  December  31 2003 or during  2003  after the two
               months   given  to  the   Employee   for  selling   according  to
               subsection10c-10d.

     (e) The Company  hereby  declares  that other than its  obligations  to the
Office of the Chief Scientist, all assets to be pledged under section 10 (a) are
free from any lien,

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attachment or any other third party rights.  The  Company's  obligations  to the
Chief Scientist are attached hereto as EXHIBIT E

     (f) Upon the execution of this agreement the Company will execute a deed of
pledge  of the lien in favor of the  Employee  and/or  Dr.  J.  Segev & Co.to be
registared  at the Registrar of Pledges  and/or the Registrar of Companies.  The
pledge shall comply with all the obligations of the Company toward the Office of
the Chief Scientist.

     (g) The parties hereof  acknowledge  that the only debts which the Employee
has to the  Company  that  will  continue  in  existence  after the date of this
Agreement are the debts in the principal  total amount of US $957,966  ("Debts")
for which the Employee has executed  non-recourse  promissory  notes on December
28, 1998 and February 9, 2000  ("Promissory  Notes").  The Promissory  Notes are
attached hereto as EXHIBIT F.

     (h) The parties hereof acknowledge that the shares specified in each of the
non-recourse Promissory Notes, respectively, are the sole security for the debts
provided  in  sub-section  (b)  above;  that the  Debts  will be  governed  only
according to the  provisions  and conditions set forth in each of the Promissory
Notes,  respectively;  that  the  recourse  of  the  Debts  under  each  of  the
non-recourse Promissory Notes shall only be the pledged shares specified in each
of the Promissory Notes,  respectively;  and that the Debts will not be released
by this Agreement.

     (i) Upon any  event  that  the  Company  becomes  adjudged  insolvent  or a
trustee,  receiver or similar  officer shall be appointed for the Company or any
substantial  part  of its  property;  or any  bankruptcy,  reorganization,  debt
arrangement,  recovery  process  or other  proceeding  under any  bankruptcy  or
insolvency law or any dissolution or liquidation proceedings shall be instituted
by or against the Company,  all remaining payments set forth in sections 2 and 9
above will  mature  immediately  and it will enable the  Employee  and/or Dr. J.
Segev & Co. to realize the Lien immediately.

     11. Binding Effect. This Agreement be binding upon or injure to the benefit
of the  successors  and assigns of the Company and the Employee and his personal
representative(s).

     12. Binding Arbitration.

     (a) This Agreement,  the  performance  thereof and all matters arising from
and connected with the Agreement, shall be governed by and construed, solely and
exclusively, in accordance with the laws of Israel.

     (b) Any dispute hereunder shall be finally settled by a binding arbitration
held in Tel Aviv, Israel, in the Hebrew language (except that witnesses shall be
permitted  to speak  in  English),  by one  arbitrator,  a  retired  judge  with
commercial  background  to be chosen by the  parties  and if the  parties do not
consent about the arbitrator,  the arbitrator will be appointed by the president
of the Israeli  Chamber of Certified  Accountants.  This section  constitutes an
arbitration agreement.

     (c) The  decision or award of the  arbitrators  shall be  published to each
party and will be final and binding upon all of the parties. Each of the parties
hereby  irrevocably  and expressly  agrees to comply  promptly and in good faith
with any and all such decisions or awards.

                                     - 9 -
<PAGE>

     (d) The arbitration  hereunder shall be the exclusive and conclusive method
for resolving disputes under this Agreement and no court shall have the power to
adjudicate such disputes.

     (e) The costs of the arbitration,  including without limitations  attorneys
fees, shall be borne by the non-prevailing party.

     13. Severability. If one or more of the provisions of this Agreement or any
application thereof shall be invalid,  illegal, or unenforceable in any respect,
the validity,  legality and  enforceability of the remaining  provisions thereof
shall in no way be affected or impaired.

     14. Entire  Agreement.  The foregoing  contains the entire agreement of the
parties and may not be altered,  amended,  or terminated except by an instrument
in writing signed by the parties hereto.

     15. Joint and Several Obligations.  The obligations and liabilities of each
company  hereunder (EFC and EFL) shall be joint and several with the obligations
and liabilities of the other company hereunder.

     16. Execution in counterparts. This agreement may be executed in any number
of separate  counterparts,  each of which shall  together be deemed an original,
but the several  counterparts  shall  together  constitute  but one and the same
agreements of the parties hereto.

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

                                      ELECTRIC FUEL CORPORATION

                                      By:
                                         --------------------------------------
                                         Name: Robert S. Ehrlich
                                         Title: Chairman, President and CEO

                                         ELECTRIC FUEL (E.F.L.) Ltd.

                                      By:
                                         --------------------------------------
                                         Name: Robert S. Ehrlich
                                         Title: Chairman, President and CEO

                                         --------------------------------------
                                                   Yehuda Harats

                                     - 10 -
<PAGE><PAGE>

                                                                 Exhibit 10.69.1

                                  PARKWAY POINT
                                  -------------

                           COMMERCIAL LEASE AGREEMENT

                       COMMERCE SQUARE ASSOCIATES, L.L.C.
                      A Colorado limited liability company
                              "LANDLORD or LESSOR"

                                       AND

                   I.E.S. ELECTRONICS INDUSTRIES U.S.A., INC.,
                   -------------------------------------------
                             a Delaware corporation
                             ----------------------
                               "TENANT or LESSEE"

                            Date: September 24, 1997
                            ------------------------
                          (For reference purposes only)

                                       1
<PAGE>

<TABLE>
<CAPTION>
                                                    TABLE OF CONTENTS

                                                                                                    Page
<S>                                                                                                    <C>
1.       Basic Lease Terms...........................................................................  1

2.       Rent........................................................................................  2

3.       Occupancy and Use...........................................................................  4

4.       Utilities and Service.......................................................................  6

5.       Repairs and Maintenance.....................................................................  7

6.       Alterations and Improvements................................................................  8

7.       Casualty and Insurance......................................................................  9

8.       Condemnation................................................................................ 12

9.       Assignment or Sublease...................................................................... 13

10.      Liens....................................................................................... 15

11.      Default and Remedies........................................................................ 15

12.      Relocation.................................................................................. 17

13.      Definitions................................................................................. 17

14.      Miscellaneous............................................................................... 18

15.      Amendment and Limitation
          of Warranties.............................................................................. 21

16.      Other Provisions............................................................................ 21

17.      Signatures.................................................................................. 22

</TABLE>

       Exhibit A - Rules and Regulations

       Exhibit B - Description of the Leased Premises

       Exhibit C - Work Letter

       Exhibit D - Agreement for Signage

       Exhibit E - Agreement for Parking

       Exhibit F - Commencement of Lease Term and Estoppel Certificate

                                       2
<PAGE>

                           COMMERCIAL LEASE AGREEMENT

                                    ARTICLE 1

                                BASIC LEASE TERMS
                                -----------------

1.0  Basic Lease Terms

     1.01 Parties. This lease agreement ("Lease") is entered into by and between
          the following Lessor and Lessee:

               COMMERCE  SQUARE  ASSOCIATES  L.L.C.  ("Landlord  or  Lessor")  a
               Colorado limited liability company

               I.E.S. ELECTRONICS INDUSTRIES U.S.A., INC. ("Tenant or Lessee") a
               Delaware corporation

     1.02 Leased Premises. In consideration of the rents, terms,  provisions and
          covenants of this Lease,  Lessor  hereby  leases,  lets and demises to
          Lessee  the  following   described   premises  ("Leased  Premises"  or
          "Premises"):

              approximately 5,700 square feet
              8250 Park Meadows Drive, Suite 110
              Lone Tree, Colorado 81024

     1.03 Term. Subject to and upon the conditions set forth herein, the term of
          this Lease  shall  commence  on  October  1, 1997 and shall  terminate
          thirty-six (36) months thereafter on September 30, 2000.

     1.04 Base Rent and Security Deposit.  Lessee shall pay to Lessor Total Base
          Rent of One  Hundred  Thirty-Six  Thousand  Eight  Hundred  and 00/100
          Dollars ($136,800.00) payable as follows:

<TABLE>
<CAPTION>
     ----------------- --------------------------- ---------------------- --------------------- ---------------------
                                                        BASE RENTAL             MONTHLY
                                                        RATE/RSF/YR            BASE RENT        TOTAL BASE RENT FOR
          PERIOD                 DATES                      NNN                   NNN                PERIOD NNN
     ----------------- --------------------------- ---------------------- --------------------- ---------------------
<S>                      <C>                               <C>                 <C>                   <C>
        12 months        10/1/1997 - 9/30/1998             $8.00               $3,800.00             $45,600.00
     ----------------- --------------------------- ---------------------- --------------------- ---------------------
        12 months        10/1/1998 - 9/30/1999             $8.00               $3,800.00             $45,600.00
     ----------------- --------------------------- ---------------------- --------------------- ---------------------
        12 months        10/1/1999 - 9/30/2000             $8.00               $3,800.00             $45,600.00
     ----------------- --------------------------- ---------------------- --------------------- ---------------------
</TABLE>

     Security  Deposit  is Three  Thousand  Eight  Hundred  and  00/100  Dollars
($3,800.00),

                                       1
<PAGE>

1.05     Addresses.

          Lessor's Address:                    Lessee's Address:

Integrated Property Management, Inc.  I.E.S. ELECTRONICS INDUSTRIES U.S.A., INC.
455 Sherman Street, Suite 140         8250 Park Meadows Drive, Suite 110
Denver, Colorado 80203                Lone Tree, Colorado 80124

1.06 Permitted  Use.  General  office and warehouse use for a high tech computer
     software and hardware design and development company.

                                    ARTICLE 2

                                      RENT
                                      ----

2.0  Rent

     2.01 Base rent.  Lessee  agrees to pay monthly as base rent during the term
          of this  Lease  the sum of money  set  forth in  section  1.04 of this
          Lease,  which amount  shall be payable to Lessor at the address  shown
          above. One monthly installment of rent shall be due and payable on the
          date of execution  of this Lease by Lessee for the first  month's rent
          and a like monthly  installment  shall be due and payable on or before
          the first day of each calendar month succeeding the commencement  date
          or  completion  date during the term of this Lease;  provided,  if the
          commencement  date or the completion  date should be a date other than
          the first day of a calendar month,  the monthly rental set forth above
          shall be prorated to the end of the calendar month, and all succeeding
          installments  of rent  shall be  payable on or before the first day of
          each succeeding  calendar month during the term of this Lease.  Lessee
          shall pay, as additional rent, all other sums due under this Lease.

