Document:

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                                                                     EXHIBIT 4.1

                                TWELFTH AMENDMENT
                                       TO
              FIRST AMENDED, RESTATED, AND COMBINED LOAN AGREEMENT
                              DATED AUGUST 28, 1997
                     BY AND BETWEEN CARRIZO OIL & GAS, INC.
                                AND COMPASS BANK

         This Twelfth Amendment to the Loan Agreement (this "Twelfth Amendment")
by and between CARRIZO OIL & GAS, INC., a Texas corporation (the "Borrower"),
and COMPASS BANK, an Alabama state chartered bank, formerly a Texas chartered
bank (the "Bank"), is entered into on this 25th day of July 2001.

                                   WITNESSETH:

         Borrower and Bank entered into a First Amended, Restated, and Combined
Loan Agreement dated August 28, 1997, as amended by the First Amendment thereto
dated December 23, 1997, the Second Amendment thereto dated December 30, 1997,
the Third Amendment thereto dated July 30, 1998, the Fourth Amendment thereto
dated September 24, 1998, the Fifth Amendment thereto dated March 22, 1999, the
Sixth Amendment thereto dated April 23, 1999, the Seventh Amendment thereto
dated August 27, 1999, the Eighth Amendment thereto dated November 11, 1999, the
Ninth Amendment thereto dated December 15, 1999, the Tenth Amendment thereto
dated November 3, 2000 and the Eleventh Amendment thereto dated April 4, 2001
(collectively, the "Loan Agreement").

         Borrower has requested, among other things, that Bank grant certain
waivers and amend certain provisions of the Loan Agreement, and Bank has agreed
to such requests, subject to the terms and conditions set forth in this Twelfth
Amendment.

         Capitalized terms used, but not defined herein, shall have the meanings
prescribed therefor in the Loan Agreement.

         NOW, THEREFORE, in consideration of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by Borrower and Bank, and each intending
to be legally bound hereby, the parties agree as follows:

1.       Specific Amendments to Loan Agreement.

         Article I, Definitions, is hereby amended by adding the following
definitions thereto:

                  "CCBM" means CCBM, INC, a Delaware corporation, a wholly owned
         Subsidiary of Borrower.
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                  "Permitted CCBM Indebtedness" is the Indebtedness of CCBM
         described on Schedule 1.01(b) of this Agreement.

                  "Twelfth Amendment" means the Twelfth Amendment to this
         Agreement executed by Borrower and Bank on July 25, 2001.

         Section 5.19, Tangible Net Worth Requirement, is hereby amended by
replacing the sum "$34,000,000.00" that appears therein with the sum
"$49,000,000.00," and by replacing the date "December 31, 1999" that appears in
two different places therein with the date "March 31, 2001".

         Section 5.20, Cash Flow to Debt Service Ratio, is hereby amended by
replacing in its entirety the text of subparagraphs (a) and (b) thereof with the
following:

                  (a) "EBITDA" shall be defined as the sum of net income plus
         interest (net of interest income), taxes, depletion, depreciation,
         amortization, any other non-cash charges, and capitalized "cash" income
         not reflected in the consolidated income statements of Borrower and its
         Subsidiaries, less non-cash income items of Borrower and its
         Subsidiaries, and all capitalized general and administrative expenses,
         including capitalized expenses relating to full-time staff salaries
         allocated to projects; provided, however, that any items of EBITDA that
         relate exclusively to Oil and Gas Properties of CCBM that are not
         included in the Borrowing Base Properties shall, for purposes of this
         Section 5.20, be excluded from the calculation of EBITDA.

                  (b) "Debt Service" shall be defined as the sum of (i) actual
         cash principal and interest amounts (including any capitalized interest
         payments) that Borrower or any of its Subsidiaries is obligated to pay
         during such quarter on Indebtedness other than in connection with this
         Agreement and (ii) cash principal and interest amounts (including any
         capitalized interest payments) required to be paid by Borrower during
         such quarter in connection with this Agreement (excluding payments made
         pursuant to the Chase Transaction, the repayment of the Subordinated
         Promissory Note and the repayment of the Permitted CCBM Indebtedness);
         provided that the interest under (i) and (ii) above shall be net of
         interest income.

         Section 6.01, Other Indebtedness, is hereby amended by deleting the
word "and" that appears immediately before clause (g) thereof, and by deleting
the period from the end of such section and adding the following text:

         and (h) the Permitted CCBM Indebtedness.

         Section 6.03, Loans, Advances or Investments, is hereby amended by
substituting a semicolon in place of the period at the end of such section, and
adding the following text thereto:

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                  provided, however, that Borrower shall be permitted to
         contribute initial capital to CCBM in connection with the formation of
         CCBM, not to exceed $1,000 and thereafter, provided no Event of Default
         or Unmatured Event of Default has occurred and is continuing, and no
         Event of Default or Unmatured Event of Default would otherwise result
         from any such payment, Borrower shall be entitled to contribute or
         otherwise loan or advance to CCBM such funds as are necessary to permit
         CCBM to make the scheduled payments described on Schedule 1.01(b)
         hereto relating to the Permitted CCBM Indebtedness.

         The Agreement, is further amended by adding thereto new Schedule
1.01(b) in the form attached to the Twelfth Amendment.

         I. Certain Waivers. Bank hereby waives Borrower's compliance with the
negative covenants in Sections 6.01, 6.03 and 6.04 of the Agreement to the
extent, but solely to the extent, necessary to permit CCBM to acquire on a basis
that is entirely nonrecourse to CCBM and/or Borrower an undivided fifty percent
(50%) interest in approximately 120,000 net acres of coalbed methane leases
("Coalbed Methane Leases") covering lands in the states of Wyoming and Montana
pursuant to the Purchase and Sale Agreement, the Assignment, the Promissory Note
and the Deed of Trust (collectively the "RMG Transaction Instruments") described
on Exhibit "A" to the Twelfth Amendment.

2.       Conditions Precedent in Connection with the Twelfth Amendment.
 The Twelfth Amendment shall not be binding on the Bank until satisfaction of
the following conditions precedent:

                  (a) Receipt of Twelfth Amendment and Compliance Certificate.
         Bank shall have received multiple fully executed counterparts of the
         Twelfth Amendment, as requested by Bank, and the Compliance Certificate
         duly executed by an authorized officer for Borrower.

                  (b) Receipt of RMG Transaction Instruments. Bank shall have
         received true and complete copies of multiple fully executed
         counterparts of the RMG Transaction Instruments described on Exhibit
         "A" attached to this Twelfth Amendment, as requested by Bank, duly
         executed by an authorized officer for Borrower and the other parties to
         such RMG Transaction Instruments.

                  (c) Accuracy of Representations and Warranties and No Event of
         Default. After giving effect to the Twelfth Amendment, the
         representations and warranties contained in Article IV of the Loan
         Agreement shall be true and correct in all material respects on the
         date of the Twelfth Amendment with the same effect as though such
         representations and warranties had been made on such date; and after
         giving effect to the Twelfth Amendment, no Event of Default shall have

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         occurred and be continuing or will have occurred upon the execution of
         the Twelfth Amendment.

                  (d) Legal Matters Satisfactory to Special Counsel to Bank. All
         legal matters incident to the consummation of the transactions
         contemplated by the Twelfth Amendment shall be satisfactory to the firm
         of Porter & Hedges, L.L.P., special counsel for Bank.

                  (e) Legal Fees. All reasonable legal fees and expenses owed by
         Bank to Porter & Hedges, L.L.P. in connection with the Loan Agreement
         shall have been paid by Borrower.

                  (f) No Material Adverse Change. No material adverse change
         shall have occurred since the date of the Loan Agreement in the
         condition, financial or otherwise, of Borrower.

3. Reaffirmation of Representations and Warranties. To induce Bank to enter into
this Twelfth Amendment, Borrower hereby reaffirms, as of the date hereof, after
giving effect to the Twelfth Amendment, its representations and warranties
contained in Article IV of the Loan Agreement and in all other documents
executed pursuant thereto, and additionally represents and warrants as follows:

                  A. The execution and delivery of this Twelfth Amendment and
         the performance by Borrower of its obligations under this Twelfth
         Amendment are within Borrower's power, have been duly authorized by all
         necessary corporate action, have received all necessary governmental
         approval (if any shall be required), and do not and will not contravene
         or conflict with any provision of law or of the articles of
         incorporation, charter or bylaws of Borrower or of any agreement
         binding upon Borrower.

                  B. The Loan Agreement as amended by this Twelfth Amendment,
         represents the legal, valid and binding obligations of Borrower,
         enforceable against Borrower in accordance with its terms, subject as
         to enforcement only to bankruptcy, insolvency, reorganization,
         moratorium or other similar laws affecting the enforcement of
         creditors' rights generally.

                  C. No Event of Default or Unmatured Event of Default has
         occurred and is continuing as of the date hereof.

                  D. The RMG Transaction Instruments delivered by Borrower to
         Bank pursuant to Section III(b) of the Twelfth Amendment are true and
         complete copies of the originals of each of said documents.

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4. Defined Terms. Except as amended hereby, terms used herein that are defined
in the Loan Agreement shall have the same meanings in this Twelfth Amendment.

5. Reaffirmation of Loan Agreement. This Twelfth Amendment shall be deemed to be
an amendment to the Loan Agreement, and the Loan Agreement, as further amended
hereby, is hereby ratified, approved and confirmed in each and every respect.
All references to the Loan Agreement herein and in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to the Loan
Agreement as amended hereby.

6. Entire Agreement. The Loan Agreement, as hereby further amended, embodies the
entire agreement between Borrower and Bank and supersedes all prior proposals,
agreements and understandings relating to the subject matter hereof. Borrower
certifies that it is relying on no representation, warranty, covenant or
agreement except for those set forth in the Loan Agreement as hereby further
amended and the other documents previously executed or executed of even date
herewith.

7. Governing Law. THIS TWELFTH AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. This Twelfth Amendment has been entered into in Harris
County, Texas, and it shall be performable for all purposes in Harris County,
Texas. Courts within the State of Texas shall have jurisdiction over any and all
disputes between Borrower and Bank, whether in law or equity, including, but not
limited to, any and all disputes arising out of or relating to this Twelfth
Amendment or any other Loan Document; and venue in any such dispute whether in
federal or state court shall be laid in Harris County, Texas.

8. Severability. Whenever possible each provision of this Twelfth Amendment
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Twelfth Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Twelfth Amendment.

9. Execution in Counterparts. Each party hereto acknowledges that this Agreement
may be executed in several counterparts by each party at different times and in
different locations; that each separate counterpart bearing the signature of any
party may be effectively delivered to the other parties by the delivery of an
electronic facsimile sent via telecopier; that each party so delivering any such
counterpart shall be bound by its facsimile signature thereon; and that the
signature pages from counterparts signed by each party may be collated into one
or more copies of

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this agreement, which shall constitute one and the same agreement among all
parties hereto.

10. Section Captions. Section captions used in this Twelfth Amendment are for
convenience of reference only, and shall not affect the construction of this
Twelfth Amendment.

11. Successors and Assigns. This Twelfth Amendment shall be binding upon
Borrower and Bank and their respective successors and assigns, and shall inure
to the benefit of Borrower and Bank, and the respective successors and assigns
of Bank.

12. Non-Application of Chapter 346 of Texas Finance Codes. In no event shall
Chapter 346 of the Texas Finance Code (which regulates certain revolving loan
accounts and revolving tri-party accounts) apply to this Loan Agreement as
hereby further amended or any other Loan Documents or the transactions
contemplated hereby.

13. Notice. THIS TWELFTH AMENDMENT TOGETHER WITH THE LOAN AGREEMENT, AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

         IN WITNESS WHEREOF, the parties hereto have caused this Twelfth
Amendment to be duly executed as of the day and year first above written.

BANK                                     BORROWER

COMPASS BANK                               CARRIZO OIL & GAS, INC.

By:                                        By:
   -------------------------------------      ----------------------------------
         Kathleen J. Bowen                      Frank A. Wojtek
         Vice President                         Vice President

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                                SCHEDULE 1.01(b)

                           PERMITTED CCBM INDEBTEDNESS

         The Indebtedness evidenced by that certain non-recourse promissory note
in the amount $7,500,000 dated June 29, 2001, executed by CCBM, Inc. as Maker,
payable to the order of Rocky Mountain Gas, Inc. ("RMG"), as Payee, said note
bearing interest at the rate of eight percent (8%) per annum with principal
payable in forty-one (41) equal monthly installments of $125,000.00, each, with
a balloon payment of $2,375,000.00 due forty-two (42) months from the date of
the note, the Indebtedness evidenced by said note being non-recourse to CCBM
and/or Borrower, and being secured only by CCBM's interest in the Coalbed
Methane Leases purchased by CCBM with the note; and

         Contingent liability in the aggregate amount of $5,000,000.00
representing CCBM's proportionate share of costs and expenses to be incurred in
the performance of RMG's 2001/2002 drilling program, as said drilling program is
described in Section 2.1 of the Purchase and Sale Agreement dated June 29, 2001
between CCBM, as Purchaser, and RMG, as Seller.

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                                   EXHIBIT "A"

                  COAL BED METHANE LEASE ACQUISITION DOCUMENTS

1.   Purchase and Sale Agreement dated June 29, 2001, between CCBM, as
     Purchaser, and RMG, as Seller.

2.   Partial Assignment of Bill of Sale and Conveyance dated June 29, 2001, from
     RMG and U.S. Energy Corp., collectively as Assignor, to CCBM, an Assignee.

3.   Promissory Note dated June 29, 2001, by CCBM, as Maker, payable to the
     order of RMG, as Payee, the terms of which are described on Schedule
     1.01(b) attached to this Twelfth Amendment.

4.   Mortgage and Financing Statement from CCBM, as Grantor, to RMG, as
     Mortgagee, dated June 29, 2001, covering CCBM's interest in the Coalbed
     Methane Leases to secure payment of the promissory note described in
     item 3, above.

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                             COMPLIANCE CERTIFICATE

                  I, Frank A. Wojtek, Vice President of CARRIZO OIL & GAS, INC.
(the "Company"), pursuant to Article III(a) of the Twelfth Amendment to the
First Amended, Restated, and Combined Loan Agreement dated as of August 28,
1997, by and among COMPASS BANK ("Bank") and the Company (the "Agreement") do
hereby certify, as of the date hereof, that to my knowledge:

         1.   After giving effect to the Twelfth Amendment, no Event of Default
              (as defined in the Agreement) has occurred and is continuing, and
              no Unmatured Event of Default (as defined in the Agreement) has
              occurred and is continuing;

         2.   No material adverse change has occurred in the business prospects,
              financial condition, or the results of operations of the Company
              since the date of the previous Financial Statements (as defined in
              the Agreement) provided to Bank;

         3.   After giving effect to the Twelfth Amendment, each of the
              representations and warranties of the Company contained in Article
              IV of the Agreement is true and correct in all respects.

              This certificate is executed this 25th day of July 2001.

                                        --------------------------------------
                                                Frank A. Wojtek<PAGE>
                                                                   EXHIBIT 10.28

                                 LEASE AGREEMENT

         LEASE AGREEMENT, made as of this _____ day of August, 2001, between NL
VENTURES III STAFFORD, L.P., a Texas limited partnership ("Landlord"), with an
address at c/o AIC Ventures, 301 Congress Avenue, Suite 320, Austin, Texas
78701, Attention: Paul M. Robshaw; and INPUT/OUTPUT, INC., a Delaware
corporation ("Tenant"), with an address at 12300 Charles E. Selecman Drive,
Stafford, Texas 77477, Attention: C. Robert Bunch.

         In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:

         1. DEMISE OF PREMISES. Landlord hereby demises and lets to Tenant, and
Tenant hereby takes and leases from Landlord, for the term and upon the
provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"): (a) the premises described in Exhibit "A"
hereto, together with the Appurtenances (collectively, the "Land"); (b) the
buildings, structures and other improvements now or hereafter constructed on the
Land (collectively, the "Improvements"); and (c) the fixtures, machinery,
equipment and other property described in Exhibit "B" hereto (collectively, the
"Equipment"). Certain portions of the Leased Premises are currently being
subleased to various tenants (the "Existing Tenants") pursuant to various
subleases (the "Existing Leases") heretofore entered into between Tenant and the
Existing Tenants.

         2. CERTAIN DEFINITIONS.

         "Acquisition Cost" shall mean $21,000,000.

         "Additional Rent" shall mean Additional Rent as defined in Paragraph 7.

         "Affiliate" shall mean when used with respect to a person or entity,
any other person or entity (i) which directly or indirectly (through one or more
intermediaries) controls, or is controlled by, or is under common control with,
such first mentioned person or entity, or (ii) which beneficially owns, holds,
or controls five percent (5%) or more of the interest of such first mentioned
person or entity. The term "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly, or as
trustee or executor, of the power to direct or cause the direction of the
management policies of a person or entity, whether through the ownership of
stock, as trustee or executor, by contract or credit arrangement or otherwise.

         "Alterations" shall mean all changes, additions, improvements or
repairs to, all alterations, reconstructions, renewals, replacements or removals
of, and all substitutions or replacements for, any of the Improvements or
Equipment, both interior and exterior, structural and non-structural, and
ordinary and extraordinary.

         "Appurtenances" shall mean all tenements, hereditaments, easements,
rights-of-way, rights, and privileges appurtenant to the Land, including (a)
easements over other lands granted by any Easement Agreement and (b) any
streets, ways, alleys, vaults, gores or strips of land adjoining the Land.

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         "Assignment" shall mean any assignment of rents and leases from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.

         "Basic Rent" shall mean Basic Rent as defined in Paragraph 6.

         "Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates as
defined in Paragraph 6.

         "Casualty" shall mean any loss of or damage to any property (including
the Leased Premises) included within or related to the Leased Premises.

         "Commencement Date" shall mean Commencement Date as defined in
Paragraph 5.

         "Condemnation" shall mean a Taking.

         "Condemnation Notice" shall mean notice or knowledge of the institution
of or intention to institute any proceeding for Condemnation.

         "Costs" of a Person or associated with a specified transaction shall
mean all reasonable costs and expenses incurred by such Person or associated
with such transaction, including without limitation, attorneys' fees and
expenses, court costs, brokerage fees, escrow fees, title insurance premiums,
mortgage commitment fees, mortgage points, recording fees and transfer taxes, as
the circumstances require.

         "Default Rate" shall mean the Default Rate as defined in Paragraph
7(a)(iv).

         "Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect the Leased Premises.

