Document:

<PAGE>

                                  May 1, 2001

Board of Directors
Digital Recorders, Inc.
4018 Patriot Drive
Durham, NC 27713

Dear Gentlemen:

        This letter agreement (this "Agreement") will confirm the understanding
and agreement between Investec Ernst & Company ("Investec Ernst") and Digital
Recorders, Inc. (the "Company") as follows:

        1. The Company hereby engages Investec Ernst to deliver a fairness
           opinion in connection with the Company's contemplated acquisition
           of Mobitec Holding AB (the "Transaction").

        2. Investec Ernst hereby accepts the engagement described in paragraph
           1 and, in that connection, agrees to render an opinion (the
           "Opinion") to the Board of Directors with respect to the fairness or
           inadequacy, from a financial point of view, to the Company's
           stockholders of the consideration to be paid pursuant to the
           Transaction.  The Opinion shall be in such a form as Investec Ernst
           shall determine, including statements therein that Investec Ernst has
           relied upon the information furnished to it by the Company and the
           Board of Directors and has assumed the accuracy and completeness of
           all information used by it without assuming any responsibility for
           independent verification of such information.  In any event, the
           Opinion shall be limited to the fairness or inadequacy, from a
           financial point of view, of the aggregate consideration to be
           offered pursuant to the Transaction and shall not address the
           Board of Director's or the Company's underlying business decision
           as to whether to accept the Transaction.

        3. The Company and the Board of Directors shall make available to
           Investec Ernst all information concerning the business, assets,
           operations, financial condition and prospects of the Company which
           Investec Ernst reasonably requests in connection with the
           performance of its obligations hereunder.  All such information
           provided by or on behalf of the Company shall contain no untrue
           statement of material fact and shall not omit to state any material
           fact required or necessary to make the statements therein, in light
           of the circumstances under which they were made or under which such
           information will be used, not misleading.  All such information
           provided by the Company or the Board of Directors shall, to the
           best knowledge of the Company and its Board of Directors after due
           inquiry, contain no untrue statement of material fact and shall not
           omit to state any material fact required or necessary to make the
           statements therein, in light of the circumstances under which they
           were made or under which such information will be

<PAGE>
           used, not misleading. Investec Ernst may assume and rely upon the
           accuracy and completeness of all such information without
           independent verification.

        4. As compensation for the services rendered by Investec Ernst
           hereunder, the Company shall pay Investec Ernst as follows:

           (a) Upon delivery of the Opinion by Investec Ernst to the Board of
               Directors, a fee of $120,000, payable in cash in three
               installments consisting of $50,000 upon delivery of the Opinion
               by the Company and two subsequent equal installments each of
               $37,500 due thirty days and sixty days from the date of the
               acceptance of the Opinion by the Company.

           (b) If Investec Ernst provides any additional financial advisory or
               investment banking services to the Company or the Board of
               Directors which are not set forth in paragraph 2, then the
               Company shall pay to Investec Ernst additional fees to be
               mutually agreed upon based on Investec Ernst's customary fees
               for the services rendered.

        5. The Company shall:

           (a) indemnify Investec Ernst and hold it harmless against any and
               all losses, claims, damages or liabilities to which Investec
               Ernst may become subject arising in any manner out of or in
               connection with the rendering of services by Investec Ernst
               hereunder (including any services rendered prior to the date
               hereof) or the rendering of additional services by Investec
               Ernst as requested by the Board of Directors that are related
               to the services rendered hereunder, unless it is finally
               judicially determined that such losses, claims, damages or
               liabilities resulted from the gross negligence or willful
               misconduct of Investec Ernst; and

           (b) reimburse Investec Ernst promptly for any legal or other
               expenses reasonably incurred by it in connection with
               investigating, preparing to defend or defending, or providing
               evidence in or preparing to serve or serving as a witness with
               respect to, or otherwise relating to, any lawsuits,
               investigations, claims or other proceedings arising in any
               manner out of or in connection with the rendering of services
               by Investec Ernst hereunder or the rendering of additional
               services by Investec Ernst as requested by the Board of
               Directors that are related to the services rendered hereunder
               (including, without limitation, in connection with the
               enforcement of this Agreement and the indemnification
               obligations set forth herein); provided, however, that in the
               event a final judicial determination is made to the effect
               specified in subparagraph 5(a) above, Investec Ernst will remit
               to the Company any amounts reimbursed under this subparagraph
               5(b).