     2.02 Operating Expenses.  Lessee shall also pay as additional rent Lessee's
          pro rata share of the  operating  expenses of Lessor for the  building
          and/or  project of which the leased  premises  are a part.  Lessor may
          invoice  Lessee  monthly for Lessee's pro rata share of the  estimated
          operating  expenses  for each  calendar  year,  which  amount shall be
          adjusted each year based upon anticipated  operating expenses.  Within
          nine (9) months  following  the close of each  calendar  year,  Lessor
          shall provide Lessee and

                                       2
<PAGE>

          accounting showing in reasonable detail all computations of additional
          rent due under this section.  In the event the  accounting  shows that
          the total of the monthly payments made by Lessee exceeds the amount of
          additional rent due by Lessee under this section, the accounting shall
          be accompanied by a refund. In the event the accounting shows that the
          total of the monthly  payments  made by Lessee is less than the amount
          of additional  rent due by Lessee under this section,  the  accounting
          shall  be  accompanied   by  an  invoice  for  the  additional   rent.
          Notwithstanding  any other provision in the Lease,  during the year in
          which this Lease  terminates,  Lessor,  prior to the termination date,
          shall have the option to invoice Lessee for Lessee's pro rata share of
          operating expenses based upon the previous year's operating  expenses.
          If this  Lease  shall  terminate  on a day other  than the last day of
          calendar  year,  the amount of any  additional  rent payable by Lessee
          applicable to the year in which the  termination  shall occur shall be
          prorated on the ratio that the number of days from the commencement of
          the calendar year to and including such termination date bears to 365.
          Lessee  shall  have  the  right,  at its  own  expense  and  within  a
          reasonable  time, to audit  Lessor's  books relevant to the additional
          rent payable under this section.  Lessee agrees to pay any  additional
          rent due under this section within ten days  following  receipt of the
          invoice or  accounting  showing the  additional  rent due. The current
          estimate of  Lessee's  share of  operating  expenses is Two and 95/100
          Dollars  ($2.95) per square foot of the Leased Premises which shall be
          paid in addition to and along with base rent.  Lessee's prorated share
          of the projects operating expenses shall be 6.31%.

     2.03 Definition  of  Operating  Expenses.  The  term  "operating  expenses"
          includes  all  expenses   incurred  by  Lessor  with  respect  to  the
          maintenance and operation of the building of which the Leased Premises
          are a part, including, but not limited to, the following: maintenance,
          repair and replacement  costs;  security;  management  fees, wages and
          benefits  payable to  employees  of Lessor  whose  duties are directly
          connected  with the operation  and  maintenance  of the building;  all
          services, utilities, supplies, repairs, replacements or other expenses
          of maintaining  and operating the common parking and plaza areas;  the
          cost, including interest, amortized over its useful life, or the costs
          (amortized  over  their  useful  life)  of  capital  improvements  are

                                       3
<PAGE>

          structural  repairs  and  replacements  made  in  or to  the  building
          (including  finance costs) in order to conform to any applicable laws,
          ordinances,  rules,  regulations,  or  orders of any  governmental  or
          quasi-governmental  authority having  jurisdiction  over the building;
          the cost,  including  interest,  amortized  over its useful  life,  of
          installation  of any  device or other  equipment  which  improves  the
          operating  efficiency  of any  system  with the  Leased  Premises  and
          thereby  reduces  operating  expenses;  all other expenses which would
          generally  be regarded as operating  and  maintenance  expenses  which
          would  reasonably  be  amortized  over a period not to exceed five (5)
          years;   all  real  property   taxes  and   installments   of  special
          assessments,   including  dues  and   assessments  by  means  of  deed
          restrictions  and/or  owners'  associations  which accrue  against the
          building  of which the Leased  Premises  are a part during the term of
          this Lease;  and all insurance  premiums  Lessor is required to pay or
          deems necessary to pay,  including  public liability  insurance,  with
          respect to the building.  The term operating expenses does not include
          the following:  repairs, restoration or other work occasioned by fire,
          wind, the elements or other  casualty;  income and franchise  taxes of
          Lessor;  expenses  incurred  in leasing to or  procuring  of  Lessees,
          leasing  commissions,   advertising  expenses  and  expenses  for  the
          renovating of space for new Lessees; interest or principal payments on
          any mortgage or other indebtedness of Lessor, compensation paid to any
          employee  of  Lessor  above  the  grade  of  property   manager;   and
          depreciation allowance or expense; or operating expenses which are the
          responsibility of Lessee.

     2.04 Late  Payment   Charge.   Other   remedies  for   nonpayment  of  rent
          notwithstanding,  if the  monthly  rental  payment is not  received by
          Lessor  on or before  the  fifth  (5th) day of the month for which the
          rent is due,  or if any  other  payment  due  Lessor  by Lessee is not
          received  by Lessor on or before the fifth (5th) day of the month next
          following  the month in which  Lessee  was  invoiced,  a late  payment
          charge of five  percent  (5%) of such past due amount shall become due
          and payable in addition to such amounts owed under this Lease.

     2.05 Interest  Due.  If any  amount  due from  Lessee to  Lessor  hereunder
          whether it be rental or other  charges,  is not paid  within  five (5)
          days of when due,  Lessee shall pay

                                       4

<PAGE>

          Lessor  an amount  equal to  eighteen  percent  (18%) per annum of the
          total  amount due  Lessor,  from the  original  due date  until  paid.
          Interest  charges shall be in addition to, and not in substitution of,
          late charges imposed.  Notwithstanding the foregoing, and no more than
          two (2) times in a given  twelve (12) month  period  under this Lease,
          (but not more  often  than a total of four (4) times  over the term of
          the Lease), Landlord will give Tenant written notice that a payment is
          late and provide  Tenant with an opportunity to make such late payment
          without being  considered  to be in default of the Lease,  and without
          such payment  being subject to a late payment  charge or interest,  as
          long as (i) such late payment is received not more than seven (7) days
          after the date  notice is given;  and (ii)  (except for the payment of
          rent as previously described in this paragraph),  at no time since the
          Commencement Date has there been more than one (1) event of default on
          any twelve (12) month period under this Lease.

     2.06 Increase in  Insurance  Premiums.  If any  increase  in any  insurance
          premiums  paid by Lessor for the building is caused by Lessee's use of
          the  Leased  Premises  in a manner  other than as set forth in section
          1.06, or if Lessee vacates the Leased  Premises and causes an increase
          in such premiums,  then Lessee shall pay as additional rent the amount
          of such increase to Lessor.

     2.07 Security  Deposit.  The security deposit set forth above shall be held
          by Lessor for the  performance of Lessee's  covenants and  obligations
          under this Lease, it being expressly understood that the deposit shall
          not be  considered  an  advance  payment  of rental  or a  measure  of
          Lessor's  damage in case of default by Lessee.  Upon the occurrence of
          any event of  default  by  Lessee  or  breach  by  Lessee of  Lessee's
          covenants  under this Lease,  Lessor may,  from time to time,  without
          prejudice to any other remedy,  use the security deposit to the extent
          necessary to make good any arrears of rent, or to repair any damage or
          injury, or pay any expense or liability incurred by Lessor as a result
          of the  event of  default  or breach of  covenant,  and any  remaining
          balance of the  security  deposit is so used or applied,  Lessee shall
          upon ten (10) days written notice from Lessor,  deposit with Lessor by
          cash or cashier's  check an amount  sufficient to restore the security
          deposit to its original amount.

                                       5
<PAGE>

     2.08 Holding  Over.  In the event  that  Lessee  does not vacate the Leased
          Premises upon the expiration or termination of the Lease, Lessee shall
          be a  tenant-at-will  for the holdover period and all of the terms and
          provisions  of this Lease  shall be  applicable  during  that  period,
          except that  Lessee  shall pay Lessor as base rental for the period of
          such  holdover an amount  equal to two times the base rent which would
          have been payable by Lessee had the holdover period been a part of the
          original  term of this Lease.  Lessee agrees to vacate and deliver the
          Leased Premises to Lessor upon Lessee's  receipt of notice from Lessor
          to vacate.  The rental  payable  during the  holdover  period shall be
          payable to Lessor on demand.  No holding over by Lessee,  whether with
          or without the consent of Lessor,  shall operate to extend the term of
          this Lease.

                                    ARTICLE 3

                                OCCUPANCY AND USE
                                -----------------

3.0  Occupancy and Use

     3.01 Use. Lessee warrants and represents to Lessor that the Leased Premises
          shall  be used  and  occupied  only for the  purpose  as set  forth in
          section  1.06.  Lessee shall occupy the Leased  Premises,  conduct its
          business and control its agents,  employees,  invitees and visitors in
          such a manner as is lawful,  reputable and will not create a nuisance.
          Lessee shall not permit any  operation  which emits any odor or matter
          which intrudes into other portions of the building,  use any apparatus
          or machine which makes undue noise or causes  vibration in any portion
          of the  building or  otherwise  interfere  with,  annoy or disturb any
          other  Lessee  in its  normal  business  operations  or  Lessor in its
          management of the building.

                                       6
<PAGE>

          Lessee shall neither permit any waste on the Leased Premises nor allow
          the Leased  Premises to be used in any way which would, in the opinion
          of Lessor, be extra hazardous on account of fire or which would in any
          way increase or render void the fire insurance on the building. Lessee
          warrants to Lessor  that the  insurance  questionnaire  (filled out by
          Lessee,  signed and presented to Lessor prior to the executing of this
          Lease,  accurately  reflects  Lessee's  original  intended  use of the
          Leased  Premises.  The insurance  questionnaire is made a part of this
          Lease by reference as though full copied herein. If at any time during
          the term of this Lease the State Board of Insurance or other insurance
          authority  disallows any of Lessor's  sprinkler  credits or imposes an
          additional penalty or surcharge in Lessor's insurance premiums because
          of Lessee's  original or subsequent  placement of use of storage racks
          or bins,  method of storage  or nature of  Lessee's  inventory  or any
          other  act of  Lessee,  Lessee  agrees to pay as  additional  rent the
          increase (between fire walls) in Lessor's insurance premiums.

     3.02 Signs. No sign of any type or description shall be erected,  placed or
          painted in or about the Leased  Premises or project except those signs
          submitted to Lessor in writing and approved by Lessor in writing,  and
          which signs are in conformance with Lessor's sign criteria established
          for the Project.

     3.03 Compliance with Laws, Rules, and Regulations. Lessee shall not use the
          Premises or permit  anything to be done in or about the Premises which
          will  in  any  way  conflict  with  any  law,  stature,  ordinance  or
          governmental rule or regulation now in force or which may hereafter be
          enacted  or  promulgated.  Lessee  shall at its sole cost and  expense
          promptly  comply with all laws,  statues,  ordinances or  governmental
          rules,  regulations  and  requirements  now  in  force  or  which  may
          hereafter  be in force  and with the  reasonable  requirements  of any
          insurer, underwriter or other similar entity now or hereafter relating
          to or affecting  the  condition,  use or  occupancy  of the  Premises,
          excluding  structural  changes  not related to or affected by Lessee's
          improvements  or  acts.   Lessee  shall  be  solely   responsible  for
          compliance with the provisions of the Americans with  Disabilities Act
          (the  "ADA") as it  applies to  Lessee's  business  and the  Premises.
          Lessor shall be solely  responsible for compliance with the provisions
          of the ADA as it applies to the  Building.  Lessor  makes no  warranty
          express of implied  that  Lessee's  intended  use of the  Premises  is
          suitable or allowable under any applicable  governmental  code, statue
          or regulation. Lessee, at Lessee's sole cost and expense, shall comply
          with all laws,  ordinances,

                                       7
<PAGE>

          orders,  rules and regulations of state,  federal,  municipal or their
          agencies  or  bodies  having  jurisdiction  over  use,  condition  and
          occupancy of the Leased Premises.

