Document:

LICENSE AGREEMENT
                              BEVMAX OFFICE CENTERS
                 1560 Broadway, 10th Floor. New York, N.Y. 10036

<TABLE>
<CAPTION>
<S>                           <C>                                            <C>
License #              0145                                          Date      1/4/2006
                   ------------    ------------------------------------------------------------------------
Licensee:                              On2 Technologies, Inc.
                                   ------------------------------------------------------------------------
(please indicate above if corporation, partnership, etc.)
                                   ------------------------------------------------------------------------
(1)Principal's/(2)Contact Person's
Name:                                  Tim Reusing
                                   ------------------------------------------------------------------------
Persons Authorized to Use Office:      Tim Reusing, Doug McIntyre, Matt Frost, Margaret Diggory,
                                       Daniel Scherer & Anthony Ciaravalo
                                   ------------------------------------------------------------------------
Federal ID #                           841280679
                                   ------------------------------------------------------------------------
BOC Telephone #                        (646) 292-3533
                                   ------------------------------------------------------------------------
Type of Business:                      Software Development
                                   ------------------------------------------------------------------------
Licensed Office(s):                    1031, 1032, 1033, 1034 & 1044
                                   ------------------------------------------------------------------------
Fixed Fee/Additional Fees:             $8,950.00 Fixed Fee per month / $670.00 Additional Fee per month
                                       for 6 phones, 5 T-1 lines & 1 fax
                                   ------------------------------------------------------------------------
Commencement Fee:                      $0.00
                                   ------------------------------------------------------------------------
Service Retainer:                      $17,900.00 (already received)
                                   ------------------------------------------------------------------------
Broker:
                                   ------------------------------------------------------------------------
License Term:                          6 months
                                   ------------------------------------------------------------------------
             A) Commencement Date:     March 1, 2006
                                   ------------------------------------------------------------------------
             B) Termination Date:      August 31, 2006
                                   ------------------------------------------------------------------------
Person's Authorized to Sign for Licensee:     Tim Reusing
                                   ------------------------------------------------------------------------
Licensor:                              Bevmax Office Centers 1560, LLC d/b/a Bevmax Office Centers
                                   ------------------------------------------------------------------------
</TABLE>

This License Agreement made as of 1/4/06 between Bevmax Office Centers 1560, LLC
d/b/a Bevmax Office Centers (hereinafter "Licensor") and On2 Technologies, Inc.
(hereinafter "Licensee") incorporates page 2 and 3 of this License Agreement
(attached hereto) and we both agree to comply with all terms and conditions as
delineated on this page and pages 2 and 3 of this License Agreement.

<TABLE>
<CAPTION>
<S>                                                  <C>
Licensee:  On2 Technologies, Inc.                    Licensor:   Bevmax Office Centers 1560, LLC
                                                                 d/b/a Bevmax Office Centers
           ----------------------------------                    ---------------------------------
By:        /s/ Tim Reusing                                       /s/ Fredric Feld
           ----------------------------------                    ---------------------------------
           Authorized Signature / Date                           Authorized Signature / Date
           Tim Reusing                                           Fredric Feld
           ----------------------------------                    ---------------------------------
           Print Name                                            Print Name
</TABLE>

<PAGE>

                           License Agreement (Page 2)

1.    Standard Services: In consideration of the Licensee's payment of the Fixed
      Fee and the Commencement Fee (both listed on front page of this License
      Agreement) as well as other valuable consideration, 1)Licensor allows
      Licensee to use the office(s) listed on the front page of this License
      Agreement (hereinafter "Agreement") 24 hours a day, 7 days a week for the
      License Term (listed on front page) subject to the Rules and Regulations,
      a copy of which Licensee acknowledges was received with this Agreement,
      (which Rules and Regulations may be reasonably changed by Licensor from
      time to time upon written notice to Licensee) and subject to Licensor's
      right upon 3 days written notice to Licensee to relocate Licensee to a
      different office within the Center of at least equal size and quality,
      2)Licensor provides Licensee with Receptionist during normal business
      hours, 3)unlimited use of a conference room (as available and upon prior
      reservation) including overtime and weekends, 4)delivery of mail, 5)use of
      common areas including pantry, 6)Licensor also provides heating, HVAC,
      electricity (subject to Building rules / limitations), 7)office cleaning,
      and 8)maintenance of Licensor equipment and offices due to ordinary wear
      and tear 9)Licensor provides Licensee access to a shower during regular
      business hours, subject to limited availability when being used by Bevmax
      employees other licensees or invitees and 10)Licensor provides Licensee
      access to the exercise room during regular business hours, subject to
      limited availability when being used by Bevmax employees other licensees
      or invitees, provided that (i) Licensee and each of Licensee's employees
      who intends to use the exercise room executes and waiver of liability in
      form reasonably acceptable to Licensor with respect to the use of the
      exercise room and (ii)Licensee agrees to indemnify Licensor for any claim
      brought by any such employee of Licensee in connection with the use of the
      exercise room and shower.

2.    a). Fees: The Fixed Fee is payable in advance on the first day of each
      month during the License Term. (If the License Term begins on a day other
      than the 1st day of a month, the second payment of the Fixed Fee will be
      prorated). The Commencement Fee and Service Retainer (defined in paragraph
      3) are to be paid upon the signing of this Agreement. Additional Fees
      (including all applicable taxes) are due on the 1st day of the month, "in
      the month following" the month that the additional services (defined in
      paragraph 4) are rendered.

      b). In the event that Licensee does not pay either the Fixed Fee and/or
      the Additional Fees when due (hereinafter "Monetary Default") and such
      Monetary Default is not cured within 3 business days after written notice
      of such Monetary Default is hand delivered to Licensee, then Licensor may
      terminate Licensee's internet access, security cards and remove
      telephones.

3.    Service Retainer: The Service Retainer is to be held by Licensor as
      security for payment of all fees due and payable under this Agreement as
      well as all possible damages to Licensor's equipment and furniture, office
      space caused by Licensee or its invitees, ordinary wear and tear excepted
      all and any obligations of Licensee under this Agreement. The Service
      Retainer will not be kept in a separate account and no interest will be
      paid to Licensee. The Service Retainer may be applied upon written notice
      to Licensee to all past due fees, monies and/or damages as they occur, at
      "Licensor's" reasonable discretion. This Service Retainer will be returned
      (less any monies due under this Agreement) 30 days after the expiration of
      the License Term or 30 days after termination as defined in paragraph 6.
      In the event the Service Retainer is applied to past due fees, then the
      Licensee is obligated to replenish the Service Retainer to the original
      amount set on page 1 of this Agreement promptly upon written request.

4.    Additional Services: Additional Services are services above and beyond
      Standard Services as defined in paragraph 1 which are available at both
      Licensee's and Licensor's option pursuant to our rate schedule. The
      Additional Fees for these Additional Services shall be paid by Licensee
      pursuant to paragraph 2.

5.    a). Liability: Licensor and Bevmax Office Centers 1560, LLC d/b/a Bevmax
      Office Centers are not liable for any loss or damages as a direct or
      indirect result of Licensor's misfeasance or nonfeasance in connection
      with providing any service including but not limited to telephone usage,
      internet usage, electricity, and all utilities and building services as
      well as all Additional Services. "Licensor is not liable for
      damages/claims resulting from fire, water damage, accidents and/or "force
      majeure". Licensees' sole remedy for interruption or failure of any
      service, utility or actual access to the office center or their assigned
      office is the suspension or adjustment of the Fixed Fee or Additional Fees
      as is applicable Licensee may effect such suspension or adjustment of the
      Fixed Fee or Additional Fees upon prior written notice to Licensor .

      b). Condition Precedent: As a specific condition precedent to the Licensor
      entering into this License Agreement, The Licensee unequivocally and
      absolutely agrees not to make any claim for damages including but not
      limited to loss of profits or gross income which are directly or
      indirectly a result of Licensor's action or inaction, misfeasance or
      nonfeasance unless said damages are a direct result of Licensor's gross
      negligence and then such damages are to be limited to suspension or
      adjustment of Fees as outlined in paragraph 5(a).