     The Company agrees that the indemnification and reimbursement commitments
set forth in this paragraph 5 shall apply if either the Company or Investec
Ernst is a formal party to any

                                       -2-
<PAGE>

such lawsuits, investigations, claims or other proceedings and that such
commitments shall extend upon the terms set forth in this paragraph to any
controlling person, affiliate, director, officer, employee or consultant of
Investec Ernst (each, with Investec Ernst, an "Indemnified Person").  The
Company further agrees that, without Investec Ernst's prior written consent,
it will not enter into any settlement of a lawsuit, claim or other proceeding
arising out of the transactions contemplated by this Agreement (i) if Investec
Ernst or any other Indemnified Person is an actual or, in the reasonable
judgment of the Company, potential, party to such lawsuit, claim or
proceeding, unless such settlement includes an explicit and unconditional
release from the party bringing such lawsuit, claim or other proceeding of all
Indemnified Persons, or (ii) if Investec Ernst or any other Indemnified Person
is not an actual or, in the reasonable judgment of the Company, potential
party to such lawsuit, claim or proceeding, unless the Company uses
commercially reasonable efforts to ensure that such settlement includes an
explicit and unconditional release from the party bringing such lawsuit, claim
or other proceeding of all Indemnified Persons.

     The Company further agrees that the Indemnified Persons are entitled to
retain separate counsel of their choice in connection with any of the matters
in respect of which indemnification, reimbursement or contribution may be
sought under this Agreement; provided that the Company may reasonably object
to the Indemnified Persons' choice of counsel if, in the reasonable opinion of
counsel to the Company, such counsel is insufficiently qualified or
inexperienced in such matters.

        6. The Company and Investec Ernst agree that if any indemnification or
           reimbursement sought pursuant to the preceding paragraph 5 is
           judicially determined to be unavailable for a reason other than the
           gross negligence or willful misconduct of Investec Ernst, then,
           whether or not Investec Ernst is the Indemnified Person, the
           Company and Investec Ernst shall contribute to the losses, claims,
           damages, liabilities and expenses for which such indemnification or
           reimbursement is held unavailable (i) in such proportion as is
           appropriate to reflect the relative benefits to the Company and the
           Board of Directors on the one hand, and Investec Ernst on the other
           hand, in connection with the transactions to which such
           indemnification or reimbursement relates, or (ii) if the allocation
           provided by clause (i) above is judicially determined not to be
           permitted, in such proportion as is appropriate to reflect not only
           the relative benefits referred to in clause (i) but also the
           relative faults of the Company and the Board of Directors on the
           one hand, and Investec Ernst on the other hand, as well as any
           other equitable considerations; provided, however, that in no event
           shall the amount to be contributed by Investec Ernst pursuant to
           this paragraph exceed the amount of the fees actually received by
           Investec Ernst hereunder.

        7. Except as contemplated by the terms hereof or as required by
           applicable law or pursuant to an order entered or subpoena issued
           by a court of competent jurisdiction, Investec Ernst shall keep
           confidential all material non-public information provided to it by
           the

                                       -3-
<PAGE>

           Company or the Board of Directors, and shall not disclose such
           information to any third party, other than such of its employees
           and advisors as Investec Ernst determines to have a need to know.

        8. Except as required by applicable law, any advice (including,
           without limitation, the Opinion) to be provided by Investec Ernst
           under this Agreement shall not be disclosed publicly or made
           available to third parties without the prior approval of Investec
           Ernst, and accordingly such advice shall not be relied upon by any
           person or entity other than the Board of Directors.  Notwithstanding
           the foregoing, Investec Ernst approves of a description and
           inclusion of the Opinion in documents required to be filed with the
           Securities and Exchange Commission and distributed to the Company's
           stockholders in connection with the Transaction and to references
           to Investec Ernst in such documents, provided that any such
           description and references are approved in advance by Investec
           Ernst, which approval shall not be unreasonably withheld.

        9. The Company agrees that Investec Ernst has the right to place
           advertisements in financial and other newspapers and journals at
           its own expense describing its services to the Board of Directors
           hereunder, provided that Investec Ernst will submit a copy of any
           such advertisements to the Board of Directors for its approval,
           which approval shall not be unreasonably withheld.

       10. Subject to the provisions of paragraphs 4 through 9 and paragraphs
           11 through 14, which shall survive any termination or expiration of
           this Agreement (including by operation of the preceding sentence),
           either party may terminate Investec Ernst's engagement hereunder at
           any time by giving the other party at least 10 days' prior written
           notice.

       11. The Board of Directors and Investec Ernst each represent that there
           is no other person or entity that is entitled to a finder's fee or
           any type of brokerage commission in connection with the
           transactions contemplated by this Agreement as a result of any
           agreement or understanding with it.