          Lessee  will  comply with the rules and  regulations  of the  building
          adopted by Lessor  which are set forth on a schedule  attached to this
          Lease.  Lessor  shall  have the right at all times to change and amend
          the rules and  regulations in any  reasonable  manner as may be deemed
          advisable  for the safety,  care,  cleanliness,  preservation  of good
          order and operation or use of the building or the Leased Premises. All
          changes and  amendments to the rules and  regulations  of the building
          will be sent by Lessor to Lessee in writing  and shall  thereafter  be
          carried out and observed by Lessee.

     3.04 Warranty  of  Possession.  Lessor  warrants  that it has the right and
          authority  to execute  this  Lease,  and Lessee,  upon  payment of the
          required  rents and subject to the terms,  conditions,  covenants  and
          agreements  contained  in this  Lease,  shall have  possession  of the
          Leased  Premises  during  the full  term of this  Lease as well as any
          extension or renewal thereof.  Lessor shall not be responsible for the
          acts or  omissions  of any  other  Lessee  or  third  party  that  may
          interfere with Lessee's use and enjoyment of the Leased Premises.

     3.05 Inspection.  In the event of an  emergency,  Lessor or its  authorized
          agents shall at any and all  reasonable  times have the right to enter
          the Leased Premises at any time. When an emergency  situation does not
          exist, and provided Lessee is not in default of the Lease, Lessor will
          attempt to provide  Lessee with  forty-eight  (48) hour advance notice
          before entering the Premises to inspect the same, to supply janitorial
          service or any other  service to be  provided  by Lessor,  to show the
          Leased  Premises to prospective  purchasers or Lessees,  and to alter,
          improve  or repair  the Leased  Premises  or any other  portion of the
          building.  Lessee  hereby  waives any claim for  damages for injury or
          inconvenience to or interference with Lessee's  business,  any loss of
          occupancy or use of the Leased Premises, and any other loss occasioned
          thereby. Lessor shall at all times have and retain a key with which to
          unlock all of the doors in, upon and about the Leased Premises.

                                       8
<PAGE>

          Lessee  shall not change  Lessor's  lock system or in any other manner
          prohibit Lessor from entering the Leased  Premises.  Lessor shall have
          the right to use any and all means  which  Lessor  may deem  proper to
          open any door in an emergency without liability therefore.

                                    ARTICLE 4

                              UTILITIES AND SERVICE

4.0  Utilities and Service

     4.01 Building  Services.  Lessor shall provide the normal  utility  service
          connections to the building.  Lessee shall pay the cost of all utility
          services,  including,  but not limited to, initial connection charges,
          all  charges for gas,  electricity,  water,  sanitary  and storm sewer
          service,  and for all electric lights.  However,  in a multi-occupancy
          building,  Lessor may provide water to the Leased  Premises,  in which
          case Lessee  agrees to pay to Lessor its pro rata share of the cost of
          such water.  Lessee  shall be  responsible  for the  installation  and
          maintenance  of any dilution  tanks,  holding tanks,  settling  tanks,
          sewer  sampling  devices,  and sand  traps,  grease  traps or  similar
          devices  as  may  be  required  by any  governmental  subdivision  for
          Lessee's use of the sanitary sewer system.  If the Leased Premises are
          in a multi-occupancy  building, Lessee shall pay all surcharges levied
          due to Lessee's use or sanitary or waste removal  services  insofar as
          such surcharges affect Lessor or other Lessees in the building. Lessor
          shall not be required to pay for any utility services,  supplies or up
          keep in connection with the Leased Premises or building.

     4.02 Theft or Burglary.  Lessor shall not be liable to Lessee for losses to
          Lessee's  property or personal injury caused by criminal acts or entry
          by unauthorized persons into the Leased Premises or the building.

                                       9
<PAGE>

                                    ARTICLE 5

                             Repairs and Maintenance
                             -----------------------

5.0  Repairs and Maintenance

     5.01 Lessor Repairs. Lessor shall not be required to make any improvements,
          replacements  or  repairs  of any  kind  or  character  to the  Leased
          Premises  or the project  during the term of this Lease  except as are
          set forth in this  section.  Lessor  shall  maintain (in a first class
          manner  similar  to  the  level  of  service  provided  in  comparable
          properties in the area) only the roof, foundation,  parking and common
          areas,  and the structural  soundness of the exterior walls (excluding
          windows,  windowglass,  plate  glass  and  doors)  Lessor's  costs  of
          maintaining  the items set forth in this  section  are  subject to the
          additional rent provisions in section 2.02. Lessor shall not be liable
          to the Lessee,  except as  expressly  provided in this Lease,  for any
          damage or  inconvenience,  and  Lessee  shall not be  entitled  to any
          abatement or  reduction of rent by reason of any repairs,  alterations
          or additions made by the Lessor under this Lease.

     5.02 Lessee Repairs.  Lesee shall, at its sole cost and expense,  maintain,
          repair and  replace  all other  parts of the Leased  Premises  in good
          repair  and  condition,   including,   but  not  limited  to  heating,
          ventilating   and   air   conditioning    systems   ("HVAC   Systems")
          notwithstanding  the  foregoing,  and  provided  Tenant  has  properly
          maintained  the  same,  if any part of the  HVAC  System  serving  the
          Premises needs to be replace, the cost for such replacement part shall
          be  amortized  over the part's  expected  reasonable  useful  life and
          Tenant  shall  be  responsible  for the  pro  rata  cost  of the  part
          according to the remaining term of Tenant's  Lease. By way of example,
          if at the end of the first year of the lease term,  (therefore  Tenant
          has two (2) years  remaining  on the Lease) a rooftop unit needs to be
          replaced with a new unit that has an expected  useful life of ten (10)
          years, the Tenant would be responsible for two-tenths (2/10) or twenty
          percent (20%) of the cost. However,  Landlord shall not be responsible
          for the cost of any  equipment  purchased  by Tenant  that will have a
          useful life beyond the  remaining  term of the  Tenant's  lease unless
          Tenant has received the  Landlord's  prior written

                                       10
<PAGE>

          consent before the equipment is purchased and installed, dock dumpers,
          trash pick-up and removal.  For Lessees Premises.  Lessee shall repair
          and pay for any  damage  caused  by any act or  omission  of Lessee or
          Lessee's agents,  employees,  invitees,  licensees or visitors. If the
          Leased Premises are in a multi-occupancy  building or project,  Lessor
          shall perform,  on behalf of Lessee,  lawn  maintenance,  and exterior
          painting, and common area trash pick-up and removal;  Lessee agrees to
          pay Lessor, as additional rent, Lessee's pro rata share of the cost of
          such services  within ten (10) days from receipt of Lessor's  invoice,
          or Lessor may by monthly invoice direct Lessee to prepay the estimated
          costs for the current calendar year, and such amount shall be adjusted
          annually. If Lessee fails to make the repairs of replacements promptly
          as required herein,  Lessor may, at its opinion,  make the repairs and
          replacements  and the cost of such repairs and  replacements  shall be
          charged to Lessee as additional  rent and shall become due and payable
          to Lessee within ten (10) days from receipt of Lessor's invoice. Costs
          incurred under this section are the total responsibility of Lessee and
          do not constitute operating expenses under section 2.02.

     5.03 Request for Repairs.  Except for  emergency  repair,  all requests for
          repairs or maintenance that are the  responsibility of Lessor pursuant
          to any  provision  of this  Lease must be made in writing to Lessor at
          the  address in section  1.05.  Lessor  shall have ten (10) days after
          written notice to complete the repair, or if repairs cannot reasonably
          be  completed  within ten (10) days,  additional  time will be allowed
          provided Landlord diligently pursues a cure through completion.

     5.04 Lessee  Damages.  Lesee shall not allow any damage to be  committed on
          any portion of the Leased Premised or building, and at the termination
          of this Lease, by lapse of time or otherwise, Lessee shall deliver the
          Leased  Premises  to Lessor in as good  condition  as  existed  at the
          commencement date of this lease, ordinary wear and tear excepted.  The
          cost and expense of any repairs  necessary to restore the condition of
          the Leased Premises shall be borne by Lessee.

                                       11
<PAGE>

     5.05 Maintenance  Contract.  Lessee  shall,  at its sole  cost and  expense
          during  the  term  of  this  Lease  maintain  a  regularly   scheduled
          preventative   maintenance/service   contract   with   a   maintenance
          contractor  for  the  servicing  of all  hot  water,  heating  and air
          conditioning  systems and equipment  within the Leased  Premises.  The
          maintenance  contractor  and  contract  must be approved by Lessor and
          must include quarterly servicing,  replacement of filters, replacement
          or adjustment of drive belts,  periodic lubrication and oil change and
          any other services suggested by the equipment manufacturer.

                                    ARTICLE 6

                          ALTERATIONS AND IMPROVEMENTS
                          ----------------------------

6.0  Alterations and Improvements

     6.01 Lessor  Improvements.  If construction to the Leased Premises is to be
          performed by Lessor prior to or during Lessee's occupancy, Lessor will
          complete the  construction of the improvements to the Leased Premises,
          in  accordance  with plans and  specification  agreed to by Lessor and
          Lessee,  which plans and  specifications are made a part of this Lease
          by   reference.   Lessee  shall  execute  a  copy  of  the  plans  and
          specifications  and change  orders if  applicable,  setting  forth the
          amount  of any costs to be borne by  Lessee  within  seven (7) days of
          receipt of the plans and specifications.  In the event Lessee fails to
          execute the plans and  specifications and change orders with the seven
          (7) day  period,  Lessor may at its sole  option,  declare  this Lease
          canceled  or notify  Lessee  that the base rent shall  commence on the
          completion  date even though the  improvements  to be  constructed  by
          Lessor  may not be  complete.  Any  changes  or  modifications  to the
          approved  plans  and  specifications  shall  be made and  accepted  by
          written  change  order or  agreement  signed by Lessor  and Lessee and
          shall constitute an amendment to this Lease.

                                       12
<PAGE>

     6.02 Lessee  Improvements.  Lessee  shall  not make or allow to be made any
          alterations or physical additions in or to the Leased Premises without
          first obtaining the written consent of the Lessor,  which consent will
          not be  unreasonably  withheld  or  delayed.  However,  Landlord  will
          require that any alterations,  additions, or improvements be performed
          by a licensed,  properly insured contractor approved by Lessor and all
          work  shall be done in  accordance  with all  applicable  governmental
          rules  and  regulations.   Any  alterations,   physical  additions  or
          improvements  to the Leased  Premises made by the Lessee shall at once
          become the property of Lessor and shall be  surrendered to Lessor upon
          the  termination of this Lease;  provided,  however at the time Lessor
          consents  to the  improvements,  Lessor may notify  Lessee that Lessee
          must remove any physical  additions  and/or repair any  alterations in
          order to restore the Leased Premises to the condition  existing at the
          time Lessee took possession,  all costs of removal and all alterations
          to be borne  by  Lessee.  This  clause  shall  not  apply to  moveable
          equipment or furniture owned by Lessee, which may be removed by Lessee
          at the end of the term of this  Lease if Lessee is not then in default
          and if such  equipment and furniture are not then subject to any other
          rights, liens and interests of Lessor.

