Document:

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                                                                    Exhibit 10.9

August 31, 2000

Integrated Resources High Equity Partners L.P., Series 85,
  A California Limited Partnership
100 Jericho Quadrangle, Suite 214
Jericho, NY  11753-2727
         Attn: Mr. Peter Braverman

RE:     Valuation Analysis for Integrated Resources High Equity Partners, Series
85, A California Limited Partnership ("the Partnership")

Gentlemen:

By letter dated June 14, 2000, the Partnership retained Insignia/ESG, Inc.
("Insignia") to undertake four separate valuation analyses with respect to the
Partnership on behalf of the Partnership. The engagement letter states that the
Partnership proposes to be converted (the "Transaction") into a real estate
investment trust (the "REIT") as described by the Partnership's management in
Amendment No.2 to the Registration Statement on Form S-4 of the REIT. We have
assumed that in the Transaction, each Partnership Unit would be exchanged for
three REIT shares. In each of the analyses, the value arrived at is expressed as
an amount per proposed REIT share. The following summarizes the specific
analyses that the Partnership asked us to perform.

1. An examination of the secondary market trading history ("Secondary Market
Trading History Analysis") of the existing units of limited partnership interest
in the Partnership (the "Partnership Units") on the limited secondary markets;

2. An analysis of the value of the net assets of the Partnership, and the amount
of cash available for distribution to partners, were the Partnership to
liquidate all of its real estate (the "Properties") and other assets
("Liquidation Analysis");

3. An analysis of the value of the Partnership Units, on a going concern basis,
based upon the future cash flow to be received by partners ("Going Concern
Analysis");

4. On the assumption that the Partnership was converted to the REIT, an analysis
of the expected range in which the REIT shares would trade based upon an
examination of comparable publicly traded real estate investment trusts
("Conversion and Comparable Company Analysis").

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In performing these analyses, we reviewed the documents provided to us by the
Partnership which are identified on Schedule A to this letter and we have relied
upon and assumed, without independent verification or investigation, the
accuracy and completeness of all financial and other information provided to or
discussed with us by the Partnership, its general partner and their respective
employees, representatives and affiliates. With respect to forecasts of the
future financial condition and operating results of the Partnership and the
proposed REIT provided to or discussed with us, we assumed, at the direction of
the management of the Partnership, without independent verification or
investigation, that such forecasts were reasonably prepared on bases reflecting
the best currently available information, estimates and good faith judgments of
the management of the Partnership. We have also relied upon assurances of the
management of the Partnership that they are unaware of any facts that would make
the historical information or forecasts incomplete or misleading. Except for the
appraisals provided to us by the Partnership referred to below, we have neither
made nor obtained any independent evaluations or appraisals of the assets or the
liabilities (contingent or otherwise) of the Partnership. The analyses do not
address the tax consequences of any aspect of the proposed Transaction (other
than transfer taxes assumed with the disposition of real estate upon
liquidation). We are not expressing any opinion as to the underlying evaluation,
future performance or long-term viability of the Partnership or the proposed
REIT, or the price at which Partnership Units or proposed REIT shares will
trade, whether or not the Transaction occurs. Our analyses are necessarily based
on the information available to us and general economic, financial and
securities market conditions and circumstances as they exist and can be
evaluated by us on the date hereof. It should be understood that, although
subsequent developments may affect our analyses, we do not have any obligation
to update, revise or reaffirm the analyses.

OVERVIEW OF CUSHMAN AND WAKEFIELD APPRAISAL METHODS
---------------------------------------------------

Insignia was provided with Cushman & Wakefield's ("Cushman") appraised values as
of June 30, 2000 for the Properties ("Appraised Values"). The valuation approach
selected by Cushman for the Properties varies based on each Property's
particular demise, encumbrances and the market conditions affecting it. Cushman
employed a discounted cash flow approach with, in most cases, support from the
sales comparison approach.

Under the discounted cash flow approaches, the cash flows for the Properties for
the next 10 years were projected. At the end of the 10th year a terminal value
("Terminal Value") was added to the cash flow by capitalizing the projected 11th
year net operating income at a rate ("Appraised Cap Rate") selected by Cushman
and then deducting the anticipated costs associated with selling the Properties
("Selling Costs"). The cash flows were then discounted to present utilizing a
discount rate ("Appraised Discount Rate") selected by Cushman.

For the properties held through joint venture interests, Cushman provided a
second set of values ("Discounted J.V. Values") which contemplate a 25% to 30%
discount ("Joint Venture Discounts") to the Appraised Values in consideration of
the illiquidity associated

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with the ownership structure. The Discounted J.V. Values together with the
Appraised Values for the non-joint venture Properties together constitute the
Adjusted Appraisals ("Adjusted Appraisals").