       12. Nothing in this Agreement, expressed or implied, is intended to
           confer or does confer on any person or entity other than the
           parties hereto or their respective successors and assigns, and to
           the extent expressly set forth herein, the Indemnified  Persons,
           any rights or remedies under or by reason of this Agreement or as a
           result of the services to be rendered by Investec Ernst hereunder.
           The parties acknowledge that Investec Ernst is not acting as an
           agent of the Company or the Board of Directors or in a fiduciary
           capacity with respect to the Company or the Board of Directors and
           that Investec Ernst is not assuming any duties or obligations other
           than those expressly set forth in this Agreement.  Each of the
           Company and the Board of Directors further agree that neither
           Investec Ernst nor any of its controlling persons, affiliates,
           directors, officers, employees or consultants shall have any
           liability to the Company or the Board of Directors or any person
           asserting claims on behalf of or in right of the Company or the
           Board of Directors for any losses, claims, damages, liabilities or
           expenses arising out of or relating to this Agreement or the
           services to be rendered by Investec Ernst hereunder, unless it is
           finally judicially

                                        -4-
<PAGE>

           determined that such losses, claims, damages, liabilities or
           expenses resulted from the gross negligence or willful misconduct
           of Investec Ernst.

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

       14. This Agreement may not be amended or modified except in writing
           signed by each of the parties and shall be governed by and
           construed and enforced in accordance with the laws of the State of
           New York.  Any right to trial by jury with respect to any lawsuit,
           claim or other proceeding arising out of or relating to this
           Agreement or the services to be rendered by Investec Ernst
           hereunder is expressly and irrevocably waived.

        If the foregoing correctly sets forth the understanding and agreement
between Investec Ernst, the Company and the Board of Directors, please so
indicate in the space provided for that purpose below, whereupon this letter
shall constitute a binding agreement as of the date hereof.

                                        INVESTEC ERNST & COMPANY

                                        By:__________________________

AGREED:

DIGITAL RECORDERS, INC.

By:__________________________
   Name:
   Title:

BOARD OF DIRECTORS OF DIGITAL RECORDERS, INC.

By:__________________________
   Name:
   Title:

                                       -5-<PAGE>

                                 STERLING PLAZA
                                  DALLAS, TEXAS

                             OFFICE LEASE AGREEMENT

                                     BETWEEN

   STERLING PLAZA LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP, DOING
         BUSINESS IN TEXAS AS DALLAS STERLING PLAZA LIMITED PARTNERSHIP

                                  ("LANDLORD")

                                       AND

              DIGITAL RECORDERS, INC, A NORTH CAROLINA CORPORATION
                                   ("TENANT")

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                       <C>
I. BASIC LEASE INFORMATION....................................................1

II. LEASE GRANT...............................................................2

III. ADJUSTMENT OF COMMENCEMENT DATE; POSSESSION..............................2

IV. RENT......................................................................3

V. COMPLIANCE WITH LAWS; USE..................................................6

VI. SECURITY DEPOSIT..........................................................6

VII. SERVICES TO BE FURNISHED BY LANDLORD.....................................7

VIII. LEASEHOLD IMPROVEMENTS..................................................7

IX. REPAIRS AND ALTERATIONS...................................................8

X. USE OF ELECTRICAL SERVICES BY TENANT.......................................9

XI. ENTRY BY LANDLORD........................................................10

XII. ASSIGNMENT AND SUBLETTING...............................................10

XIII. LIENS..................................................................11

XIV. INDEMNITY AND WAIVER OF CLAIMS..........................................11

XV. INSURANCE................................................................12

XVI. SUBROGATION.............................................................12

XVII. CASUALTY DAMAGE........................................................12

XVIII. CONDEMNATION..........................................................13

XIX. EVENTS OF DEFAULT.......................................................13

XX. REMEDIES.................................................................14

XXI. LIMITATION OF LIABILITY.................................................15

XXII. NO WAIVER..............................................................15

XXIII.  QUIET ENJOYMENT......................................................15

XXIV. RELOCATION.............................................................15

XXV. HOLDING OVER............................................................15

XXVI. SUBORDINATION TO MORTGAGES; ESTOPPEL CERTIFICATE.......................16

XXVII. ATTORNEYS' FEES.......................................................16

XXVIII. NOTICE...............................................................16

XXIX. EXCEPTED RIGHTS........................................................16

XXX. SURRENDER OF PREMISES...................................................17

XXXI. MISCELLANEOUS..........................................................17

XXXII. ENTIRE AGREEMENT......................................................18
</TABLE>

                                       i
<PAGE>

                             OFFICE LEASE AGREEMENT

This Office Lease Agreement (the "Lease") is made and entered into as of the
_________ day of _________, _____, by and between STERLING PLAZA LIMITED
PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP, DOING BUSINESS IN TEXAS AS
DALLAS STERLING PLAZA LIMITED PARTNERSHIP ("Landlord") and DIGITAL RECORDERS,
INC. A NORTH CAROLINA CORPORATION ("Tenant").