     6.03 Mechanics Lien. Lessee will not permit any mechanic's or materialman's
          lien(s) or other lien to be placed  upon the  Leased  Premises  or the
          building and nothing in this Lease shall be deemed to  constructed  in
          any way as constituting  the consent or request of Lessor,  express or
          implied,  by  interference  or  otherwise,   to  any  person  for  the
          performance  of any labor or the  furnishing  of any  materials to the
          Leased Premises,  or any part thereof, nor as giving Lessee any right,
          power,  or authority  to contract  for or permit the  rendering of any
          services of the  furnishing of any  materials  that would give rise to
          any  mechanic's   materialman's  or  other  lien  against  the  Leased
          Premises.  In the  vent  any  such  lien  is  attached  to the  Leased
          Premises,  then, in addition, any other right or remedy of Lessor may,
          but shall not be  obligated  to,  obtain the  release of or  otherwise
          discharge the same. Any amount paid by Lessor for any of the aforesaid
          purposes  shall be paid by Lessee  to  Lessor on demand as  additional
          rent.

                                       13
<PAGE>

                                    ARTICLE 7

                             CASUALTY AND INSURANCE
                             ----------------------

7.0  Casualty and Insurance

     7.01 Substantial  Destruction.  If the  Leased  Premises  should be totally
          destroyed by fire or other casualty,  or if the Leased Premises should
          be damaged so that rebuilding  cannot  reasonably be completed  within
          ninety (90)  working  days after the date of written  notification  by
          Lessee to Lessor of the  destruction,  this Lease shall  terminate and
          the rent  shall be abated  for the  unexpired  portion  of the  Lease,
          effective as of the date of the written notification.  Notwithstanding
          the foregoing  there shall be no abatement of rent in the event Tenant
          is responsible in whole or in part of the casualty or destruction.

     7.02 Partial  Destruction.  If the  Leased  Premises  should  be  partially
          damaged by fire or other  casualty,  and  rebuilding  or  repairs  can
          reasonable be completed  within ninety (90) working days from the date
          of written  notification by Lessee to Lessor of the destruction,  this
          Lease  shall  not  terminate,  and  Lessor  shall at its sole risk and
          expense  proceed  with  reasonable  diligence to rebuild or repair the
          building or other  improvements  to substantial  the same condition in
          which they existed prior to the damage.  If the Leased Premises are to
          be  rebuilt  or  repaired  and are  untenatable  in  whole  or in part
          following the damage,  and the damage or destruction was not caused or
          contribute  to by  act  or  negligence  of  the  Lessee,  its  agents,
          employees, invitees, or those for whom Lessee is responsible, the rent
          payable  under  this  Lease  during  the  period  for which the Leased
          Premises are  untenantable  shall be adjusted to such an extent as may
          be fair and reasonable  under the  circumstances.  In the event if the
          Lessor fails to complete the necessary  repairs or  rebuilding  within
          ninety  (90)  working  days  from  the  date  of  written   notice  of
          termination to Lessor whereupon all rights and obligations  under this
          Lease shall cease to exist.

                                       14
<PAGE>

     7.03 Waiver  of  Subrogation.  Anything  in  this  Lease  to  the  contrary
          notwithstanding, Lessor and Lessee hereby waive and release each other
          of and from any and all right of recovery,  claim,  action or cause of
          action, against each other, their agents, officers and employees,  for
          any loss or damage that may occur to the Leased Premises, improvements
          to the building of which the Leased  Premises are a part,  or personal
          property  within  the  building,  by reason  of fire or the  elements,
          regardless  of cause of  origin,  including  negligence  of  Lessor or
          Lessee agree immediately to give their respective  insurance companies
          which have issued  policies of  insurance  covering all risk of direct
          physical  loss,  written  notice  of the terms of the  mutual  waivers
          contained in this section, and to have the insurance policies property
          endorsed,  if necessary,  to prevent the invalidation of the insurance
          overages by reason of the mutual waivers.

     7.04 Hold  Harmless.  Lessor  shall not be liable  to  Lessee's  employees,
          agents,  invitees,  licensees or visitors, or to any other person, for
          any injury to any other person,  for any injury to person or damage to
          property on or about the Leased Premises caused by any act or omission
          Lessee,  its agents,  servants or  employees,  or of any other  person
          entering upon the Leased Premises under express or implied  invitation
          by  Lessee,  or  caused  by the  improvements  located  on the  Leased
          Premises  becoming  out of repair,  the  failure or  cessation  of any
          service provided by Lessor  (including  security service and devices),
          or caused by leakage  of gas,  oil,  water or steam or by  electricity
          emanating  from the Leased  Premises.  Lessee  agrees to indemnify and
          hold harmless Lessor of and from any loss,  attorney's fees,  expenses
          or claims arising out of any such damage or injury.

          Landlord,  its agents and  employees  shall not be liable,  and Tenant
          hereby waives its right,  if any, to claim for any damage or loss as a
          result of any failure of the Building to comply  strictly  with ADA as
          applies to the Building.  Tenant hereby agrees to save,  hold harmless
          and defend Landlord from any claims, suits or

                                       15
<PAGE>

          liabilities  made against the Landlord by any of Tenant's  existing or
          prospective  clients,  employees,  agents,  servants  or invitees as a
          result of or in  connection  with any  non-compliance  of the Building
          with the ADA.  In the event of any  failure  substantially  interferes
          with the operation of Tenant's business in the Premises, Tenant's sole
          remedy shall be for termination of this Lease,  provided that,  Tenant
          shall  have no  claim  for  termination  of this  Lease,  based on the
          non-compliance with the ADA by the Building unless Tenant (i) promptly
          gives  notice  of  any  such  non-compliance  and  allows  Landlord  a
          reasonable  time to correct any such  non-compliance,  and (ii) if any
          such compliance is not effected within a reasonable time, Tenant gives
          no less than ninety (90) days prior written notice of the  termination
          date,   Tenant  actually  vacates  the  Premises  on  or  before  such
          termination  date,  and Tenant is in compliance  with its  obligations
          under  this  Lease  on  the  date  the  notice  is  given  and  on the
          termination date.

          In case any claim,  demand,  action or  proceeding  is made or brought
          against  Landlord,  its agents or  employees,  as a result of Tenant's
          default or alleged  default of any  obligation  on Tenant's part to be
          performed  under the terms of this  Lease,  or  arising  from any act,
          omission or  negligence of Tenant,  its agents or employees,  or which
          gives rise to Tenant's obligation to indemnify Landlord,  Tenant shall
          be responsible for all costs and expenses, including by not limited to
          reasonable attorney's fees incurred in defending or prosecution of the
          same, as applicable.

     7.05 Tenant's Insurance. Tenant shall, at its own cost, at all times during
          the term of this Lease and any extensions hereof, procure and maintain
          special covered causes of loss insurance on Tenant's  Property and the
          contents of the Premises in an amount equal to full  replacement  cost
          thereof.   Tenant  shall  also  maintain  workers'   compensation  and
          employers'  liability  insurance in the minimum  statutory  amount and
          including  a  waiver  of  subrogation  in favor  of the  Landlord  and
          Landlord's  insurer,  and commercial general liability insurance on an
          occurrence  basis,  including  coverage  for bodily  injury,  property
          damage,  personal injury products and completed operations,  liability
          assumed  under and insured

                                       16
<PAGE>

          contract  host liquor legal  liability  and cross  liability  with the
          following  limits  of  liability;  One  Million  Dollars  ($1,000,000)
          combined  single  limit  for each  occurrence  of  bodily  injury  and
          property damage and personal injury. Two Million Dollars  ($2,000,000)
          aggregate  for bodily  injury and  property  damage for  products  and
          completed  operations.  Tenant shall further,  at its own cost, at all
          times during the term of this Lease and any extensions hereof, procure
          and maintain insurance for automobile liability including coverage for
          bodily  injury and property  damage for owned and hired autos with the
          following  limits and  liability;  One  Million  Dollars  ($1,000,000)
          combined  single  limit  for each  occurrence  of  bodily  injury  and
          property  damage.  Tenant shall also  maintain  business  interruption
          insurance in an amount  sufficient to reimburse  Tenant for direct and
          indirect loss of earnings  attributable to prevention of access to the
          Building or Premises as a result of such perils,  and such other forms
          and amounts of insurance  as Landlord or its  mortgage may  reasonably
          require from time to time. All such insurance shall be procured from a
          reasonable insurance company or companies authorized to do business in
          the State where the Premises are located, with general  policyholder's
          ratings of not less than "A-" and a financial  rating of not less than
          "VI" in the most current available bent's Insurance Reports, and shall
          be otherwise  reasonably  satisfactory to Landlord.  All such policies
          except  Workers   Compensation  shall  name  Landlord  and  Landlord's
          property  management agent as additional  insureds,  and shall provide
          that the same may not be cancelled  except upon thirty (30) days prior
          to the annual  renewal date thereof and upon request from time to time
          and such  certificate(s)  shall disclose that insurance names Landlord
          and Landlord's  designated  property management agent as an additional
          insured,  in addition to the other  requirements set forth herein. The
          time  limits of such  insurance  shall not,  under any  circumstances,
          limit the liability of Tenant hereunder.

          Should  Tenant fail to procure such  insurance  within the time period
          hereinbefore  specified,  Landlord  may, at its opinion,  but Landlord
          shall have no obligation to do so,  procure such insurance and pay the
          premiums  therefore  and Tenant  agrees to reimburse  Landlord for the
          cost thereof  plus  interest  thereon at the rate of

                                       17
<PAGE>

          eighteen  percent  (18%) per  annum  (but in no event in excess of the
          maximum rate permitted under law), as Additional rent on the first day
          of the calendar  month  following  the  rendition of the bill or bills
          therefore  and  Landlord  shall have the same  rights and  remedies in
          enforcing  the  payment  of such  additional  rent  as in the  case of
          Tenant's failure to pay the rent herein reserved.

     7.06 Landlord's  Insurance.  Landlord  agrees  to carry  and  maintain  the
          following  insurance  during  the term of his  Leas and any  extension
          hereof; general public liability insurance against claims for personal
          injury,  including  death and property damage in or about the Premises
          and  the  Building  or  the  Building  Complex   (excluding   Tenant's
          Property), such insurance to be in an amount not less than One Million
          Dollars ($1,000,000)  combined single limit. Landlord shall also carry
          fire and a casualty  insurance  covering the Building in an amount not
          less than eighty percent (80%) of the  replacement  cost of same. Such
          insurance may expressly  exclude  property paid for by tenants or paid
          for by Landlord for which tenants have reimbursed Landlord located in,
          or  constituting  a part of the  Building  or Building  complex.  Such
          insurance  hall afford  coverage for damages  resulting from (a) fire,
          (b) perils covered by extended coverage  insurance,  and (c) explosion
          of steam and  pressure  boilers and similar  apparatus  located in the
          Building  or the  Building  Complex.  Landlord  may carry  such  other
          additional  insurance  coverage,  as Landlord or  Landlord's  mortgage
          deems  appropriate  including  coverage  for loss of  rents.  All such
          insurance  shall be procured from a responsible  insurance  company or
          companies  authorized  to do business in the State where the  Premises
          are located, with general  policyholder's rating of not less than "A-"
          and a  financial  rating  of not less  than  "XI" in the most  current
          available Best's Insurance Reports.