<PAGE>

                           License Agreement (Page 3)

6.    a). Licensor Termination: Licensor may terminate this Agreement before the
      end of the License Term in the event that any of the terms, conditions,
      paragraphs of this Agreement that Licensee does not perform or comply
      with, or violates including but not limited to payment of any fees,
      monies, and/or violations o f the Rules and Regulations (hereinafter
      "Default"), and the Default is not cured within 3 business days after
      written notice of such Default is hand delivered to Licensee.
      Notwithstanding the foregoing, Licensor may terminate this Agreement
      immediately after Licensee has committed 3 separate Defaults of this
      Agreement and Licensor has previously provided Licensee with prior written
      notice of such default. Licensee agrees not to terminate this Agreement
      willfully or capriciously and to enforce the Rules and Regulations
      consistently with respect to all licensees.

      b).Licensee Termination: Licensee can terminate this Agreement in either
      of the following events, 1)there is no access to the office center for 6
      concurrent business days, 2)there is no telecommunication service, phone
      or internet service for 4 concurrent business days, upon written notice of
      termination of Agreement indicating lack of access or telecommunication
      service and Licensor's not curing same within 2 business days or 3)
      Licensee can demonstrate that Licensor has consistently failed to provide
      internet service at commercially reasonable levels.

7.    Insurance: Licensee is to provide Licensor with a certificate of insurance
      covering all of Licensee's personal property as well as liability
      insurance covering its own employees and third parties naming Bevmax
      Office Centers/Licensor as additional insured. Licensee has the obligation
      to indemnify Licensor for Licensee's breaches, negligence and all and any
      actions that cause damage to Licensee, Licensor's employees, center or
      property and/or Licensee's invitees Licensor is not responsible for loss,
      damage or theft of any of Licensee, or its employees, invitees, guests,
      vendors, and/or visitor's personal property unless the loss theft or
      damage is a direct result of Licensor's gross negligence.

8.    Damages: Licensee is to take good commercially reasonable care of all of
      the furnishings, equipment, personal property of the Office Center as well
      as the installation of the Office Center (e.g. carpet, light fixtures,
      wallcoverings, pictures, sheetrock walls). All damages resulting from
      Licensee or its invitees, guests, vendors, and visitors actions will be
      added to the Additional Fees invoice.

9.    Internet Service: Licensee is limited to 200 MB per paid connection per
      day. Licensor reserves the right to terminate internet service to the
      Licensee upon 2 business days written notice when, a) Licensee is either
      using a disproportionate amount of bandwidth, or b) Other licensee's use
      of internet is negatively affected in any way, or c) there is a material
      negative impact on the Bevmax Office Centers network. In the event
      Licensor terminates the Licensee's internet service, Licensee has the
      right to terminate this License Agreement upon 3 days written notice. d)
      Licensee must have acceptable and functioning "anti-virus" software before
      they will be connected to the internet.

10.   Miscellaneous:

      a).   Licensee may not assign this agreement without Licensor's prior
            written consent and may not grant use of its office to a 3rd party.
      b).   Upon termination of this Agreement, Licensee agrees NOT to file a
            change of address form with the US Post Office. Licensor will file
            change of address form for Licensee based on Licensee's written
            notice of new address. Licensor agrees to forward all mail to
            Licensee (at Licensee's expense) for a period of 30 days. Provided
            Licensee is not in default, Licensor agrees to forward all mail and
            will keep their telephone number and voicemail active for 1 month
            after termination of License Agreement.
      c).   All notices are to be in writing, Certified or Registered Mail or
            any other delivery service providing proof of delivery to either
            Licensor or Licensee at their addresses listed on page 1 of this
            agreement.
      d).   Licensee agrees to abide by, comply with and not violate the Rules
            and Regulations of Bevmax Office Centers, a copy of which was
            delivered to Licensee before the signing of this License Agreement.
      e).   Licensor & Licensee agree to waive their respective rights to a Jury
            Trial.
      f).   Telephone usage shall be billed at the rates as listed on our rate
            schedule. These rates are subject to change based upon 30 days prior
            written notice.
      g).   In the event that Licensee remains in the office after the
            Termination Date or earlier Termination of License based on
            paragraph 6 then in addition to Licensor availing itself of all
            legal remedies available under applicable law, Licensee will be
            charged 200% of the Fixed Fee listed on the 1st page of the License
            Agreement on a prorata basis.
      h).   If the last day of the License Term or any renewal thereof falls on
            a Saturday, Sunday or holiday, this License shall terminate on the
            business day immediately following. The last invoices shall be
            pro-rated accordingly.
      i).   This Agreement is specifically subject to all the terms, conditions,
            and paragraphs of Licensor's Lease of the 10th floor of 1560
            Broadway dated February 13, 2003.
      j).   It is understood that this License is not a lease, that no leasehold
            or tenancy is intended to be created hereby, and that this License
            shall not be construed so as to create the relationship of landlord
            and tenant.EXHIBIT 10.16
                            RESTATED LEASE AGREEMENT

      LEASE AGREEMENT, made this 23rd day of March, 2005 between SITTERLY
ASSOCIATES II, LLC, a New York limited liability company with offices c/o Abele
Builders, Inc., 14 Corporate Drive, Clifton Park, New York 12065 (the
"Landlord"), and ON2 TECHNOLOGIES, INC., a Delaware corporation with an office
21 Corporate Drive, Suite 103, Clifton Park, New York 12065 (the "Tenant").

      Recitals. This Lease Agreement (also sometimes called "this Lease") is
made with reference to the following facts:

A.     Landlord and Tenant entered into two (2) Lease Agreements for portions
of Landlord's 2-story building containing +/-51,200 square feeT located on a
certain parcel of land at 21 Corporate Drive, Halfmoon, New York (the
"Building") (such parcel of land and the Building collectively, the "Property",
as follows:

         1. Lease Agreement dated September 26, 2002 for +/-5,540 squarE feet
inclusive of Tenant's proportionate share of common area (the "Initial Leased
Property"); and

         2. Lease Agreement dated December 1, 2003 for +/-200 squarE feet
inclusive of Tenant's proportionate share of common area (the "2003 Leased
Property");

B.     Landlord and Tenant desire to add +/-1,506 square feet of thE Building
inclusive of Tenant's proportionate share of common area to the Initial Leased
Property (such additional area, the "Expansion Area") and to restate the Lease
Agreement to cover the Initial Leased Property and the Expansion Area
(collectively, the "Leased Property" or the "Leased Premises") upon the terms
and conditions set forth herein. The Initial Leased Property is shown on Exhibit
A, and the Expansion Area is shown on Exhibit B.

      NOW, THEREFORE, the Landlord and Tenant agree as follows:

1.     Leasing. The Landlord hereby leases to Tenant, for a term of three (3)
years and ten (10) months beginning on April 1, 2005 (the "Lease Commencement
Date"), the Leased Property, containing +/-7,046 square feeT inclusive of
Tenant's proportionate share of common area.

      2. Construction by Landlord and Tenant and Contingencies.

         (A) Construction by Landlord. The Landlord shall, at its own cost and
expense, provide opening(s) between the Initial Leased Property and the
Expansion Area, install a sink with six (6') feet of base cabinets in the
Expansion Area, and create a tenant separation wall in the location shown on
Exhibit C.

         (B) Construction by Tenant and Tenant's Access During Construction. The
Tenant, its agents, employees and contractors at Tenant's own cost and expense
may enter upon the Expansion Area at all reasonable times after the date hereof
for the purpose of installing improvements, fixtures and other equipment, upon
<PAGE>

the express condition that prior to such entry, Tenant or Tenant's contractors
obtain and thereafter maintain comprehensive general liability insurance
including Landlord as an additional insured; provided, however, that such entry
shall not interfere with Landlord's construction under 2(A) hereof.

         (C) Intentionally Deleted.

         (D) Intentionally Deleted.

         (E) Contingencies. The obligations of Landlord and Tenant under this
Lease are contingent upon the completion, or waiver, of Landlord obtaining to
its sole satisfaction and discretion (a) all necessary governmental approvals
for leasing of space in the Building to Tenant and (b) the approval by
Landlord's mortgagee of this Lease and a Subordination, Non-Disturbance and
Attornment Agreement reasonably agreeable to the Tenant. Each party will
cooperate with the other in pursuit of the satisfaction of these conditions.

3.    Lease Term.

      (A) Intentionally Deleted.

      (B) Lease Commencement Date. The commencement date for the lease term (the
"Lease Commencement Date") shall be April 1, 2005, subject to the satisfaction
of the contingencies in Paragraph 2(E).