I.   BASIC LEASE INFORMATION.

     A.  "Building" shall mean the building located at 5949 Sherry Lane,
         Dallas, Texas 75225, and commonly known as Sterling Plaza.

     B.  "Rentable Square Footage of the Building" is deemed to be 302,747
         square feet.

     C.  "Premises" shall mean the area shown on EXHIBIT A to this Lease. The
         Premises are located on floor ten (10) and known as suite number 1050.
         The "Rentable Square Footage of the Premises" is deemed to be 2,206
         square feet. If the Premises include one or more floors in their
         entirety, all corridors and restroom facilities located on such full
         floor(s) shall be considered part of the Premises. Landlord and Tenant
         stipulate and agree that the Rentable Square Footage of the Building
         and the Rentable Square Footage of the Premises are correct and shall
         not be remeasured.

     D.  "Base Rent":

<TABLE>
<CAPTION>
              MONTHS OF       ANNUAL RATE        ANNUAL        MONTHLY
                TERM        PER SQUARE FOOT     BASE RENT     BASE RENT
                ----        ---------------     ---------     ---------
<S>                         <C>                 <C>           <C>
                1-48             $23.00         $50,738.04    $4,228.17
</TABLE>

     E.  "Tenant's Pro Rata Share":  .7287%.

     F.  "Base Year" for Taxes:  2000; "Base Year" for Expenses:  2000.
                                                                       -

     G.  "Term": A period of 48 months. The Term shall commence on April 1,
         2000, (the "Commencement Date") and, unless terminated early in
         accordance with this Lease, end on March 31, 2004, (the "Termination
         Date"). However, if Landlord is required to Substantially Complete
         (defined in Section III.A) any Landlord Work (defined in Section I.O.)
         prior to the Commencement Date under the terms of a Work Letter
         (defined in Section I.O): (1) the date set forth in the prior sentence
         as the "Commencement Date" shall instead be defined as the "Target
         Commencement Date" by which date Landlord will use reasonable efforts
         to Substantially Complete the Landlord Work; and (2) the actual
         "Commencement Date" shall be the date on which the Landlord Work is
         Substantially Complete, as determined by Section III.A. In such
         circumstances, the Termination Date will instead be the last day of the
         Term as determined based upon the actual Commencement Date. Landlord's
         failure to Substantially Complete the Landlord Work by the Target
         Commencement Date shall not be a default by Landlord or otherwise
         render Landlord liable for damages. Promptly after the determination of
         the Commencement Date, Landlord and Tenant shall enter into a
         commencement letter agreement in the form attached as EXHIBIT C.

     H.  Tenant allowance(s):  INTENTIONALLY OMITTED

     I.  "Security Deposit":  $4,228.17.

     J.  "Guarantor(s)":  None.

     K.  "Broker(s)":  Cushman & Wakefield of Texas, Inc.

     L.  "Permitted Use":  General office use.

     M.  "Notice Addresses":

                                       1
<PAGE>

     Tenant:

         On and after the Commencement Date, notices shall be sent to Tenant at
         the Premises. Prior to the Commencement Date, notices shall be sent to
         Tenant at the following address:

         Mr. David L. Turney
         Digital Recorders, Inc.
         4018 Patriot Drive, suite 100
         Research Triangle Park, NC 27709-4068
         Phone #:  (919) 313-3003
         Fax #:  (919) 361-0200

         Landlord:                           With a copy to:

         Sterling Plaza                      Equity Office Properties
         c/o Equity Office Properties        Two North Riverside Plaza
         5949 Sherry Lane, Suite 505         Suite 2200
         Dallas, Texas  75225                Chicago, Illinois 60606
         Attention:  Building Manager        Attention:  Southwest Regional
                                             Counsel

         Rent (defined in Section IV.A) is payable to the order of EQUITY
         OFFICE PROPERTIES at the following address: EQUITY OFFICE PROPERTIES
         TRUST, DBA STERLING PLAZA, P.O. BOX 844544, DALLAS, TEXAS  75284-4544.

     N.  "Business Day(s)" are Monday through Friday of each week, exclusive of
         New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
         Day and Christmas Day ("Holidays"). Landlord may designate additional
         Holidays, provided that the additional Holidays are commonly recognized
         by other office buildings in the area where the Building is located.