         "Environmental Law" shall mean (i) whenever enacted or promulgated, any
applicable federal, state, foreign and local law, statute, ordinance, rule,
regulation, license, permit, authorization, approval, consent, court order,
judgment, decree, injunction, code, requirement or agreement with any
governmental entity, (x) relating to pollution (or the cleanup thereof), or the
protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Conditions or Hazardous Activities, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations or injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes,

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without limitation, the federal Comprehensive Environmental Response
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the federal Water Pollution Control Act, the federal Clean
Air Act, the federal Clean Water Act, the Federal Resources Conservation and
Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments to
RCRA), the federal Solid Waste Disposal Act, the federal Toxic Substance Control
Act, the federal Insecticide, Fungicide and Rodenticide Act, the federal
Occupational Safety and Health Act of 1970, the federal National Environmental
Policy Act and the Federal Hazardous Materials Transportation Act, each as
amended and as now or hereafter in effect and any similar state or local Law.

         "Environmental Violation" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring, injection,
leaching, release, seepage, filtration or transporting of any Hazardous
Substance at, upon, under, onto or within the Leased Premises, or from the
Leased Premises to the environment, in violation of any Environmental Law or in
excess of any reportable quantity established under any Environmental Law or
which could result in any liability to Landlord, Tenant or Lender, any Federal,
state or local government or any other Person for the costs of any removal or
remedial action or natural resources damage or for bodily injury or property
damage, any deposit, storage, dumping, placement or use of any Hazardous
Substance at, upon, under or within the Leased Premises or which extends to any
adjoining property in violation of any Environmental Law or in excess of any
reportable quantity established under any Environmental Law or which could
result in any liability to any Federal, state or local government or to any
other Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (c) the abandonment or
discarding of any barrels, containers or other receptacles containing any
Hazardous Substances in violation of any Environmental Laws, (d) any activity,
occurrence or condition which could result in any liability, cost or expense to
Landlord or Lender or any other owner or occupier of the Leased Premises, or
which could result in a creation of a lien on the Leased Premises under any
Environmental Law, or (e) any material violation of or noncompliance with any
Environmental Law.

         "Equipment" shall mean the Equipment as defined in Paragraph 1.

         "Event of Default" shall mean an Event of Default as defined in
Paragraph 22(a).

         "Fair Market Value" shall mean with respect to a determination made in
connection with the sale of the Leased Premises, the higher of (A) the fair
market value of the Leased Premises as of the Relevant Date as if unaffected and
unencumbered by this Lease or (B) the fair market value of the Leased Premises
as of the Relevant Date as affected and encumbered by this Lease with the
residual value determined on the basis of a "value in use" appraisal.

         "Fair Rental Value" shall mean (solely for the purpose of calculating
fair rental value of the Leased Premises during any Renewal Term, as provided in
Paragraph 6(b) of this Lease) the rental rate that a ready and willing tenant
would pay as of the commencement of such Renewal Term as basic rent for a 5-year
term to a ready and willing landlord for leased premises comparable to the
Leased Premises in the market area in which the Leased Premises are located, if
such property were exposed for lease on the open market for a reasonable period
of time, and taking into account all of the purposes for which such property may
be used and not just the uses of the Leased Premises permitted under this

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Lease. For all purposes of this Lease, Fair Rental Value shall be determined in
accordance with the same procedures specified in Paragraph 29 for the
determination of Fair Market Value, except as otherwise provided and that where
the term "Fair Market Value" appears in such paragraph it shall be read as "Fair
Rental Value" and subparagraphs (b) and (c) of such paragraph shall not apply.

         "Fair Market Value Date" shall mean the date when the Fair Market Value
is determined in accordance with Paragraph 29.

         "Federal Funds" shall mean federal or other immediately available funds
which at the time of payment are legal tender for the payment of public and
private debts in the United States of America.

         "Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance; (ii) causes or results in (or threatens to cause or result
in) the release, seepage, spill, leak, flow, discharge or emission of any
Hazardous Substance into the environment (including the air, ground water,
watercourses or water systems) (iii) involves the containment or storage of any
Hazardous Substance; or (iv) would use the Leased Premises or any portion
thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any Environmental
Law.

         "Hazardous Condition" means any condition which would support any claim
or liability under any Environmental Law, including the presence of underground
storage tanks.

         "Hazardous Substance" means (i) any substance, material, product,
petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, manmade or the by-product of any process, that
is toxic, harmful or hazardous or acutely hazardous to the environment or public
health or safety or (ii) any substance supporting a claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law. Hazardous Substances include, without limitation, any toxic
or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead and
polychlorinated biphenyls.

         "Impositions" shall mean the Impositions as defined in Paragraph 9(a).

         "Improvements" shall mean the Improvements as defined in Paragraph 1.

         "Indemnitee" shall mean an Indemnitee as defined in Paragraph 15.

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<PAGE>

         "Insurance Requirements" shall mean the requirements of all insurance
policies required to be maintained in accordance with this Lease.

         "Land" shall mean Land as defined in Paragraph 1.

         "Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.

         "Lease" shall mean this Lease Agreement.

         "Lease Year" shall mean, with respect to the first Lease Year, the
period commencing on the Commencement Date and ending at midnight on the last
day of the twelfth (12th) consecutive calendar month following the month in
which the Commencement Date occurred, and each succeeding twelve (12) month
period during the Term.

         "Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.

         "Legal Requirements" shall mean the requirements of all present and
future Laws (including but not limited to Environmental Laws and Laws relating
to accessibility to, usability by, and discrimination against, disabled
individuals) and all covenants, restrictions and conditions now or hereafter of
record which may be applicable to Tenant or to any of the Leased Premises, or to
the use, manner of use, occupancy, possession, operation, maintenance,
alteration, repair or restoration of any of the Leased Premises, even if
compliance therewith necessitates structural changes or improvements or results
in interference with the use or enjoyment of any of the Leased Premises.

         "Lender" shall mean the lender providing acquisition financing for
Landlord's acquisition of the Leased Premises from Tenant, and such lender's
successors and assigns, and any other person or entity (and their respective
successors and assigns) which may, after the date hereof, make a Loan to
Landlord or is the holder of any Note.

         "Letter of Credit" shall mean an irrevocable standby letter of credit
issued to Landlord by a financially sound national banking association having
assets in excess of $50,000,000,000 and otherwise reasonably acceptable to
Landlord, the proceeds of which shall be available to Landlord without the need
for Landlord to satisfy any requirements or conditions whatsoever other than
delivery of (a) Landlord's sight draft to the issuing institution with reference
to the appropriate letter of credit number for the Letter of Credit, as set
forth therein and (b) (i) a certificate signed by Landlord certifying that an
Event of Default has occurred and is continuing under the Lease, or (ii) a
certificate signed by Landlord certifying that Tenant has canceled or terminated
the Letter of Credit or failed to renew the Letter of Credit at least thirty
(30) days prior to its stated expiration date. The Letter of Credit shall be
valid for an initial period of one (1) year from and after the date of its
issuance and, by its express terms, shall provide (i) that its term shall
automatically be extended for successive one (1) year periods unless at least
thirty (30) days prior to the expiration of the initial one year term or any one
year

                                       5
<PAGE>

extension (as applicable) the issuer provides Landlord with written notification
that it will not be extended, and (ii) that Landlord may assign (whether by way
of outright or collateral assignment) all or any portion of its interest in the
Letter of Credit to Lender or any other Person (including, without limitation,
any Third Party Purchaser).

         "Loan" shall mean any loan made by one or more Lenders to Landlord,
which loan is secured by a Mortgage and Assignment and evidenced by a Note.

         "Monetary Obligations" shall mean Rent and all other sums properly
payable by Tenant under this Lease to Landlord, to any third party on behalf of
Landlord or to any Indemnitee.

         "Mortgage" shall mean any mortgage or deed of trust from Landlord to a
Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.

         "Net Award" shall mean (a) the entire award payable to Landlord or
Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a), as the case may be, less any reasonable expenses
incurred by Landlord and Lender in collecting such award or proceeds.

         "Note" shall mean any promissory note evidencing Landlord's obligation
to repay a Loan, as the same may be amended, supplemented or modified.

         "Partial Casualty" shall mean any Casualty which does not constitute a
Termination Event.

         "Partial Condemnation" shall mean any Condemnation which does not
constitute a Termination Event.

         "Permitted Encumbrances" shall mean those covenants, restrictions,
reservations, liens, conditions and easements and other encumbrances, other than
any Mortgage or Assignment, listed on Exhibit "C" hereto (but such listing shall
not be deemed to revive any such encumbrances that have expired or terminated or
are otherwise invalid or unenforceable).

         "Person" shall mean an individual, partnership, association,
corporation or other entity.

         "Prepayment Premium" shall mean any payment (other than a regularly
scheduled payment of principal and/or interest which Landlord is required to
make under a Note or a Mortgage) by reason of any prepayment by Landlord of any
principal due under a Note or Mortgage, and which may be (in lieu of such
prepayment premium or prepayment penalty) a "make whole" clause requiring a
prepayment premium in an amount determined by Lender to be sufficient to
compensate the Lender for the loss of the benefit of its bargain due to a
prepayment. Without limiting the foregoing, as used herein, the term "Prepayment
Premium" shall include, without limitation, any and all defeasance payments,
yield maintenance premiums and other costs, fees, expenses and charges incurred
by, or imposed by Lender

                                       6
<PAGE>

upon, Landlord of as result of any such prepayment of Loan principal by
Landlord. There will be no Prepayment Premium on any prepayment resulting from
Casualty or Condemnation.

         "Present Value" of any amount shall mean such amount discounted by a
rate per annum which is the higher of (a) the Prime Rate at the time such
present value is determined or (b) seven percent (7.0%) per annum.

         "Prime Rate" shall mean the annual interest rate as published, from
time to time, in The Wall Street Journal as the "Prime Rate" in its column
entitled "Money Rate". The Prime Rate may not be the lowest rate of interest
charged by any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event The Wall Street
Journal ceases publication or ceases to publish the "Prime Rate" as described
above, the Prime Rate shall be the average per annum discount rate (the
"Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued from
time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-day Treasury Bills are then
being issued, the Discount Rate shall be the discount rate on Treasury Bills
then being issued for the period of time closest to 91 days.

         "Relevant Amount" shall mean the Termination Amount.

         "Relevant Date" shall mean (a) the date immediately prior to the date
on which the applicable Condemnation Notice is received, in the event of a
Termination Notice under Paragraph 18 which is occasioned by a Taking, (b) the
date immediately prior to the date on which the applicable Casualty occurs, in
the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, or (c) the date when Fair Market Value is re-determined, in the event
of a re-determination of Fair Market Value pursuant to Paragraph 20(c).

         "Renewal Term" shall mean Renewal Term as defined in Paragraph 5.

         "Rent" shall mean, collectively, Basic Rent and Additional Rent.

         "Site Assessment" shall mean a Site Assessment as defined in Paragraph
10(c).

         "State" shall mean the State of Texas.

         "Surviving Obligations" shall mean any obligations of Tenant under this
Lease, actual or contingent, which arise on or prior to the expiration or prior
termination of this Lease or which survive such expiration or termination by
their own terms

         "Taking" shall mean (a) any taking or damaging of all or a portion of
any of the Leased Premises (i) in or by condemnation or other eminent domain
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any other means, or
(b) any de facto condemnation. The Taking shall be considered to have taken
place as of the later of the date actual

                                       7
<PAGE>

physical possession is taken by the condemnor, or the date on which the right to
compensation and damages accrues under the law applicable to the Leased
Premises.

         "Term" shall mean the Term as defined in Paragraph 5.

         "Termination Amount" shall mean the Fair Market Value.

         "Termination Date" shall mean Termination Date as defined in Paragraph
18.

         "Termination Event" shall mean a Termination Event as defined in
Paragraph 18.

         "Termination Notice" shall mean Termination Notice as defined in
Paragraph 18(a).

         "Third Party Purchaser" shall have the meaning ascribed to such term in
Paragraph 21(g).

         3. TITLE AND CONDITION.

                  (a) The Leased Premises are demised and let subject only to
(i) the Mortgage and Assignment presently in effect (including, without
limitation, any Mortgage, Assignment and related documents entered into
contemporaneously herewith in connection with Landlord's acquisition of the
Leased Premises), (ii) the rights of any Persons in possession of the Leased
Premises, (iii) the existing state of title of any of the Leased Premises,
including any Permitted Encumbrances, (iv) any state of facts which an accurate
survey or physical inspection of the Leased Premises might show, (v) all Legal
Requirements, including any existing violation of any thereof, and (vi) the
condition of the Leased Premises as of the commencement of the Term, without
representation or warranty by Landlord.

                  (b) Tenant acknowledges that the Leased Premises is in good
condition and repair at the inception of this Lease. LANDLORD LEASES AND WILL
LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT
ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER
CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE
MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF
THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS
FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY
OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT,
LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH
SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY,
(xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY, (v) OPERATION, (xv) THE
EXISTENCE OF ANY HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY
OR (xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT;
AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES
THAT THE LEASED PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT
THE LEASED PREMISES HAS BEEN INSPECTED BY TENANT

                                       8
<PAGE>

AND IS SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF
THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT
HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL
OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF
THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE
EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM
COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING
OTHERWISE.

                  (c) Tenant acknowledges to Landlord that Tenant has examined
the title to the Leased Premises prior to the execution and delivery of this
Lease and has found the same to be satisfactory for the purposes contemplated
hereby. Tenant acknowledges that (i) Landlord holds fee simple title to the
Leased Premises and that Tenant has only the leasehold right of possession and
use of the Leased Premises as provided herein, and (ii) Tenant either acquired
or constructed the Leased Premises and has occupied the Leased Premises for a
number of years and is familiar and satisfied with its condition.

                  (d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all assignable warranties, guaranties, indemnities and
similar rights (collectively, "Warranties") which Landlord may have against any
manufacturer, seller, engineer, contractor or builder in respect of any of the
Leased Premises. Such assignment shall remain in effect until the expiration or
earlier termination of this Lease, whereupon such assignment shall cease and all
Warranties shall automatically revert to Landlord. Tenant shall enforce the
Warranties in accordance with their respective terms.

         4. USE OF LEASED PREMISES, QUIET ENJOYMENT.

                  (a) Tenant may occupy and use the Leased Premises for general
business office purposes and uses ancillary thereto, for manufacturing, testing,
assembly, storage and shipping of goods and for any other lawful purpose with
the prior written consent of Landlord which consent shall not be unreasonably
withheld or delayed. Tenant shall not knowingly use or occupy or permit any of
the Leased Premises to be used or occupied, nor knowingly do or permit anything
to be done in or on any of the Leased Premises, in a manner which would (i)
violate any Law or Legal Requirement, (ii) make void or voidable or cause any
insurer to cancel any insurance required by this Lease, or make it impossible to
obtain any such insurance at commercially reasonable rates, (iii) make void or
voidable, cancel or cause to be canceled or release any Warranty that would have
a material adverse effect on the value of Landlord's interest in the Leased
Premises, (iv) cause structural injury to any of the Improvements or (v)
constitute a public or private nuisance or waste.

                  (b) Subject to the provisions hereof, so long as no Event of
Default has occurred and is continuing, Tenant shall quietly hold, occupy and
enjoy the Leased Premises throughout the Term, without any hindrance, ejection
or molestation by Landlord with respect to matters that arise after the date
hereof, provided that Landlord or its agents may enter upon and examine any of
the Leased Premises at such reasonable times as Landlord may select and upon at
least 48 hours notice to Tenant

                                       9
<PAGE>

(except in the case of an emergency, in which case only reasonable notice shall
be required) for the purpose of inspecting the Leased Premises, verifying
compliance or noncompliance by Tenant with its obligations hereunder and the
existence or non-existence of an Event of Default or event which with the
passage of time and/or notice would constitute an Event of Default, showing the
Leased Premises to prospective Lenders and purchasers and taking such other
action with respect to the Leased Premises as is permitted by any provision
hereof; provided that such entry and examination shall not unreasonably
interfere with Tenant's or any subtenant's operations and shall be subject to
any safety or other rules and regulations of Tenant.

         5. TERM.

                  (a) Subject to the provisions hereof, Tenant shall have and
hold the Leased Premises for an initial term (the "Initial Term") commencing on
the date hereof (the "Commencement Date") and ending on the last day of the one
hundred forty-fourth (144th) consecutive full calendar month following the date
hereof (the "Expiration Date"). The Initial Term and any Renewal Terms properly
exercised in accordance with the provisions of sub-paragraph (b) of this
Paragraph 5 are collectively herein referred to as the "Term".

                  (b) Provided that if, on or prior to the Expiration Date or
any other Renewal Date (as hereinafter defined) this Lease shall not have been
terminated pursuant to any provision hereof, then on the Expiration Date and on
the fifth (5th), tenth (10th) and fifteenth (15th) anniversaries of the
Expiration Date (the Expiration Date and such anniversaries being a "Renewal
Date"), the Term may be extended for three (3) subsequent additional periods of
five (5) years each, with twelve (12) months prior written notice by Tenant to
Landlord before each Renewal Date, as applicable. Any such extension of the Term
is herein referred to as a "Renewal Term" and shall be subject to all of the
provisions of this Lease, as the same may be amended, supplemented or modified.

                  (c) If Tenant fails to exercise its option to extend or
further extend the Term, or if an Event of Default occurs, then Landlord shall
have the right during the remainder of the Term then in effect and, in any
event, Landlord shall have the right during the last year of the Term, to (i)
advertise the availability of the Leased Premises for sale or reletting and to
erect upon the Leased Premises signs indicating such availability and (ii) show
the Leased Premises to prospective purchasers or tenants or their agents at such
reasonable times as Landlord may select.

         6. BASIC RENT.

                  (a) Initial Term. Tenant shall pay to Landlord, as base annual
rent for the Leased Premises ("Basic Rent") in accordance to the schedule
attached hereto as Exhibit "D" and made a part hereof for all purposes. Basic
Rent shall be payable in twelve equal monthly installments in the amount of
one-twelfth (1/12) of the annual Basic Rent for the Lease Year in which they
apply, and each such monthly installment shall be due and payable monthly in
advance on or before the twenty-fifth (25th) day of the immediately preceding
month to which it pertains (each such day being a "Basic Rent Payment Date").
Pro rata Basic Rent for the period from the date hereof through the last day of
the month hereof shall be paid on the date hereof. Should Tenant vacate more
than fifty percent (50%)

                                       10
<PAGE>

of the Leased Premises for more than 365 consecutive days during the last four
(4) years of the Term, or during any Renewal Term, then Tenant shall pay Basic
Rent from that point forward equaling the Basic Rent otherwise due multiplied by
1.2.

                  (b) Renewal Terms. Annual Basic Rent for each Renewal Term
shall be ninety-five percent (95%) of the Fair Rental Value (on an annualized
basis) of the Leased Premises.