      (C) Intentionally Deleted.

      (D) Intentionally Deleted.

      (E) Intentionally Deleted.

      (F) Intentionally Deleted.

      (G) Duration of Term. The lease term shall expire three (3) years and ten
(10) months from the Lease Commencement Date, on January 31, 2009 (the "Initial
Term" or "Term").

4.    Rentals.

      (A) Definitions. The term "Rent" or "Rents" shall mean all Base Rents (see
subparagraph 4(B)), and all items denominated as Additional Rent (hereinafter
defined) pursuant to various provisions of this Lease.

      (B) Base Rent. Tenant shall pay to Landlord the annual Base Rent of $13.00
per square foot for the Initial Leased Property (annual Base Rent of $72,020.00)
and annual Base Rent of $14.00 per square foot for the Expansion Area (annual
Base Rent of $21,084.00) during the period from the Lease Commencement Date
through January 31, 2006, which is agreed to be total annual Base Rent of
$93,104.00, in equal monthly installments of $7,758.67 on the first day of each
<PAGE>

and every month from April, 2005 through January, 2006. On the first day of
February, 2006 and each month thereafter during the remainder of the term,
Tenant shall pay to Landlord the annual Base Rent of $15.00 per square foot,
which is agreed to be annual Base Rent of $105,690.00 in each monthly
installments of $8,807.50.

      Base Rent shall be computed on the basis of the actual square feet
encompassed within the Leased Premises (+/-5,986 sq. ft.) plus the square feeT
representing the proportionate share of common area within the Building
(+/-1,060 sq. ft.). Each payment of Base Rent is net to Landlord and to thaT end
all costs, expenses and obligations of every kind and nature whatsoever relating
to the Leased Property which may arise during the term hereof (and extended term
if any) shall be paid by Tenant, unless otherwise specifically set forth herein.

      (C) Place and Manner of Payment. All payments of Rent shall be made by the
Tenant to the Landlord without notice or demand. All Rents shall be payable at
the Landlord's address as specified above, or at such other place as Landlord
may from time to time designate in writing. All Rent shall be payable by
Tenant's check or, if requested by Landlord, by certified or bank cashier's
check or by wire transfer. Payment of Rent shall commence on the Lease
Commencement Date except for the first three (3) months of the term as herein
specifically provided in Subparagraph 4 (B). Rents for any partial month at the
beginning or end of the lease term shall be prorated, on a daily basis. The
extension of the time for payment of any installment of Rent, or the acceptance
by the Landlord of any payment of any installment of Rent, or the acceptance by
the Landlord of any payment other than of the kind or within the time herein
specified, shall not be deemed a waiver of Landlord's right to insist upon
having all other payments of Rent made in the manner and at the time herein
specified. All Rent shall be paid to the Landlord without any abatement,
deduction or set-off of any kind or nature whatever, except as herein
specifically provided otherwise.

      (D) Late Charge. Tenant acknowledges that Landlord intends to utilize the
Rent payments to pay Landlord's mortgage lender and fund Landlord's tax and
insurance escrow and that any delay by Tenant in making its Rent payments may
cause the Landlord to incur late payment penalties and additional charges under
the terms of its mortgage loan. Accordingly, Tenant shall pay Landlord a late
charge of five (5%) percent of any payment of Base Rent or Additional Rent not
received by Landlord within five (5) days of its due date.

5.    Operating Expenses and Other Charges.

      (A) Intentionally deleted.

      (B) Intentionally deleted.

      (C) Intentionally deleted.

      (D) Intentionally deleted.
<PAGE>

6. Tenant's Operating Expenses. At such time, if any, as Landlord determines to
separately meter utilities, Tenant shall arrange for all utility meters for the
Leased Premises to be placed in its name for its account. Prior thereto, Tenant
shall pay its pro-rata share of electrical and other utility usage, based upon
the square footage of the Leased Premises divided by the square footage of the
Building, provided that all other tenants in the Building operate similar
businesses in terms of utility usage. Otherwise Landlord and Tenant shall
determine a mutually acceptable usage share for Tenant to pay. The Tenant shall
be solely and separately responsible for payment of all separately metered
electrical, gas and heating oil charges, and Tenant shall also be responsible
for janitorial services for the Leased Premises. Normal office trash only shall
be placed in the dumpster provided by Landlord. Large packaging and similar
materials shall be Tenant's obligation to remove and shall not be placed in the
dumpster. Tenant shall maintain the thermostat setting in the Leased Premises at
a minimum of 55 degrees to prevent water lines located inside the Building from
freezing and to prevent other temperature related damages.

7. All Sums Denominated Additional Rent. All charges, costs and expenses which
the Tenant is required to pay or reimburse the Landlord (in whole or in part)
under this Lease, together with all interest and penalties that may accrue
thereon, and all damages, costs and expenses which Landlord may incur by reason
of any default or other failure on Tenant's part to comply with the terms of
this Lease, shall be deemed to be Additional Rent and, in the event of
non-payment by Tenant, Landlord shall have all the rights and remedies with
respect thereto as the Landlord has for the non-payment of base rent. Landlord
represents and warrants that the HVAC and electrical services for the Leased
Premises are in good working order and that to the best of Landlord's knowledge,
the Building is in compliance with the New York State Uniform Fire Protection
and Building Code.

8. Tenant's Acceptance of Property. Tenant has inspected and accepted the Leased
Property in "as is" condition as of the date of this Lease, excepting, however,
latent defects.

9. Access To and Use of Leased Property.

      (A) Permitted Use. The Tenant shall use the Leased Property for office
purposes only.

      (B) Hours of Access. Tenant shall have free access to the Building 24
hours per day, 7 days per week, 365 days per year.

10. Certain Prohibitions.

      (A) Prohibited Uses. Tenant shall not use or occupy, and shall not permit
or suffer the Leased Property or any part thereof to be used or occupied, for
any business, use or purpose which in any manner:

         (1) is in violation of any present or future laws, rules, regulations
or ordinances, applicable to Tenant or to the Leased Property;

         (2) would violate the Certificate of Occupancy affecting the Leased
Property;
<PAGE>

         (3) would make void or voidable any insurance then in force with
respect to the Leased Property or which will make it impossible to obtain fire
or any other insurance on the Leased Property;

         (4) would be likely to cause structural damage to the Building or any
part thereof; or

         (5) would constitute a public or private nuisance.

         The Tenant shall promptly after the discovery of any such prohibited
use take all necessary steps to discontinue such use or compel its
discontinuance.

      (B) Obstructions. Tenant shall not obstruct or encumber the common areas,
or stairways adjacent hereto, nor shall Tenant use such places for any purposes
other than ingress and egress and loading and unloading of materials to and from
the Leased Property.

      (C) Floor Load. Tenant shall not place, or permit any Subtenant to place,
a load upon any floor of the Leased Property which exceeds the load of 100
pounds per square foot live load.

11.    Services Provided by Landlord. Landlord shall provide to the Leased
Property and the Common Area on a twenty-four (24) hour per day, seven (7) day a
week basis elevator service, heating, ventilation, air-conditioning,
electricity, water and sewage service for the use of Tenant. Tenant shall, at
its sole cost and expense, pay or cause to be paid all charges (including any
deposits) for telephone or other services or utilities furnished to the
Premises.

12.    Quiet Enjoyment. The Tenant, upon payment of all rents reserved and
upon the performance of all the terms and conditions of this Lease, shall,
during the lease term and any extended terms, peacefully and quietly enjoy the
Leased Property without any disturbance from Landlord or from any other person
claiming from or through Landlord.

13.    Rights of Mortgagee. Landlord shall cause the mortgage(s) or other
lending documents to provide that the lender shall not have any right to
terminate this Lease, provided that the Tenant is not in default beyond any
applicable notice and cure period under the terms of this Lease and enters into
an attornment agreement satisfactory to such lender. Landlord shall obtain from
each current mortgagee a Subordination, Non-Disturbance and Attornment Agreement
reasonably agreeable to the Tenant.