     O.  "Landlord Work" means the work, if any, that Landlord is obligated to
         perform in the Premises pursuant to a separate work letter agreement
         (the "Work Letter"), if any, attached as EXHIBIT D. If a Work Letter is
         not attached to this Lease or if an attached Work Letter does not
         require Landlord to perform any work, the occurrence of the
         Commencement Date shall not be conditioned upon the performance of work
         by Landlord and, accordingly, Section III.A. shall not be applicable to
         the determination of the Commencement Date.

     P.  "Law(s)" means all applicable statutes, codes, ordinances, orders,
         rules and regulations of any municipal or governmental entity.

     Q.  "Normal Business Hours" for the Building are 8:00 A.M. to 6:00 P.M. on
         Business  Days and 8:30 A.M. to 1:00 P.M. on Saturdays.

     R.  "Property" means the Building and the parcel(s) of land on which it is
         located and, at Landlord's discretion, the Building garage and other
         improvements serving the Building, if any, and the parcel(s) of land on
         which they are located.

II.      LEASE GRANT.

         Landlord leases the Premises to Tenant and Tenant leases the Premises
from Landlord, together with the right in common with others to use any portions
of the Property that are designated by Landlord for the common use of tenants
and others, such as sidewalks, unreserved parking areas, common corridors,
elevator foyers, restrooms, vending areas and lobby areas (the "Common Areas").

III.     ADJUSTMENT OF COMMENCEMENT DATE; POSSESSION.

     A.  The Landlord Work shall be deemed to be "Substantially Complete" on the
         date that all Landlord Work has been performed, other than any details
         of construction, mechanical adjustment or any other similar matter, the
         noncompletion of which does not materially interfere with Tenant's use
         of the Premises. However, if Landlord is delayed in the

                                       2

<PAGE>

         performance of the Landlord Work as a result of any Tenant Delay(s)
         (defined below), the Landlord Work shall be deemed to be Substantially
         Complete on the date that Landlord could reasonably have been expected
         to Substantially Complete the Landlord Work absent any Tenant Delay.
         "Tenant Delay" means any act or omission of Tenant or its agents,
         employees, vendors or contractors that actually delays the Substantial
         Completion of the Landlord Work, including, without limitation:
         (1) Tenant's failure to furnish information or approvals within any
         time period specified in this Lease, including the failure to prepare
         or approve preliminary or final plans by any applicable due date;
         (2) Tenant's selection of equipment or materials that have long lead
         times after first being informed by Landlord that the selection may
         result in a delay; (3) changes requested or made by Tenant to
         previously approved plans and specifications; (4) performance of work
         in the Premises by Tenant or Tenant's contractor(s) during the
         performance of the Landlord Work; or (5) if the performance of any
         portion of the Landlord Work depends on the prior or simultaneous
         performance of work by Tenant, a delay by Tenant or Tenant's
         contractor(s) in the completion of such work.

     B.  Subject to Landlord's obligation, if any, to perform Landlord Work and
         Landlord's obligations under Section IX.B., the Premises are accepted
         by Tenant in "as is" condition and configuration. By taking possession
         of the Premises, Tenant agrees that the Premises are in good order and
         satisfactory condition, and that there are no representations or
         warranties by Landlord regarding the condition of the Premises or the
         Building. If Landlord is delayed delivering possession of the Premises
         or any other space due to the holdover or unlawful possession of such
         space by any party, Landlord shall use reasonable efforts to obtain
         possession of the space.

     C.  If Tenant takes possession of the Premises before the Commencement
         Date, such possession shall be subject to the terms and conditions of
         this Lease and Tenant shall pay Rent (defined in Section IV.A.) to
         Landlord for each day of possession before the Commencement Date.
         However, except for the cost of services requested by Tenant (e.g.
         freight elevator usage), Tenant shall not be required to pay Rent for
         any days of possession before the Commencement Date during which
         Tenant, with the approval of Landlord, is in possession of the Premises
         for the sole purpose of performing improvements or installing
         furniture, equipment or other personal property.