                                       18
<PAGE>

                                    ARTICLE 8

                                  CONDEMNATION
                                  ------------

8.0  Condemnation

     8.01 Substantial  Taking.  If  all or a  substantial  part  of  the  Leased
          Premises  are  taken  for any  public  or  quasi-public  use under any
          governmental law, ordinance or regulation,  or by right or by right of
          eminent  domain or by purchase in lieu  thereof,  and the taking would
          prevent or materially  interfere  with the use of the Leased  Premises
          for the  purpose  for which it is then being  used,  this Lease  shall
          terminate and the rent shall be abated during the unexpired portion of
          this Lease  effective on the date physical  possession is taken by the
          condemning  authority.  Lessee shall have no claim to the condemnation
          award or proceeds in lieu thereof.

     8.02 Partial Taking. If a portion of the Leased Premises shall be taken for
          any public or quasi-public use under any governmental law,  ordinance,
          or  regulation,  or by right of eminent  domain or by purchase in lieu
          thereof,  and this Lease is not terminated as provided in Section 8.01
          above,  Lessor shall at Lessor's  sole risk and  expense,  restore and
          reconstruct the building and other improvements on the Leased Premises
          to the extent  necessary to make it  reasonable  tenantable.  The rent
          payable  under this Lease  during this  unexpired  portion of the term
          shall be  adjusted  to such an  extent  as may be fair and  reasonable
          under the circumstance. Lessee shall have no claim to the condemnation
          award or proceeds in lieu thereof.

                                    ARTICLE 9

                             ASSIGNMENT OR SUBLEASE
                             ----------------------

9.0  Assignment or Sublease

     9.01 Lessor  Assignment.  Lessor shall have the right to sell,  transfer or
          assign,  in whole or in part,  its rights and  obligations  under this
          Lease and in the building. So long as an assignee of Lessor is capable
          of performing and assumes  Lessor's rights and obligations  hereunder,
          any such sale,  transfer or assignment

                                       19
<PAGE>

          shall  operate to  release  Lessor  from any and all such  liabilities
          under this Lease arising  after the date of such sales,  assignment or
          transfer.

     9.02 Lessee Assignment.  Lessee shall not assign, in whole or in part, this
          Lease,  or allow it to be assigned,  in whole or in part, by operation
          of law or otherwise  (including  without  limitation  by transfer of a
          majority interest of stock, merger, of dissolution,  which transfer of
          majority  interest of stock,  merger or dissolution shall be deemed an
          assignment)  or  mortgage  or pledge  the same,  or sublet  the Leased
          Premises,  in whole or in part,  without the prior written  consent of
          Lessor (which consent shall not be unreasonably  withheld or delayed),
          and in no event shall any  assignment or sublease ever release  Lessee
          or any  guarantor  from any  obligation  or  liability  hereunder.  No
          assignee or sub lessee of the Leased  Premises or any portion  thereof
          may assign or sublet the Leased Premises or any portion thereof.

     9.03 Condition of Agreement.  If Lessee  desires to assign or sublet all or
          any part of the Leased  Premises,  it shall so notify  Lessor at least
          thirty  (30) days in  advance of the date on which  Lessee  desires to
          make such  assignment or sublease.  Lessee shall provide Lessor with a
          copy of the proposed  assignment or sublease and such  information  as
          Lessor might request  concerning the proposed sublessee or assignee to
          allow Lessor to make informed judgments as to the financial condition,
          reputation,  operations  and  general  desirability  of  the  proposed
          sublessee or assignee. Within fifteen (15) days after Lessor's receipt
          of  Lessee's   proposed   assignment  or  sublease  and  all  required
          information  concerning  the proposed  sublessee  or assigner,  Lessor
          shall have the  following  options:  (1)  cancel  this Lease as to the
          Leased Premises or portion thereof  proposed to be assigned or sublet;
          (2) consent to the propoed  assignment  or sublease,  and, if the rent
          due and payable by any assignee or sublessee  under an such  permitted
          assignment or sublease (or a combination f the rent payable under such
          assignment of the sublease  plus any bonus or any other  consideration
          or any payment  incident  thereto) exceeds the rent payable under this
          Lease for such  space,  Lessee  shall pay to Lessor  one half (1/2) of
          such excess rent and other

                                       20
<PAGE>

          excess consideration within ten (10) days following receipt thereof by
          Lessee; or (3) refuse, in its reasonable  judgment,  to consent to the
          proposed  assignment or sublease which refusal shall be deemed to have
          been  exercised  unless Lessor give Lessee  written  notice  providing
          otherwise.  Upon the occurrence of an event of default,  if all or any
          part of the Leased  Premises  are then  assigned or sublet,  Lessor in
          addition to any other  remedies  provided by this Lease or provided by
          law,  may,  at its  option,  collect  directly  from the  assignee  or
          sublessee all rents becoming due to Lessee by reason of the assignment
          or  sublease,  and  Lessor  shall  have  a  security  interest  in all
          properties on the Leased  Premises to secure payment of such sums. Any
          collection directly by Lessor from the assignee or sublessee shall not
          be  construed  to  constitute  a novation  or release of Lessee or any
          guarantor from the further  performance of fits  obligation  under the
          lease.

     9.04 Subordination.  Lessee  accepts this Lease subject and  subordinate to
          any  record  mortgage  or  deed o trust  lien  presently  existing  or
          hereafter  created  upon the  building or project and to all  existing
          recorded  restrictions,   covenants,  easements  and  agreements  with
          respect  to the  building  or  project.  Lessor is hereby  irrevocably
          vested with full power and authority to subordinate  Lessee's interest
          under this Lease to any first mortgage or deed of trust lien hereafter
          placed on the  Leased  Premises,  and  Lessee  agrees  upon  demand to
          execute additional instruments  subordinating this Lease as Lessor may
          require.  If the  interests  of  Lessor  under  this  Lease  shall  be
          transferred  by  reason  of  foreclosure  or  other   proceedings  for
          enforcement  of nay first mortgage or deed of trust lien on the Leased
          Premises.  Lessee shall be bound to the transferee (sometimes call the
          "Purchaser")  at  the  opinion  of the  Purchaser,  under  the  terms,
          covenants  and  conditions  of this Lease for the  balance of the term
          remaining,  including any extensions or renewals,  with the same force
          and effect as if the Purchaser  were Lessor under this Lease,  and, if
          requested by the Purchaser,  Lessee agrees to attorn to the Purchaser,
          including  the first  mortgagee  under any such  mortgage if it be the
          Pruchase,  as its  Lessor.  Lessee  shall  have  the  right  to  quiet
          enjoyment.

                                       21
<PAGE>

     9.05 Estoppel  Certificates.  Lessee agrees to furnish,  from time to time,
          within  ten (10)  days  after  receipt  of a  request  from  Lessor or
          Lessor's  mortgagee,  a  statement  certifying,  if  applicable,   the
          following: Lessee is in possession o f the Leased Premises; the Leased
          premises are  acceptable;  the Lease is in full force and effect,  the
          lease is unmodified;  Lessee claims no present charge,  lien, or claim
          of offset against rent; the rent is paid for the current month, but is
          not  prepaid for more than one (1) month and will not prepaid for more
          than one (1) month in advance;  there is no existing default by reason
          of some act or  omission  by Lessor or  Lessor's  mortgagee.  Lessee's
          failure to deliver  such  statement,  in  addition  to being a default
          under this Lease,  hall be deemed to establish  conclusively that this
          Lease is In full force and effect  except as declared by Lessor,  that
          Lessor is not in default of any of its  obligations  under this Lease,
          and the Lessor has not received more than one month rent in advance.

                                       22
<PAGE>

                                   ARTICLE 10

                                      LIENS
                                      -----

                              (Deleted in Original)

                                   ARTICLE 11

                              DEFAULT AND REMEDIES
                              --------------------

11.0   Default and Remedies

11.01  Default by Lessee.  The following shall be deemed to be events of default
       by Lessee  under this  Lease:  (1) Lessee  shall fail to pay when due any
       installment of rent of any other payment required pursuant to this Lease;
       (2) Lessee shall abandon any substantial portion of the Leased Premises ;
       (3) Lessee  shall fail to comply with any term,  provision or covenant of
       this Lease,  other than the payment of rent, and the failure is not cured
       within ten (10) days after written notice to Lessee, of if repairs cannot
       reasonably to be completed  within ten (10)days,  additional tine will be
       allowed provided Tenant diligently pursues a cure through completion; (4)
       Lessee shall file a petition or be adjudged  bankrupt or insolvent  under
       any applicable federal or state bankruptcy or insolvent law or admit that
       it  cannot  meet its  financial  obligations  as they  become  due;  or a
       receiver or trustee  shall be appointed for all or  substantially  all of
       the  assets  of  lessee'  or Lessee  shall  make a  transfer  in fraud of
       creditors or shall make an assignment  for the benefit of creditors;  (5)
       Lessee  shall do or  permit to be done any act  which  results  in a lien
       being filed  against the Leased  Premises or the building and /or project
       of which the Leased Premises are a part.

11.02  Remedies for Lessees Default. Upon the occurrence of any event of default
       set forth in this Lease.  Lessor  shall have the option to pursue any one
       or more of the  remedies  set forth  herein  (to the  extent  they are in
       accordance  with Colorado  law) without any notice or demand.  (1) Lessor
       may enter upon and take possession of the Leased Premises,  by

                                       23
<PAGE>

       picking or changing  locks if  necessary,  and lock out,  expel or remove
       Lessee and any other person who may be  occupying  all or any part of the
       Leased Premises without being liable for any claim for damages, and relet
       the  Leased  Premises  on behalf  of  Lessee  and all or any party of the
       Leased Premises without being liable for any claim for damages, and relet
       the Leased  Premises on behalf of Lessee and receive the rent directly by
       reason  of the  reletting.  Lessee  agrees to pay  Lessor  on demand  any
       deficiency  that may  arise by  reason  of any  reletting  of the  Leased
       Premises;  further, Lessee agrees to reimburse Lessor for any expenditure
       made by it in order to  relet  the  Leased  Premises  including,  but not
       limited to  remodeling  and repair  costs.  (2) Lessor may enter upon the
       Leased Premises, by picking or changing locks if necessary, without being
       liable for any claim for damages,  and do whatever Lessee is obligated to
       do under the terms of this Lease.  Lessee  agrees to reimburse  Lessor on
       demand for any expenses  which  Lessor may incur in effecting  compliance
       with Lessee's obligations under this Lease;  further,  Lessee agrees that
       Lessor  shall not be liable  for any  damages  resulting  to Lessee  from
       effecting compliance with Lessee's obligations under this Lease caused by
       the  negligence  of Lessor or otherwise.  (3) Lessor may  terminate  this
       Lease,  in which event  Lessee  shall  immediately  surrender  the LEASED
       PREMISES to Lessor and if Lessee fails to surrender the LEASED  PREMISES,
       Lessor may,  without  prejudice to any other remedy which it any have for
       possession of arrearages in rent,  enter upon and take  possession of the
       LEASED PREMISES, by picking or changing locks if necessary, and lock out,
       expel or remove  Lessee and any other person who; may be occupying all or
       any part of the LEASED  PREMISES  without  being liable for any claim for
       damages. Lessee agrees to pay on demand the amount of all loss and damage
       which Lessor may suffer by reason of the  termination of this Lease under
       this section,  whether through  inability to relet the upon  satisfactory
       terms or  otherwise.  Notwithstanding  any other remedy set forth in this
       Lease,  in the  event  Lessor  has made rent  concessions  of any type of
       character, or waived any base rent, and Lesee fails to take possession of
       the Leased  Premises on the  commencement or completion date or otherwise
       defaults at any time during the term of this Lease,  the rent concessions
       including any waived base rent,  shall be cancelled and the amount of the
       base rent or other rent concessions shall be due and payable  immediately
       as is no rent  concessions  or  waiver  of any base  rent  had ever  been
       granted.