14.    Repairs and Maintenance. The Tenant shall during the term of this
Lease (and any renewals or extensions thereof), at Tenant's sole cost and
expense, maintain, repair and keep the Leased Property in as good condition as
it was at the date of commencement of this Lease, reasonable use, wear and tear
excepted. It is recognized by both Landlord and Tenant that the roof previously
leaked and Landlord has previously repaired the roof and the Landlord agrees to
further maintain in good order and repair the roof, roof covering, exterior
walls, plumbing, electrical, HVAC, and other major building systems and other
<PAGE>

structural components of the Building, and to repair the Tenant's rentable space
as necessary, at the sole expense of Landlord, to the reasonable satisfaction of
Tenant, if the need for repair to Tenant's rentable space is due to Landlord's
failure to maintain the roof or other structural components of the Building.
Landlord further agrees to maintain and repair the common areas of the Building
in a first class condition at the sole expense of Landlord.

15.    Compliance With Laws and Regulations.

      (A) Tenant, at Tenant's sole cost and expense, shall comply with all laws,
orders, rules and regulations of any governmental unit and with any direction of
any public officer, which shall impose any duties or obligations concerning
Tenant's use or occupancy of the Leased Property, including but not limited to
all environmental laws, rules and regulations relating to the generation,
storage and disposal of waste which are applicable to Tenant's use of the Leased
Property. The Tenant, at its sole expense, shall obtain all licenses or permits
which may be required for the conduct of its business within the Leased
Property, or for the making of repairs, permitted alterations or improvements,
or additions. Landlord, where necessary and at Tenant's sole cost and expense,
agrees to join with Tenant in applying for all such licenses or permits.

      (B) The Tenant shall comply with any and all requirements of all policies
of fire, public liability and other types of insurance at any time in force with
respect to the Leased Property issued by the Board of Fire Underwriters, or by
any other body exercising similar functions.

      (C) Tenant shall promptly give notice to the Landlord of any notice of
violation received by Tenant. Without diminishing any obligation of the Tenant,
if Tenant shall at any time fail to pay any fine and/or correct with reasonable
promptness any such notice of violation, Landlord, after ten (10) days' prior
written notice to the Tenant, may pay such fine and/or correct such violation
and the amount of such fine and the reasonable costs and expenses of Landlord in
correcting such violation shall be paid by the Tenant. All such payments, costs
and expenses shall be deemed Additional Rent.

      (D) Tenant shall have the right to contest by appropriate legal action or
proceeding in the name of the Tenant or Landlord or both, the validity or
application of any such law, and Landlord shall cooperate with Tenant and will
execute and deliver any appropriate papers which may be necessary to permit
Tenant to contest the validity or application thereof, provided that Tenant
shall be solely responsible for all legal work and other professional costs and
expenses incurred in connection therewith.

16.    Surrender. At the expiration of the lease term, Tenant shall surrender
the Leased Property in as good condition as it was at the beginning of the term,
reasonable use, wear and tear and damage by casualty or condemnation which
results in termination of the lease excepted. The Tenant shall surrender the
Leased Property broom clean, and shall remove any furniture, furnishings,
fixtures, and equipment which were contained in or installed by Tenant upon the
Leased Property. In the event any such removal causes damage to the Building's
<PAGE>

components, Tenant shall promptly correct the same by restoration to the
condition that existed prior to installation of any such property. Any of
Tenant's property not removed within thirty (30) days after the expiration of
the lease term shall, at the option of Landlord, become the property of
Landlord. In removing such property after expiration of the lease term, Tenant
shall not interfere with use of the Leased Property by any replacement tenant.

17.    Alterations and Improvements.

      (A) Landlord's Consent. Tenant shall have the right to make changes and
non-structural alterations, additions or improvements in or to the Leased
Property so long as the same do not affect the electrical or mechanical systems
of the Building. Tenant shall not make, or cause or permit the making of, any
structural alterations, additions or improvements, (or otherwise affect the
electrical or mechanical systems) including demolition and rebuilding in or to
the Leased Property without obtaining Landlord's prior written consent thereto
in each instance. Plans and Specifications showing the proposed structural
alterations, additions and improvements shall be submitted to Landlord for
approval as part of the application for Landlord's consent. Landlord's consent
shall not be unreasonably withheld

      (B) Compliance with Laws. In making, or causing to be made, any
alteration, addition or improvement, Tenant shall comply with all applicable
laws, regulations, ordinances and orders and shall at its sole cost and expense
procure all requisite governmental approvals, authorizations and permits.
Landlord will, on written request from Tenant, execute any documents necessary
to be signed on its part to obtain any such permits.

      (C) Performance of the Work. All alterations, additions and improvements
made by Tenant shall be made in a good and workmanlike manner and shall be
completed promptly. At all times when any such work is in progress, Tenant shall
maintain or cause to be maintained adequate Worker's Compensation insurance
covering all persons employed in connection with the work, and comprehensive
general public liability insurance for the mutual benefit of Landlord and Tenant
for the purposes and in the amounts as Landlord may reasonably require.

      (D) Permits. No alteration or improvement shall be undertaken until the
Tenant has procured and paid for all required permits and authorizations from
the appropriate governmental unit(s).

      (E) Improvements Become Landlord's Property. As to any alteration or
improvement which Landlord does not require to be removed by Tenant at the
expiration of the lease term, (Landlord shall notify Tenant of any obligation to
so remove in writing no later than 120 days prior to the expiration of the term)
the components of such alteration or improvement shall become the absolute
property of Landlord at the expiration of the lease without payment of any
consideration herefore unless such alteration or improvement is readily portable
and Tenant desires to remove same, in which case Tenant may do so. Tenant shall
have the option to remove any improvements and restore the Leased Property to
its original condition at Tenant's sole cost, provided such removal is completed
in the time and manner required under Paragraph 16.
<PAGE>

      (F) Additional Conditions to Alterations. Before making final payment with
respect to any permitted work, the Tenant shall deliver to Landlord written
waivers of lien by any architect, engineer, contractor, materialman, laborer or
other persons supplying materials or labor in connection with the improvement or
alteration whereby such person waives any lien upon or against the Leased
Property, or the Building, or the interest of the Landlord therein.

      (G) Removal of Liens. Tenant shall not permit any mechanic's lien or other
similar lien to be filed against the Leased Property or the Building or against
the Landlord's interest in the same by reason of any work, labor, services or
material supplied for any alteration or improvement or other work performed by
or on behalf of Tenant in connection with the Building or the Leased Property.
If any such lien shall at any time be filed against the Leased Property, Tenant
shall, within thirty (30) days after written notice from Landlord, cause such
lien to be discharged of record, by payment, deposit, bond or court order. If
Tenant fails to discharge such lien within such thirty (30) day period, then, in
addition to (and not in lieu of) any other right or remedy of the Landlord, the
Landlord may, but shall not be obligated to, discharge such lien either by
payment, deposit, bond, court order or otherwise. In such event, Landlord shall
be entitled to be reimbursed by Tenant for any payment made to satisfy or
discharge such lien (including, without limitation, legal costs and expenses and
bond premiums) together with interest thereon at the prime rate of Key Bank of
New York plus three percent (3%) per annum, computed as to each item from the
date of payment by Landlord. All such sums shall be construed as additional
rent. Nothing in this paragraph shall be construed in any way as constituting
the consent or request of the Landlord, express or implied, by inference or
otherwise, to any contractor, subcontractor, laborer or materialman for the
performance of any labor or the furnishing of any materials for any specific
improvement, alteration, or repair of or to the Leased Property, or as giving
the Tenant the right, power or authority to contract for or permit the rendering
of any service for the furnishing of any material without the Landlord's prior
written consent as provided above.

18.    Landlord Rights Upon Tenant's Default.

      (A) Definition of Default. A "default" is defined as follows:

         (1) If an action or proceeding is commenced by or against the Tenant
under the federal bankruptcy laws or any other federal or state insolvency laws,
and the same is not discharged within sixty (60) days after commencement.

         (2) If any trustee, receiver, or committee for the benefit of creditors
is appointed for Tenant or Tenant's property and the same is not discharged
within sixty (60) days after appointment.

         (3) If Tenant fails to pay any Rent and such failure is not cured
within ten (10) days after written notice of default.
<PAGE>

         (4) If this Lease is assigned or the Leased Property or any portion
thereof is sublet, other than in accordance with the terms and conditions of
this Lease Agreement and such default is not cured within thirty (30) days after
written notice.

         (5) If Tenant ceases to conduct business in the Leased Property or
allows same to become vacant for more than thirty (30) consecutive days.

         (6) If Tenant fails to maintain the insurance policy and coverage(s)
required herein.