1. SECONDARY MARKET TRADING HISTORY ANALYSIS
--------------------------------------------

The Secondary Market Trading History Analysis is intended to value the
Partnerships based on the recent trading prices of Partnership Units. These
secondary markets cannot be characterized as either efficient or liquid markets,
and Partnership Units are expected to trade at a discount to liquidation value
or value based upon a going-concern analysis of the Partnership. The information
provided to us by the Partnership included the high sale price and low sale
price per Partnership Unit during each two months of trading from April 1, 1996
to May 31, 2000, together with a weighted average price per Partnership Unit for
the same period. The ranges of values indicated by this analysis are based upon
that secondary market trading data, with particular consideration given to the
weighted average trading prices in May, 2000, the most recent month for which
data was provided. Also considered are the trends in prices over the period for
which data was provided. The resulting range of values per REIT share from the
Secondary Market Trading History Analysis is indicated to be $28.96 to $32.66
per share.

2. LIQUIDATION ANALYSIS
-----------------------

The Liquidation Analysis is intended to value the Partnership's net assets
assuming a complete liquidation of the Partnership on a current basis. For
purposes of this analysis, we assumed that the non-joint venture Properties
would sell at their Appraised Values and that interests in joint ventures would
sell at the values indicated the Adjusted Appraisals.

The Liquidation Analysis assumes an adjustment for the anticipated property
disposition costs consisting of estimated transfer taxes, brokerage commissions
and closing costs ("Disposition Costs"). To the extent Properties were appraised
based on a discounted cash flow methodology, Disposition Costs were assumed to
be equal to Selling Costs utilized by Cushman in determining Terminal Value.

Consideration was also given for the non-real estate assets of the Partnership.
The net assets considered were the Assets and Liabilities reported on the
Balance Sheet at June 30, 2000 included in the Form 10-Q of the Partnership for
the period ended June 30, 2000 and were included at the value set forth on the
Balance Sheet with the exception of the assets classified as Other Assets on the
Balance Sheets. The only Other Assets included were those that were deemed to
have value upon liquidation, i.e. furniture, fixtures & equipment and
receivables.

The fee giveback obligation was also considered to be realized by the limited
partners of the Partnership at full value as of June 30, 2000.

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Finally, consideration was given for the partnership dissolution costs that were
estimated at $500,000 for the Partnership.

No general partner liquidation fees or priority distributions were considered,
as the partnership liquidation values would not provide for same under the terms
of the Partnership Agreement.

The resulting range of values per proposed REIT share based on the Liquidation
Analysis is indicated to be $52.39 to $59.07 per share.

3. GOING-CONCERN ANALYSIS
-------------------------

Insignia was provided with the distribution history of the Partnership. In
addition, pro forma financial statements showing forecasts of Partnership cash
flows, expenses and potential distributions were also provided to us by the
Partnership for the period ending December 31, 2001.

The Going-Concern Analysis is intended to value the Partnership as a going-
concern assuming its current asset base. The most significant component of the
value of the Partnership as a going-concern is the distributions to the
partners, which are assumed to be equal to the cash flow from the Partnership's
real estate assets. For purposes of this analysis, the Properties' cash flows
were attributed values based on the Appraised Values.

An adjustment was made to give effect for the joint venture illiquidity that
would impact the Terminal Values of the joint venture Properties. This
adjustment was made for the joint venture Properties that were valued by Cushman
pursuant to the discounted cash flow methodology, by applying to the Terminal
Value the same Joint Venture Discount utilized by Cushman in determining the
appraised liquidation value and discounting it to the present utilizing the
Appraised Discount Rate.

Consideration was also given for the non-real estate assets of the Partnership.
The net assets considered were the Assets and Liabilities cited on the Balance
Sheet as of June 30, 2000 included in the Form 10-Q of the Partnership for the
period ended June 30, 2000, and were included at the value set forth in the
Balance Sheet with the exception of the assets classified as Other Assets on the
Balance Sheet of the Partnership at June 30, 2000. The only Other Assets
included were those that were deemed to have value upon liquidation, i.e.
furniture fixtures & equipment and receivables.

An adjustment was also made to reflect the going-concern reserve requirements. A
general reserve of $1,000,000 was to be maintained by the Partnership and then
liquidated in 8 years. An adjustment was thus made equal to the cost of
maintaining this reserve.

Finally, an adjustment was made for the cost of asset management fees and
administrative costs. The values of these costs were derived by capitalizing the

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anticipated annual cost of these expenses for the year ending December 31, 2001.
The capitalization rates employed were equal to the weighted average Appraised
Discount Rate/Appraised Cap Rate for the Properties.

The resulting range of values per proposed REIT share based on the Going-Concern
Analysis is indicated to be $42.10 to $47.47 per share.