                  (c) Payment Terms. Until such time as Landlord provides Tenant
with written instructions to the contrary given at least fifteen (15) days in
advance of the first rental payment to which they apply, Tenant shall make all
payments of Basic Rent in cash, by certified funds or by wire transfer of
immediately available funds in United States Dollars, to Landlord (or Lender, as
applicable) as follows:

                  Bank: Bank of America
                  ABA #: 111000025
                  Account Number: 004792802114
                  Account Name: "NL Ventures III Stafford, L.P. Clearing Account
                  as mortgagor for the benefit of Morgan Guaranty Trust Company
                  of New York as mortgagee"
                  Bank contact: Keith Price @ 214-559-6308
                  Bank of America
                  5500 Preston Road, Suite B
                  Dallas, TX 75205-1653

         7. ADDITIONAL RENT.

                  (a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):

                           (i) except as otherwise specifically provided herein,
all reasonable costs and expenses of Tenant, Landlord and any other Persons
specifically referenced herein which are incurred in connection or associated
with (A) the ownership, use, non-use, occupancy, possession, operation,
condition, design, construction, maintenance, alteration, repair or restoration
of any of the Leased Premises, including, but not limited to third party
management fees whether said property manager is appointed by Landlord or Lender
(provided that Landlord and Lender shall only have the right to appoint such
manager following and during the continuance of an Event of Default), (B) the
performance of any of Tenant's obligations under this Lease, (C) any sale or
other transfer of any of the Leased Premises to Tenant under this Lease, (D) any
Condemnation proceedings, (E) the adjustment, settlement or compromise of any
insurance claims involving or arising from any of the Leased Premises, (F) the
prosecution, defense or settlement of any litigation involving or arising from
any of the Leased Premises, this Lease, or the sale of the Leased Premises to
Landlord, (G) the exercise or enforcement by Landlord, its successors and
assigns, of any of its rights under this Lease, (H) any amendment to or
modification or termination of this Lease made at the request of Tenant, (I)
Costs of Landlord's counsel incurred in connection with any act undertaken by
Landlord (or its counsel) at the request of Tenant, or incurred in connection
with any act of Landlord performed on behalf of Tenant and (J) any other items
specifically required to be paid by Tenant under this Lease;

                                       11
<PAGE>

                           (ii) if all or any portion of any installment of
Basic Rent remains due and not paid after the date such amounts are due taking
into consideration any applicable cure periods, an amount equal to five percent
(5%) of the amount of such unpaid installment or portion thereof;

                           (iii) a sum equal to any additional sums (including
any late charge, default penalties, interest and fees of Lender's counsel) which
are payable by Landlord to any Lender under any Note by reason of Tenant's late
payment or non-payment of Basic Rent or by reason of an Event of Default; and

                           (iv) interest at the rate (the "Default Rate") of
four percent (4%) over the Prime Rate per annum on the following sums until paid
in full: (A) all overdue installments of Basic Rent from the respective due
dates thereof taking into consideration any applicable cure periods, (B) all
overdue amounts of Additional Rent relating to obligations which Landlord shall
have paid on behalf of Tenant from the date of payment thereof by Landlord
taking into consideration any applicable cure periods, and (C) all other overdue
amounts of Additional Rent, from the date when any such amount becomes overdue
taking into consideration any applicable cure periods.

                  (b) Tenant shall pay and discharge (i) any properly payable
Additional Rent referred to in Paragraph 7(a)(i) when the same shall become due,
provided that amounts which are billed to Landlord or any third party, but not
to Tenant, shall be paid within fifteen (15) days after Landlord's demand for
payment thereof, and (ii) any other properly payable Additional Rent, within
fifteen (15) days after Landlord's demand for payment thereof.

                  (c) In no event shall amounts payable under Paragraph
7(a)(ii), (iii) and (iv) exceed the maximum amount permitted by applicable Law.

         8. NET LEASE, NON-TERMINABILITY.

                  (a) This is a net lease and all Monetary Obligations shall be
paid without notice or demand and without set-off, counterclaim, recoupment,
abatement, suspension, deferment, diminution, deduction, reduction or defense
(collectively, a "Set-Off'").

                  (b) Except as otherwise expressly provided herein, this Lease
and the rights of Landlord and the obligations of Tenant hereunder shall not be
affected by any event or for any reason, including the following: (i) any damage
to or theft, loss or destruction of any of the Leased Premises, provided the Net
Award, if any, is made available to tenant for repair or restoration, (ii) any
Condemnation, (iii) any default on the part of Landlord hereunder or under any
Note, Mortgage, Assignment or any other agreement, (iv) any latent or other
defect in any of the Leased Premises, (v) the breach of any warranty of any
seller or manufacturer of any of the Equipment, (vi) any violation of any
provision of this Lease by Landlord (other than Paragraph 4(b)), (vii) the
bankruptcy, insolvency, reorganization, composition, readjustment, liquidation,
dissolution or winding-up of, or other proceeding affecting Landlord, (viii) the
exercise of any remedy, including foreclosure, under any

                                       12
<PAGE>

Mortgage or Assignment, (ix) any action with respect to this Lease (other than
the disaffirmance hereof) which may be taken by Landlord, any trustee, receiver
or liquidator of Landlord or any court under the Federal Bankruptcy Code or
otherwise, (x) any interference with Tenant's use of the Leased Premises other
than by Landlord or Lender, (xii) market or economic changes, or (xiii) any
other cause, whether similar or dissimilar to the foregoing, any present or
future Law to the contrary notwithstanding.

                  (c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary Obligations shall continue to
be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal
thereto), and the obligations of Tenant hereunder shall continue unaffected
unless the requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lease. The obligation to pay Rent or
amounts equal thereto shall not be affected by any collection of rents by any
governmental body pursuant to a tax lien or otherwise resulting from Tenant's
actions or omissions, even though such obligation results in a double payment of
Rent. All Rent payable by Tenant hereunder shall constitute "rent" for all
purposes (including Section 502(b)(6) of the Federal Bankruptcy Code).

                  (d) Except as otherwise expressly provided herein, Tenant
shall have no right and hereby waives all rights which it may have under any Law
(i) to quit, terminate or surrender this Lease or any of the Leased Premises, or
(ii) to any Set-Off of any Monetary Obligations.

         9. PAYMENT OF IMPOSITIONS.

                  (a) Tenant shall, before interest or penalties are due
thereon, pay and discharge all taxes (including real and personal property,
franchise, sales and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all assessments and
levies, all permit, inspection and license fees, all rents and charges for
water, sewer, utility and communication services relating to any of the Leased
Premises, all ground rents and all other public charges whether of a like or
different nature, even if unforeseen or extraordinary, imposed upon or assessed
against (i) Tenant, (ii) Tenant's leasehold interest in the Leased Premises,
(iii) any of the Leased Premises, (iv) Landlord as a result of or arising in
respect of the acquisition, ownership, occupancy, leasing, use, possession or
sale of any of the Leased Premises, any activity conducted on any of the Leased
Premises, or the Rent, or (v) any Lender by reason of any Note, Mortgage,
Assignment or other document evidencing or securing a loan and which (as to this
clause (v)) is normal and customary in the State and Landlord has agreed to pay
(collectively, the "Impositions"); provided, that nothing herein shall obligate
Tenant to pay (A) income, excess profits or other taxes to Landlord (or Lender)
which are determined on the basis of Landlord's (or Lender's) net income or net
worth (unless such taxes are in lieu of or a substitute for any other tax,
assessment or other charge upon or with respect to the Leased Premises which, if
it were in effect, would be payable by Tenant under the provisions hereof or by
the terms of such tax, assessment or other charge), (B) any estate, inheritance,
succession, gift, franchise or similar tax imposed on Landlord, or (C) any
capital gains tax imposed on Landlord, in connection with the sale of the Leased
Premises to any Person. If any Imposition may be paid in installments without
interest or penalty, Tenant shall have the option to pay such Imposition in
installments; in such event, Tenant shall be liable only for those installments
which accrue or become due and payable during the Term. Tenant shall prepare and
file all tax reports required by governmental authorities which relate to the

                                       13
<PAGE>

Impositions. Tenant shall deliver to Landlord (1) copies of all settlements and
notices pertaining to the Impositions which may be issued by any governmental
authority within ten (10) days after Tenant's receipt thereof, (2) receipts for
payment of all taxes required to be paid by Tenant hereunder within thirty (30)
days after the due date thereof, and (3) receipts for payment of all other
Impositions within ten (10) days after Landlord's request therefor.

                  (b) Landlord shall have the right at any time following the
occurrence of (i) an Event of Default and until such Event of Default is cured,
(ii) Tenant's failure to pay the real estate taxes or the insurance premiums
timely or to provide evidence of such payment to both Landlord and Lender within
thirty (30) days following the date such payment was due, or (iii) Tenant's
breach of Tenant's Financial Covenants which requires Tenant to obtain the
Letter of Credit, to require Tenant to pay to Landlord an additional monthly sum
(each an "Escrow Payment") sufficient to pay the Escrow Charges (as hereinafter
defined) as they become due. As used herein, "Escrow Charges" shall mean real
estate taxes on the Leased Premises or payments in lieu thereof and premiums on
insurance required by this Lease. Landlord shall reasonably determine the amount
of the Escrow and of each Escrow Payment, unless the Escrow is required by
Lender, in which case the amount of the Escrow shall be as reasonably required
by Lender. As long as the Escrow Payments are being held by Landlord, the Escrow
Payments shall not be commingled with other funds of Landlord or other Persons
and interest thereon shall accrue for the benefit of Tenant from the date such
monies are received and invested until the date such monies are disbursed to pay
Escrow Charges. Landlord shall apply the Escrow Payments to the payment of the
Escrow Charges in such order or priority as Landlord (or Lender, as applicable)
shall determine or as required by law. If at any time the Escrow Payments
theretofore paid to Landlord shall be insufficient for the payment of the Escrow
Charges, Tenant, within ten (10) days after Landlord's demand therefor, shall
pay the amount of the deficiency to Landlord.

         10. COMPLIANCE WITH LAWS AND EASEMENT AGREEMENTS; ENVIRONMENTAL
MATTERS.

                  (a) Tenant shall, at its expense, use reasonable commercial
efforts to comply with and conform to, and cause the Leased Premises and any
other Person occupying any part of the Leased Premises to comply with and
conform to, all Insurance Requirements and Legal Requirements (including all
applicable Environmental Laws). Tenant shall use reasonable commercial efforts
not to (i) cause, permit or suffer to occur any Environmental Violation or (ii)
permit any sublessee, assignee or other Person occupying the Leased Premises
under or through Tenant to cause, permit or suffer to occur any Environmental
Violation and, at the request of Landlord or Lender, Tenant shall promptly
remediate or undertake any other appropriate response action to correct any
existing Environmental Violation.

                  (b) Tenant, at its sole cost and expense, will at all times
promptly and faithfully abide by, discharge and perform all of the covenants,
conditions and agreements contained in any Easement Agreement on the part of
Landlord or the occupier to be kept and performed thereunder. Tenant will not
itself modify, amend or terminate any Easement Agreement, give any consent or
approval thereunder, or enter into any new Easement Agreement without, in each
case, the prior written consent of Landlord, which consent will not be
unreasonably withheld.

                                       14
<PAGE>

                  (c) If required by any Lender, prospective Lender or purchaser
or if an Event of Default exists, if Landlord has reasonable cause to believe
that an Environmental Violation exists or upon any assignment of Tenant's
interest in this Lease and upon prior written notice from Landlord, Tenant shall
permit such persons as Landlord may designate ("Site Reviewers") to visit the
Leased Premises and perform environmental site investigations and assessments
("Site Assessments") on the Leased Premises for the purpose of determining
whether there exists on the Leased Premises any Environmental Violation or any
condition which could result in any Environmental Violation. Such Site
Assessments may include both above and below the ground testing for
Environmental Violations and such other tests as may be necessary, in the
reasonable opinion of the Site Reviewers, to conduct the Site Assessments.
Tenant shall supply to the Site Reviewers such historical and operational
information regarding the Leased Premises as may be reasonably requested by the
Site Reviewers in Tenant's possession or control to facilitate the Site
Assessments, and shall make available for meetings with the Site Reviewers
appropriate personnel having knowledge of such matters. The cost of performing
and reporting Site Assessments shall be paid by Landlord.

                  (d) If an Environmental Violation occurs or is found to exist
and, in Landlord's reasonable judgment, the cost of remediation of, or other
response action with respect to, the same is likely to exceed $250,000, Tenant
shall provide to Landlord, within ten (10) days after Landlord's request
therefor, adequate financial assurances that Tenant will effect such remediation
in accordance with applicable Environmental Laws. Such financial assurances
shall be a bond or letter of credit reasonably satisfactory to Landlord in form
and substance and in an amount equal to or greater than Landlord's reasonable
estimate, based upon a Site Assessment performed pursuant to Paragraph 10(c), of
the anticipated cost of such remedial action.

                  (e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist and the Term would otherwise
terminate or expire and after good faith efforts by Landlord, Landlord is unable
to relet the Leased Premises at a commercially reasonable rental rate, then, at
the option of Landlord, the Term shall be automatically extended beyond the date
of termination or expiration and this Lease shall remain in full force and
effect beyond such date until the earlier to occur of (i) the completion of all
remedial action in accordance with applicable Environmental Laws, (ii) the date
specified in a written notice from Landlord to Tenant terminating this Lease, or
(iii) the expiration of two (2) years.

                  (f) If Tenant fails to commence correction of, within a
reasonable time of notice thereof, and to continue such corrective actions
diligently, in good faith and without interruption until complete, any
Environmental Violation which occurs or is found to exist, Landlord shall have
the right (but no obligation) to take any and all actions as Landlord shall
reasonably deem necessary or advisable in order to cure such Environmental
Violation.

                  (g) Tenant shall notify Landlord promptly after becoming aware
of any material Environmental Violation (or alleged Environmental Violation) or
noncompliance with any of the covenants contained in this Paragraph 10 and shall
forward to Landlord promptly upon receipt thereof copies of all orders, reports,
notices, permits, applications or other communications relating to any such
violation or noncompliance.

                                       15
<PAGE>

                  (h) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain covenants
of the other party not to knowingly at any time (i) cause any Environmental
Violation to occur or (ii) permit any Person occupying the Leased Premises
through said subtenant or concessionaire to knowingly cause any Environmental
Violation to occur.

         11. LIENS; RECORDING.

                  (a) Subject to the provisions of Paragraph 14 of this Lease,
Tenant shall not, directly or indirectly, create or permit to be created or to
remain and shall promptly (within sixty (60) days) discharge or remove any lien,
levy or encumbrance on any of the Leased Premises or on any Rent or any other
sums payable by Tenant under this Lease, other than any Mortgage or Assignment,
the Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. NOTICE IS
HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR
OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES, OR MATERIALS SHALL
ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED
PREMISES. LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL
PROMPTLY, POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY
OF LANDLORD.

                  (b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted by
any present or future Law in order to evidence the respective interests of
Landlord and Tenant in the Leased Premises, and shall cause a memorandum of this
Lease (or, if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and in such places
as may be required or permitted by any present or future Law in order to protect
the validity and priority of this Lease.

         12. MAINTENANCE AND REPAIR.

                  (a) Tenant shall at all times maintain the Leased Premises in
good repair and appearance and fit to be used for their intended use in
accordance with the practices generally recognized as then acceptable by other
companies in its industry and, in the case of the Equipment, in as good
mechanical condition as it was on the later of the date hereof or the date of
its installation, except for ordinary wear and tear. Tenant shall take every
other action reasonably necessary or appropriate for the preservation and safety
of the Leased Premises. Tenant shall promptly make all Alterations of every kind
and nature, whether foreseen or unforeseen, which may be required to comply with
the foregoing requirements of this Paragraph 12(a). Landlord shall not be
required to make any Alteration, whether foreseen or unforeseen, or to maintain
any of the Leased Premises in any way, and Tenant hereby expressly waives any
right which may be provided for in any Law now or hereafter in effect to make
Alterations at the expense of Landlord or to require Landlord to make
Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12 shall
be made in conformity with the provisions of Paragraph 13.

                                       16
<PAGE>

                  (b) If any Improvement, now or hereafter constructed, shall
(i) encroach upon any setback or any property, street or right-of-way adjoining
the Leased Premises, (ii) violate the provisions of any restrictive covenant
affecting the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject, or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving notice or otherwise acquiring knowledge thereof, either (A)
obtain from all necessary parties waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation,
hindrance, obstruction or impairment, whether the same shall affect Landlord,
Tenant or both, or (B) take such action as shall be reasonably necessary to
remove all such encroachments, hindrances or obstructions and to end all such
violations or impairments, including, if necessary, making Alterations.

         13. ALTERATIONS AND IMPROVEMENTS.

                  (a) Unless and only to the extent otherwise provided in any
Mortgage or Assignment, Tenant shall have the right, without having obtained the
prior written consent of Landlord and Lender and provided that no Event of
Default then exists, to make (i) Alterations or a series of related Alterations
that, as to any such Alterations or series of related Alterations, do not cost
in excess of $250,000, and (ii) to install accessions to the Equipment or new
Equipment of the same type, so long as at the time of construction or
installation of any such Equipment or Alterations no Event of Default exists and
the value and utility of the Leased Premises is not diminished thereby. If the
cost of any of the above-described Alterations, or series of related
Alterations, is in excess of $250,000, the prior written approval of Landlord
and Lender shall be required, such approval not to be unreasonably withheld or
delayed. Notwithstanding any provision hereof to the contrary, Tenant shall have
the right, without the consent of Landlord or Lender, to remodel, reconfigure,
alter and improve any interior improvements, fixtures, finishes and equipment,
provided such Alterations do not materially diminish the value of the Leased
Premises. If Tenant determines the need for the construction of additional
buildings on the Leased Premises or a major expansion of the Improvements (as
defined in Paragraph 1), then Tenant shall present its needs and expansion plans
to the Landlord. Should Landlord agree to fund the construction of any
additional buildings or major expansion as requested by Tenant then upon
completion of construction this Lease will be amended to incorporate the
additional buildings or major expansion into the definition of Leased Premises,
Rent shall be adjusted upon commercially reasonable terms agreeable to both
Landlord and Tenant, and any other terms of this Lease necessary to set forth
the Tenant's right to use, possess and occupy the additional buildings or major
expansion upon the same terms and conditions as Tenant currently enjoys as to
the Leased Premises under this Lease shall be added. Should Landlord, however,
refuse to fund the construction of any additional buildings or major expansion,
then Tenant shall have the right, but not the obligation, to fund the
construction of any additional buildings or major expansion, so long as at the
time of construction of any such additional buildings or major expansion no
Event of Default exists and the value and utility of the Leased Premises is not
diminished thereby. Should Tenant choose to fund the construction then Tenant
shall adhere to all requirements as set forth in Paragraph 13(b) and upon
completion of the construction the Lease will be amended as contemplated above,
save for and except, Base Rent will not be increased.