         (7) Intentionally Deleted.

         (8) If Tenant defaults in the performance of any other term of
provision of this Lease and such default is not cured within thirty (30) days
after written notice of default. If it is not reasonably possible to completely
cure any such default within such thirty (30) day period, a default shall be
deemed to exist if Tenant fails to commence a cure within thirty (30) days or
fails to diligently prosecute such cure after timely commencement. If such
default by Tenant also constitutes an event of default by Landlord under any
mortgage affecting the Building, and such mortgage contains shorter cure
periods, the shorter time periods shall control.

      (B) Tenant's Responsibilities on Default. In the event of any default by
Tenant, re-entry by Landlord, expiration or termination of this Lease or
dispossess by summary proceeding or otherwise, Tenant shall be responsible for
the following:

         (1) Rent up to the time of such re-entry, dispossess, expiration or
termination of this Lease.

         (2) The Present Value of Rent for the balance of the full term, all of
which may, at Landlord's option, be accelerated by Landlord and made due and
payable as of the date of re-entry by Landlord, termination of this Lease or
entry of a judgment of possession, whichever date first occurs. If Landlord
exercises such option, the Present Value (hereinafter defined) of all such sums
shall become immediately due and payable as of the date on which Landlord
notifies Tenant of Landlord's exercises of its option to accelerate as
hereinabove provided, together with all sums past due. As used herein, the term
"Present Value" means the present value of all sums due under the terms hereof
after the date of re-entry by Landlord, termination of this Lease or entry of a
judgment by possession, whichever date first occurs, discounted at the rate of
eight (8%) percent per annum.

         (3) The payment of all reasonable sums incurred by Landlord in putting
the Premises in good order or preparing the same for re-rental, including
brokerage and advertising;

         (4) Reasonable attorney's fees and expenses resulting from Landlord
enforcing any of the remedies described below, or in the enforcement of this
Lease or in defending any claim brought against Lessor by Lessee against which
Lessor successfully defends; and
<PAGE>

      (C) Landlord's Remedies on Default. Upon the occurrence of any default,
Landlord shall have the right to declare the lease term to have come to an end,
and the Landlord shall have the following rights and remedies, in addition to
(and not in lieu of any other rights or remedies Landlord may have at law):

         (1) Re-Entry. To reenter or repossess the Leased Property, either by
force, eviction proceedings, summary proceedings, surrender or otherwise, and to
dispossess and remove the Tenant and other occupants, and their property and
effects.

         (2) Injunctive Relief. Landlord shall be entitled to enjoin breach by
the Tenant of any of the terms and conditions in this Lease and in such event
shall also be entitled to a preliminary injunction, temporary restraining order,
or similar provisional relief.

         (3) Damages. Landlord may seek monetary damages in any re-entry action
or summary proceeding, or commence a separate action or special proceeding
against Tenant and any other responsible parties, to recover monetary damages
accruing by reason of any default, together with interest, plus all reasonable
attorney's fees, disbursements, court costs and other reasonable expenses
incurred in connection therewith. Monetary damages shall include, without
limitation, Base Rent and all Additional Rent due at the time proceedings are
commenced, rent shortages accruing thereafter as set forth in subparagraph (D)
below, plus all costs associated with any reletting of the Leased Property.
Landlord is under no obligation to mitigate its damages.

         (4) Remedies Not Exclusive. Mention in this Lease of any particular
remedy shall not preclude Landlord from any other reasonable remedy, at law or
in equity, it being agreed that the rights and remedies of Landlord are
cumulative.

      (D) Reletting. Landlord may attempt to re-let the Leased Property, for a
term or terms which may, at Landlord's option, be less than or exceed the period
which would otherwise have constituted the balance of the term of this Lease.
The Landlord may grant concessions in connection with such re-letting. Tenant
shall also pay Landlord, as liquidated damages, the deficiency between the rents
and additional rents reserved under this Lease and the rents collected or to be
collected on account of the lease or leases of the Leased Property for the
remaining period which would otherwise have constituted the balance of the term
of this Lease. In computing such damages there shall be added to the deficiency
such expenses as Landlord may reasonably incur in connection with re-letting.
Any such damages shall be paid from time to time upon demand after transmittal
by Landlord of its calculations of the amount then due. Landlord, at Landlord's
option may make such alterations, repairs, replacements and/or decorations in
the Leased Property as Landlord, in Landlord's sole judgment, considers
advisable and necessary for the purpose of re-letting the Leased Property.

      (E) Waiver of Redemption. Tenant hereby expressly waives any statutory
notice of intention to re-enter or of institution of legal proceedings for
purposes of re-entry. Tenant further waives any and all rights to redeem under
Section 761 of the New York Real Property actions and Proceedings Law, and under
any other present or future law creating any right of redemption or similar
rights in favor of tenants.
<PAGE>

19.    Aggrieved Party's Right to Perform Other's Obligations.

      (A) Right to Cure. If either party defaults, and the default is not timely
cured, after notice, the other party shall have the option to cure such default
on the other's behalf, in which event such defaulting party shall reimburse the
aggrieved party for all sums paid to effect such cure, plus interest at a rate
equal to the highest prevailing prime rate charged by Key Bank of New York plus
three percent (3%), calculated from the date of such payment, together with all
reasonable professional fees, costs, and other expenses incurred in connection
therewith. If payable by Tenant, all such sums shall be deemed additional rent
hereunder.

      (B) Notice to Landlord. Landlord shall in no event be charged with default
in any of its obligations hereunder unless and until Landlord shall have failed
to perform such obligations within thirty (30) days (or such additional time as
is reasonably required to correct any such default) after written notice to
Landlord by Tenant, specifically describing such failure. If Landlord commences
within such thirty (30) day period and proceeds with due diligence to remedy a
defect or to make any change required under this Lease, it shall not be in
default.

      (C) Notice to Mortgagee. If the holder of any mortgage covering the Leased
Property shall have given written notice to Tenant of the address to which
notices to such holder are to be sent, Tenant shall give such holder written
notice simultaneously with any notice given to Landlord of any default of
Landlord, and if Landlord fails to cure any default asserted in said notice
within the time provided above, Tenant shall notify such holder in writing of
the failure to cure, and said holder shall have thirty (30) days after receipt
of such second notice to cure such default before Tenant may take any action by
reason of such default.

      (D) Liability of Mortgagee. No mortgagee, or its nominee, shall become
liable under the provisions of this Lease unless and until such time as it
becomes, and then only for so long as it remains, the owner of the Landlord's
interest in this Lease, and such liability shall be limited solely to such
mortgagee's or nominee's interest in the Property.

      (E) Liability of Landlord. Tenant shall look only to the Landlord for the
satisfaction of Tenant's remedies for the collection of a judgement (or other
judicial process) regarding the payment of money by Landlord in the event of any
default by Landlord hereunder. The Landlord's partners or principals (disclosed
or undisclosed) shall not be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies under or with respect to
this Lease, the relationship of Tenant and Landlord or Tenant's use and
occupancy of the Leased Property.

20.    Landlord's Right of Access and Use.

      (A) Landlord and Landlord's agents, employees, and representatives may
enter upon the Leased Property upon reasonable prior notice at all reasonable
times, to inspect it, to perform any work which Landlord elects or is required
to undertake, or to perform any work made necessary by reason of the Tenant's
default under the Lease, and may also exhibit the Leased Property in connection
with efforts to sell, lease (within the last six (6) months of the Term), or
<PAGE>

obtain financing for the Building, provided that such access does not
unreasonably interfere with Tenant's use of the Leased Property. Landlord's
right of entry shall not be deemed to impose upon Landlord any obligation or
liability for the care, supervision or repair of the Leased Property other than
expressly provided in this Lease.

      (B) Landlord shall provide Tenant with keys for all door locks providing
entry to the Building. Tenant shall provide Landlord with keys for all interior
lockable doors, providing access to or within the Leased Premises upon request
by Landlord. Tenant shall not change such locks without Landlord's written
consent.

      (C) The making of any repairs which Landlord is required or permitted to
make under this Lease shall not constitute an eviction of Tenant in whole or in
part and the rent reserved shall in no way abate, while such repairs or
alterations are being made, but such repairs shall be made as expeditiously as
reasonably possible, and be conducted so as to minimize any unreasonable
interference with Tenant's business.