4. CONVERSION AND COMPARABLE COMPANY ANALYSIS
---------------------------------------------

The Conversion and Comparable Company Analysis endeavors to determine the range
of value for the proposed REIT's shares.

The methodology employed in determining the REIT's value consisted of applying
to the Projected Funds from Operations ("Projected FFO") of the REIT a range of
multiples (the "FFO Multiples") which are consistent with the FFO Multiples at
which comparable real estate investment trusts are currently trading in the
marketplace. Funds from Operations were calculated in accordance with the
guidelines set out by the National Association of Real Estate Investment Trusts
("NAREIT"). While no directly comparable companies were identified, by adjusting
and applying the median Projected FFO multiple for small-capitalization real
estate investment trusts, those with an implied market capitalization less than
$250 million, a range of reasonable FFO Multiples was established. The range of
FFO Multiples determined to be 5.4 to 6.7.

The Projected FFO of the REIT is comprised of two components: (1) Pro-forma FFO
("Pro-Forma FFO") for the assets currently owned ("Current Assets") by the
Partnership and (2) Anticipated FFO ("Anticipated FFO") for assets projected to
be acquired by the REIT in the future ("New Assets").

The Pro-Forma FFO is based on the actual operating results of the Current Assets
for the 12 month period ending June 30, 2000, as adjusted for the anticipated
increase in Asset Management Fees resulting from the higher Adjusted Appraisals
as compared to the 1998 appraised values.

Anticipated FFO is based on the projected operating results of the New Assets,
as decreased by the rise in the asset management fees resulting from the
acquisition of the New Assets. The New Assets are assumed to be acquired in two
ways: (1) by utilizing all available cash less a reserve equal to 3% of the
Adjusted Appraisals to buy New Assets and (2) by leveraging the Current Assets
and the New Assets to a level of 75% with debt which carries an interest rate of
8%. The New Assets are assumed to generate net operating income equal to 10.5%
of their gross purchase price.

The resulting range of values per proposed REIT share based on the Conversion
and Comparable Company Analysis are indicated to be $40.25 to $49.94 per share.

<PAGE>

Estimates of value of the proposed REIT shares are not intended and should not
be construed as a prediction of estimates as to the trading price of the
proposed REIT shares upon or after consummation of the Transaction.

The information set forth in this letter does not constitute and should not be
construed as a recommendation to any holder of Partnership Units with respect to
the proposed Transaction. The analyses do not address the merits of the proposed
Transaction or consider any alternatives to the proposed Transaction. This
letter has been prepared for the Partnership, and should not be reproduced,
summarized, described or referred to without the prior written consent of
Insignia; provided, however, that this letter may be summarized and reproduced
in full in the Registration Statement on Form S-4 to be filed by the
Partnership.

                                                          Insignia/ESG, Inc.

                                                     By:_________________

                                                     Title:________________

                                                     Name:_______________

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                                   SCHEDULE A

             LIST OF PARTNERSHIP-PROVIDED INFORMATION AND MATERIALS
             -------------------------------------------------------
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------
ITEM                                          DESCRIPTION
---------------------------------------------------------------------------------------------------
<S>                                              <C>
Appraisals                                    Narrative  appraisals  of each of the  Partnership's
                                              properties  prepared  by Cushman &  Wakefield  as of
                                              June 30, 2000
---------------------------------------------------------------------------------------------------
Forms 10-K                                    Form  10-K for the  Partnership  for the year  ended
                                              December 31, 1999
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Forms 10-Q                                    Form 10-Q for the  Partnership for the quarter ended
                                              June 30, 2000
---------------------------------------------------------------------------------------------------
Capital Plans                                 Descriptions    of    the    anticipated     capital
                                              improvements  requirements  at of the  Partnership's
                                              properties for the next 5 years
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Asset Management Fees                         The    Partnership's   and   the   proposed   REIT's
                                              anticipated  asset  management  fees  based  on  the
                                              Appraised Values
---------------------------------------------------------------------------------------------------
Administrative Expenses                       The Partnership's and the proposed REIT's anticipated
                                              Administrative Costs based on historical costs and
                                              management's estimation of future costs assuming a 3%
                                              inflationary factor
---------------------------------------------------------------------------------------------------
Pro-Forma FFO                                 A projection of the Partnership's and the REIT's
                                              funds from operations based on the assets currently
                                              owned by the Partnership.
---------------------------------------------------------------------------------------------------
Anticipated FFO                               A  projection  of the  increase in the REIT's  funds
                                              from  operations  based  on the  acquisition  of New
                                              Assets  assuming 75%  leverage of the  Partnership's
                                              Current   Assets   and  New   Assets,   and  use  of
                                              approximately 80% of the Partnership's  current cash
                                              reserves   for  the   acquisition   of  New  Assets.
                                              Leverage was assumed to be 75% and bear  interest at
                                              an average  rate of 8%, and New Assets were  assumed
                                              to generate net  operating  income of 10.5% of their
                                              gross cost.  Asset  Management  Fees were assumed to
                                              be based upon 1.25% of