                                       17
<PAGE>

                  (b) If Tenant makes any Alterations pursuant to this Paragraph
13 or as required by Paragraph 12 or 17, or constructs any additional buildings
or major expansion (such Alterations and actions being hereinafter collectively
referred to as "Work"), whether or not Landlord's consent is required, then (i)
the market value of the Leased Premises shall not be lessened by any such Work
or its usefulness impaired, (ii) all such Work shall be performed by Tenant in a
good and workmanlike manner, (iii) all such Work shall be expeditiously
completed in compliance with all Legal Requirements, (iv) all such Work shall
comply with the Insurance Requirements, (v) if any such Work involves the
replacement of Equipment or parts thereto, all replacement Equipment or parts
shall have a value and useful life equal to the greater of (A) the value and
useful life on the date hereof of the Equipment being replaced or (B) the value
and useful life of the Equipment being replaced immediately prior to the
occurrence of the event which required its replacement, (vi) subject to the
provisions of Paragraph 14 of this Lease, Tenant shall promptly discharge or
remove all liens filed against any of the Leased Premises arising out of such
Work, (vii) Tenant shall procure and pay for all permits and licenses required
in connection with any such Work, (viii) all such Work shall be the property of
Landlord and shall be subject to this Lease, and Tenant shall execute and
deliver to Landlord any document requested by Landlord evidencing the assignment
to Landlord of all estate, right, title and interest (other than the leasehold
estate created hereby) of Tenant or any other Person thereto or therein, and
(ix) Tenant shall comply, to the extent requested by Landlord or required by
this Lease, with the provisions of Paragraph 19(a), whether or not such work
involves restoration of the Leased Premises.

         14. PERMITTED CONTESTS.

                  Notwithstanding any other provision of this Lease, Tenant
shall not be required to (a) pay any Imposition, (b) discharge or remove any
lien referred to in Paragraph 11 or 13 or (c) take any action with respect to
any encroachment, violation, hindrance, obstruction or impairment referred to in
Paragraph 12(b) (such non-compliance with the terms hereof being hereinafter
referred to collectively as "Permitted Violations"), so long as at the time of
such contest no Event of Default exists and so long as Tenant shall contest, in
good faith, the existence, amount or validity thereof, the amount of the damages
caused thereby, or the extent of its or Landlord's liability therefor by
appropriate proceedings which shall operate during the pendency thereof to
prevent or stay (i) the collection of, or other realization upon, the Permitted
Violation so contested, (ii) the sale, forfeiture or loss of any of the Leased
Premises or any Rent to satisfy or to pay any damages caused by any Permitted
Violation, (iii) any interference with the use or occupancy of any of the Leased
Premises, (iv) any interference with the payment of any Rent, or (v) the
cancellation or increase in the rate of any insurance policy or a statement by
the carrier that coverage will be denied. Tenant shall provide Landlord security
which is satisfactory, in Landlord's reasonable judgment, to assure that such
Permitted Violation is corrected, including all Costs, interest and penalties
that may be incurred or become due in connection therewith. While any
proceedings which comply with the requirements of this Paragraph 14 are pending
and the required security is held by Landlord, Landlord shall not have the right
to correct any Permitted Violation thereby being contested unless Landlord is
required by law to correct such Permitted Violation and Tenant's contest does
not prevent or stay such requirement as to Landlord. Each such contest shall be
promptly and diligently prosecuted by Tenant to a final conclusion, except that
Tenant, so long as the conditions of this Paragraph 14 are at all times complied
with, has the right to attempt to settle or compromise such contest through
negotiations. Tenant shall pay any and all losses,

                                       18
<PAGE>

judgments, decrees and Costs in connection with any such contest and shall
promptly after the final determination of such contest, fully pay and discharge
the amounts which shall be levied, assessed, charged or imposed or be determined
to be payable therein or in connection therewith, together with all penalties,
fines, interest and Costs thereof or in connection therewith, and perform all
acts the performance of which shall be ordered or decreed as a result thereof.
No such contest shall subject Landlord to the risk of any civil or criminal
liability.

         15. INDEMNIFICATION.

                  (a) Tenant shall pay, protect, indemnify, defend, save and
hold harmless Landlord, Lender and all other Persons described in clauses (i)
through (iv) of Paragraph 30 of this Lease (each an "Indemnitee") from and
against any and all liabilities, losses, damages (including punitive damages),
penalties, Costs (including reasonable attorneys' fees and costs), causes of
action, suits, claims, demands or judgments of any nature whatsoever, howsoever
caused, without regard to the form of action and whether based on strict
liability, negligence or any other theory of recovery at law or in equity
(unless caused by the gross negligence or willful misconduct of any Indemnitee)
arising or occurring during the Term and arising from (i) any matter pertaining
to the acquisition (or the negotiations leading thereto), ownership, use,
non-use, occupancy, operation, condition, design, construction, maintenance,
repair or restoration of the Leased Premises, (ii) any Casualty in any manner
arising from the Leased Premises, whether or not Indemnitee has or should have
knowledge or notice of any defect or condition causing or contributing to said
Casualty or injury or death to any Person, (iii) any violation by Tenant of any
provision of this Lease, any contract or agreement to which Tenant is a party,
any Legal Requirement or any Permitted Encumbrance or any encumbrance Tenant
consented to or the Mortgage or Assignment, or (iv) any alleged, threatened or
actual Environmental Violation, including (A) liability for response costs and
for costs of removal and remedial action incurred by the United States
Government, any state or local governmental unit or any other Person, or damages
from injury to or destruction or loss of natural resources, including the
reasonable costs of assessing such injury, destruction or loss, incurred
pursuant to Section 107 of CERCLA, or any successor section or act or provision
of any similar state or local Law, (B) liability for costs and expenses of
abatement, correction or cleanup, fines, damages, response costs or penalties
which arise from the provisions of any of the other Environmental Laws, and (C)
liability for personal injury or property damage arising under any statutory or
common-law tort theory, including damages assessed for the maintenance of a
public or private nuisance or for carrying on of a dangerous activity. TENANT
UNDERSTANDS AND AGREES THAT THE FOREGOING INDEMNIFICATION OBLIGATIONS OF TENANT
ARE EXPRESSLY INTENDED TO AND SHALL INURE TO THE BENEFIT OF THE INDEMNITEES EVEN
IF SOME OR ALL OF THE MATTERS FOR WHICH SUCH INDEMNIFICATION IS PROVIDED ARE
CAUSED OR ALLEGED TO HAVE BEEN CAUSED BY THE SOLE SIMPLE, JOINT OR CONCURRENT
NEGLIGENCE OR STRICT LIABILITY OF ANY OF THE INDEMNITEES, BUT NOT TO THE EXTENT
CAUSED BY THE INDEMNITEES' GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED,
HOWEVER, THAT TENANT SHALL IN NO EVENT BE LIABLE FOR ANY CONSEQUENTIAL, PUNITIVE
OR EXEMPLARY DAMAGES ARISING FROM THE ACTS OR OMISSIONS OF ANY INDEMNITEE.

                                       19
<PAGE>

                  (b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a
conflict of interest or a dispute between Tenant and any such Indemnitee or
during the continuance of an Event of Default, retain its own counsel and defend
such action (it being understood that Landlord may, at its own cost, employ
counsel of its choice to monitor the defense of any such action), and (ii) such
Indemnitee shall notify Tenant to resist or defend such action or proceeding by
retaining counsel reasonably satisfactory to such Indemnitee, and such
Indemnitee will cooperate and assist in the defense of such action or proceeding
if reasonably requested so to do by Tenant. In the event of a conflict of
interest or dispute or during the continuance of an Event of Default, Landlord
shall have the right to select counsel, and the cost of such counsel shall be
paid by Tenant. The parties acknowledge that, with respect to claims for which
insurance is available, the rights of the parties to select counsel for the
defense of such claims shall be subject to such approval rights as the insurance
company providing coverage may have.

                  (c) The obligations of Tenant under this Paragraph 15 shall
survive any termination, expiration, rejection in bankruptcy, or assumption in
bankruptcy of this Lease.

         16. INSURANCE.

                  (a) Tenant shall maintain the following insurance on or in
connection with the Leased Premises:

                           (i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All Risk" property
policy, covering, at a minimum, loss or damage by water, fire, vandalism, riot,
malicious mischief, burglary, theft and flood (if the Leased Premises is in a
flood zone) in amounts not less than the actual replacement cost of the
building, Improvements and Equipment. Such policies shall contain Replacement
Cost and Agreed Amount Endorsements, without deduction for depreciation, and
shall contain deductibles of not more than $10,000 per occurrence; provided,
however, for so long as no Event of Default exists and Tenant has not been
required to obtain the Letter of Credit, the maximum amount of such deductible
shall be $50,000.00. Also, if the rebuildability of the Improvements is
restricted for any reason, a Law & Ordinance endorsement to the policies is
required providing coverage that is usual and customary for properties of this
type. In addition, should Tenant's premium increase by more than ten percent
(10%) from the immediately preceding year and such increase is not the result of
Tenant's intentional actions or intentional omissions, other than intentional
acts or omissions that are part of Tenant's loss history, then, for so long as
no Event of Default exists and Tenant has not been required to obtain the Letter
of Credit, Tenant shall have the right to request and Landlord shall be
obligated to agree to an increase in the maximum deductible to a level that will
decrease the premium to an amount equal to 110% of the premium for the
immediately preceding year.

                           (ii) Commercial General Liability Insurance and
Business Automobile Liability Insurance (including Non-Owned and Hired
Automobile Liability) against claims for personal and bodily injury, death or
property damage occurring on, in or as a result of the use of the Leased
Premises, in an amount not less than $5,000,000 per occurrence/annual aggregate.
Commercial General Liability Insurance shall include broad form property damage
coverage, blanket contractual coverage (including, coverage for Tenant's
contractual indemnification obligations hereunder), and all other

                                       20
<PAGE>

coverage extensions that are usual and customary for properties of this size and
type. No deductible greater than $10,000 per occurrence is permissible on
liability coverage. In addition, should Tenant's premium increase by more than
ten percent (10%) from the immediately preceding year and such increase is not
the result of Tenant's intentional actions or intentional omissions, other than
intentional acts or omissions that are part of Tenant's loss history, then, for
so long as no Event of Default exists and Tenant has not been required to obtain
the Letter of Credit, Tenant shall have the right to request and Landlord shall
be obligated to agree to an increase in the maximum deductible to a level that
will decrease the premium to an amount equal to 110% of the premium for the
immediately preceding year.

                           (iii) Workers' compensation insurance covering all
persons employed by Tenant in connection with any work done on or about any of
the Leased Premises for which claims for death, disease or bodily injury may be
asserted. In lieu of such Workers' Compensation Insurance, a program of
self-insurance complying with the rules, regulations and requirements of the
appropriate agency of the State or domicile, may be substituted.

                           (iv) Comprehensive Boiler and Machinery Insurance on
any of the Equipment or any other equipment on or in the Leased Premises, in an
amount equal to full replacement cost per accident for damage to property. Such
policies shall include at least $1,000,000 per accident for Off-Premises Service
Interruption and at least $250,000 per accident for Expediting Expenses, Ammonia
Contamination, and Hazardous Materials Clean-Up Expense, and may contain a
deductible not to exceed $25,000. In addition, should Tenant's premium increase
by more than ten percent (10%) from the immediately preceding year and such
increase is not the result of Tenant's intentional actions or intentional
omissions, other than intentional acts or omissions that are part of Tenant's
loss history, then, for so long as no Event of Default exists and Tenant has not
been required to obtain the Letter of Credit, Tenant shall have the right to
request and Landlord shall be obligated to agree to an increase in the maximum
deductible to a level that will decrease the premium to an amount equal to 110%
of the premium for the immediately preceding year.

                           (v) Business Income/Extra Expense Insurance covering
Landlord's losses of income and rents derived from the Leased Premises at limits
sufficient to cover 100% of the period of indemnity not less than twelve (12)
months from time of loss. Such insurance shall name Landlord as loss payee
solely with respect to Rent payable to or for the benefit of Landlord as its
interest appears under this Lease and said coverage must be reviewed annually
and adjusted to reflect then current rent levels.

                           (vi) During any period in which substantial
Alterations at the Leased Premises are being undertaken, builder's risk
insurance covering the total completed value including any "soft costs" with
respect to the Improvements being altered or repaired (on a completed value,
non-reporting basis), replacement cost of work performed and equipment, supplies
and materials finished in connection with such construction or repair of
Improvements or Equipment, together with such "soft cost" endorsements and such
other endorsements as Landlord may reasonably require and general liability,
worker's compensation and automobile liability insurance with respect to the
Improvements being constructed, altered or repaired.

                                       21
<PAGE>

                           (vii) Such other coverage as Lender may reasonably
require.

                  (b) The insurance required by Paragraph 16(a) shall be written
by companies which are rated at least "AA" by Standard & Poor's or have a Best's
rating of "A/A-:VIII" or above and are admitted in, and approved to write
insurance policies by, the State Insurance Department for the State. The
insurance policies shall be in amounts sufficient at all times to satisfy any
coinsurance requirements thereof. The insurance referred to in Paragraphs
16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord as an additional insured
as its interests may appear and Lender as loss payee and Tenant as its interest
may appear. The insurance referred to in Paragraph 16(a)(ii) shall name Landlord
and Lender as additional insureds, and the insurance referred to in Paragraph
16(a)(v) shall name Landlord as insured and Lender and Landlord as loss payee,
as their interests may appear. If said insurance or any part thereof shall
expire, be withdrawn, become void, voidable, unreliable or unsafe for any
reason, including a breach of any condition thereof by Tenant or the failure of
any insurer, or Tenant shall immediately obtain new or additional insurance
which meets the requirements of this Paragraph 16.

                  (c) Each insurance policy referred to in clauses (i), (iv),
(v) and (vi) of Paragraph 16(a) shall contain standard non-contributory
mortgagee clauses in favor of and acceptable to Lender. Each policy required by
any provision of Paragraph 16(a), except clause (iii) thereof, shall provide
that it may not be canceled substantially modified or allowed to lapse on any
renewal date except after thirty (30) days' prior notice to Landlord and Lender.
Each such policy shall also provide that any loss otherwise payable thereunder
shall be payable notwithstanding (i) any act or omission of Landlord or Tenant
which might, absent such provision, result in a forfeiture of all or a part of
such insurance payment, (ii) the occupation or use of any of the Leased Premises
for purposes more hazardous than those permitted by the provisions of such
policy, (iii) any foreclosure or other action or proceeding taken by Lender
pursuant to any provision of the Mortgage, Note, Assignment or other document
evidencing or securing the Loan upon the happening of an event of default
therein, or (iv) any change in title to or ownership of any of the Leased
Premises.

                  (d) Tenant shall (i) pay as they become due all premiums for
the insurance required by Paragraph 16(a), (ii) renew or replace each policy and
deliver to Landlord evidence of the payment of the full premium therefor or
installment then due at least ten (10) days prior to the expiration date of such
policy, and (iii) promptly deliver to Landlord all original certificates of
insurance.

                  (e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant to
Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant, provided that such "blanket"
or umbrella policy or policies otherwise comply with the provisions of this
Paragraph 16, including the identification of the Leased Premises with an
adequately assigned coverage amount and the naming of Lender, its successors and
assigns, as a loss payee under a standard mortgagee clause, and provided further
that Tenant shall provide to Landlord and Lender, a Statement of Values which
shall be reviewed annually and amended as necessary based on Replacement Cost
Valuations. The original or a certified copy of each such "blanket" or umbrella
policy shall promptly be delivered to Landlord.

                                       22
<PAGE>

                  (f) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 16, and (ii) all
requirements of the insurers thereunder applicable to Landlord, Tenant or any of
the Leased Premises or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Leased Premises, even
if such compliance necessitates Alterations or results in interference with the
use or enjoyment of any of the Leased Premises.

                  (g) Tenant shall not carry separate insurance concurrent in
form or contributing in the event of a Casualty from that required in this
Paragraph 16 unless (i) Landlord and Lender are included therein as named
insureds, with loss payable as provided herein, and (ii) such separate insurance
complies with the other provisions of this Paragraph 16. Tenant shall
immediately notify Landlord of such separate insurance and shall deliver to
Landlord the original policies thereof.

                  (h) All policies shall contain effective waivers by the
carrier against all claims for insurance premiums against Landlord and shall
contain full waivers of subrogation against the Landlord.

                  (i) All proceeds of any insurance required under Paragraph
16(a) shall be payable as follows:

                           (1) Proceeds payable under clauses (ii), (iii) and
(iv) of Paragraph 16(a) and proceeds attributable to the general liabilities
coverage of Builder's Risk insurance under clause (vi) of Paragraph 16(a) shall
be payable to the Person entitled to receive such proceeds.

                           (2) Proceeds of insurance required under clauses (i)
and (v) of Paragraph 16(a) and proceeds attributable to Builder's Risk insurance
(other than its general liability coverage provisions) under clause (vi) of
Paragraph 16(a) shall be payable to Landlord, unless otherwise set forth in this
Lease, (or Lender, if applicable) and applied as set forth in Paragraph 17.
Tenant shall apply the Net Award to restoration of the Leased Premises in
accordance with the applicable provisions of this Lease.

         17. CASUALTY AND CONDEMNATION.

                  (a) If any Casualty to the Leased Premises occurs, Tenant
shall give Landlord and Lender prompt notice thereof. So long as no Event of
Default exists Tenant is hereby authorized to negotiate, collect, settle and
compromise in good faith all claims less than $250,000.00, without Landlord's or
Lender's prior consent, under any of the insurance policies required by
Paragraph 16(a) (except public liability insurance claims payable to a Person
other than Tenant, Landlord or Lender) and to execute and deliver on behalf of
Landlord all necessary proofs of loss, receipts, vouchers and releases required
by the insurers and Landlord shall have the right to join with Tenant therein.
Any final adjustment, settlement or compromise of any such claim greater than or
equal to $250,000.00 shall be subject, however, to the prior written consent of
Landlord, and, if Landlord does not reasonably consent, Landlord shall have the
right to prosecute or contest, or to require Tenant to prosecute or contest, any
such claim, adjustment, settlement or compromise. Landlord's consent shall not
be

                                       23
<PAGE>

unreasonably withheld, and shall be deemed given, if such consent is not
forthcoming within ten (10) business days after Landlord's receipt of Tenant's
written request for approval. If an Event of Default exists, Tenant shall not be
entitled to adjust, collect or compromise any such claim or to participate with
Landlord in any adjustment, collection and compromise of the Net Award payable
in connection with a Casualty. Tenant agrees to sign, upon the request of
Landlord, all such proofs of loss, receipts, vouchers and releases. Each insurer
is hereby authorized and directed to make payment under said policies, including
return of unearned premiums, directly to Landlord or, if required by the
Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby
appoints each of Landlord and Lender as Tenant's attorneys-in-fact to endorse
any draft therefor. The rights of Landlord under this Paragraph 17(a) shall be
extended to Lender if and to the extent that any Mortgage so provides.