                                       24
<PAGE>

       A rent  concession or waiver of the base rent shall nor relieve Lessee of
       any  obligation  to pay any other charge due and payable under this Lease
       including   without   limitation   any  sum  due  under   Section   2.02.
       Notwithstanding  anything  contained in this Lease to the contrary,  this
       Lease may be terminated  by Lessor only by mailing or delivering  written
       notice of such  termination  to Lessee,  and no other  actor  omission of
       Lessor shall be construed as a termination of this lease.

                                   ARTICLE 12
                                   RELOCATION
                               Deleted in original

                                   ARTICLE 13
                                   DEFINITIONS
                                   -----------

13.0   Definition

       13.01  Abandon.  "Abandon"  means the  vacating  of all or a  substantial
              portion of the LEASED PREMISES by Lessee, whether of not Lessee is
              in default of the rental payments due under this Lease.

       13.02  Act of God or Force Majeur.  An "act of God " or "force majeur" is
              defined for purposes of this Lease as strikes,  lockouts sitdowns,
              material  or labor  restrictions  by any  governmental  authority,
              unusual transportation delay, riots floods, washouts,  explosions,
              earthquakes,  fire,  storms,  weather  (including  wet  grounds or
              inclement weather which prevents construction), acts of the public
              enemy,  wars,  insurrections  and any other  cause not  reasonably
              within  the  control of Lessor  and which by the  exercise  of due
              diligence  Lessor is  unable  wholly  or in part , to  prevent  or
              overcome.

       13.03  Building or Project.  "Building  or Project" as used in this Lease
              means the  building  and /or  project  described  in Section  1.02
              including the LEASED PREMISES and the land upon which the building
              or project is situated.

                                       25
<PAGE>

       13.04  Commencement Date.  Completion Date shall be the date on which the
              improvements  erected and to be erected  upon the LEASED  PREMISES
              shall  have  been  completed  in  accordance  with the  plans  and
              specification described in Article 6.00. The completion date shall
              constitute  the  commencement  of the term of this  Lease  for all
              purposes, whether or not Lessee has actually taken possession.

       13.05  Completion Date.  "Completion date" shall be the date on which the
              improvements  erected and to be erected  upon the Leased  Premises
              shall  have  been  completed  in  accordance  with the  plans  and
              specification described in Article 6.00. The completion date shall
              constitute  the  commencement  of the term of this  Lease  for all
              purposes,  whether or not Lessee has  actually  taken  possession.
              Lessor shall use its best efforts to establish the completion date
              as the date set  forth in  Section  1.03.  In the  event  that the
              improvements  have not in fact  been  completed  as of that  date,
              Lessee shall notify  Lessor in writing of its  objections.  Lessor
              shall have a reasonable time after delivery of the notice in which
              to take  such  corrective  action  as may be  necessary  and shall
              notify  Lessee  in  writing  as soon as it deems  such  corrective
              action  has been  completed  and the  improvements  are  ready for
              occupancy.  Upon completion of construction.  Lessee shall deliver
              the Lessor a letter  accepting the Leased Premises as suitable for
              the  purposes  for which they are let, and the date of such letter
              shall  constitute  the  commencement  of the  term of this  Lease.
              Whether or not  Lessee has  executed  such  letter of  acceptance,
              taking possession of the Leased Premises by Lessee shall be deemed
              to establish conclusively that the improvements have been competed
              in accordance with the plans and  specification,  are suitable for
              the  purposes  for which the Leased  Premises are let and that the
              Leased Premises are in good and  satisfactory  condition as to the
              date possession was so taken by Lessee, except for latent defaults
              if any.

                                       26
<PAGE>

       13.06  Square Feet. "Square Feet" as used in this Lease includes the area
              contained  within the Leased Premises  together with a common area
              percentage  factor of the  Leased  Premises  proportionate  to the
              total building area.

                                   ARTICLE 14

                                  MISCELLANEOUS
                                  -------------

       14     Miscellaneous

       14.01  Waiver.   Failure  of  Lessor  to  declare  an  event  of  default
              immediately upon its occurrence,  or delay in taking any action in
              connection with an event of default, shall not constitute a waiver
              of the default, but the Lessor shall have the right to declare the
              default  at  any  item  and  take  such  action  as is  lawful  or
              authorized  under this one or more of the other remedies  provided
              elsewhere in this Lease or provided by law,  nor shall  pursuit of
              any remedy  constitute  forfeiture or waiver if any rent f damaged
              according  to  Lessor by  reason  of the  violation  of any of the
              terms, provisions or covenants of this Lease. Failure by Lessor to
              enforce  one or more of the  remedies  provided  upon an  event of
              default  shall not be deemed or  construed a waiver of the default
              or of  any  other  violation  or  breach  of  any  of  the  terms,
              provisions and covenants in this Lease.

       14.02  Act of God.  Lessor  shall not be required to perform any covenant
              or obligation in this Lease, or be liable in damages to Lessee, so
              long as the  performance  or  non-performance  of the  covenant of
              obligation is delayed, caused or prevented by an act of God, force
              majeure or by Lessee.

       14.03  Attorney's  Fees. In the event Lessee  defaults in the performance
              of any of the terms covenants.  Agreements or conditions contained
              in this Lease and Lessor  places in the hands of an  attorney  the
              enforcement  of all or any part of this Lease,  the  collection of
              any rent die or to become due, or  recovery of the  possession  of
              the  Leased  Premises.  Lessee  agrees  to pay  Lessor's  costs of
              collection,  including reasonable attorney's fees for the services
              of the attorney, whether suit is actually filed or not.

                                       27
<PAGE>

       14.04  Successors.  This  Lease  shall be  binding  upon and inure to the
              benefit  of the Lessor  and  Lessee  and their  respective  heirs,
              personal  representative,  successors  and  assigns.  It is hereby
              covenanted and agreed that should Lessor's  interest in the LEASED
              PREMISES  cease to exist for any  reason  during  the term of this
              Lease, then notwithstanding the happening of such event this Lease
              nevertheless shall remain unimpaired and in full force and effect,
              and  Lessee  hereunder  agrees to attorn to the then  owner of the
              LEASED PREMISES.

       14.05  Rent Tax.  If  applicable  in the  jurisdiction  where the  LEASED
              PREMISES  are  situated,  Lessee  shall pay and be liable  for all
              rental, sales and use taxes or other similar taxes, if any, levied
              or imposed by any city, state,  county or other  governmental body
              having  authority  such  payments  to be in  addition to all other
              payments  required to be paid to Lessor by Lessee  under the terms
              of this Lease.  Any such payment shall be paid  concurrently  with
              the payment of the rent.  Additional rent,  operating  expenses or
              other charges upon which the tax is based as set forth above.

       14.06  Captions.  The captions  appearing in this Lease are inserted only
              as a matter of convenience and in no way define,  limit,  construe
              or describe the scope of intent of any section.

       14.07  Notice.  All rent and other payments required to be made by Lessee
              shall be  payable  to Lessor at the  address  set forth in Section
              1.05.  All payments  required to be made by Lessor to Lessee shall
              be payable to the Lessee at the address  set forth in  Section1.05
              or at any other  address  within the  United  States as Lessee may
              specify  from  time to time  by  written  notice.  Any  notice  or
              document  required or  permitted  to be  delivered by the terms of
              this  Lease  shall  be  deemed  to be  delivered  (whether  or not
              actually  received)  when  deposited  in the United  States  Mail,
              postage  prepaid,   certified  mail,  return  receipt   requested,
              addressed  to the parties at the  respective  address set forth in
              Section 1.05

       14.08  Submission  of Lease.  Submission of Lease to Lessee for signature
              does not  constitute a reservation of space or an option to lease.
              This Lease is not  effective  until  execution  by and delivery to
              both Lessor and Lessee.

                                       28
<PAGE>

       14.09  Corporate   Authority.   If  Lessee   executes  this  Lease  as  a
              corporation, each of the persons executing this Lease on behalf of
              Lessee does hereby personally represent and warrant that Lessee is
              a  duly  authorized  and  existing  corporation,  that  Lessee  is
              qualified to do business in the state in which the LEASED PREMISES
              are located,  that the corporation has full right and authority to
              enter  into this Lease and that each  person  signing in behalf of
              the  corporation  is  authorized  to  do  so.  In  the  event  any
              representation  or warranty is false, all persons who execute this
              Lease shall be liable, individually, as Lessee.

       14.10  Severability.  In any  provision of this Lease or the  application
              thereof  to  any  person  or  circumstance  shall  be  invalid  or
              unenforceable  to any extent,  the remainder of this Lease and the
              application of such  provisions to other persons or  circumstances
              shall  not be  affected  thereby  and  shall  be  enforced  to the
              greatest extent permitted by law.

       14.11  Lessor's Liability. If Lessor shall be in default under this Lease
              and, if as a consequence  of such default,  Lessee shall recover a
              money  judgment  against  Lessor such judgment  shall be satisfied
              only  out of the  right,  title  and  interest  of  Lessor  in the
              building as the same may them be encumbered and neither Lessor not
              any  person or entity  comprising  Lessor  shall be liable for any
              deficiency.  In no  event  shall  Lessee  have  the  right to levy
              execution agents any property of Lessor other than its interest in
              the building as herein expressly provided.

       14.12  Indemnity.  Lessor agrees to indemnify  and hold  harmless  Lessee
              from and against any liability or claim,  whether  meritorious  or
              not,  arising  with  respect to any broker  whose claim arises by,
              through  or on  behalf  of  Lessee.  If the  Building  is,  at the
              execution hereof or at any time during the term hereof, subject to
              a mortgage or deed of trust,  the Lessee agrees to give the holder
              thereof  (the  "Note  Holder")  written  notice  of each and every
              alleged  default  within  ten (10)  days  after  the time for cure
              thereof  allotted to the Lessor under the forging  subparagraph or
              within such longer period as may be  reasonably  necessary if such
              default  cannot  be  cured  within  such  (10)  days.  The  Tenant
              understands  that the Note Holder shall have the right but not the
              obligation or duty to cure any such default by the Lessor.

                                       29
<PAGE>

       14.13  Hazardous  Waste.  Lessee  shall  not  bring or  allow  any of its
              agents. Employees, contractors or invitees to bring, onto or about
              the Leased Premises or the Building, any Hazardous Materials.  For
              purposes of this Lease, the term "Hazardous  Materials" shall mean
              any one or more of the  following:  (a) any  "hazardous  waste" as
              defined by the Resource  Conservation and Recovery Act of 1976 (42
              U.S.C.  Section 6901 et seq.),  as amended from time to time,  and
              regulations promulgated thereunder;  (b) any "hazardous substance,
              as   defined   by  the   Comprehensive   Environmental   Response.
              Compensation  and  Liability  Act 1980 (42 U.S.C.  Section 9601 et
              seq.)  ("CERCLA"),  as amended  from time to time and  regulations
              promulgated  thereunder'  (c) any other  substance,  in a quantity
              which,  by,  any  governmental  rules,  statutes  or  regulations,
              requires special handling or notification of any federal, state or
              local governmental entity in its collection, storage, treatment or
              disposal.