</TABLE>

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<TABLE>
<CAPTION>
<S>                                                  <C>
---------------------------------------------------------------------------------------------------
                                              the prospective  value of the New Assets.
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Projected FFO                                 The total FFO assumed to be generated by the proposed
                                              REIT in the future. Calculated by adding the Pro-Forma
                                              FFO and Anticipated FFO.
---------------------------------------------------------------------------------------------------
Going-Concern Reserve Requirements            An estimate of the cost of the maintenance and use of
                                              the cash reserves projected for the Partnership
                                              assuming the proposed REIT conversion does not occur.
---------------------------------------------------------------------------------------------------
Form S-4                                      Amendment  No. 2 to the  Registration  Statement  on
                                              Form S-4 filed by the REIT in April 2000
---------------------------------------------------------------------------------------------------
Pro-Forma Partnership Income Statements       Pro-forma   stabilized  income  statements  for  the
                                              Partnership  assuming the proposed  REIT  conversion
                                              does   not   occur.    These   statements    reflect
                                              operations  for the twelve  month  period ended June
                                              30,  2000 as  adjusted  for major  known  changes in
                                              property   operations,    changes   in   the   Asset
                                              Management  Fees  based on the  increased  Appraised
                                              Going- Concern Values, and increased  administrative
                                              costs assuming an inflationary factor of 3%.
---------------------------------------------------------------------------------------------------
Secondary Market Trading History              Chart of number and prices of Partnership Units sold
                                              from April 1, 1996 through May 31, 2000 as reported by
                                              Partnership Spectrum.
---------------------------------------------------------------------------------------------------
Fee Giveback Obligations                      The General Partner's current fee giveback obligations
                                              stipulated in The Class Action Settlements, as defined
                                              in the Form S-4.
---------------------------------------------------------------------------------------------------
Going Concern Distributions                   Estimates of the distributions by the Partnership if
                                              the Partnership were to be a going concern.
---------------------------------------------------------------------------------------------------
Partnership Dissolution Costs                 Estimates of the Partnership-level costs associated
                                              with the dissolution and winding up of the affairs of
                                              the Partnership.
---------------------------------------------------------------------------------------------------

</TABLE><PAGE>

                                                                    EXHIBIT 10.9

                              EMPLOYMENT AGREEMENT

         Employment Agreement ("Agreement") dated as of July 12, 1999 between
MUSE Technologies, Inc., a Delaware corporation (the "Company"), and Steve
Sukman (the "Executive").

                                    ARTICLE I

                                   EMPLOYMENT

         The Company hereby employs the Executive, and the Executive accepts
employment with the Company, upon the following terms and conditions:

         I.1 Employment. The Company hereby employs the Executive, and the
Executive agrees to serve, as the Vice President, Communications of the Company
and its subsidiaries (the "Subsidiaries") during the term of this Agreement.
Subject to the President of the Company and the President of each Subsidiary,
the Executive shall actively manage and have responsibility for and supervision
over the business activities and affairs of the Company and the Subsidiaries,
with respect to communications, and he shall manage, supervise and direct its
and their officers, employees and agents, with respect to Communications. The
Executive agrees to devote his full business time and attention and best efforts
to the affairs of the Company and the Subsidiaries during the term of this
Agreement.

         I.2 Term. The Employment of the Executive by the Company under the
terms and conditions of this Agreement will commence as of July 12, 2000 and
continue until July 12, 2001 (the "Term") unless terminated sooner in accordance
with the provisions of Article IV.

                                       1

<PAGE>

                                   ARTICLE II

                                  COMPENSATION

         II.1 (a) Annual Salary. During the Term the Company shall pay to the
Executive an annual salary of $110,000 (the "Base Salary") payable in equal
installments every two weeks. The President shall review the performance of the
Executive annually and thereafter, at the sole discretion of the President,
determine whether the Executive is entitled to an increase in the Base Salary.

              (b) Performance Bonus. In addition to any other compensation to be
received pursuant to this Agreement, the Vice President, Business Development
shall be entitled to receive an annual performance bonus (the "Performance
Bonus") of up to thirty-two and one-half percent (32.5%) (the "Bonus Rate") of
the Base Salary based upon the Company achieving revenue and profit targets or
other similar objectives established by the President, and approved by
Compensation Committee thereof for each fiscal year which ends during the Term
(or a partial fiscal year in the case of death, a Permanent Disability
determination or expiration of the Term). The President and Compensation
Committee thereof shall review the performance of the Vice President,
Communications annually and, thereafter, determine whether the Vice President,
Communications is entitled to an increase in the Bonus Rate. The Performance
Bonus shall be paid in cash periodically as the President directs, but no less
frequently than annually, promptly after the close of each fiscal year and of
the preparation of fiscal year financial statements, but in no event later than
90 days from such fiscal year end. Notwithstanding the foregoing, the
Performance Bonus for the Vice President, Communications for fiscal year 1999
shall be determined by the President, independent of any established revenue and
profit targets or other similar objectives established by the President and
approved by Compensation Committee thereof for 1999.