                  (b) Tenant, promptly upon receiving a Condemnation Notice,
shall notify Landlord and Lender thereof. So long as no Event of Default exists,
Tenant is authorized to negotiate, collect, settle and compromise in good faith
all Net Awards less than $250,000.00, without Landlord's or Lender's prior
consent, and Landlord shall have the right to join with Tenant therein. Any
final agreement with any condemnor in settlement or under threat of any
Condemnation regarding any such Net Award greater than or equal to $250,000.00
shall be subject, however, to the prior written consent of Landlord, and, if
Landlord does not reasonably consent, Landlord shall have the right to prosecute
or contest, or to require Tenant to prosecute or contest, any such claim,
adjustment, settlement or compromise. Landlord's consent shall not be
unreasonably withheld, and shall be deemed given, if such consent is not
forthcoming within ten (10) business days after Landlord's receipt of Tenant's
written request for approval. If an Event of Default exists, Landlord shall be
authorized to collect, settle and compromise the amount of any Net Award and
Tenant shall not be entitled to participate with Landlord in any Condemnation
proceeding or negotiations under threat thereof or to contest the Condemnation
or the amount of the Net Award therefor. Subject to the provisions of this
Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord any award or
payment to which Tenant is or may be entitled by reason of any Condemnation,
whether the same shall be paid or payable for Tenant's leasehold interest
hereunder or otherwise; but nothing in this Lease shall impair Tenant's right to
any award or payment on account of Tenant's trade fixtures, equipment or other
tangible property which is not part of the Equipment, moving expenses or loss of
business, if available, to the extent that and so long as (i) Tenant shall have
the right to make, and does make, a separate claim therefor against the
condemnor, and (ii) such claim does not in any way reduce either the amount of
the award otherwise payable to Landlord for the Condemnation of Landlord's fee
interest in the Leased Premises or the amount of the award (if any) otherwise
payable for the Condemnation of Tenant's leasehold interest hereunder. The
rights of Landlord under this Paragraph 17(b) shall also be extended to Lender
if and to the extent that any Mortgage so provides.

                  (c) If any Partial Casualty (whether or not insured against)
or Partial Condemnation shall occur, this Lease shall continue, notwithstanding
such event, and there shall be no abatement or reduction of any Monetary
Obligations save for a pro rata reduction in Rent not to exceed the amount of
insurance proceeds paid to Landlord from insurance for loss of income and rents
derived from the Leased Premises. Promptly after such Partial Casualty or
Partial Condemnation, Tenant, as required in Paragraph 12(a), shall commence and
diligently continue to restore the Leased Premises as nearly as possible to
their value, condition and character immediately prior to such event (assuming
the Leased

                                       24
<PAGE>

Premises to have been in condition required by this Lease). So long as no Event
of Default exists, any Net Award up to and including $250,000 shall be promptly
paid by Landlord to Tenant and Tenant shall restore the Leased Premises in
accordance with the requirements of Paragraph 13(b) of this Lease. Any Net Award
in excess of $250,000 shall (unless such Casualty resulting in the Net Award is
a Termination Event) be made available by Landlord (or Lender, if required by
the terms of any Mortgage) to Tenant for the restoration of any of the Leased
Premises pursuant to and in accordance with the provisions of Paragraph 19
hereof. If any Casualty or Condemnation which is not a Partial Casualty or
Partial Condemnation shall occur, Tenant shall comply with the terms and
conditions of Paragraph 18.

                  (d) Notwithstanding anything to the contrary in this Lease,
all of the foregoing provisions of this Paragraph 17 shall be subject and
subordinate to any provisions to the contrary contained in any Mortgage,
Assignment or other document evidencing or securing a Loan.

         18. TERMINATION EVENTS.

                  (a) If (i) the entire Leased Premises shall be taken by a
Taking, or (ii) any substantial portion of the Leased Premises shall be taken by
a Taking or all or any substantial portion of the Leased Premises shall be
damaged or destroyed by a Casualty and, in either such case, Tenant certifies
and covenants to Landlord that it will forever abandon operations at the Leased
Premises (each of the events described in the above clauses (i) and (ii) shall
hereinafter be referred to as a "Termination Event"), then Tenant shall have the
option, within thirty (30) days after Tenant receives a Condemnation Notice or
thirty (30) days after the Casualty, as the case may be, to give to Landlord
written notice of the Tenant's option to terminate this Lease (a "Termination
Notice") in the form described in Paragraph 18(b).

                  (b) A Termination Notice shall contain (i) notice of Tenant's
intention to terminate this Lease on the first Basic Rent Payment Date which
occurs at least sixty (60) days after the Fair Market Value Date (the
"Termination Date"), (ii) a binding and irrevocable offer of Tenant to pay to
Landlord the Termination Amount, and (iii) if the Termination Event is an event
described in Paragraph 18(a)(ii), the certification and covenants described
therein and a certified resolution of the Board of Directors of Tenant
authorizing the same. Promptly upon the delivery to Landlord of a Termination
Notice, Landlord and Tenant shall commence to determine the Fair Market Value.

                  (c) If Landlord shall reject such offer to terminate this
Lease by written notice to Tenant ("Rejection"), which Rejection shall contain
the written consent of Lender, not later than thirty (30) days following the
Fair Market Value Date, then this Lease shall terminate on the Termination Date;
provided that, if Tenant has not satisfied all Monetary Obligations and all
other obligations and liabilities under this Lease which have arisen on or prior
to the Termination Date (collectively, "Remaining Obligations") on the
Termination Date, then Landlord may, at its option, extend the date on which
this Lease may terminate to a date which is no later than the first Basic Rent
Payment Date after the Termination Date on which Tenant has satisfied all
Remaining Obligations. Upon such termination (i) all obligations of Tenant
hereunder shall terminate except for any Surviving Obligations, (ii) Tenant
shall immediately vacate and shall have no further right, title or interest in
or to any of the Leased Premises, and (iii) the Net Award shall be retained by
Landlord. Notwithstanding anything to

                                       25
<PAGE>

the contrary hereinabove contained, if Tenant shall have received a Rejection
and, on the date when this Lease would otherwise terminate as provided above,
Landlord shall not have received the full amount of the Net Award payable by
reason of the applicable Termination Event, then the date on which this Lease is
to terminate automatically shall be extended to the day after the receipt by
Landlord of the full amount of the Net Award provided that, if Tenant has not
satisfied all Remaining Obligations on such date, then Landlord may, at its
option, extend the date on which this Lease may terminate to a date which is no
later than the first Basic Rent Payment Date after such date on which Tenant has
satisfied all such Remaining Obligations.

                  (d) Unless Tenant has received a Rejection not later than the
thirtieth (30th) day following the Fair Market Value Date, Landlord shall be
conclusively presumed to have accepted such offer. If such offer is accepted by
Landlord then, on the Termination Date, Tenant shall pay to Landlord the
Termination Amount and all Remaining Obligations and, if requested by Tenant,
Landlord shall pay to or assign to Tenant Landlord's entire interest in and to
the Net Award, all in accordance with Paragraph 20, and if requested by Tenant,
shall convey to Tenant the Leased Premises or the remaining portion, thereof, if
any.

         19. RESTORATION.

                  (a) Landlord (or Lender if required by any Mortgage) shall
hold any Net Award in excess of $250,000.00 in a fund (the "Restoration Fund")
and disburse amounts from the Restoration Fund only in accordance with the
following conditions:

                           (i) prior to commencement of restoration, (i) if the
Restoration Fund is greater than or equal to $5,000,000.00, then (a) the
architects, contracts, contractors, plans and specifications for the restoration
shall have been reasonably approved by Landlord, and (b) Landlord and Lender
shall be provided with mechanics' lien insurance (if available) and acceptable
performance and payment bonds which insure satisfactory completion of and
payment for the restoration, are in an amount and form and have a surety
reasonably acceptable to Landlord, and name Landlord and Lender as additional
dual obligees, or (ii) if the Restoration Fund is less than $5,000,000.00, then
the architects, contracts, contractors, plans and specifications for the
restoration shall have been reasonably approved by Landlord and no mechanics'
lien insurance or performance and payment bonds will be required by Landlord;

                           (ii) at the time of any disbursement, no Event of
Default shall exist and no mechanics' or materialmen's liens shall have been
filed against any of the Leased Premises and remain undischarged unless the same
are being contested in accordance with the provisions of Paragraph 14 hereof or
have been bonded around;

                           (iii) disbursements shall be made from time to time
in an amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A) satisfactory evidence, including architects'
certificates, of the stage of completion, the estimated total cost of completion
and performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (B) waivers of liens,
(C) contractors' and subcontractors' sworn

                                       26
<PAGE>

statements as to completed work and the cost thereof for which payment is
requested, (D) a satisfactory bringdown of title insurance, and (E) other
evidence of cost and payment so that Landlord can verify that the amounts
disbursed from time to time are represented by work that is completed, in place
and free and clear of mechanics' and materialmen's lien claims;

                           (iv) each request for disbursement shall be
accompanied by a certificate of Tenant, signed by a duly authorized officer of
Tenant, describing the work for which payment is requested, stating the cost
incurred in connection therewith, stating that Tenant has not previously
received payment for such work and, upon completion of the work, also stating
that the work has been fully completed and complies with the applicable
requirements of this Lease;

                           (v) Whenever required or permitted under applicable
Legal Requirements, Tenant shall withhold the statutorily prescribed amount of
retainage from all payments to be made to contractors performing work at the
Leased Premises. Without limiting the foregoing, if applicable Legal
Requirements do not prohibit retainage but also do not contain specific
requirements regarding retainage, then all contracts for work at or with respect
to the Leased Premises costing in excess of $100,000 shall contain a provision
to the effect that ten percent (10%) of the amount of each payment due to the
contractor thereunder will be withheld as retainage until completion in full of
the work and the delivery by the contractor of an appropriate executed and
acknowledged instrument containing a full release and waiver of all lien claims
by such contractor and an indemnification of Landlord and Tenant against any
lien claims by anybody claiming by, through or under such contractor.

                           (vi) if the Restoration Fund is held by Landlord, the
Restoration Fund shall not be commingled with Landlord's other funds and shall
bear interest at a rate agreed to by Landlord and Tenant; and

                           (vii) such other reasonable conditions as Landlord or
Lender may impose.

                  (b) Prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the restoration work
free and clear of all liens (as set forth in the contract(s) for such work or as
determined by any third party estimate obtained by Landlord or Tenant) exceeds
the amount of the Net Award available for such restoration, the amount of such
excess shall, upon demand (accompanied by written evidence supporting Landlord's
determination, if based on an estimate obtained by Landlord) by Landlord, be
paid by Tenant to Landlord to be added to the Restoration Fund. Any sum so added
by Tenant which remains in the Restoration Fund upon completion of restoration
shall be refunded to Tenant. For purposes of determining the source of funds
with respect to the disposition of funds remaining after the completion of
restoration, the Net Award shall be deemed to be disbursed prior to any amount
added by Tenant.

                  (c) If any sum remains in the Restoration Fund after
completion of the restoration and any refund to Tenant pursuant to Paragraph
19(b), such sum shall be paid to Tenant.

                  (d) Notwithstanding anything to the contrary in this Lease,
all of the foregoing provisions of this Paragraph 19 shall be subject and
subordinate to any provisions to the contrary

                                       27
<PAGE>

contained in any Mortgage, Assignment or other document evidencing or securing a
Loan. Nevertheless, with respect to Paragraph 19, Tenant shall not be bound by
the terms of future Mortgages, Assignments or other documents evidencing or
securing a Loan, unless the said Mortgage is on substantially similar terms as
the current Mortgage, and Tenant has been provided with an SNDA substantially
similar to the one contemplated in Paragraphs 31 and 32.

         20. PROCEDURES UPON PURCHASE.

                  (a) If the Leased Premises is purchased by Tenant pursuant to
Paragraph 18 of this Lease, Landlord shall convey the same title that was
conveyed to Landlord, and Tenant shall accept such title, subject, however, to
the Permitted Encumbrances and to all other liens, exceptions and restrictions
on, against or relating to any of the Leased Premises and to all applicable
Laws, but free of the lien of and security interest created by any Mortgage or
Assignment and liens, exceptions and restrictions on, against or relating to the
Leased Premises which have been created by or resulted from acts of Landlord
after the date of this Lease, unless the same are Permitted Encumbrances or
customary utility easements benefitting the Leased Premises or were created with
the concurrence of Tenant or as a result of a default by Tenant under this
Lease. Tenant acknowledges and understands that any conveyance of the Leased
Premises by Landlord to Tenant shall be made on an "As-Is", "Where-Is" and "With
All Faults" basis, and without any representations or warranties (other than
warranty of title), express, implied or statutory as to the Leased Premises'
habitability, suitability, marketability, value, fitness for any particular use
or purpose, the absence or presence of any latent or patent defects at or within
the Leased Premises, or the compliance of the Leased Premises with any laws
(including, without limitation, any Environmental Laws), and the deed by which
Landlord conveys the Leased Premises to Tenant shall contain express language to
such effect.

                  (b) Upon the date fixed for any such purchase of the Leased
Premises pursuant to any provision of this Lease (any such date the "Purchase
Date"), Tenant shall pay to Landlord, or to any Person to whom Landlord directs
payment, the Relevant Amount therefor specified herein, in Federal Funds, less
any credit of the Net Award received and retained by Landlord or a Lender
allowed against the Relevant Amount, and Landlord shall deliver to Tenant (i) a
special warranty deed which describes the premises being conveyed and conveys
the title thereto as provided in Paragraph 20(a), (ii) such other instruments as
shall be necessary to transfer to Tenant or its designee any other property (or
rights to any Net Award not yet received by Landlord or a Lender) then required
to be sold by Landlord to Tenant pursuant to this Lease, and (iii) any Net Award
received by Landlord, not credited to Tenant against the Relevant Amount and
required to be delivered by Landlord to Tenant pursuant to this Lease; provided,
that if any Monetary Obligations remain outstanding on such date, then Landlord
may deduct from the Net Award the amount of such Monetary Obligations; and
further provided, that if any event has occurred which, in Landlord's reasonable
judgment, is likely to subject any Indemnitee to any liability which Tenant is
required to indemnify against pursuant to Paragraph 15, then an amount shall be
deducted from the Net Award which, in Landlord's reasonable judgment, is
sufficient to satisfy such liability, which amount shall be deposited in an
escrow account with a financial institution reasonably satisfactory to Landlord
and Tenant pending resolution of such matter. If on the Purchase Date any
Monetary Obligations remain outstanding and no Net Award is payable to Tenant by
Landlord or the amount of such Net Award is less than the amount of the Monetary
Obligations, then Tenant shall pay

                                       28
<PAGE>

to Landlord on the Purchase Date the amount of such Monetary Obligations. Upon
the completion of such purchase, this Lease and all obligations and liabilities
of Tenant hereunder shall terminate, except any Surviving Obligations.

                  (c) If the completion of such purchase shall be delayed as a
result of Tenant's acts or omissions after the Termination Date, in the event of
a purchase pursuant to Paragraph 18, then (x) Rent shall continue to be due and
payable until completion of such purchase, and (y) at Landlord's sole option,
Fair Market Value shall be re-determined and the Relevant Amount payable by
Tenant pursuant to the applicable provision of this Lease shall be adjusted to
reflect such re-determination.

                  (d) Any prepaid Monetary Obligations paid to Landlord shall be
prorated as of the Purchase Date, and the prorated unapplied balance shall be
deducted from the Relevant Amount due to Landlord; provided, that no
apportionment of any Impositions shall be made upon any such purchase.

                  (e) Without limiting the foregoing, Tenant agrees to pay all
of Tenant's Costs and Landlord's Costs incurred in connection with any
conveyance of the Leased Premises from Landlord to Tenant under this Lease,
including, without limitation any and all escrow fees, transfer taxes, recording
costs, and reasonable attorneys' fees. Landlord shall not be obligated to
provide Tenant with any title reports, title insurance or surveys of the Leased
Premises in connection with any conveyance made hereunder.

         21. ASSIGNMENT AND SUBLETTING.

                  (a) Except as otherwise expressly provided in this Paragraph,
Tenant shall not assign, mortgage, pledge, transfer or otherwise encumber or
dispose of this Lease, or any interest therein, or in any manner assign,
mortgage, pledge, transfer or otherwise encumber or dispose of its interest or
estate in the Leased Premises, or any portion thereof, without obtaining
Landlord's prior written consent in each and every instance, which consent,
shall be in Landlord's absolute and sole discretion. Tenant, however, shall be
free to sublease all or any part of the Leased Premises without Landlord's
consent provided the following conditions are complied with:

                           (i) At the time of any subletting, this Lease must be
in full force and effect, without any Event of Default hereunder or breach
hereunder on the part of Tenant.

                           (ii) A copy of any sublease, and copies of any
amendments or modifications thereto, fully executed by Tenant and the subtenant,
shall be mailed or delivered to Landlord at least ten days after the effective
date of such sublease, amendments or modifications.

                           (iii) Such subletting shall be subject to all the
provisions, terms, covenants and conditions of this Lease, and Tenant shall
continue to be and remain liable under this Lease, as it may be amended from
time to time.

                           (iv) Except for Existing Leases, each sublease
permitted under this Section shall contain provisions to the effect that (1)
such sublease is only for actual use and occupancy by the

                                       29
<PAGE>

sublessee; (2) such sublease is subject and subordinate to all of the terms,
covenants and conditions of this Lease and to all of the rights of Landlord
hereunder; and (3) in the event this Lease shall terminate before the expiration
of such sublease, the sublessee thereunder will, at Landlord's option, attorn to
Landlord and waive any rights the sublessee may have to terminate the sublease
or to surrender possession thereunder, as a result of the termination of this
Lease.

                           (v) Further, Tenant agrees that Landlord shall in no
event be liable for any leasing commissions, finish-out costs, rent abatements
or other costs, fees or expenses incurred by Tenant in subleasing or seeking to
sublease the Leased Premises, and Tenant agrees to indemnify, defend and hold
harmless Landlord and its partners, and their respective officers, directors,
shareholders, agents, employees and representatives from, against and with
respect to any and all such commissions, costs, fees and expenses.