IV.      RENT.

     A.  PAYMENTS. As consideration for this Lease, Tenant shall pay Landlord,
         without any setoff or deduction, the total amount of Base Rent and
         Additional Rent due for the Term. "Additional Rent" means all sums
         (exclusive of Base Rent) that Tenant is required to pay Landlord.
         Additional Rent and Base Rent are sometimes collectively referred to as
         "Rent". Tenant shall pay and be liable for all rental, sales and use
         taxes (but excluding income taxes), if any, imposed upon or measured by
         Rent under applicable Law. Base Rent and recurring monthly charges of
         Additional Rent shall be due and payable in advance on the first day of
         each calendar month without notice or demand, provided that the
         installment of Base Rent for the first full calendar month of the Term
         shall be payable upon the execution of this Lease by Tenant. All other
         items of Rent shall be due and payable by Tenant on or before 30 days
         after billing by Landlord. All payments of Rent shall be by good and
         sufficient check or by other means (such as automatic debit or
         electronic transfer) acceptable to Landlord. If Tenant fails to pay any
         item or installment of Rent when due, Tenant shall pay Landlord an
         administration fee equal to 5% of the past due Rent, provided that
         Tenant shall be entitled to a grace period of 5 days for the first 2
         late payments of Rent in a given calendar year. If the Term commences
         on a day other than the first day of a calendar month or terminates on
         a day other than the last day of a calendar month, the monthly Base
         Rent and Tenant's Pro Rata Share of any Tax Excess (defined in Section
         IV.B.) or Expense Excess (defined in Section IV.B.) for the month shall
         be prorated based on the number of days in such calendar month.
         Landlord's acceptance of less than the correct amount of Rent shall be
         considered a payment on account of the earliest Rent due. No
         endorsement or statement on a check or letter accompanying a check or
         payment shall be considered an accord and satisfaction, and either
         party may accept the check or payment without prejudice to that party's
         right to recover the balance or pursue other available remedies.
         Tenant's covenant to pay Rent is independent of every other covenant in
         this Lease.

     B.  EXPENSE EXCESS AND TAX EXCESS. Tenant shall pay Tenant's Pro Rata Share
         of the amount, if any, by which Expenses (defined in Section IV.C.) for
         each calendar year

                                       3

<PAGE>

         during the Term exceed Expenses for the Base Year (the "Expense
         Excess") and also the amount, if any, by which Taxes (defined in
         Section IV.D.) for each calendar year during the Term exceed Taxes
         for the Base Year (the "Tax Excess"). If Expenses and/or Taxes in any
         calendar year decrease below the amount of Expenses and/or Taxes for
         the Base Year, Tenant's Pro Rata Share of Expenses and/or Taxes, as
         the case may be, for that calendar year shall be $0. Landlord shall
         provide Tenant with a good faith estimate of the Expense Excess and
         of the Tax Excess for each calendar year during the Term. On or
         before the first day of each month, Tenant shall pay to Landlord a
         monthly installment equal to one-twelfth of Tenant's Pro Rata Share of
         Landlord's estimate of the Expense Excess and one-twelfth of Tenant's
         Pro Rata Share of Landlord's estimate of the Tax Excess. If Landlord
         determines that its good faith estimate of the Expense Excess or of the
         Tax Excess was incorrect by a material amount, Landlord may provide
         Tenant with a revised estimate. After its receipt of the revised
         estimate, Tenant's monthly payments shall be based upon the revised
         estimate. If Landlord does not provide Tenant with an estimate of the
         Expense Excess or of the Tax Excess by January 1 of a calendar year,
         Tenant shall continue to pay monthly installments based on the previous
         year's estimate(s) until Landlord provides Tenant with the new
         estimate. Upon delivery of the new estimate, an adjustment shall be
         made for any month for which Tenant paid monthly installments based on
         the previous year's estimate(s). Tenant shall pay Landlord the amount
         of any underpayment within 30 days after receipt of the new estimate.
         Any overpayment shall be refunded to Tenant within 30 days or credited
         against the next due future installment(s) of Additional Rent.

         As soon as is practical following the end of each calendar year,
         Landlord shall furnish Tenant with a statement of the actual Expenses
         and Expense Excess and the actual Taxes and Tax Excess for the prior
         calendar year. If the estimated Expense Excess and/or estimated Tax
         Excess for the prior calendar year is more than the actual Expense
         Excess and/or actual Tax Excess, as the case may be, for the prior
         calendar year, Landlord shall apply any overpayment by Tenant against
         Additional Rent due or next becoming due, provided if the Term expires
         before the determination of the overpayment, Landlord shall refund any
         overpayment to Tenant after first deducting the amount of Rent due. If
         the estimated Expense Excess and/or estimated Tax Excess for the prior
         calendar year is less than the actual Expense Excess and/or actual Tax
         Excess, as the case may be, for such prior year, Tenant shall pay
         Landlord, within 30 days after its receipt of the statement of Expenses
         and/or Taxes, any underpayment for the prior calendar year.

     C.  EXPENSES DEFINED. "Expenses" means all costs and expenses incurred in
         each calendar year in connection with operating, maintaining,
         repairing, and managing the Building and the Property, including, but
         not limited to:

         1.   Labor costs, including, wages, salaries, social security and
              employment taxes, medical and other types of insurance, uniforms,
              training, and retirement and pension plans.