                                       2

<PAGE>

         II.2 Stock Options. The Executive will be eligible to receive grants of
stock options under the Company's Stock Option Plan as the President shall
determine. As of the date of this Agreement, subject to the terms of the Stock
Option Plan, the Director shall be entitled to receive stock options under the
Company's Stock Option Plan exercisable for 30,000 and 30,000 shares of common
stock of the Company and vesting on July 12, 2000 and July 12, 2001,
respectively, at an exercise price per share of $7.50, in the event the Vice
President, Communications' employment with the Company has not been terminated
prior to each such vesting date, as the case may be.

         II.3 Reimbursement of Expenses. The Executive shall be entitled to
receive prompt reimbursement of all reasonable expenses incurred by the
Executive in performing services hereunder, including all expenses of travel,
entertainment and living expenses while away from Albuquerque, NM on business at
the request of, or in the service of, the Company or any Subsidiary, provided
that such expenses are incurred and accounted for in accordance with the
policies and procedures and approved operating budget established by the
Company.

         II.4 Benefits. The Executive shall be entitled to participate in and be
covered by all health, insurance, pension and other employee plans and benefits
established by the Company (collectively referred to herein as the "Company
Benefit Plans") for its Executive employees generally, subject to meeting
applicable eligibility requirements.

         II.5 Vacations and Holidays. During the Term, the Executive shall
accrue personal leave of 6.15 hours per pay period up to a maximum of 160 hours
per year. The Executive may utilize this personal leave for vacation, illness,
doctor visits, etc. The Executive shall also be entitled to such holidays as are
established by the Company for all employees and such other religious holidays
as is customary pursuant to the Executive's religious practice.

                                       3

<PAGE>

                                   ARTICLE III

                        CONFIDENTIALITY AND NONDISCLOSURE

         III.1 Confidentiality. The Executive will not during his employment by
the Company or thereafter at any time disclose, directly or indirectly, to any
person or entity or use, or permit the use of, any trade secrets or confidential
information relating to the Company or any Subsidiary (the "Confidential
Information") except as required by law. "Confidential Information" shall
include, but shall not be limited to, the terms of any agreement for the
development or commercialization of any hardware or software or technology
related thereto, the terms of any license, marketing, sales or distribution
agreement relating to any of the foregoing, and all information denominated as
"Confidential" and made available only on a restricted basis; provided however,
that "Confidential Information" shall not include information which comes into
the public domain through no fault of the Executive or which the Executive
obtains after the termination of employment with the Company or otherwise from a
third party who, to the knowledge of the Executive, has the right to disclose
such information.

         III.2 Return of Company Material. The Executive shall promptly deliver
to the Company on termination of the Executive's employment with the Company,
for whatever the reason, or at any time the Company may so request, all Company
or Subsidiary memoranda, notes, records, reports, manuals, drawings, computer
software, and all documents containing Confidential Information belonging to the
Company, including all copies of such materials which the Executive may then
possess or have under the Executive's control irrespective of the format of such
materials.

         III.3 Non-Competition. During the Term and for up to a one-year period
thereafter (the "Non-Compete Period") the Executive will not, directly or
indirectly, without the consent of the President of the Company: (i) own,
manage, operate, join, control, or participate in or be connected with, as an
officer, employee partner, stockholder, director, adviser, consultant, or agent
(whether paid or unpaid), any business, which is at the time engaged in any
activities

                                       4

<PAGE>

which compete with the business of the Company or any Subsidiary; the foregoing
provision being also intended to prohibit the Executive from acquiring or
holding in excess of 5% of any issue of stock or securities of any Company which
has any securities listed on a national securities exchange or quoted in the
daily listing of over-the-counter market securities; (ii) utilize any employees
of the Company to perform any service which conflicts with their full-time
employment with the Company or otherwise take actions which result in the
termination of any employee's relationship with the Company; provided, however,
that notwithstanding any other provision contained in this Agreement, in the
event of termination of the Executive for any reason, the restrictions contained
in this Section III.3 shall be effective only for so long as the Company, at its
sole discretion, continues to pay the Executive his then monthly Base Salary in
advance during the Non-Compete Period.