                  (b) Notwithstanding anything contained in this Lease to the
contrary and notwithstanding any consent by Landlord to any sublease of the
Leased Premises, or any portion thereof, or to any assignment of this Lease or
of Tenant's interest or estate in the Leased Premises, no sublessee shall assign
its sublease nor further sublease the Leased Premises, or any portion thereof,
without Tenant's consent and no assignee shall sublease the Leased Premises, or
any portion thereof, without Tenant's consent, and no assignee shall further
assign its interest in this Lease or its interest or estate in the Leased
Premises, or any portion thereof, without Landlord's prior written consent in
each and every instance which consent may be granted or withheld in Landlord's
sole discretion.

                  (c) Tenant's failure to comply with all of the foregoing
provisions and conditions of this Paragraph shall (whether or not Landlord's
consent is required under this Article), at Landlord's option, render any
purported assignment or subletting null and void and of no force and effect.

                  (d) No assignment or subleasing by Tenant (even if permitted
or consented to by Landlord) shall relieve Tenant from any of Tenant's
obligations under this Lease, and Tenant shall in all events and at all times
remain primarily liable for the satisfaction of each and every obligation on the
part of Tenant to be honored or performed hereunder, unless and only to the
extent otherwise hereafter agreed to in writing by Landlord (it being understood
that Landlord shall have no obligation to waive or release any obligations of
Tenant).

                  (e) Notwithstanding anything to the contrary herein or in the
Existing Leases, Landlord and Tenant agree that from and after the date hereof
the Existing Leases shall be deemed for all purposes to constitute "subleases"
as such term is used herein, and the tenancies created thereby shall be treated
by Landlord and Tenant as being subleases between Tenant, as sublessor, and the
Tenants named therein, as sublessees, and not as leases between Landlord and
such Tenants. The obligation of Tenant to pay rent and satisfy its other
obligations hereunder is not contingent upon the satisfaction by the Existing
Tenants of any of their obligations under the Existing Leases, and Tenant shall
not be entitled to any offsets, deductions or grace periods hereunder on account
of any defaults by the Existing Tenants under the Existing Leases. Landlord and
Tenant agree that so long as Tenant has not committed an Event of Default
hereunder, Tenant shall be entitled to collect and retain all rents and other
sums payable under the Existing Leases. Tenant acknowledges and agrees that
Tenant shall be

                                       30
<PAGE>

solely responsible for the satisfaction of all obligations of the "Landlord"
under each of the Existing Leases, and that Landlord shall in no event be liable
for the satisfaction of any obligations of "Landlord" under the Existing Leases;
provided, however, that such release from liability shall not operate or be
construed to release Landlord from any of its obligations to Tenant hereunder.
Tenant and Landlord further agree that, upon the occurrence of an Event of
Default by Tenant under Paragraph 22(a)(i) (which Event of Default continues
beyond any cure period permitted hereunder), Landlord shall have the right (but
not the obligation), without prior notice to or the need to obtain the consent
of Tenant, to send written notice to each of the Existing Tenants advising them
that, beginning as of the time of such notice, and continuing thereafter until
they receive written direction from Landlord to the contrary, they are to begin
payment of all rent and other sums due or to become due under the Existing
Leases directly to Landlord. All sums so received by Landlord shall be applied
towards the satisfaction of Tenant's obligations hereunder, but Tenant shall not
thereby be relieved of any of its obligations hereunder. At such time as Tenant
fully cures its Event of Default hereunder (with due credit being given for all
sums, if any, received by Landlord directly from the Existing Tenants, as
aforesaid), Landlord shall have the right, but not the obligation, to notify the
Existing Tenants to commence paying rent directly to Tenant, and if Landlord
elects not to so notify the Existing Tenants, Landlord shall continue to apply
all sums, if any, actually received from the Existing Tenants as an offset
against the amounts owed by Tenant hereunder, without thereby otherwise
releasing Tenant from any of its obligations hereunder. Any election by Landlord
to receive rent directly from the Existing Tenants as aforesaid shall not
constitute an undertaking on the part of Landlord to enforce the Existing Leases
or collection of any amounts due thereunder, nor shall it constitute an
assumption by Landlord of any of Tenant's obligations at "Landlord" under the
Existing Leases. To the extent the terms of any of the Existing Leases extend
beyond the expiration or termination hereof, Landlord shall succeed to the
rights and obligations of Tenant thereunder arising and accruing from and after
the time of expiration or termination of this Lease, but in no event shall
Landlord be deemed to have assumed any of the liabilities of Tenant under any of
the Existing Leases arising or accruing prior to the termination or expiration
of this Lease.

                  (f) Landlord and Tenant acknowledge that Tenant has retained
all security and similar deposits heretofore paid to Tenant by the Existing
Tenants under the Existing Leases and shall have the right to require and retain
security deposits under any future subleases of the Leased Premises or any part
thereof entered into by Tenant. Tenant assumes all liabilities and
responsibilities associated with the collection and disposition of such security
deposits and agrees that Landlord shall have no liability or responsibility
therefor or in connection therewith. The parties acknowledge and agree that,
upon the expiration or termination of this Lease, Tenant shall assign and
transfer to Landlord all security deposits then on deposit with Tenant from
sublessees whose subleases will thereafter remain in effect as direct leases
between Landlord and such sublessees, and upon such assignment Landlord shall
assume responsibility and liability for same.

                  (g) Landlord may sell or transfer the Leased Premises at any
time, without Tenant's consent, to any third party (each a "Third Party
Purchaser"). In the event of any such transfer, Tenant shall attorn to any Third
Party Purchaser as Landlord so long as such Third Party Purchaser and Landlord
notify Tenant in writing of such transfer and provided such Third Party
Purchaser agrees to recognize this Lease and takes title to the Leased Premises
subject to the terms and conditions hereof.

                                       31
<PAGE>

At the request of Landlord, Tenant will execute such documents confirming the
agreement referred to above and such other agreements as Landlord may reasonably
request, provided that such agreements do not increase the liabilities and
obligations of Tenant hereunder.

                  (h) Tenant shall not have the power to mortgage, pledge or
otherwise encumber its interest under this Lease or any sublease of the Leased
Premises, and any such attempted mortgage, pledge or encumbrance made in
violation of this Paragraph shall be void and of no force or effect and shall,
immediately upon the attempted making thereof, constitute an Event of Default
hereunder.

         22. EVENTS OF DEFAULT.

                  (a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:

                           (i) a failure by Tenant to make any payment of any
Monetary Obligation when due, regardless of the reason for such failure;

                           (ii) a failure by Tenant duly to perform and observe,
or a violation or breach of, any other provision hereof not otherwise
specifically mentioned in this Paragraph 22(a);

                           (iii) any material representation or warranty made by
Tenant herein or in any certificate, demand or request made pursuant hereto
proves to be incorrect, now or hereafter, in any material respect and results in
any material harm or damage to Landlord;

                           (iv) a default beyond any applicable cure period or
at maturity by Tenant in any payment of principal or interest on any obligations
for borrowed money having an original principal balance of $5,000,000 or more in
the aggregate, or in the performance of any other provision contained in any
instrument under which any such obligation is created or secured (including the
breach of any covenant thereunder), (x) if such payment is a payment at maturity
or a final payment, or (y) if an effect of such default is to cause, or permit
any Person to cause, such obligation to become due prior to its stated maturity;

                           (v) a default by Tenant beyond any applicable cure
period in the payment of rent under, or in the performance of any other material
provision of, any lease that has, in the aggregate, rental obligations over the
term thereof (excluding any optional renewal or extension terms) of $5,000,000
or more;

                           (vi) a final, non-appealable judgment or judgments
for the payment of money in excess of $5,000,000 in the aggregate shall be
rendered against Tenant and the same shall remain undischarged for a period of
ninety (90) consecutive days;

                           (vii) Tenant shall (A) voluntarily be adjudicated a
bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or
trustee for itself or for the Leased Premises, (C) file

                                       32
<PAGE>

a petition seeking relief under the bankruptcy or other similar laws of the
United States, any state or any jurisdiction, (D) make a general assignment for
the benefit of creditors, or (E) be unable to pay its debts as they mature;

                           (viii) a court shall enter an order, judgment or
decree appointing, without the consent of Tenant, a receiver or trustee for it
or for any of the Leased Premises or approving a petition filed against Tenant
which seeks relief under the bankruptcy or other similar laws of the United
States, any state or any jurisdiction, and such order, judgment or decree shall
remain undischarged or unstayed sixty (60) days after it is entered;

                           (ix) the Leased Premises shall have been abandoned;

                           (x) Tenant shall be liquidated or dissolved or shall
begin proceedings towards its liquidation or dissolution;

                           (xi) the estate or interest of Tenant in any of the
Leased Premises shall be levied upon or attached in any proceeding and such
estate or interest is about to be sold or transferred or such process shall not
be vacated or discharged within sixty (60) days after it is made;

                           (xii) a failure by Tenant to perform or observe, or a
violation or breach of, or a misrepresentation by Tenant under any provision of
any document between Tenant and Lender, if such failure, violation, breach or
misrepresentation gives rise to a material default beyond any applicable cure
period with respect to any Loan;

                           (xiii) Tenant shall sell or transfer or enter into an
agreement to sell or transfer all or substantially all of its assets, and such
assignment or sale does not include an assignment of this Lease in compliance
with Paragraph 21 hereof; or

                           (xiv) If the Letter of Credit has been posted, and
the issuer of the Letter of Credit cancels, terminates or refuses to honor it,
Tenant (or such other Person as may be responsible therefor) shall fail to renew
the Letter of Credit within five (5) business days or shall fail to post a cash
equivalent amount of the Letter of Credit within five (5) days after notice of
such cancellation, termination or refusal; or

                  (b) No notice or cure period shall be required in any one or
more of the following events: (A) the occurrence of an Event of Default under
clause (i) or (iii) (except as otherwise set forth below), (vi), (vii), (viii),
(ix), (x), (xi), (xii), (xiii), or (xiv) of Paragraph 22(a); (B) the default
consists of a failure to pay Basic Rent, a failure to provide any insurance
required by Paragraph 16 or an assignment or sublease entered into in violation
of Paragraph 21; or (C) the default is such that any delay in the exercise of a
remedy by Landlord could reasonably be expected to cause irreparable harm to
Landlord. If the default consists of the failure to pay any Monetary Obligation
under clause (i) of Paragraph 22(a), the applicable cure period shall be five
(5) days from the date on which notice is given, but Landlord shall not be
obligated to give notice of, or allow any cure period for, any such default more
than one (1) time within any Lease Year. If the default consists of a breach
under clause (iii) of

                                       33
<PAGE>

Paragraph 22(a), Landlord shall give Tenant five (5) days after notice to cure
such breach; provided, however, if Tenant has knowledge of such breach then
Landlord shall have no obligation to give such notice or permit such cure
period. If the default consists of a default under clause (ii), (iv), or (v) of
Paragraph 22(a), other than the events specified in clauses (B) and (C) of the
first sentence of this Paragraph 22(b), the applicable cure period shall be
thirty (30) days from the date on which notice is given or, if the default
cannot be cured within such thirty (30) day period and delay in the exercise of
a remedy would not (in Landlord's reasonable judgment) cause any material
adverse harm to Landlord or any of the Leased Premises, the cure period shall be
extended for the period required to cure the default (but such cure period,
including any extension, shall not in the aggregate exceed ninety (90) days),
provided that Tenant shall commence to cure the default within the said
thirty-day period and shall actively, diligently and in good faith proceed with
and continue the curing of the default until it shall be fully cured.

         23. REMEDIES AND DAMAGES UPON DEFAULT.

                  (a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or at any
time thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.

                           (i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in such notice and
occurring no earlier than ten (10) days from and after the date of such notice
(except that, if Landlord, in Landlord's reasonable discretion, determines that
a delay in terminating this Lease will place the Leased Premises at risk of
damage or destruction, or will materially jeopardize Landlord's rights hereunder
or under applicable Legal Requirements, then Landlord shall not be required to
give the full ten (10) days' notice). Upon such date, this Lease, the estate
hereby granted and all rights of Tenant hereunder shall expire and terminate.
Upon such termination, Tenant shall immediately surrender and deliver possession
of the Leased Premises to Landlord in accordance with Paragraph 26. If Tenant
does not so surrender and deliver possession of the Leased Premises, Landlord
may re-enter and repossess the Leased Premises, with or without legal process,
by peaceably entering the Leased Premises and changing locks or by summary
proceedings, ejectment or any other lawful means or procedure. Upon or at any
time after taking possession of the Leased Premises, Landlord may, by peaceable
means or legal process, remove any Persons or property therefrom. Landlord shall
be under no liability for or by reason of any such entry, repossession or
removal. Notwithstanding such entry or repossession, Landlord may collect the
damages set forth in Paragraph 23(b)(i) or 23(b)(ii).

                           (ii) After repossession of the Leased Premises
pursuant to clause (i) above, Landlord shall have the right to relet any of the
Leased Premises to such tenant or tenants, for such term or terms, for such
rent, on such conditions and for such uses as Landlord in its sole discretion
may determine, and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such reletting
as it may deem advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii).

                                       34
<PAGE>

                           (iii) Upon the occurrence of an Event of Default
based upon Paragraph 22(a)(i), (vii), (viii), (ix), (x), (xi), or (xiii),
Landlord may declare by notice to Tenant the entire Basic Rent (in the amount of
Basic Rent then in effect) for the remainder of the then current Term to be
immediately due and payable. Tenant shall, within ten (10) days from the end of
the ten (10) day cure period set forth in this Paragraph, pay to Landlord all
such Basic Rent discounted to its Present Value, all accrued Rent then due and
unpaid, all other Monetary Obligations which are then due and unpaid and all
Monetary Obligations which arise or become due by reason of such Event of
Default (including any Costs of Landlord). Upon receipt by Landlord of all such
accelerated Basic Rent and Monetary Obligations, this Lease shall remain in full
force and effect, and Tenant shall have the right to possession of the Leased
Premises from the date of such receipt by Landlord to the end of the Term, and
subject to all the provisions of this Lease, including the obligation to pay all
increases in Basic Rent and all Monetary Obligations that subsequently become
due, except that (A) no Basic Rent which has been prepaid hereunder shall be due
thereafter during the said Term, and (B) Tenant shall have no option to extend
or renew the Term. Prior to exercise of this remedy, Landlord shall give Tenant
written notice of its intention to do so, and shall grant Tenant an additional
ten (10) days to cure the existing Event of Default. Also, if Landlord exercises
this remedy and Tenant prepays the discounted amount of Basic Rent and Monetary
Obligations, then Landlord shall have no right to exercise any other remedy for
that particular Event of Default and Landlord's rights to declare Events of
Default under Paragraphs 22(a)(iv), (v), (vi), (ix), (xii) and (xiv) shall be
eliminated. Furthermore, if the Basic Rent and Monetary Obligations are prepaid,
and Landlord later terminates this Lease, any unamortized prepaid amounts will
be applied to Landlord's damages and any remainder will be payable to Tenant.

                  (b) The following constitute damages to which Landlord shall
be entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or
23(a)(ii):

                           (i) If Landlord exercises its remedy under Paragraph
23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise
such remedy and is unsuccessful in reletting the Leased Premises) then, upon
written demand from Landlord, Tenant shall pay to Landlord, as liquidated and
agreed final damages for Tenant's default and in lieu of all current damages
beyond the date of such demand (it being agreed that it would be impracticable
or extremely difficult to fix the actual damages), an amount equal to the
Present Value of the excess, if any, of (A) all Basic Rent from the date of such
demand to the date on which the Term is scheduled to expire hereunder in the
absence of any earlier termination, reentry or repossession over (B) the then
fair market rental value of the Leased Premises for the same period. Tenant
shall also pay to Landlord all of Landlord's Costs in connection with the
repossession of the Leased Premises and any attempted reletting thereof,
including all brokerage commissions, legal expenses attorneys' fees, employees'
expenses, costs of Alterations and expenses and preparation for reletting.

                           (ii) If Landlord exercises its remedy under Paragraph
23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant
shall, until the end of what would have been the Term in the absence of the
termination of the Lease, and whether or not any of the Leased Premises shall
have been relet, be liable to Landlord for, and shall pay to Landlord, as
liquidated and agreed current damages all Monetary Obligations which would be
payable under this Lease by Tenant in the absence of such termination less the
net proceeds, if any, of any reletting pursuant to Paragraph

                                       35
<PAGE>

23(a)(ii), after deducting from such proceeds all of Landlord's Costs (including
the items listed in the last sentence of Paragraph 23(b)(i) hereof) incurred in
connection with such repossessing and reletting; provided, that if Landlord has
not relet the Leased Premises, such Costs of Landlord shall be considered to be
Monetary Obligations payable by Tenant. Tenant shall be and remain liable for
all sums aforesaid, and Landlord may recover such damages from Tenant and
institute and maintain successive actions or legal proceedings against Tenant
for the recovery of such damages. Nothing herein contained shall be deemed to
require Landlord to wait to begin such action or other legal proceedings until
the date when the Term would have expired by its own terms had there been no
such Event of Default.

                  (c) Notwithstanding anything to the contrary herein contained,
in lieu of or in addition to any of the foregoing remedies and damages, Landlord
may exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.

                  (d) Without in any way limiting any other rights or remedies
available to Landlord hereunder, Landlord shall be entitled to draw on the
Letter of Credit which shall be applied to any Monetary Obligations in
Landlord's sole discretion; provided, however, if the amount of the proceeds
exceeds the aggregate amount of all Monetary Obligations payable during the
entire remaining Term hereof (without taking into account any then-unexercised
Renewal Terms) and all other amounts owing by Tenant hereunder, then such
excess, if any, will be paid to Landlord to be held in an interest-bearing
account. Such excess, along with any accrued interest, shall be paid to Tenant
at the end of the Term of this Lease.

                  (e) Landlord shall not be required to mitigate any of its
damages hereunder unless required to by applicable Law. If any Law shall validly
limit the amount of any damages provided for herein to an amount which is less
than the amount agreed to herein, Landlord shall be entitled to the maximum
amount available under such Law.

                  (f) No termination of this Lease, repossession or reletting of
the Leased Premises, exercise of any remedy or collection of any damages
pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.

                  (g) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, LANDLORD AND TENANT EACH WAIVE ANY RIGHT TO A TRIAL BY JURY.

                  (h) Upon the occurrence of any Event of Default, Landlord
shall have the right (but no obligation) to perform any act required of Tenant
hereunder, and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.

                  (i) No failure of Landlord (1) to insist at any time upon the
strict performance of any provision of this Lease, or (2) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any sum
in satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision

                                       36
<PAGE>

hereof shall be deemed to have been made unless expressed in a writing signed by
Landlord.