         2.   Management fees, the cost of equipping and maintaining a
              management office, accounting and bookkeeping services, legal fees
              not attributable to leasing or collection activity, and other
              administrative costs. Landlord, by itself or through an affiliate,
              shall have the right to directly perform or provide any services
              under this Lease (including management services), provided that
              the cost of any such services shall not exceed the cost that would
              have been incurred had Landlord entered into an arms-length
              contract for such services with an unaffiliated entity of
              comparable skill and experience.

         3.   The cost of services, including amounts paid to service providers
              and the rental and purchase cost of parts, supplies, tools and
              equipment.

         4.   Premiums and deductibles paid by Landlord for insurance, including
              workers compensation, fire and extended coverage, earthquake,
              general liability, rental loss, elevator, boiler and other
              insurance customarily carried from time to time by owners of
              comparable office buildings.

         5.   Charges for water, gas, steam and sewer, but excluding those
              charges for which Landlord is otherwise reimbursed by tenants.

                                       4
<PAGE>

         6.   The amortized cost of capital improvements (as distinguished from
              replacement parts or components installed in the ordinary course
              of business) made to the Property which are: (a) performed
              primarily to reduce operating expense costs or otherwise improve
              the operating efficiency of the Property; or (b) required to
              comply with any Laws that are enacted, or first interpreted to
              apply to the Property, after the date of this Lease. The cost of
              capital improvements shall be amortized by Landlord over the
              lesser of the Payback Period (defined below) or 5 years. The
              amortized cost of capital improvements may, at Landlord's option,
              include actual or imputed interest at the rate that Landlord
              would reasonably be required to pay to finance the cost of the
              capital improvement. "Payback Period" means the reasonably
              estimated period of time that it takes for the cost savings
              resulting from a capital improvement to equal the total cost of
              the capital improvement.

         If Landlord incurs Expenses for the Property together with one or more
         other buildings or properties, whether pursuant to a reciprocal
         easement agreement, common area agreement or otherwise, the shared
         costs and expenses shall be equitably prorated and apportioned between
         the Property and the other buildings or properties. Expenses shall not
         include: the cost of capital improvements (except as set forth above);
         depreciation; interest (except as provided above for the amortization
         of capital improvements); principal payments of mortgage and other
         non-operating debts of Landlord; the cost of repairs or other work to
         the extent Landlord is reimbursed by insurance or condemnation
         proceeds; costs in connection with leasing space in the Building,
         including brokerage commissions; lease concessions, including rental
         abatements and construction allowances, granted to specific tenants;
         costs incurred in connection with the sale, financing or refinancing
         of the Building; fines, interest and penalties incurred due to the
         late payment of Taxes (defined in Section IV.D) or Expenses;
         organizational expenses associated with the creation and operation of
         the entity which constitutes Landlord; or any penalties or damages
         that Landlord pays to Tenant under this Lease or to other tenants in
         the Building under their respective leases. If the Building is not at
         least 95% occupied during any calendar year or if Landlord is not
         supplying services to at least 95% of the total Rentable Square
         Footage of the Building at any time during a calendar year, Expenses
         shall, at Landlord's option, be determined as if the Building had been
         95% occupied and Landlord had been supplying services to 95% of the
         Rentable Square Footage of the Building during that calendar year. If
         Tenant pays for its Pro Rata Share of Expenses based on increases over
         a "Base Year" and Expenses for a calendar year are determined as
         provided in the prior sentence, Expenses for the Base Year shall also
         be determined as if the Building had been 95% occupied and Landlord
         had been supplying services to 95% of the Rentable Square Footage of
         the Building. The extrapolation of Expenses under this Section shall
         be performed by appropriately adjusting the cost of those components
         of Expenses that are impacted by changes in the occupancy of the
         Building.

     D.  TAXES DEFINED. "Taxes" shall mean: (1) all real estate taxes and other
         assessments on the Building and/or Property, including, but not
         limited to, assessments for special improvement districts and building
         improvement districts, taxes and assessments levied in substitution or
         supplementation in whole or in part of any such taxes and assessments
         and the Property's share of any real estate taxes and assessments under
         any reciprocal easement agreement, common area agreement or similar
         agreement as to the Property; (2) all personal property taxes for
         property that is owned by Landlord and used in connection with the
         operation, maintenance and repair of the Property; and (3) all costs
         and fees incurred in connection with seeking reductions in any tax
         liabilities described in (1) and (2), including, without limitation,
         any costs incurred by Landlord for compliance, review and appeal of
         tax liabilities. Without limitation, Taxes shall not include any
         income, capital levy, franchise, capital stock, gift, estate or
         inheritance tax. If an assessment is payable in installments, Taxes
         for the year shall include the amount of the installment and any
         interest due and payable during that year. For all other real estate
         taxes, Taxes for that year shall, at Landlord's election, include
         either the amount accrued, assessed or otherwise imposed for the year
         or the amount due and payable for that year, provided that Landlord's
         election shall be applied consistently throughout the Term. If a
         change in Taxes is obtained for any year of the Term during which
         Tenant paid Tenant's Pro Rata Share of any Tax Excess, then Taxes for
         that year will be retroactively adjusted and Landlord shall provide
         Tenant with a credit, if any, based on the adjustment. Likewise, if a
         change is obtained for Taxes for the Base Year, Taxes for the Base
         Year shall be restated and the Tax Excess for all subsequent years
         shall be recomputed. Tenant shall pay Landlord the amount of Tenant's
         Pro Rata Share of any