         III.4 Right to Injunctive and Equitable Relief As a result of the
Executive's position as an Executive, Manager, director and principal
shareholder of the Company, the Executive's obligations not to disclose or use
Confidential Information and to refrain from the activities described in this
Article III are of a special and unique character which gives them a peculiar
value and which is supported by valuable consideration. The Company cannot be
reasonably or adequately compensated in damages in an action at law in the event
the Executive breaches such obligations. Therefore, the Executive expressly
agrees that the Company shall be entitled to injunctive and other equitable
relief without bond or other security in the event of such breach in addition to
any other rights or remedies which the Company may possess. Furthermore, the
obligations of the Executive and the rights and remedies of the Company under
this Article III are cumulative and in addition to, and not in lieu of, any
obligations, rights, or remedies created by applicable law relating to
misappropriation or theft of trade secrets or confidential information.

                                       5

<PAGE>

                                   ARTICLE IV

                                   TERMINATION

         IV.1 Termination by the Company. The President may terminate the
Executive's employment hereunder as follows:

              (a) Upon the death of the Executive, whereupon this Agreement
shall immediately terminate;

              (b) Upon a determination of Permanent Disability; "Permanent
Disability" shall mean a physical or mental incapacity as a result of which the
Executive becomes totally unable to continue the performance of his duties
hereunder for a period of 180 consecutive days or an aggregate of 270 days in
any 24 month period. A determination of Permanent Disability shall be subject to
the certification of a qualified medical doctor agreed to by the Company and the
Executive or, in the event of the Executive's incapacity to designate a doctor,
the Executive's legal representative. In the absence of agreement between the
Company and the Executive, each party shall nominate a qualified medical doctor
and the two doctors so nominated shall select a third doctor, who shall make the
determination as to the occurrence and continuance of a Permanent Disability; or

              (c) For cause. "Cause" shall mean only the following:

                  (i) the willful and, after written notice and a reasonable
opportunity to cure, continued failure by the Executive to follow the reasonable
directions of the Board not inconsistent with this Agreement (other than such
failure resulting from the Executive's incapacity due to physical or mental
illness);

                  (ii) willful and, after written notice and a reasonable
opportunity to cure, continued misconduct by the Executive that materially
adversely affects the Company;

                  (iii) conviction of a felony or guilty plea or plea of nolo
contendre to a crime or offense relating to the performance of the Executive's
duties to the Company;

                  (iv) willful theft from the Company;

                                       6

<PAGE>

                  (v) a willful violation of any law, rule or regulation, or the
imposition of a final order issued by any regulatory authority against the
Company, which, in any event, prohibits the Executive from holding an Executive
position with the Company or any Subsidiary;

                  (vi) the Executive's habitual drunkenness or habitual use of
illegal substances, after notice to cease and the opportunity provided by the
Company to enter into and successfully complete a reputable rehabilitation
program at the expense of the Company; or

                  (vii) the Executive fails to substantially perform any
material term or provision of this Agreement.

         For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive in bad faith and without a reasonable belief that such
action or omission by the Executive was in the best interests of the Company,
and no termination by the Company for "Cause" shall be effective unless the
Executive shall have been given written notice of the breaches of this Section
IV.1(c), (i) and (ii) for a period of 30 days within which to cure any such
breach provided that such curative period shall be permitted only once in any 12
month period,

         IV.2 Severance Payments.

              (a) Termination for Cause. In the event of termination pursuant to
Section IV.1(c), the Executive shall receive no severance, and shall be entitled
to receive, in lieu of any other payments or benefits, his accrued but unpaid
salary at the rate provided in Section II.1(a) (as increased from time to time
by the Board), plus any amounts earned but unpaid for any prior completed fiscal
or calendar year including discretionary bonuses for any prior calendar or
fiscal year, and any reimbursable expenses incurred prior to the date of
termination (collectively, the "Accrued Obligations").

              (b) Termination as a Result of Death. In the event of termination
pursuant to Section IV.1(a), the Executive's estate or beneficiaries, as the
case may be, shall be entitled to receive, in addition to any other payments or
benefits hereunder, (i) the proceeds from any insurance policies paid for by the
Company in favor of the Executive's estate or beneficiaries,

                                       7

<PAGE>

(ii) any Accrued Obligations. Such amounts shall be paid promptly in a lump sum
in cash. In addition, all options that are unvested at the date of termination
shall vest, and the restriction on any options or stock held by the Executive
shall terminate.

              (c) Termination Without Cause or For Good Reason. In the event of
termination by the Company without Cause or by the Executive for Good Reason,
the Executive shall be entitled to receive (i) Accrued Obligations through the
date of termination, plus (ii) an amount equal to one-quarter (three (3) months)
of his Base Salary or a greater amount determined in the sole discretion of the
President (each of the amounts in subclauses (i) and (ii) payable in a lump sum
in cash within 30 days after the date of termination), (iii) continuation, at
the Company's expense, if allowable by law, of any group health (which may be
provided by payment of COBRA continuation coverage premiums), life insurance and
long-term disability coverage's at the levels in effect on the Executive's date
of termination for a period of twelve months following such date of termination,
and (iv) all options held by the Executive shall automatically vest, and the
restriction on any options or stock held by the Executive shall terminate.