21.    Condemnation, Damage and Destruction.

      (A) Restoration Time.

         (1) Within fifteen (15) days from the date of any fire or casualty, the
Landlord shall obtain from any reputable A.I.A. architect, a certification
certifying in his/her opinion the time within which the Leased Property and the
reasonable access thereto can be restored and reconstructed under standard
building conditions (hereinafter called the "Restoration Time"). Landlord shall
deliver such certification to the Tenant, and in the event the damages be so
substantial the Leased Property cannot be restored within one hundred twenty
(120) days from the date of Landlord's receipt of the insurance proceeds, from
such fire or casualty, based on the certified Restoration Time hereinabove
referred to, then, in that event, either the Landlord or the Tenant shall have
the right (a) within thirty (30) days after receipt of such notice to advise the
other that it elects to terminate the Lease; or (b) that it requires Landlord to
prosecute restoration of the Leased Property in the manner hereinafter provided.
In the event the Landlord or Tenant shall elect to terminate the Lease, Tenant
shall surrender the Leased Property forthwith provided that it shall continue to
pay pro rata net annual Base Rent and additional rent for any portion of the
Leased Property which it continues to occupy and conduct business from pending
such surrender of the Leased Property.

         (2) Restoration. In the event this Lease is not terminated in
accordance with Section 21 (A) (1) above, the Landlord shall undertake to
restore the Leased Property substantially to the condition prior to the fire or
casualty subject to then applicable law, with reasonable speed and dispatch, and
Landlord shall diligently prosecute reconstruction in order to restore the
Leased Property for Tenant's use as expeditiously as possible.
<PAGE>

         (3) Rent Abatement. To the extent the Leased Property is unusable for
the conduct of business by Tenant after the casualty, Tenant's obligation to pay
rent shall abate and Landlord shall look to the rent insurance provided by
Tenant as required hereunder.

      (B) Condemnation or Taking. If there shall be a taking of all or a
material portion of the Leased Property or the reasonable access thereto by
federal, state, county, city or other authority for public use, or under any
statute, or by right of eminent domain (a "Taking"), then this Lease shall
terminate as of the date of the Taking and the rent shall be adjusted as of the
date of such termination of this Lease. A Taking of a material portion of the
Leased Property shall be deemed to mean a taking of such scope that the untaken
portion of the Leased Property is insufficient to permit the restoration of the
then existing improvements thereof so as to constitute a complete operating
facility of sufficient size to permit Tenant to conduct its business in
substantially the same manner as prior to the Taking.

      (C) Partial Taking. If there shall be a partial Taking of the Leased
Property which shall not result in a termination of this Lease as provided in
Section 21 (B), then Landlord shall, at its own cost and expense, restore the
remaining portion of the Leased Property within ninety (90) days from such
partial Taking and the rent shall be equitably apportioned according to the
space taken.

      (D) Awards. All compensation awarded or paid upon such a total or partial
Taking of the Leased Property shall belong to and be the property of the
Landlord without any participation by the Tenant; provided, however, that Tenant
shall not be precluded from prosecuting any claims directly against the
condemning authority for moving expenses or other awards specifically set aside
for tenants of the Building, including damages for the taking of the Tenant's
leasehold interest, provided that Landlord's award for damages in the Taking is
not reduced or diminished.

      (E) No Obligation. Anything in this Paragraph 21 to the contrary
notwithstanding, it is expressly understood and agreed that Landlord shall not
be obligated, in its sole discretion, to repair or replace the Building, in the
event that insurance or condemnation proceeds are retained by the mortgagee of
the first lien or such fire, casualty or condemnation shall occur during the
last year of the Initial Term or any renewal term. In such event, at either
Landlord's or Tenant's option this Lease shall be terminated and deemed null and
void and of no further force and effect, and both parties shall be released of
liability one to the other, except as otherwise in the Lease provided. Landlord
and Tenant agree to execute at the request of the other a lease termination
agreement in recordable form to evidence the Lease termination.

22.    Tenant's Insurance. Tenant shall carry Commercial General Liability
Insurance (1986 Form) written on an occurrence form for the duration of this
Lease. Such insurance shall cover the Leased Premises and the Tenant's
contractual obligations as stipulated in this Lease. The Commercial General
Liability policy shall reflect the interests of the Landlord as an additional
insured.
<PAGE>

      Such insurance shall be provided in amounts not less than:

          Coverage                                           Limits of Liability

General Aggregate Limit                                      $        2,000,000

Products/Completed Operations Aggregate Limit                $        2,000,000

Personal/Advertising Injury Occurrence Limit                 $        2,000,000

Each Occurrence Limit                                        $        2,000,000

Fire Damage (any one fire)                                   $          300,000

Medical Expenses (any one person)                            $            5,000

      Prior to occupying the Leased Premises, Tenant shall provide a Certificate
of Insurance to the Landlord evidencing coverages in compliance with the above
requirements. The Certificate of Insurance shall provide thirty (30) days
advance written notice (if reasonably available) to the Landlord in the event of
the cancellation, change and/or non-renewal of the coverages certified. The
Certificate of Insurance shall be renewed and filed with the Landlord annually
for the duration of this Lease. A copy of the Certificate of Insurance shall be
provided to Landlord upon thirty (30) days written notice.

23.   Intentionally Deleted.

24.   Assignment and Subletting, Change in Control

      (A) In General. The Tenant may not, voluntarily or by operation of law,
assign, sublet, mortgage or encumber this Lease, for all or any portion of the
remainder of this term, without the express prior written consent of the
Landlord in each instance which consent shall not be unreasonably delayed,
conditioned or withheld. The Tenant shall remain primarily liable for the rent
reserved in this Lease Agreement and the performance of all of its terms and
conditions notwithstanding any such assignment or subletting, or change in
control or transfer of assets. The collection or acceptance of any rent or
additional rent by the Landlord shall not be deemed a waiver of this covenant,
or the acceptance of the assignee, subtenant or occupant as a tenant, or release
of the Tenant from the further performance of the terms and conditions of this
Lease. Landlord's consent to an assignment or sublease or change in control or
transfer of assets shall not be construed to relieve Tenant from obtaining
Landlord's written consent for any further assignment or sublease. Change in
control shall mean the transfer of 51% or more of the voting stock of Tenant or
any Guarantor after the date hereof in one or more of a series of transactions,
whether by sale of stock, merger, liquidation, or other transfer, but there
shall be no change in control if the resulting entity has greater net worth than
the Tenant previously had.
<PAGE>

      (B) Instruments of Assignment. No assignment or subletting or change in
control of Tenant or transfer of assets of Tenant shall be valid or effective
until there is delivered to Landlord a duplicate original of the written
instrument of assignment or sublease containing the name and address of the
assignee or subtenant and an express assumption by the assignee or subtenant or
new principals of Tenant or new owner of the assets of Tenant of this Lease
Agreement and of all of the obligations under this Lease to be performed by the
Tenant.

      (C) Instruments of Subletting. Any sublease(s) consented to by Landlord
must provide that Tenant (as sublandlord) assigns all rents under the sublease
to Landlord and in the event of default by Tenant hereunder upon written notice
from Landlord all rents under such sublease(s) shall be paid by the subtenants
to Landlord.

25.   Subordination and Attornment.

      (A) Tenant recognizes that Landlord has financed all or part of the
construction costs of the Building through financing which is secured by
mortgages or similar encumbrances upon the land and the Building. In addition,
Landlord may obtain IDA financing involving the execution and delivery of
deed(s), leases, bond(s), mortgage(s) and an installment sale agreement. This
Lease Agreement shall be subject and subordinate to any lease, sale agreement
and mortgage(s) given to secure the financing and any other mortgage now or
hereafter constituting a lien upon the Leased Property, and to all additions,
increases, renewals, modifications, consolidations, replacements or extensions
thereof. Although no instrument or act on the part of the Tenant shall be
necessary to effectuate such subordination, the Tenant agrees to execute,
acknowledge and deliver such further commercially reasonable instruments
subordinating this Lease to such lease or sale agreement and mortgage. However,
Landlord agrees to cause the IDA sale agreement and mortgage, or any other sale
agreement or mortgage, and all other financing instruments to provide that the
Lender shall not have any right to terminate this Lease, so long as Tenant is
not in default under this Lease beyond any applicable notice and cure period.