                  (j) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.

         24. NOTICES. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given and received for all purposes when delivered
in person or by Federal Express or other reliable 24-hour delivery service or
five (5) business days after being deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the other party at its address stated above or when delivery is
refused. A copy of any notice given by Tenant to Landlord shall simultaneously
be given by Tenant to Heath D. Esterak, c/o Fulbright & Jaworski L.L.P., 300
Convent, Suite 2200, San Antonio, Texas 78205. A copy of any notice given by
Landlord to Tenant shall simultaneously be given by Landlord to Robert S. Ladd,
c/o Haynes and Boone, LLP, 1000 Louisiana, Suite 4300, Houston, Texas 77002. For
the purposes of this Paragraph, any party may substitute another address stated
above (or substituted by a previous notice) for its address by giving fifteen
(15) days' notice of the new address to the other party, in the manner provided
above.

         25. ESTOPPEL CERTIFICATE. At any time upon not less than ten (10) days'
prior written request by either Landlord or Tenant (the "Requesting Party") to
the other party (the "Responding Party"), the Responding Party shall deliver to
the Requesting Party a statement in writing, executed by an authorized officer
of the Responding Party, certifying (a) that, except as otherwise specified
therein, this Lease is unmodified and in full force and effect, (b) the dates to
which Basic Rent, Additional Rent and all other Monetary Obligations have been
paid, (c) that, to the knowledge of the signer of such certificate and except as
otherwise specified therein, no default by either Landlord or Tenant exists
hereunder, (d) such other matters as the Requesting Party may reasonably
request, and (e) if Tenant is the Responding Party that, except as otherwise
specified, there are no proceedings pending or, to the knowledge of the signer,
threatened, against Tenant before or by any court or administrative agency
which, if adversely decided, would materially and adversely affect the financial
condition and operations of Tenant. Any such statements by the Responding Party
may be relied upon by the Requesting Party, any Person whom the Requesting Party
notifies the Responding Party in its request for the Certificate is an intended
recipient or beneficiary of the Certificate, any Lender or their assignees and
by any prospective purchaser or mortgagee of any of the Leased Premises. Any
certificate required under this Paragraph 25 and delivered by Tenant shall state
that, in the opinion of each person signing the same, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to the subject matter of such certificate, and shall briefly
state the nature of such examination or investigation.

         26. SURRENDER. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the

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<PAGE>

Leased Premises was at the commencement of this Lease, except as repaired,
rebuilt, restored, altered, replaced or added to as permitted or required by any
provision of this Lease, and except for ordinary wear and tear and damage by
Casualty that results in a Termination Event. Upon such surrender, Tenant shall
(a) remove from the Leased Premises all property which is owned by Tenant or
third parties other than Landlord, and (b) repair any damage caused by such
removal. Property not so removed shall become the property of Landlord, and
Landlord may thereafter cause such property to be removed from the Leased
Premises. The cost of removing and disposing of such property and repairing any
damage to any of the Leased Premises caused by such removal shall be paid by
Tenant to Landlord upon demand. Landlord shall not in any manner or to any
extent be obligated to reimburse Tenant for any such property which becomes the
property of Landlord pursuant to this Paragraph 26.

         27. NO MERGER OF TITLE. There shall be no merger of the leasehold
estate created by this Lease with the fee estate in any of the Leased Premises
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein, and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.

         28. FINANCIAL STATEMENTS.

                  Tenant shall deliver to Landlord and to Lender within ninety
(90) days of the close of each fiscal year, and within forty-five (45) days
after the end of each of the three remaining quarters Tenant's Form 10-K, Form
10-Q ("Financial Reports") and any other required filings with the Securities
and Exchange Commission pursuant to the provisions of the Securities Exchange
Act of 1934, as amended, or any other Law.

         29. DETERMINATION OF VALUE.

                  (a) Whenever a determination of Fair Market Value is required
pursuant to any provision of this Lease, such Fair Market Value shall be
determined in accordance with the following procedures:

                           (i) Landlord and Tenant shall endeavor to agree upon
such Fair Market Value within thirty (30) days after the date (the "Applicable
Initial Date") on which (A) Tenant provides Landlord with notice of its
intention to terminate this Lease and purchase the Leased Premises pursuant to
Paragraph 18, or (B) Landlord provides Tenant with notice of its intention to
re-determine Fair Market Value pursuant to Paragraph 20(c). If Tenant exercises
or is deemed to have exercised its renewal options as set forth in Paragraph 5
of this Lease, then Landlord and Tenant shall endeavor to agree upon such Fair
Rental Value within ninety (90) days after the date Landlord receives notice of
Tenant's desire to exercise its renewal options (also, the "Applicable Initial
Date"). Landlord shall provide Tenant with its interpretation of Fair Rental
Value within fifteen (15) days of the Applicable Initial Date. Upon reaching any
such agreement, the parties shall execute a written agreement setting forth the
amount of such Fair Market Value or Fair Rental Value, as applicable.

                                       38
<PAGE>

                           (ii) If the parties shall not have signed such
agreement within thirty (30) days after the Applicable Initial Date for Fair
Market Value or within ninety (90) days after the Applicable Initial Date for
Fair Rental Value, Tenant shall within forty-five (45) days after the Applicable
Initial Date for Fair Market Value and within one hundred and five (105) days
after the Applicable Initial Date for Fair Rental Value select an appraiser and
notify Landlord in writing of the name, address and qualifications of such
appraiser. Within fifteen (15) days following Landlord's receipt of Tenant's
notice of the appraiser selected by Tenant, Landlord shall select an appraiser
and notify Tenant of the name, address and qualifications of such appraiser.
Such two appraisers shall endeavor to agree upon Fair Market Value based on a
written appraisal made by each of them (and given to Landlord by Tenant) as of
the Relevant Date. If such two (2) appraisers shall agree upon a Fair Market
Value, the amount of such Fair Market Value as so agreed shall be binding and
conclusive upon Landlord and Tenant.

                           (iii) If such two (2) appraisers shall be unable to
agree upon a Fair Market Value within twenty (20) days after the selection of an
appraiser by Landlord, then such appraisers shall advise Landlord and Tenant of
their respective determination of Fair Market Value and shall select a third
(3rd) appraiser to make the determination of Fair Market Value. The selection of
the third (3rd) appraiser shall be binding and conclusive upon Landlord and
Tenant.

                           (iv) If such two (2) appraisers shall be unable to
agree upon the designation of a third (3rd) appraiser within ten (10) days after
the expiration of the twenty (20) day period referred to in clause (iii) above,
or if such third (3rd) appraiser does not make a determination of Fair Market
Value within twenty (20) days after his selection, then such third (3rd)
appraiser or a substituted third (3rd) appraiser, as applicable, shall, at the
request of either party hereto, be appointed by the seniormost judge of the
United States District Court, Southern District of Texas. The determination of
Fair Market Value made by the third (3rd) appraiser appointed pursuant hereto
shall be made within twenty (20) days after such appointment.

                           (v) If a third (3rd) appraiser is selected, Fair
Market Value shall be the average of the determination of Fair Market Value made
by the third (3rd) appraiser and the determination of Fair Market Value made by
the appraiser (selected pursuant to Paragraph 29(a)(ii) hereof) whose
determination of Fair Market Value is nearest to that of the third (3rd)
appraiser. Such average shall be binding and conclusive upon Landlord and
Tenant.

                           (vi) All appraisers selected or appointed pursuant to
this Paragraph 29(a) shall (A) be independent qualified MAI appraisers, (B) have
no right, power or authority to alter or modify the provisions of this Lease,
(C) utilize the definition of Fair Market Value hereinabove set forth above, and
(D) be registered in the State if the State provides for or requires such
registration. The Cost of the procedure described in this Paragraph 29(a) above
shall be borne by Tenant.

                  (b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term, then the
date on which the Term would otherwise expire or terminate shall be extended to
the date specified for termination in the particular provision of this Lease
pursuant to which the determination of Fair Market Value is being made.

                                       39
<PAGE>

                  (c) In determining Fair Market Value as defined in clause (b)
of the definition of Fair Market Value, the appraisers shall assume (a) the
present value of the Rent for the remaining Term using a discount rate (which
may be determined by an investment banker retained by each appraiser) based on
the creditworthiness of Tenant, and (b) the present value of the Leased Premises
as of the end of such Term based on "value in use" of the Leased Premises after
expiration of the Term.

                  (d) Notwithstanding the foregoing, either Landlord or Tenant
may terminate the negotiations to determine Fair Rental Value at anytime prior
to its final determination at which time Tenant's renewal option as set forth in
this Lease shall expire.

         30. NON-RECOURSE.

                  (a) Anything contained herein to the contrary notwithstanding,
any claim based on or in respect of any liability of Landlord under this Lease
shall be enforced only against the Leased Premises or Landlord's interest in
Rents and not against any other assets, properties or funds of (i) Landlord,
(ii) any director, officer, member, general partner, shareholder, limited
partner, beneficiary, employee or agent of Landlord or any general partner of
Landlord or any of its members or general partners (or any legal representative,
heir, estate, successor or assign of any thereof), (iii) any predecessor or
successor partnership or corporation (or other entity) of Landlord or any of its
general partners, shareholders, officers, directors, members, employees or
agents, either directly or through Landlord or its general partners,
shareholders, officers, directors, employees or agents or any predecessor or
successor partnership or corporation (or other entity), or (iv) any Person
affiliated with any of the foregoing, or any director, officer, employee or
agent of any thereof. Notwithstanding the foregoing, Tenant shall not be
precluded from instituting legal proceedings for the purpose of making a claim
against Landlord only on account of an alleged violation of Landlord's
obligations under this Lease; provided, however, that Tenant hereby waives the
right to seek and to recover any consequential, special, exemplary, punitive or
other extraordinary damages from Landlord hereunder, Tenant hereby agreeing that
any damages to which it may be entitled shall be limited to the actual damages
incurred by Tenant. Nothing in the immediately preceding sentence is intended or
shall operate or be construed to alter any provisions of this Lease (such as, by
way of example and not by way of limitation those of Paragraph 3(b) and
Paragraph 8 hereof) that serve to limit the liability or obligations of
Landlord.

                  (b) Any claim based on or in respect of any liability of
Tenant under this Lease shall be enforced only against the assets of Tenant or
the Letter of Credit (as applicable) and not against any assets, properties or
funds of any officer, director, shareholder, employee, agent, affiliate, parent,
subsidiary, or sister corporation of Tenant or of any of the aforementioned
entities.

         31. FINANCING. If Landlord desires to obtain or refinance any Loan,
Tenant shall negotiate in good faith with Landlord concerning any reasonable
request made by any Lender or proposed Lender for changes or modifications in
this Lease provided there is no increase in Tenant's obligations. 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

                                       40
<PAGE>

documents that such Lender reasonably requires in connection with such
financing, including any environmental indemnity agreement and subordination,
non-disturbance and attornment agreement ("SNDA"), so long as the same do not
adversely affect any right, benefit or privilege of Tenant under this Lease or
increase Tenant's obligations under this Lease. Such SNDA may require Tenant to
confirm that (i) Lender and its assigns will not be liable to Tenant for any
misrepresentation, act or omission of Landlord, and (ii) Lender and its assigns
will not be subject to any counterclaim, demand or offset which Tenant may have
against Landlord.

         32. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT. Notwithstanding
anything to the contrary in this Lease, this Lease and Tenant's interest
hereunder shall be subject, subordinate and inferior to any Mortgage or other
security instrument granted or entered into by Landlord in connection with the
Loan by which Landlord acquired the Leased Premise from Tenant, and any Mortgage
or other security instrument hereafter placed upon the Leased Premises by
Landlord, and to any and all advances made or to be made thereunder, to the
interest thereon, and all renewals, replacements and extensions thereof,
provided that any such Mortgage (or a separate SNDA entered into between Tenant
and the Lender in whose favor such Mortgage was granted) shall provide for the
recognition of this Lease and all Tenant's rights hereunder unless and until an
Event of Default exists and Landlord shall have the right to terminate this
Lease pursuant to any applicable provision hereof.

         33. INTENTIONALLY DELETED.

         34. HOLDING OVER. If Tenant should remain in occupancy of the Leased
Premises after the expiration or earlier termination of this Lease, Tenant shall
be deemed to be a tenant at sufferance and all provisions of this Lease shall
remain applicable to such tenancy, except that the monthly Basic Rent payable
during such period shall be one hundred and twenty percent (120%) of the monthly
Basic Rent prevailing immediately prior to the expiration or termination hereof.

         35. LANDLORD'S LIEN. Without waiving any of Landlord's other rights and
remedies hereunder, Landlord hereby expressly waives any and all landlord's
liens and similar liens or security interests against any of the equipment,
inventory and other personal property of Tenant located at the Leased Premises
(whether arising at law or in equity) to which Landlord is or may be entitled as
security for the performance of Tenant's obligations hereunder.

         36. DISCLAIMER OF PURCHASE RIGHTS. Except for the limited rights of
Tenant to acquire title to the Leased Premises in accordance with the provisions
of paragraph 18(d) hereof, nothing in this Lease is intended or shall operate to
grant to Tenant of any right of first refusal, right of first offer, purchase
option, or similar right to elect to purchase or acquire the Leased Premises or
any portion thereof, and Tenant hereby expressly waives any and all such rights.

         37. MISCELLANEOUS.

                  (a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.

                                       41
<PAGE>

                  (b) As used in this Lease, the singular shall include the
plural and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall
mean "lien, charge, encumbrance, title retention agreement, pledge, security
interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of
the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements" shall mean "the
Improvements or any part thereof or interest therein"; and (viii) "any of the
Equipment" shall mean "the Equipment or any part thereof or interest therein".

                  (c) Any act which Landlord is permitted to perform under this
Lease may be performed at any time and from time to time by Landlord or any
person or entity designated by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except as otherwise specifically provided herein, Landlord shall not
unreasonably withhold or delay its consent whenever such consent is required
under this Lease. Time is of the essence with respect to the performance by
Tenant of its obligations under this Lease.

                  (d) Landlord shall in no event be construed for any purpose to
be a partner, joint venturer or associate of Tenant or of any subtenant,
operator, concessionaire or licensee of Tenant with respect to any of the Leased
Premises or otherwise in the conduct of their respective businesses.

                  (e) This Lease and any documents which may be executed by
Tenant on or about the effective date hereof at Landlord's request constitute
the entire agreement between the parties and supersede all prior understandings
and agreements, whether written or oral, between the parties hereto relating to
the Leased Premises and the transactions provided for herein. Landlord and
Tenant are business entities having substantial experience with the subject
matter of this Lease and have each fully participated in the negotiation and
drafting of this Lease. Accordingly, this Lease shall be construed without
regard to the rule that ambiguities in a document are to be construed against
the drafter.

                  (f) This Lease may be modified, amended, discharged or waived
only by an agreement in writing signed by the party against whom enforcement of
any such modification, amendment, discharge or waiver is sought.

                  (g) The covenants of this Lease shall run with the land and
bind Tenant, its successors and assigns and all present and subsequent
encumbrancers and subtenants of any of the Leased Premises, and shall inure to
the benefit of Landlord, its successors and assigns. If there is more than one
Tenant, the obligations of each shall be joint and several.

                  (h) Should any provision of this Agreement be held
unenforceable or invalid under the laws of the United States of America or the
State of Texas, or under any other applicable laws of any other jurisdiction,
then the parties hereto agree that such provision shall be deemed modified for
purposes of performance of this Lease in such jurisdiction to the extent
necessary to render it lawful and enforceable, or if such a modification is not
possible without materially altering the intention of

                                       42
<PAGE>

the parties hereto, then such provision shall be severed herefrom for purposes
of performance of this Lease in such jurisdiction. The validity of the remaining
provisions of this Lease shall not be affected by any such modification or
severance, except that if any severance materially alters the intentions of the
parties hereto as expressed herein (a modification being permitted only if there
is no material alteration), then the parties hereto shall use commercially
reasonable efforts to agree to appropriate equitable amendments to this Lease in
light of such severance.

                  (i) This Lease shall be governed by and construed and enforced
in accordance with the Laws of the State.

                  (j) Tenant represents and warrants to Landlord that Tenant has
all requisite power and authority to enter into and perform this Lease. The
execution of this Lease, and the performance or observance of the obligations of
Tenant hereunder, have been duly authorized by all requisite action and are
enforceable against Tenant. The individual executing this Lease on behalf of
Tenant is authorized to act for and on behalf of and to bind Tenant in
connection with this Lease and in so doing to bind Tenant to all of the terms
and provisions hereof.

         38. TENANT'S FINANCIAL COVENANTS AND LETTER OF CREDIT

                  (a) Tenant shall maintain for the first five (5) years of the
Term, based on the Financial Reports for each quarter of such year a Tangible
Net Worth and a Current Ratio as set forth in the table below in Paragraph 38(b)
(the "Tenant's Financial Covenants"). If Tenant fails to be in compliance with
Tenant's Financial Covenants for any four (4) consecutive quarters during such
time, the Tenant, shall provide to Landlord a Letter of Credit in the amount of
one million five hundred thousand and no/Dollars ($1,500,000.00) and meeting the
other requirements set forth in this Lease, and which shall thereafter be
subject to the relevant provisions of this Lease, and if Tenant fails to provide
such Letter of Credit within five (5) business days following Landlord's demand
therefor, such failure shall constitute an Event of Default hereunder.

                  (b) Any Letter of Credit provided shall remain in full force
and effect until the earlier to occur of (A) the date on which the Tenant has
been in compliance with Tenant's Financial Covenants for eight (8) consecutive
quarters as evidenced by the Financial Reports of the Tenant, or (B) until
expiration of eighth Lease Year, and, unless and until released under clause (A)
above, shall be renewed annually at least thirty (30) days prior to its stated
expiration date (as previously renewed, as applicable). Landlord shall have the
right to assign to Lender or any other holder of a Mortgage the Letter of Credit
during the term of the applicable Loan, and the Lender or such other holder of a
Mortgage shall have all of the rights of, and shall be subject to the terms of,
this Paragraph. Further, Landlord shall have the right to assign the Letter of
Credit to any Third Party Purchaser. Tenant covenants and agrees to execute such
agreements, consents and acknowledgments as may be reasonably requested by
Landlord and Lender from time to time to acknowledge the assignment of the
Letter of Credit. The Tenant's Financial Covenants are set forth in the table
below.