       Each party herein shall immediately  advise the other in writing,  in the
       event  such  party  becomes  aware  that there is located in or about the
       Leased  Premises or the  Building,  or that such party or there lessee or
       any other person  intends or may bring onto or about the Leased  Premises
       or the Building any Hazardous  Materials without being in full compliance
       of  all  governmental   rules  and  regulations   regarding   Hazardously
       Materials.  Each party herein shall save, hold harmless and indemnify the
       other form all claims,  suits, and liabilities  which may be brought as a
       result of the use, storage or transportation  of any Hazardous  Materials
       in our about the Leased  Premises  or the  Building  by such  party,  its
       agents. contractors or invitees.

                                   ARTICLE 15

                     AMMENDMENT AND LIMITATION OF WARRANTIES
                     ---------------------------------------

15.0   Entire  Agreement.  IT IS  EXTRESSLY  AGREED  BY  LESSEE,  AS A  MATERIAL
       CONSIDERATION  FOR THE EXECUTION OF THIS LEASE, THAT THIS LEASE, WITH THE
       SPECIFIC  REFERNCES  TO  WRITTEN  EXTRINSIC  DOCUMENTS.   is  THE  ENTIRE
       AGREEMENT  OF  THE  PARTIES;

                                       30
<PAGE>

       THAT  THERE  ARE,  AND  WERE,  NO  VERBAL  REPRESENTATIONS,   WARRANTIES,
       UNDERSTANDINGS,  STIPULATIONS.  AGREEMENTS OR PROMISES PERTAINING TO THIS
       LEASE OR TO THE EXPRESSLY MENTIONED WRITTEN EXTRINSIC  DOCUMENTS,  IS NOT
       INCORPERATED IN WRITING IN THIS LEASE.

15.02  Amendment.  THIS LEASE MAY NOT BE  ALTERED.  WAIVED  AMENDED OR  EXTEDNED
       EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY LESSOR AND LESSEE.

15.03  Limitation of Warranties.  LESSOR AND LESSEE  EXPRESSLY  AGREE THAT THERE
       ARE AND SHALL BE NO IMPLIED  WARRANTIES OF  MERCHTABILITY,  HABITABILITY,
       FITNSS FOR A PARTICULAR  PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS
       LEASE, AND THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THIS EXPRESSLY SET
       FORTH IN THIS LEASE.

                                   ARTICLE 16

                                OTHER PROVISIONS
                                ----------------

16.0   Other Provisions

       Lessor's Contribution Towards Lessee's improvements. If, during the first
       twelve (12) months of the term of the lease. Lessee recarpets and repairs
       the  office  portion of the Leased  premises  when upon the  satisfactory
       completion  of the work and receipt by Lessor of copies of  invoices  for
       this work that have been paid by Lessee.  The Lessor shall  reimburse the
       Lessee  for the cost of the  work to  recarpet  and  repaint  the  Leased
       Premises up to a maximum  contribution  of Lessor of Three  Thousand Five
       hundred and 00/100 Dollars (3,500.00). This reimbursement by Lessor shall
       be in the form of a credit  against  the next  months  Base Rent due from
       Lessee

                                       31
<PAGE>

       If within the first  twelve (12) months of the Lease,  Lessee  desires to
       make  alterations to the Premises in accordance with Section 6.02 of this
       Lease, and these  alterations  require the purchase and installation of a
       new HVAC  rooftop  unit and receipt by Lessor of copies of  invoices  for
       this work that have been paid by Lessee,  the Lessor shall  reimburse the
       Lessee an amount  equal to seventy  percent  (70%)of the cost of the HVAC
       rooftop unit up to a maximum contribution of Lessor of Four Thousand Five
       Hundred and 00/100 dollars (4,500,00). This reimbursement by Lessor shall
       be in the form of a credit  against the next  months'  Base Rent due from
       Lessee.

                                   ARTICLE 17
                                   ----------

                                   SIGNATURES
                                   ----------

17.0   Signatures

LESSOR:                                    LESSEE:
COMMERCE SQUARE ASSOCIATES L.L.C.          I.E.S. ELECTRONICS INDUSTRIES U.S.A.,
A Colorado Limited liability Company       INC., a Delaware corporation

By:                                        By:
   --------------------------------------     ----------------------------------
Name:                                      Name:  David Spitz
Title: Manager                             Title: President and CEO
Date: 09/27/97                             Date:  09/26/97

                                       32
<PAGE>

                        EXHIBIT A - Rules and Regulations

                              RULES AND REFULATIONS

1.     Lessor agrees to furnish Lessee two keys without charge.  Additional keys
       will be furnished at a nominal  charge.  Lessee shall not change locks or
       install  additional  locks in doors  without  prior  written  consent  of
       Lessor.  Lessee  shall  not make or cause to be made  duplicates  of keys
       procured from Lessor without prior approval of Lessor. All keys to Leased
       Premises shall be surrendered to Lessor upon termination of this Lease.

2.     Lessee  will  refer all  contractors,  contractor's  representatives  and
       installation  technician  rendering  any  services  on or to  the  LEASED
       PREMISES for Lessee to Lessor for Lessor's approval before performance of
       any  contractual   service.   Lessee's   contractors   and   installation
       technicians  shall comply with Lessor's rules and regulations  pertaining
       to  construction  and  installation.  This  provision  shall  comply with
       Lessor's   rules  and   regulations   pertaining  to   construction   and
       installation.  This  provision  shall apply to all work  performed  on or
       about  the  Leased  Premises  or  project,   including   installation  of
       telephones.  Telegraph equipment,  electrical devices and attachments and
       installations  of any nature affecting  floors,  walls,  woodwork,  trim,
       windows,  ceilings  and  equipment or any other  physical  portion of the
       Leased Premises or project

3.     Lessee  shall not at any time  occupy  any part of the OP or  project  as
       sleeping or lodging quarters.

4.     Lessee shall not place,  install or operate in the Leased  Premises or in
       any part of the  building  any  engine,  stove or  machinery,  or conduct
       mechanical  operations or cook thereon or therein,  or place or use in or
       about the Leased Premises or project any explosives,  gasoline, kerosene,
       oil, acids,  caustics,  or nay flammable  explosive or hazardous material
       without written consent.

5.     Lessor  will not be  responsible  for lost or stolen  personal  property,
       equipment,  money or jewelry  from the  Leased  Premises  or the  project
       regardless  of whether  such loss occurs when the area is locked  against
       entry or not.

                                       33
<PAGE>

6.     No dogs,  cats,  fowl or other  animals  shall be brought in or about the
       Leased Premises or project.

7.     Employees  of Lessor  shall not receive or carry  messages  for or to any
       Lessee to other person or contract  with or render free or paid  services
       to any Lessee or to any of Lessee's agents, employees or invitees.

8.     None of the Parking,  plaza recreation or lawn area,  entries,  passages,
       doors, elevators, hallways or stairways shall be blocked or obstructed or
       any rubbish,  litter, trash, or material of any nature placed, emptied or
       thrown into these areas or such area used by Lessee's  agents,  employees
       or invitees at any time for purposes  inconsistent with their designation
       by Lessor.

9.     The water  closets  and other  water  fixtures  shall not be used for any
       purpose other that those for which they were constructed,  and any damage
       resulting to them from noise or by the defacing or injury of any party of
       the  building  shall be borne by the  person  who shall  occasion  it. No
       person shall waste water by interfering with the faucets or otherwise.

10.    No person  shall  disturb  occupants  of the  building  by the use of any
       radios, record players, tape recorders,  musical instruments,  the making
       unseemly noises or any unreasonable use.

11.    Nothing  shall be thrown out of the  windows of the  building or down the
       stairways or other passages.

12.    Lessee and its  employees,  agents and invitees shall park their vehicles
       only on those  parking areas  designated by Lessor.  Lessee shall furnish
       Lessor with state automobile license numbers of Lessee's vehicles and its
       employees'  vehicles within five (5) days after taking  possession of the
       Leased  Premises and shall notify  Lessor of any changes  within five (5)
       days after such change  occurs.  Lessee  shall not leave any vehicle in a
       state of disrepair (including without limitation, flat tires, out of date
       inspection stickers or license plates) on the Leased Premises or project.
       If Lessee or its  employees,  agents or invitees  park their  vehicles in
       areas other than the  designated  parking areas or leave any vehicle in a
       state of disrepair,  Lessor after giving written notice to Lessee of such
       violation,  shall have the right to remove such  vehicles at the Lessee's
       expense.

                                       34
<PAGE>

13.    Parking  in a parking  garage  or area  shall be in  compliance  with all
       parking   rules  and   regulations   including   any   sticker  or  other
       identification system established by Lessor.  Failure to observe the rule
       and regulations shall terminate  Lessee's right to use the parking garage
       or area and  subject the vehicle in  violation  of the parking  rules and
       regulations  or  removal  and  impoundment.  No  termination  of  parking
       privileges  or  removal  of  impoundment  of a vehicle  shall  create any
       liability  on Lessor or be deemed to  interfere  with  Lessee's  right to
       possession  of its  Leased  Premises.  Vehicles  must be parked  entirely
       within  the stall  lines and all of its  directional  signs,  arrows  and
       posted speed limits must be observed.  Parking is prohibited in areas not
       striped for parking,  in aisles,  where "No Parking" signs are posted, on
       ramps, in cross hatched areas, and in other areas as may be designated by
       Lessor.  Parking  stickers or other forms of  identification  supplied by
       Lessor shall remain the property of Lessor and not the property of Lessee
       and are not  transferable.  Every person is required to park and lock his
       vehicle.  All  responsibly of damage to vehicles or persons is assumed by
       the owner of the vehicle or its driver

14.    Movement on or out of the building of  furniture  or office  supplies and
       equipment,  or  dispatch  or receipt by Lessee of any  merchandise  or or
       materials  which  requires  use of elevators  or  stairways,  or movement
       throughout  the building  entrances or lobby shall be restricted to hours
       designated by Lessor.  All such movement  shall be under  supervision  of
       Lessor and carried out in the manner agreed  between Lessee and Lessor by
       prearrangement  before  performance.  Such  prearrangements  will include
       determination by Lessor of time, method, prohibit any article,  equipment
       or any other item from being  brought into the building  Lessee  assumes,
       and shall  indemnify  Lessor  against,  all risks and claims of damage to
       persons and properties arising in connection with any said movement.

15.    Lessor shall not be liable for any damages from the stoppage of elevators
       for necessary or desirable  repairs or improvements or delays of any sort
       of duration in connection with the elevator service.

16.    Lessee shall not lay floor covering  within the Leased  Premises  without
       written  approval  of the  Lessor.  The use of  cement  or other  similar
       adhesive  materials  in  not  easily  removed  with  water  is  expressly
       prohibited.

                                       35
<PAGE>

17.    Lessee  agrees  to  cooperate  and  assist  Lessor in the  prevention  of
       canvassing, soliciting and peddling within the building or project.