              (d) Voluntary Termination. If the Executive shall voluntarily
resign for other than Good Reason, he shall be entitled only to Accrued
Obligations through the effective date of such resignation or voluntary
termination, and that any such amounts shall be promptly paid in a lump sum in
cash.

              (e) Termination due to Permanent Disability. If the Executive's
employment hereunder is terminated as a result of Permanent Disability, in lieu
of any other payments or benefits (other than any such disability benefits he
may receive), he shall be paid a single lump sum in cash within thirty (30) days
of the date of his termination, an amount equal to (i) all Accrued Obligations
plus (ii) all unpaid salary, whether or not accrued, remaining through the Term.
In addition the unvested portion of any options held by the Executive on such
date shall vest, and any restriction on any options or stock held by the
Executive shall terminate.

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              (f) General Release. Prior to the Executive's receipt of any
severance payment under this Section IV.3, the Executive shall issue a general
release to the Company in such form as the Company may reasonably require, which
release shall extinguish all actual or potential claims or causes of action he
has, may have had, or hereafter may have against the Company. The Company shall
simultaneously provide a release to the Executive in the form mutatis mutandis
given to the Company by the Executive.

              (g) Other Payments Upon Termination. If notice of termination of
the Executive is given by the Executive or the Company, the Executive shall
continue to receive his Base Salary (as increased from time to time by the
Board), bonus payments and benefits as provided in Article II until the date of
termination, and shall also be entitled to reimbursement for reimbursable
expenses as set forth in Section II.2.

              (h) Company's Option to Terminate Executive after Notice of
Termination. The Company, or, if notice is given by the Company, the Executive,
may, at any time during the period after notice of termination by the Executive
or the Company and before the date of termination specified in the notice given
in accordance with Section IV.1 or Section IV.2, as the case may be (the "Notice
Period"), elect to terminate this Agreement and the Executive's employment
hereunder immediately. In such event the Company shall pay the Executive an
amount equal to all Accrued Obligations he would have received or been entitled
to for the duration of the Notice Period at the rate provided in Article II.
Such amounts shall be paid within five (5) days after the election pursuant to
this Section IV.3(h). Nothing contained in this Section IV.3(h) shall be deemed
to reduce in any way any amounts due the Executive pursuant to any other term or
provision of this Article IV.

                                        9

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                                    ARTICLE V

                ASSUMPTION OF OBLIGATIONS BY SUCCESSOR TO COMPANY

         V.1 Merger etc.; Change of Control

              In the event of a future disposition of the properties and
business of the Company substantially as an entirety by merger, consolidation,
sale of assets, reorganization or otherwise, then the Company may elect:

                   (i) to assign this Agreement and all of its rights and
obligations hereunder to the acquiring, surviving or reorganized entity;
provided that such entity shall assume in writing all of the obligations of the
Company hereunder; and provided further, that the Company (in the event and so
long as it remains in existence) shall remain liable for the performance of its
obligations hereunder in the event of a breach of this Agreement by the
acquiring, surviving or reorganized entity; or

                   (ii) in addition to its other rights of termination, to
terminate this Agreement upon at least 90 days' written notice and by paying the
Executive an amount equal to (a) all Accrued Obligations through the date of
termination, plus (b) an amount equal to his Base Salary for one year, all such
amounts pursuant to subclauses (a) and (b) shall be payable in a single lump sum
within 30 days after the date of termination. In addition, upon the date of
termination hereunder, (A) all options which the Executive then holds which are
not vested shall immediately vest , (B) the restrictions on any stock held by
the Executive shall terminate, (C) the Executive, at the Company's expense, if
allowable by law, shall continue to be a participant in any group health (which
may be provided by payment of the COBRA continuation coverage premiums), life
insurance and long-term disability plans or programs maintained by the Company
at the level in effect on the Executive's date of termination for a period of
twelve months following his date of termination.

                                       10

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                                   ARTICLE VI

                               GENERAL PROVISIONS

         VI.1 Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt required, postage prepaid, as follows:

                If to the Company:
                MUSE Technologies, Inc.
                1601 Randolph, SE,
                Albuquerque, NM 87106
                Attn: Chairman, Compensation Committee of the Board of Directors

                If to Executive:
                Steve Sukman

or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

         VI.2 No waivers. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time or any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver or similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.