                                       43
<PAGE>

<Table>
<Caption>

LEASE YEAR                                TANGIBLE NET WORTH                     CURRENT RATIO
-----------------------                   ----------------------                 ----------------------
<S>                                       <C>                                    <C>
One - Four                                $175,000,000                           2:1

Five                                      $175,000,000                           1.75:1

Six                                       $150,000,000                           1.50:1

Seven                                     $125,000,000                           1.25:1

Eight                                     $100,000,000                           1.00:1
</Table>

                  (c) For purposes of this Paragraph the following terms shall
have the following meanings:

                  "Current Ratio" at any date means the ratio of the total
consolidated current assets of Tenant and its subsidiaries to the ratio of the
total consolidated current liabilities of Tenant and its subsidiaries, all as
determined (i) with reference to Tenant's most recent financial report filed
with the Securities and Exchange Commission on Form 10K or Form 10Q and (ii) in
accordance with Generally Accepted Accounting Principles.

                  "Tangible Net Worth" at any date means Tenant's total
stockholders' equity as shown on Tenant's most recent financial report filed
with the Securities and Exchange Commission on Form 10K or Form 10Q, less any
amount reported as a deferred income tax asset or goodwill in such financial
statement, all as determined in accordance with Generally Accepted Accounting
Principles.

         39. TENANT'S ADDITIONAL COVENANTS. Notwithstanding any other provision
of this Lease, Tenant hereby agrees to abide by the following:

                  (a) Tenant shall maintain in full force and effect all
environmental permits required under Environmental Law for the operation of the
Leased Premises, and shall deliver to Landlord copies of the same within a
reasonable time period from receipt thereof;

                  (b) Tenant shall not dump, landfill, store, locate, or dispose
of any Hazardous Substance on the Leased Premises in violation of Environmental
Law;

                  (c) Tenant shall not emit (other than steam or water vapor) in
the atmosphere or discharge, directly or indirectly, any pollutants into the
waters of the State of Texas or the United States other than domestic sewage
discharged into a publicly owned treatment facility in violation of
Environmental Law;

                  (d) Tenant shall fully perform and observe all material
requirements of all other contracts and agreements affecting the Leased
Premises;

                  (e) Subject to Section 21, Tenant shall not enter into any
service contracts, management agreements, or other agreements or instruments
that grant to any natural person,

                                       44
<PAGE>

governmental authority, corporation, partnership, association or any other
entity of any kind any right, title, interest or benefit in or to all or any
part of the Leased Premises or any right relating to the use, operation,
management, maintenance, or repair of all or any part of the Leased Premises;

                  (g) Tenant shall not, without prior written consent from
Landlord, apply for or acquiesce in any proceedings to change any restrictive
covenants or zoning (or its equivalent) classification covering the Leased
Premises; and

                  (h) Tenant shall promptly notify Landlord of any material
change with respect to the Leased Premises or any information heretofore or
hereafter furnished to Landlord with respect to the Leased Premises, and of any
such change which would make any portion of this Lease, including, but not
limited to, the representations, warranties, covenants and agreements in this
Lease untrue or materially misleading.

                      [SIGNATURE OF LANDLORD ON NEXT PAGE]

                                       45
<PAGE>

         IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed as of the Commencement Date.

                              LANDLORD:

                              NL Ventures III Stafford, L.P.,
                              a Texas limited partnership

                              By: NL Ventures III Stafford Management, L.L.C.,
                                  a Delaware limited liability company,
                                  its sole General Partner

                                  By:  /s/ PAUL M. ROBSHAW
                                      ----------------------------------------
                                           Paul M. Robshaw, President

                       [SIGNATURE OF TENANT ON NEXT PAGE]

                                      S-1
<PAGE>

                                           TENANT:

                                           INPUT/OUTPUT, INC.,
                                           a Delaware corporation

                                           By:    /s/ TIMMOTHY PROBERT
                                              ---------------------------------
                                           Name:  Timmothy Propert
                                                -------------------------------
                                           Title: CEO
                                                  -----------------------------

                                      S-2
<PAGE>

                                   EXHIBIT A

                                 LEASED PREMISES

TRACT 1:

Being a tract or parcel containing 6.290 acres (274,005 square feet) of land
situated in James Alston Survey, A-101, Fort Bend County, Texas; said 6.290 acre
tract being all of Reserve "A-3", REPLAT OF RESERVE "A", PARC PLAZA BUSINESS
PARK, a plat of subdivision recorded on Slide Number 687-B of the Plat Records
of Fort Bend County, Texas (F.B.C.P.R.); said 6.290 acre tract being more
particularly described as follows (bearings based on said REPLAT OF RESERVE "A":

BEGINNING at a 5/8-inch iron rod with plastic cap stamped "Terra Surveying" set
in the southerly line of AUTONATION USA SOUTH, a plat of subdivision recorded in
Slide No. 1542-A, F.B.C.P.R., for the north common corner of said Reserve "A-3"
and SOUTHPORT BUSINESS PARK, SECTION TWO, a plat of subdivision recorded in
Volume 27, Page 20, F.B.C.P.R., said iron rod also being at the northwest corner
of the herein described tract;

THENCE, South 88(degrees)41'12" East, with the north line of said Reserve"A-3",
a distance of 550.00 feet to a set "X" in concrete for the northeast corner of
said Reserve "A-3" and the herein described tract, said iron rod also being in
the west right-of-way (R.O.W.) line of C. E. Selecman Drive (formerly known as
Parc Crest Drive), based on a 60 foot width, from which a found "X" in concrete
bears South 86(degrees)12' East, 0.40 feet;

THENCE, South 01(degrees)18'48" West, with said west R.O.W. line, a distance of
498.19 feet to a 5/8-inch iron rod found for the southeast corner of said
Reserve "A-3" and the herein described tract;

THENCE, North 88(degrees)41'12" West, departing said west R.O.W. line and with
the south line of said Reserve "A-3", a distance of 550.00 feet to a point in
the common line of the aforesaid REPLAT OF RESERVE "A" and the aforesaid
SOUTHPORT BUSINESS PARK, said point also being the southwest corner of said
Reserve "A-3" and the herein described tract, from which a 5/8-inch iron rod
found for reference bears North 42(degrees)46' East, 0.22 feet;

THENCE, North 01(degrees)18'48" East, with said common line, a distance of
498.19 feet to the POINT OF BEGINNING and containing 6.290 acres (274,005 square
feet) of land.

TRACT 2:

Being a tract or parcel containing 4.802 acres (209,163 square feet) of land
situated in James Alston Survey, A-101, T.J. Nichols Survey, A-296, Fort Bend
County, Texas; said 4.802 acre tract being all of Reserve "A-1", REPLAT OF
RESERVE "A", PARC PLAZA BUSINESS PARK, a plat of subdivision recorded on Slide
Number 687-B of the Plat Records of Fort Bend County, Texas (F.B.C.P.R.); said
4.802 acre tract being more particularly described as follows:

                                      A-1
<PAGE>

BEGINNING at a "X" in concrete set for the south common corner of said Reserve
"A-1" and SOUTHPORT BUSINESS PARK, SECTION TWO, a plat of subdivision recorded
in Volume 27, Page 20, F.B.C.P.R., said "X" in concrete also being in the north
right-of-way (R.O.W.) line of West Airport Boulevard (100 feet wide) and marking
the southwest corner of the herein described tract;

THENCE, North 01(degrees)18'48" East, departing said north R.O.W. line and with
the common line of said Reserve"A-1" and said SOUTHPORT BUSINESS PARK, a
distance of 380.00 feet to a 5/8-inch iron rod with plastic cap stamped "Terra
Surveying" set for the westerly common corner of said Reserve "A-1" and "A-2",
and marking the northwest corner of the herein described tract;

THENCE, South 88(degrees)41'12" East, with the common line of said Reserve A-1
and A-2, a distance of 550.00 feet to a 5/8-inch iron rod found for the easterly
common corner of said Reserve "A-1" and "A-2" and the northeast corner of the
herein described tract, said iron rod also being in the west R.O.W. line of C.E.
Selecman Drive (formerly known as Parc Crest Drive), based on a 60 foot width;

THENCE, South 01(degrees)18'48" West, with said west R.O.W. line, a distance of
147.79 feet to a 5/8-inch iron rod found for a point of curvature of a tangent
curve to the right;

THENCE, in a southerly direction, an arc distance of 50.00 feet, continuing
along said west R.O.W. line and along said curve to the right, having a radius
of 500.00 feet, a central angle of 05(degrees)43'46" and a chord which bears
South 04(degrees)10'41" West, 49.98 feet to a 5/8-inch iron rod found for the
end of said curve to the right;

THENCE, South 07(degrees)02'34" West, continuing along said west R.O.W. line, a
distance of 50.13 feet to a 5/8-inch iron rod found for a point of curvature of
a tangent curve to the left;

THENCE, in southerly direction, an arc distance of 50.00 feet, continuing along
said west R.O.W. line and said curve to the left, having a radius of 500.00
feet, a central angle of 05(degrees)43'46" and a chord which bears South
04(degrees)10'41" West, 49.98 feet, to a 5/8-inch iron rod found for the end of
said curve;

THENCE, South 01(degrees)18'48" West, continuing with said west R.O.W. line, a
distance of 66.02 feet to a 5/8-inch iron rod with plastic cap stamped "Terra
Surveying" set for the northerly end of a 15-foot cutback corner and the most
easterly southeast corner of the herein described tract;

THENCE, South 45(degrees)34'48" West, along said cutback line, a distance of
21.48 feet to a 5/8-inch iron rod with plastic cap stamped "Terra Surveying" set
for the southerly end of said 15-foot cutback corner and the most southerly
southeast corner of the herein described tract, said iron rod also being in the
aforesaid north R.O.W. line West Airport Boulevard;

                                      A-2
<PAGE>

THENCE, South 89(degrees)50'48" West, along said north R.O.W. line and the south
line of said Reserve "A-1", a distance of 261.55 feet to a 5/8-inch iron rod
with plastic cap stamped "Terra Surveying" set marking a point of curvature of a
tangent curve to the right;

THENCE, in a westerly direction, an arc distance of 263.70 feet, continuing
along said north R.O.W. line, said Reserve "A-1" and said curve to the right,
having a radius of 2,814.79 feet, a central angle of 05(degrees)22'04" and chord
which bears North 87(degrees)28'10", West, 263.60 feet to the end of said curve
and the POINT OF BEGINNING and containing 4.802 acres (209,163 square feet) of
land.

TRACT 3:

Being a tract or parcel containing 4.167 acres (181,500 square feet) of land
situated in James Alston, A-101, Fort Bend County, Texas; said 4.167 acre tract
being all of Reserve "A-2", REPLAT OF RESERVE "A", PARC PLAZA BUSINESS PARK, a
plat of subdivision recorded on Slide Number 687-B of the Plat of Records of
Fort Bend County, Texas (F.B.C.P.R.); said 4.167 acre tract being more
particularly described as follows (bearings based on said REPLAT OF RESERVE "A":

COMMENCING at a 5/8-inch iron rod with plastic cap stamped "Terra Surveying" set
in the southerly line of AUTONATION USA SOUTH, a plat of subdivision recorded in
Slide Number 1542-A, F.B.C.P.R., and for the north common corner of said Reserve
"A-3" and SOUTHPORT BUSINESS PARK, SECTION TWO, a plat of subdivision recorded
in Volume 27, Page 20, F.B.C.P.R.;

THENCE, South 01(degrees)18'48" West, with the common line of said Reserve "A-3"
and SOUTHPORT BUSINESS PARK, a distance of 498.19 feet to a point for the
westerly common corner of said Reserve "A-3" and Reserve "A-2" and the POINT OF
BEGINNING of the herein described tract, from which a 5/8-inch iron rod found
for reference bears North 42(degrees)46' East, 0.22 feet;

THENCE, South 88(degrees)41'12" East, with the common line of said Reserves
"A-2" and "A-3", a distance of 550.00 feet to a 5/8-inch iron rod found for the
easterly common corner of said Reserves "A-2" and "A-3" and the northeast corner
of the herein described tract, said iron rod also being in the west right-of-way
(R.O.W.) line of C.E. Selecman Drive (formerly known as Parc Crest Drive), based
on a 60 foot width;

THENCE, South 01(degrees)18'48" West, with said west R.O.W. line, a distance of
330.00 feet to the easterly common corner of said Reserve "A-2" and Reserve
"A-1" and the southeast corner of the herein described tract;

THENCE, North 88(degrees)41'12" West, departing said west R.O.W. line and with
the common line of said Reserves "A-1" and "A-2", a distance of 550.00 feet to a
5/8-inch iron rod with plastic cap stamped "Terra Surveying" set in the common
line of the aforesaid REPLAT OF RESERVE "A" and the aforesaid SOUTHPORT BUSINESS
PARK, said point also being the southwest corner of the herein described tract;

                                      A-3
<PAGE>

THENCE, North 01(degrees)18'48" East, with said common line, a distance of
330.00 feet to the POINT OF BEGINNING and containing 4.167 acres (181,500 square
feet) of land.

                                      A-4
<PAGE>

                                    EXHIBIT B

                                    EQUIPMENT

All fixtures, machinery, apparatus, equipment, fittings and appliances of every
kind and nature whatsoever now or hereafter affixed or attached to or installed
in any of the Leased Premises (except as hereafter provided), including all
electrical, anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing and
ventilating systems, devices and machinery and all engines, pipes, pumps, tanks
(including exchange tanks and fuel storage tanks), motors, conduits, ducts,
steam circulation coils, blowers, steam lines, compressors, oil burners,
boilers, doors, windows, loading platforms, lavatory facilities, stairwells,
fencing (including cyclone fencing), passenger and freight elevators, overhead
cranes and garage units, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this Lease, but
excluding all movable personal property and all trade fixtures, trade or office
machinery, office, manufacturing and warehouse equipment which are not
considered "fixtures" of real property under the laws of the State and are not
necessary to the operation, as buildings alone and without regard to any other
operation, of the buildings which constitute part of the Leased Premises.

                                      B-1
<PAGE>

                                   EXHIBIT C

                             PERMITTED ENCUMBRANCES

1.       A water line easement 10 feet in width located along the East line of
         subject property as shown on the recorded plat. (As to Tracts 1, 2 and
         3)

2.       An easement 5 feet in width along the West property line(s) together
         with an aerial easement 5 feet in width from a plane 20 feet above the
         ground upward located adjacent thereto, for the use of public
         utilities, as set forth and defined in instrument recorded in Volume
         1023, Page 771, of the Deed Records and as shown on the recorded plat.
         (As to Tracts 1, 2 and 3)

3.       An easement 5 feet in width along the North property line(s) together
         with an aerial easement 5 feet in width from a plane 20 feet above the
         ground upward located adjacent thereto, for the use of public
         utilities, as set forth and defined in instrument recorded in Volume
         1023, Page 771, of the Deed Records and as shown on the recorded plat.
         (As to Tract 1)

4.       An easement 20 feet in width along the South property line(s) together
         with an aerial easement 5 feet in width from a plane 20 feet above the
         ground upward located adjacent thereto, for the use of public
         utilities, as set forth and defined in instrument recorded in Volume
         524, Page 253, of the Deed Records and as shown on the recorded plat.
         (As to Tract 2)

5.       Building set back line 25 feet in width along the East property line(s)
         as shown on the recorded plat. (As to Tracts 1, 2 and 3)

6.       Building set back line 25 feet in width along the South property
         line(s) as shown on the recorded plat. (As to Tract 2)

7.       Easements 10 feet in width at three (3) locations granted to Houston
         Lighting and Power Company as set forth and defined in instrument
         recorded under Clerk's File No. 1999030257, of the Official Records of
         Fort Bend County, Texas. (As to Tract 1)

8.       An easement 29 feet in width and 32 feet in length granted to Houston
         Lighting and Power Company and as set forth and defined in instrument
         recorded under Clerk's File No. 1999030257, of the Official Records of
         Fort Bend County, Texas. (As to Tract 1)

                                      C-1
<PAGE>
                                   EXHIBIT D

                            Basic Rent & Escalations

11104 WEST AIRPORT BOULEVARD (90,990 square feet)

         The initial Basic Rent shall be Eleven and No/100 Dollars ($11.00) per
square foot per year, which shall continue through Lease Year 4. The Basic Rent
will then increase by one dollar ($1.00) per square foot per Lease Year in each
of Lease Years five (5) through eight (8) and shall increase by one dollar
($1.00) per square foot per Lease Year in each of Lease Years nine (9) through
twelve (12).

<Table>
<S>                                 <C>
Initial Rent:              $1,000,890
Lease Year 2:              $1,000,890
Lease Year 3:              $1,000,890
Lease Year 4:              $1,000,890
Lease Year 5:              $1,091,880
Lease Year 6:              $1,091,880
Lease Year 7:              $1,091,880
Lease Year 8:              $1,091,880
Lease Year 9:              $1,182,870
Lease Year 10:             $1,182,870
Lease Year 11:             $1,182,870
Lease Year 12:             $1,182,870
</Table>

12300 CHARLES E. SELECMAN (79,566 square feet)

         The initial Basic Rent shall be Eleven and No/100 Dollars ($11.00) per
square foot per year, which shall continue through Lease Year 4. The Basic Rent
will then increase by one dollar ($1.00) per square foot per Lease Year in each
of Lease Years five (5) through eight (8) and shall increase by one dollar
($1.00) per square foot per Lease Year in each of Lease Years nine (9) through
twelve (12).

<Table>
<S>                        <C>
Initial Rent:              $  875,226
Lease Year 2:              $  875,226
Lease Year 3:              $  875,226
Lease Year 4:              $  875,226
Lease Year 5:              $  954,792
Lease Year 6:              $  954,792
Lease Year 7:              $  954,792
Lease Year 8:              $  954,792
Lease Year 9:              $1,034,358
Lease Year 10:             $1,034,358
Lease Year 11:             $1,034,358
Lease Year 12:             $1,034,358
</Table>

                                       D-1
<PAGE>

12200 CHARLES E. SELECMAN (110,000 square feet)

         The initial Basic Rent shall be Seven and No/100 Dollars ($7.00) per
square foot per year, which shall continue through Lease Year 4. The Basic Rent
will then increase by one dollar ($1.00) per square foot per Lease Year in each
of Lease Years five (5) through eight (8) and shall increase by one dollar
($1.00) per square foot per Lease Year in each of Lease Years nine (9) through
twelve (12).

<Table>
<S>                        <C>
Initial Rent:              $ 770,000
Lease Year 2:              $ 770,000
Lease Year 3:              $ 770,000
Lease Year 4:              $ 770,000
Lease Year 5:              $ 880,000
Lease Year 6:              $ 880,000
Lease Year 7:              $ 880,000
Lease Year 8:              $ 880,000
Lease Year 9:              $ 990,000
Lease Year 10:             $ 990,000
Lease Year 11:             $ 990,000
Lease Year 12:             $ 990,000
</Table>

                                      D-2

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