      (B) In the event of the cancellation or termination of the sale agreement,
including any extensions or renewals, or in the event of the foreclosure of any
mortgage, the Tenant shall make full and complete attornment to the IDA and/or
other lender for the balance of the term of this Lease, upon the same covenants
and conditions as are contained herein, so as to establish direct privity of
estate and contract between the IDA and/or other lender and the Tenant with the
same force and effect as though this Lease Agreement were originally made
directly between them. The Tenant shall thereafter make all rent payments
directly to the IDA or to the other lender, as the case may be.

26.   Fees and Expenses. Should either party hereto commence an action
against the other to enforce any obligation under this Lease, the prevailing
party shall be entitled to recover reasonable attorneys' fees and expenses from
the other.
<PAGE>

27.   Indemnification.

      (A) Indemnification by Landlord. Landlord hereby agrees to indemnify,
defend and hold harmless Tenant, its successors, assigns, subsidiaries,
directors, officers, agents and employees from and against any and all damage,
loss, liability or expense including, but not limited to, reasonable attorneys'
fees and legal costs, suffered by same directly or by reason of any claim, suit
or judgment brought by or in favor of any person or persons for damage, loss or
expense due to, but not limited to, bodily injury, including death arising at
any time therefrom, and property damage sustained by such person or persons
which arises out of, is occasioned by or attributable to the acts or omissions
of Landlord, its licensees, concessionaires, agents, employees or contractors
("Landlord Employees"), or any breach or default in the performance of any
obligation on Landlord's part to be performed under the terms of this Lease,
except to the extent caused by the negligence or the willful misconduct of
Tenant, its employees and agents. If any proceeding is brought against Tenant by
reason of any such claim, Landlord shall defend same at Landlord's expense by
counsel satisfactory to Tenant.

      (B) Indemnification by Tenant. Tenant hereby agrees to indemnify, defend
and hold harmless Landlord, its successors, assigns, subsidiaries, directors,
officers, agents and employees from and against any and all damage, loss,
liability or expense including, but not limited to, reasonable attorney's fees
and legal costs, suffered by same directly or by reason of any claim, suit or
judgment brought by or in favor of any person or persons for damage, loss or
expense due to, but not limited to, bodily injury, including death arising at
any time therefrom, and property damage sustained by such person or persons
which arises out of, is occasioned by or attributable to the use or occupancy of
the Leased Premises by Tenant, the acts or omissions of Tenant, its subtenants,
licensees, concessionaires, agents, employees or contractors ("Tenant
Employees"), or any breach or default in the performance of any obligation on
Tenant's part to be performed under the terms of this Lease, except to the
extent caused by the negligence or willful misconduct of Landlord, its employees
and agents. If any proceeding is brought against Landlord by reason of any such
claim, Tenant shall defend same at Tenant's expense by counsel satisfactory to
Landlord.

      (C) Survival. The foregoing indemnities shall survive the expiration of
the Term or any other termination of this Lease. Notwithstanding the foregoing,
Landlord and Tenant agree that neither party hereto is indemnifying the other
for the acts of third parties who are not Landlord Employees (for whom Landlord
shall bear responsibility) or Tenant Employees (for whom Tenant shall bear
responsibility). Each party's agreement to indemnify and hold the other party
harmless pursuant to the foregoing is not intended to and shall not relieve any
insurance carrier of its obligations under policies required to be maintained
under this Lease by Tenant or Landlord, with the indemnitor in each such case
having the right to the benefit of any available insurance proceeds as a setoff
and/or mitigation of any indemnity amounts paid.

      (D) Limitation of Liability. Neither party shall be liable to the other
party for special or consequential damages as a result of any breach of any
provision of this Lease or any negligent act or omission.
<PAGE>

      (E) Subrogation. Upon either party's fully assuming and performing its
obligations as set forth in subparagraph (A) or subparagraph (B) hereof,
whichever is applicable, such party (the "Indemnifying Party") shall be
subrogated to any rights of the other party (the "Indemnified Party") against
any third parties. The Indemnified Party shall promptly notify the Indemnifying
Party of any claim asserted against the Indemnified Party on account of any
injury or claimed injury to persons or property and shall promptly deliver to
the Indemnifying Party the original or a true copy of any summons or other
process, pleading, or notice issued in any suit or other proceeding to assert or
enforce any such claim. The Indemnifying Party shall have the duty to defend any
such suit, to the extent of its indemnification as set forth in subparagraph (A)
or (B) above whichever is applicable, is applicable thereto.

      (F) Insurance. The Indemnifying Party's obligation to indemnify the
Indemnified Party hereunder shall only apply to the extent any liability, loss
or expense incurred by the Indemnified Party (including reasonable attorneys'
fees) is not covered by insurance maintained by Indemnified Party.

28.   Waiver of Subrogation. Without affecting any other rights or remedies,
each party to this Lease hereby releases and relieves the other party (including
such other party's officers, directors, agents, representatives, employees,
affiliated corporations, partners, managers, successors and assigns) and waives
its right to recover damages (whether in contract or tort) against such other
party (and such other party's officers, directors, agents, representatives,
employees, affiliated corporations, partners, managers, successors and assigns),
for any and all losses and damages to the waiving party, or to any property of
the waiving party, arising out of or incident to any peril covered by insurance
maintained by the waiving party as required by the terms of this Lease, but only
to the extent of such insurance. Each party to this Lease agrees to cause its
insurer(s) to include a waiver of subrogation rights provision in the policies
of insurance required to be maintained pursuant to this Lease.

29.   Notices. Any notice, consent or request required or permitted under
this Lease Agreement shall be in writing and will be deemed sufficiently given
if delivered personally or sent by registered or certified mail, return receipt
requested, to the respective parties at the following addresses:

         If to Landlord:            Sitterly Associates II, LLC
         --------------             c/o Abele Builders, Inc.
                                    14 Corporate Drive
                                    Clifton Park, New York 12065
                                    Attn:  Edward P. Abele

         If to Tenant:              Anthony Principe
         --------------             On2 Technologies, Inc.
                                    21 Corporate Drive, Suite 103
                                    Clifton Park, New York 12065
<PAGE>

30.   Modification and Waivers.

      (A) No Oral Modifications or Discharge. This Lease Agreement may not be
discharged or terminated, nor may it be changed, modified or supplemented
orally, but only by a document in writing, signed by both Landlord and Tenant.

      (B) Modification at Request of Mortgage Lenders. If, in connection with
obtaining temporary or permanent financing for any portion of the Leased
Property, any lender shall request reasonable modifications of the Lease as a
condition to such financing, Tenant agrees that Tenant will not unreasonably
withhold, delay or defer the execution of a modification agreement, provided
such modifications do not increase the financial obligations of Tenant hereunder
or materially adversely affect the leasehold interest hereby created or Tenant's
reasonable use and enjoyment of the Leased Property.

      (C) No Waiver by Implication; No Oral Waivers. The failure of either party
to seek redress for any default, or to insist upon the strict performance of any
covenant or condition of this Lease shall not constitute an implied waiver, and
shall not prevent any subsequent act or omission from having all the force and
effect of any original default. The receipt by Landlord of rent or payment of
rent by Tenant with knowledge of the breach of any covenant of this Lease shall
not be deemed a waiver of such breach. No provision of this Lease shall be
deemed to have been waived by either party, unless such waiver be in writing
signed by such party. No payment by Tenant or receipt by Landlord of a lesser
amount than the monthly rent herein stipulated shall be deemed to be other than
on account of the earliest stipulated rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy in this Lease provided.

31.   Security Deposit. The Tenant has heretofore deposited with Landlord
the sum of $6,001.67, as security for the full and faithful performance by the
Tenant of all of the terms, covenants and conditions of this Lease upon the
Tenant's part to be performed. Provided that Tenant is not in default under any
of the terms and provisions of this Lease, the security deposit shall be
returned to Tenant; otherwise, it shall be used to restore the Leased Premises
to the condition required by the terms of this Lease or otherwise applied
against Tenant's obligations in the event of a default.

32.   Memorandum of Lease. This Lease Agreement shall not be recorded.
Landlord and Tenant shall, at the request of either party, execute and deliver a
memorandum of this Lease Agreement in proper form for recording, but the
memorandum shall not in any circumstances be deemed to modify or change any of
the provisions of this Lease Agreement, the provisions of which shall in all
instances prevail.