18.    Lessor  serves the right to exclude from the building or project  between
       the hour of 6:00  p.m.  and 7:00  a.m.  on  weekdays  and at all hours on
       Saturday, Sunday and legal holidays, all persons who are not known to the
       building or project  security  personnel and who do not present a pass to
       the building  signed by the Lessee.  Each Lessee shall be responsible for
       all persons for whom he supplied a pass.

19.    It is Lessor's  desire to maintain in the building or project the highest
       standard  of  dignity  and  good  taste   consistent   with  comfort  and
       convenience  for Lessee's.  Any action or condition not meeting this high
       standard should be reported directly to Lessor.  Your cooperation will be
       mutually beneficial and sincerely appreciated.  Lessor reserves the right
       to make such other and further reasonable rules and regulations as in its
       judgment  may from time to time be  necessary,  for the safety,  care and
       cleanliness of the LEASED PREMISES and for the preservation of good order
       therein.

                                       36
<PAGE>

                 Exhibit B - Description of the Leased Premises

                       DESCRIPTION OF THE LEASED PREMISES

                          Suite 110 - 5,700 square feet

                             8250 Park Meadows Drive
                            Lone Tree, Colorado 80124

                             (Graphic image omitted)

                                       37
<PAGE>

                             Exhibit C - Work Letter

                                   WORK LETTER

       The  Exhibit  C is dated  September  24,  1997  between  COMMERCE  SQUARE
ASSOCIATES L.L.C., a Colorado limited liability company  ("Landlord") and I.E.S.
ELECTRONICS INDUSTRIES U.S.A. INC., a Delaware corporation ("Tenant").

       1.  This  Exhibit  C is  attached  to and  forms a part  of that  certain
commercial  lease  agreement  dated  September  24, 1997,  (the "Office  Lease")
pursuant to which  Landlord  has leased to Tenant  office  space in the building
located t 8250 Park Meadows Drive, Lone Tree, Colorado 80124 (the "Building").

       2. Tenant agrees to accept the Premises in its current "as is" condition.

       This Exhibit C is executed by Landlord and Tenant below:

LANDLORD:                                  TENANT:
COMMERCE SQUARE ASSOCIATES L.L.C.          I.E.S. ELECTRONICS INDUSTRIES U.S.A.,
A Colorado Limited liability Company       INC., a Delaware corporation

By:                                        By:
   --------------------------------------     ----------------------------------
Name:                                      Name:  David Spitz
Title: Manager                             Title: President and CEO
Date: 09/27/97                             Date:  09/26/97

                                       38
<PAGE>

                        Exhibit D - Agreement for Signage

                              AGREEMENT FOR SIGNAGE

       THIS  AGREEMENT  FOR  SIGNAGE is dated this 24th day of  September,  1997
between COMMERCE SQUARE ASSOICATES L.L.C. a Colorado limited liability  company,
(the  "Landlord")  and I.E.S.  ELECTRONIC  INDUSTIRES  U.S.A.,  INC., a Delaware
corporation (the "Tenant")

                               W I T N E S S E T H

       A. By Commercial  lease  agreement  dated  September  24, 1997,  Landlord
leased to Tenant  certain space located at 8250 park Meadows  Drive,  Lone Tree,
Colorado 80124.

       B. Landlord is willing to provide signage to Tenant pursuant to the terms
and conditions contained herein.

                  NOW, THEREFORE, the parties agree as follows:

       1. Building standard  identification  showing the Tenant's name and suite
number  will  be  displayed   on  the  entry  door.   This   building   standard
identification  will be provided by the Landlord at the Landlord's  expense upon
written request by the Tenant.  Any additional  suite and/or building signs will
be at Tenant's expense and will be consistent with existing building signage and
will  require  the  prior  written  approval  of  Landlord  which  will  not  be
unreasonably withheld.

       2.  Default.  Tenant shall be in default  under this  Agreement  upon the
occurrence of any of the following events:

       2.1  Tenant  is in  default  for any  reason  pursuant  to the  terms and
       conditions of the Commercial Lease Agreement

                                       39
<PAGE>

       3. Remedies.  Upon the occurrence of ay event of default,  Landlord shall
be entitled to declare this  Agreement  terminated,  to terminate  the rights of
Tenant to utilize the  signage,  and seek  whatever  damages  Landlord  may deem
reasonable  and proper  including,  without  limitation,  its fees and  expenses
(including attorney's fees) incurred in pursing such action.

       IN WITNESS WHEREOF,  the Landlord and Tenant have executed this statement
on the date above written.

LANDLORD:                                  TENANT:
COMMERCE SQUARE ASSOCIATES L.L.C.          I.E.S. ELECTRONICS INDUSTRIES U.S.A.,
A Colorado Limited liability Company       INC., a Delaware corporation

By:                                        By:
   --------------------------------------     ----------------------------------
Name:                                      Name:  David Spitz
Title: Manager                             Title: President and CEO
Date: 09/27/97                             Date:  09/26/97

                                       40
<PAGE>

                        Exhibit E - Agreement for Parking

                              AGREEMENT FOR PARKING

       This  AGREEMTN  FOR  PARKING  is dated this 24th day of  September,  1997
between COMMERCE SQUARE ASSOCIATES L.L.C., a Colorado limited liability company,
("Landlord')  and  I.E.S.   ELECTRONICS   INDUSTRIES  U.S.A.  INC.,  a  Delaware
corporation ("Tenant").

                               W I T N E S S E T H

       A. By commercial  lease agreement  dated  September 24th 1997,  Landlord,
leased to Tenant  certain  office  building  space  located at 8250 Park Meadows
Drive, Lone Tree, Colorado 80124 (the "Building").

       B.  Appurtenant  to the Building are  uncovered  parking  spaces.  Tenant
desires to lease from Landlord parking spaces in said areas.

       C. Landlord is willing to let certain  parking spaces to Tenant  pursuant
to the terms and conditions contained herein.

              NOW, THEREFORE, the parties agree as follows:

              1. Lease of Parking Spaces. Landlord herby leases to Tenant eleven
       (11) parking  spaces  located in the parking area  adjacent to and around
       the building.  Said Lease shall be for a period  concurrent with the term
       of the Lease.

              2.  Nonexclusive.  This Lease  creates a license  to  utilize  the
       parking spaces  above-referenced.  It is not a Lease of specific  parking
       spaces and no parking spaces shall be reserved for the use of the Tenant.

              3. Operation of Parking  Spaces.  Tenant agrees to comply with all
       rules and regulations imposed by Landlord for the operation,  utilization
       and  maintenance  of the parking  spaces.  Tenant shall not undertake any
       activity,   which  will  increase   Landlord's   insurance  or  create  a
       disturbance  or waste to the  parking  spaces.  Landlord  shall  have the
       right, at any time and from time to time by written notice to Tenant,  to
       designate  specific

                                       41
<PAGE>

       parking spaces for use by Tenant, its agents,  employees and invitees, in
       which case Tenant shall use, and shall require its agents,  employees and
       invites,  in which case Tenant shall use,  and shall  require its agents,
       employees and invites to use only such spaces.

              4. Default.  Tenant shall be in default under this  Agreement upon
       the occurrence of any of the following events:

              4.1 Failure to pay the rental described herein when due

              4.2 Tenant in its default for any reason pursuant to the terms and
       conditions of the Office Lease.

              5. Remedies. Upon the occurrence of an event of default,  Landlord
       shall be entitled to declare this Agreement terminated,  to terminate the
       rights of Tenant to utilize the parking spaces, and seek whatever damages
       Landlord may deem reasonable and proper  including,  without  limitation,
       its fees and expenses  (including  attorney's  fees) incurred in pursuing
       such action.

              IN WITNESS  WHEREOF,  the Landlord and Tenant have  executed  this
       statement on the date above written.

LANDLORD:                                  TENANT:
COMMERCE SQUARE ASSOCIATES L.L.C.          I.E.S. ELECTRONICS INDUSTRIES U.S.A.,
A Colorado Limited liability Company       INC., a Delaware corporation

By:                                        By:
   --------------------------------------     ----------------------------------
Name:                                      Name:  David Spitz
Title: Manager                             Title: President and CEO
Date: 09/27/97                             Date:  09/26/97

                                       42
<PAGE>

                         Exhibit F - Commencement Letter

               COMMENCEMENT OF LEASE TERM AND ESTOPPEL CERTIFICATE

       THIS COMMENCEMENT OF LEASE TERM AND ESTOPPEL  CERTIFICATE dated this 24th
day of September,  1997, by and between  COMMERCE SQUARE  ASSOCIATES  L.L.C.,  a
Colorado limited liability company,  ("Landlord"),  whose address is 455 Sherman
Street,  suttee 140, Denver,  Colorado 80203 and I.E.S.  ELECTRONICS  INDUSTIRES
U.S.A.  INC,. a Delaware  corporation  (the "Tenant") whose address is 8250 Park
Meadows Drive, Suite 110, Lone Tree, Colorado 80124.

                               W I T N E S S E T H

       WHEREAS,  the  landlord  and  Tenant,  entered  into a  commercial  lease
agreement  dated  September  24,  1997,  (the  Lease")  which lease  demised the
Premises  located  at 8250  Park  Meadows  Drive,  Lone  Tree,  Colorado  80124,
described in Exhibit B to the Lease.

       WHEREAS,  the  parties  desire to  reaffirm  and/or  amend and certify to
certain  provisions  of the Lease;  and  WHEREAS,  the  parties  desire that the
matters set forth herein be conclusive and binding on the parties

       NOW, THEREFORE,  for a good and valuable  consideration,  the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

       1. The Lease  Commencement  Date is deemed  and  agreed to be  October 1,
1997,  and the Lease  Termination  Date is agreed and deemed to be September 30,
2000, unless sooner terminated, as provided therein.

       2.  Tenant's  first  installment  of Base  Rent in the  amount  of  Three
Thousand Eight Hundred and 00/100 Dollars  ($3,800.00) for the month of October,
1997 is due upon execution of the Lease.

                                       43
<PAGE>

       3.  Tenant's  first  installment  of Tenant's Pro Rate Share of Operating
Expenses  in the amount of One  Thousand  Four  Hundred  One and 25/100  Dollars
($1,401.25) for the month of October, 1997 is due upon execution of the Lease.

       4. Tenant  Security  Deposit of Three  Thousand  Eight Hundred and 00/100
Dollars ($3.800.00) is due upon execution of the Lease.

       5.  By  execution  hereof,   Tenant  acknowledges  and  agrees  that  all
improvements or work required of Landlord has been satisfactorily performed.

       6. Except as may be amended herein, all terms and conditions of the lease
shall  continue  in full  force  and  effect  and  are  hereby  republished  and
reaffirmed in their entirety.

       7. This Certificates  shall be binding upon and may be relied upon by the
parties  hereto  and their  respective  legal  representatives,  successors  and
assigns.

       IN WITNESS WHEREOF,  the Landlord and Tenant have executed this statement
on the date above written

LANDLORD:                                  TENANT:
COMMERCE SQUARE ASSOCIATES L.L.C.          I.E.S. ELECTRONICS INDUSTRIES U.S.A.,
A Colorado Limited liability Company       INC., a Delaware corporation

By:                                        By:
   --------------------------------------     ----------------------------------
Name:                                      Name:  David Spitz
Title: Manager                             Title: President and CEO
Date: 09/27/97                             Date:  09/26/97

                                       44
<PAGE>

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