         VI.3 No Mitigation; No Offset. In the event of the Executive's
termination of employment, he shall be under no obligation to seek other
employment and there shall be no offset against any amounts due the Executive
hereunder on account of any remuneration the Executive may obtain from any
subsequent employment.

                                       11

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         VI.4 Arbitration. Any and all disputes or controversies arising out of
or relating to this Agreement, other than injunctive relief pursuant to Section
III.4, shall be resolved by arbitration at the American Arbitration Association
at its New Mexico offices before a panel of three arbitrators under the then
existing rules and regulations of the American Arbitration Association. The
parties agree that in any such arbitration, the arbitrators shall not have the
power to reform or modify this Agreement in any way and to that extent their
powers are so limited. The determination of the arbitrators shall be final and
binding on the parties hereto and judgment on it may be entered in any court of
competent jurisdiction. Except as required by law, neither the Company nor the
Executive shall issue any press release or make any statement which is
reasonably foreseeable to become public with respect to any arbitration or
dispute between the parties without receiving the prior written consent of the
other party to the content of such press release or statement. In the event the
Executive prevails in such proceedings, as determined by the arbitrators, the
Company shall reimburse the Executive for all expenses (including, without
limitation, reasonable legal fees and expenses) incurred by the Executive in
connection with such proceeding or any other proceeding in which the Executive
prevails in contesting or defending any claim or controversy arising out of or
relating to this Agreement. All such amounts shall be paid promptly, but in any
event within ten (10) days after the Executive provides the Company with a
statement of such amounts to be recovered. In the event the Executive does not
prevail in such proceedings, as determined by the arbitrators, each party hereto
shall be responsible for their own expenses (including, without limitation,
legal fees and expenses) incurred in connection with such proceedings.

         VI.5 Indemnification. In addition to the indemnification provided under
the Company's Articles of Incorporation and By-Laws, the Company hereby agrees
to hold the Executive harmless and indemnify the Executive from and against, and
to reimburse the Executive for, any and all judgments, fines, liabilities,
amounts paid in settlement and expenses, including attorneys' fees, incurred
directly or indirectly as a result of or in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,

                                       12

<PAGE>

administrative or investigative, whether or not such action, suit or proceeding
is by or in the right of the Company to procure a judgment in its favor,
including an action, suit or proceeding by or in the right of any other
corporation of any type or kind, domestic or foreign, or any partnership, joint
venture, trust, employee benefit plan or other enterprise for which the
Executive served in any capacity at the request of the Company, to which the
Executive is, was or at any time becomes a party, or is threatened to be made a
party, or a result of or in connection with any appeal therein, by reason of the
fact that the Executive is or was at any time a director, officer, employee or
agent of the Company; provided, however, that (i) indemnification shall be paid
pursuant to this paragraph if and only if the Executive acted in good faith and
in a manner reasonably believed by the Executive to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the Executive's conduct was
unlawful; and (ii) no indemnification shall be payable pursuant to this
paragraph if a court having jurisdiction in the matter shall determine that such
indemnification is not lawful.

         VI.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the New Mexico without regard to its
Conflicts of Laws provisions.

         VI.7 Severability or Partial Invalidity. The invalidity or
unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.

         VI.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         VI.9 Entire Agreement. This Agreement constitutes the entire agreement
of the parties and supersedes all prior written or oral and all contemporaneous
oral agreements, understanding, and negotiations between the parties with
respect to the subject matter hereof. This Agreement is intended by the parties
as the final expression of their agreement with respect of such terms as

                                       13

<PAGE>

are included in this agreement and may not be contradicted by evidence of any
prior or contemporaneous agreement. The parties further intend that this
Agreement constitutes the complete and exclusive statements of its terms and
that no extrinsic evidence may be introduced in any judicial proceeding
involving this Agreement.

         VI.10 Assignment. Subject to the provisions of Article V hereof, this
Agreement and the rights, duties and obligations hereunder may not be assigned
or delegated by any party without the prior written consent of the other party.
Any such assignment or delegation without the prior written consent of the other
party shall be void and be of no effect. Notwithstanding the foregoing
provisions of this Section VI.10, the Company may assign or delegate its rights,
duties and obligations hereunder to any person or entity which succeeds to all
or substantially all of the business of the Company through merger,
consolidation, reorganization, or other business combination or by acquisition
of all or substantially all of the assets of the Company; provided that such
person assumes the Company's obligations under this Agreement in accordance with
Section V.1

         VI.11 Beneficial Interests. This Agreement shall inure to the benefit
of and be enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee,
or other designee, if there be no such designee, to the Executive's estate.

                                       14

<PAGE>

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

                                         MUSE TECHNOLOGIES, INC.
                                         A Delaware corporation

                                         By:
                                             --------------------------------
                                             Name:
                                             Title:

                                         EXECUTIVE

                                         ------------------------------------
                                         Steve Sukman

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