33.   Estoppel Certificates. Each party agrees at any time, and from time to
time, upon not less than fifteen (15) days prior notice by the other party, to
execute, acknowledge, and deliver to the other party, a statement in writing
certifying (or, if there have been modifications, that the same is in full force
and effect as modified and stating the modifications) stating the dates to which
the fixed base rent and additional rent have been paid, and stating whether or
<PAGE>

not to the best knowledge of the signer, there exists any default beyond any
applicable notice and cure period by the other and, if so, specifying each such
default. It is the parties intent that any such statement delivered pursuant
hereto may be relied upon by the other party and by any mortgagee or prospective
mortgagee of any mortgage affecting the Building or Tenant's interest in this
Lease, and by any subtenant or assignee.

34.   Environmental Matters. Insofar as they are applicable to Tenant's use
of the Leased Premises, Tenant shall comply with all environmental laws, which
include all federal, state, local and municipal laws, statutes, ordinances,
rules, regulations, orders, decrees or requirements for regulating, relating to,
or imposing liability or standards of conduct concerning the use, storage,
treatment, transportation, manufacture, refinement, handling, production and
disposal of all waste generated on the Leased Property, hazardous materials
covered by any Environmental Law, or otherwise pertaining to environmental
protection, as now or at any time hereafter in effect, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601; the Superfund Amendment and Reauthorization Act of
1986, Public Law 99-499, 100 Stat. 1613; Toxic Substances Control Act of 1976;
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901; the
Occupational Safety and Health Act, 29 U.S.C. Section 655 and Section 657; the
Clean Air Act, 42 U.S.C. Section 7401; the Clean Water Act, 33 U.S.C. Section
1251; the New York State Environmental Quality Review Act, New York State
Environmental Conservation Law Section 8-1101; the New York Environmental
Conservation Law, together with all amendments thereto, substitutions therefor,
rules and regulations promulgated thereunder and all amendments to and
substitutions for the rules and regulations (the aforementioned are called the
"Environmental Laws"). Tenant shall defend, indemnify and hold harmless the
Landlord and the Landlord's employees, agents, partners, officers, directors and
trustees from any and against any and all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and/or expenses of whatever kind or
nature and/or any other environmental clean-up of any kind or description, known
or unknown, contingent or otherwise, arising out of or in any way relating to
any violation of any Environmental Laws arising out of Tenant's use of the
Building and Leased Property and caused by Tenant, its employees, contractors,
invitees or such other persons under Tenant's control. Landlord represents to
Tenant that to the best of Landlord's knowledge, as of the date hereof there are
no material violations of any environmental law or any of the above cited
statutes. Notwithstanding the foregoing, Tenant shall have the right to use and
store at the Leased Property in compliance with applicable laws reasonable
quantities of office products and cleaning supplies.

35.   Construction and Miscellaneous.

      (A) Governing Law. This Lease shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York.
<PAGE>

      (B) Grammatical Usage. In construing this Lease, feminine or neuter
pronouns shall be substituted for those masculine in form, and vice versa, and
plural terms shall be substituted for singular and singular for plural, in any
place in which the context so requires.

      (C) Terms Inclusive. The term "Landlord" and "Tenant" shall include the
parties named in this Lease, their legal successors in interest, and all
permitted subtenants or assigns.

      (D) Captions. Captions are inserted in the Lease only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of intent of this Lease Agreement or in any way affect this Lease.

      (E) Severability. If any term or provision of this Lease shall, to any
extent, be declared to be invalid or unenforceable, the remainder of this Lease
shall not be affected thereby and the balance of the terms and provisions of
this Lease shall be valid and enforceable to the fullest extent permitted by
Law.

      (F) Counterparts. This Lease Agreement may be executed in several
counterparts, and any signed counterpart shall constitute a legal original for
all purposes. Any such counterparts may be introduced into evidence in any
action or proceeding without having to produce the others.

      (G) Consent. Whenever either party's consent or approval shall be required
herein, unless such consent or approval is expressed herein as being in the sole
or absolute discretion of such party, such consent or approval shall not be
unreasonably or arbitrarily withheld, conditioned or delayed, and shall be
deemed to have been given, unless within thirty (30) days of the other party's
request therefor, the party whose consent has been requested notifies the other
that it is denying such consent or approval, stating in such notice the
reasonable grounds therefor.

      (H) Intentionally deleted.

      (I) Force Majeure. If either party hereto shall be delayed or hindered in
or prevented from the performance of any act required hereunder by reason of
acts of God, governmental emergencies, strikes, lockouts, labor troubles,
inability to procure material, failure of power, restrictive governmental laws
or regulations, riots, insurrection, war or other reason of a like nature not
the fault of the party delayed in performing work or doing acts required under
this Lease, the period for the performance of any such act shall be extended for
a period equivalent to the period of such delay. Notwithstanding the foregoing,
the provisions of this Subparagraph shall at no time operate to excuse Tenant
from any obligations for payment of Rent, or any other payments required by the
terms of this Lease when the same are due, and all such amounts shall be paid
when due, except as otherwise expressly provided in this Lease.

      (J) Further Action. The parties shall execute and deliver all documents,
provide all information and take or forbear from all such action as may be
necessary or appropriate to achieve the purpose of this Agreement.
<PAGE>

      (K) Exclusive Agreement. This Lease Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto. No
covenant, representation or condition not expressed in this Lease shall affect,
or be deemed to interpret, change or restrict the express provisions hereof.

      (L) Trial by Jury. It is mutually agreed between the Landlord and the
Tenant that each of them shall, and hereby does, waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties against the
other on any matters whatsoever arising out of, or in any way connected with,
this Lease, the Tenant's use or occupancy of the Leased Property, and any claim
of injury or damage related to any of the same.

      (M) Amendment or Termination. Except as otherwise provided herein, this
Lease may be modified or amended only with the prior written approval of both
parties, and it may not be discharged or terminated except in writing.

      (N) Authorizations and Representations. Each party hereby severally
represents that it has been duly authorized to execute, deliver and perform this
Lease through its members, officers or agents signing on its behalf and affixing
any appropriate seal hereto.

      (O) Accord and Satisfaction. Landlord is entitled to accept, receive and
cash or deposit any payment made by Tenant for any reason or purpose or in any
amount whatsoever, and apply the same at Landlord's option to any obligation of
Tenant and the same shall not constitute payment of any amount owed except that
to which Landlord has applied the same. No endorsement or statement on any check
or payment shall effect Landlord's right to recover any and all amounts owed by
Tenant hereunder and Landlord's right to pursue any other available remedy.

      (P) Financing. If Landlord desires to obtain or refinance any mortgage
loan, Tenant shall negotiate in good faith with Landlord concerning any request
made by any lender or proposed lender for changes or modifications in this Lease
subject however to Subsection 30(B). In particular, Tenant shall agree, upon
request of Landlord, to supply any such Lender with such notices and information
as Tenant is required to give to Landlord hereunder and to extend the rights of
Landlord hereunder to any such lender and to consent to such financing if such
consent is requested by such lender. Tenant shall provide any other consent or
statement and shall execute any and all other commercially reasonable documents
that such lender reasonably requires in connection with such financing,
including any commercially reasonable subordination, non-disturbance and
attornment agreement, so long as the same do not adversely affect any right,
benefit or privilege of Tenant under this Lease except in any non-material
respect or materially increase Tenant's obligations under this Lease in any
material respect or increase any of Tenant's monetary obligations under this
Lease.

36.   Lease of 2003 Leased Property Unaffected. Landlord and Tenant
acknowledge and agree that the Lease Agreement dated December, 2003 shall remain
in full force and effect.
<PAGE>

37.   Temperature of Expansion Premises. In the event that the temperature
at which the Expansion Premises is maintained is reasonably determined to be
unsatisfactory in Tenant's sole discretion, Landlord shall, at Landlord's sole
expense, install a thermostat in the Expansion Premises to enable Tenant to
maintain the Expansion Premises at a satisfactory temperature.

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

                                    SITTERLY  ASSOCIATES  II, LLC

                                    By:      /s/ Edward  P. Abele
                                       --------------------------
                                       Edward P. Abele, General Partner of Sole
                                       Member

                                    ON2 TECHNOLOGIES, INC.

                                    By:      /s/ Anthony Principe
                                       --------------------------
                                             Anthony Principe

                                    Its: Chief Financial Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]