                                       5
<PAGE>

         such increase in the Tax Excess within 30 days after Tenant's receipt
         of a statement from Landlord.

     E.  AUDIT RIGHTS. Tenant may, within 90 days after receiving Landlord's
         statement of Expenses, give Landlord written notice ("Review Notice")
         that Tenant intends to review Landlord's records of the Expenses for
         that calendar year. Within a reasonable time after receipt of the
         Review Notice, Landlord shall make all pertinent records available for
         inspection that are reasonably necessary for Tenant to conduct its
         review. If any records are maintained at a location other than the
         office of the Building, Tenant may either inspect the records at such
         other location or pay for the reasonable cost of copying and shipping
         the records. If Tenant retains an agent to review Landlord's records,
         the agent must be with a licensed CPA firm. Tenant shall be solely
         responsible for all costs, expenses and fees incurred for the audit.
         Within 60 days after the records are made available to Tenant, Tenant
         shall have the right to give Landlord written notice (an "Objection
         Notice") stating in reasonable detail any objection to Landlord's
         statement of Expenses for that year. If Tenant fails to give Landlord
         an Objection Notice within the 60 day period or fails to provide
         Landlord with a Review Notice within the 90 day period described above,
         Tenant shall be deemed to have approved Landlord's statement of
         Expenses and shall be barred from raising any claims regarding the
         Expenses for that year. If Tenant provides Landlord with a timely
         Objection Notice, Landlord and Tenant shall work together in good faith
         to resolve any issues raised in Tenant's Objection Notice. If Landlord
         and Tenant determine that Expenses for the calendar year are less than
         reported, Landlord shall provide Tenant with a credit against the next
         installment of Rent in the amount of the overpayment by Tenant.
         Likewise, if Landlord and Tenant determine that Expenses for the
         calendar year are greater than reported, Tenant shall pay Landlord the
         amount of any underpayment within 30 days. The records obtained by
         Tenant shall be treated as confidential. In no event shall Tenant be
         permitted to examine Landlord's records or to dispute any statement of
         Expenses unless Tenant has paid and continues to pay all Rent when due.

V.       COMPLIANCE WITH LAWS; USE.

         The Premises shall be used only for the Permitted Use and for no other
use whatsoever. Tenant shall not use or permit the use of the Premises for any
purpose which is illegal, dangerous to persons or property or which, in
Landlord's reasonable opinion, unreasonably disturbs any other tenants of the
Building or interferes with the operation of the Building. Tenant shall comply
with all Laws, including the Americans with Disabilities Act, regarding the
operation of Tenant's business and the use, condition, configuration and
occupancy of the Premises. Tenant, within 10 days after receipt, shall provide
Landlord with copies of any notices it receives regarding a violation or alleged
violation of any Laws. Tenant shall comply with the rules and regulations of the
Building attached as EXHIBIT B and such other reasonable rules and regulations
adopted by Landlord from time to time. Tenant shall also cause its agents,
contractors, subcontractors, employees, customers, and subtenants to comply with
all rules and regulations. Landlord shall not knowingly discriminate against
Tenant in Landlord's enforcement of the rules and regulations.

VI.      SECURITY DEPOSIT.

         The Security Deposit shall be delivered to Landlord upon the execution
of this Lease by Tenant and shall be held by Landlord without liability for
interest (unless required by Law) as security for the performance of Tenant's
obligations. The Security Deposit is not an advance payment of Rent or a measure
of Tenant's liability for damages. Landlord may, from time to time, without
prejudice to any other remedy, use all or a portion of the Security Deposit to
satisfy past due Rent or to cure any uncured default by Tenant. If Landlord uses
the Security Deposit, Tenant shall on demand restore the Security Deposit to its
original amount. Landlord shall return any unapplied portion of the Security
Deposit to Tenant within 45 days after the later to occur of: (1) the
determination of Tenant's Pro Rata Share of any Tax Excess and Expense Excess
for the final year of the Term; (2) the date Tenant surrenders possession of the
Premises to Landlord in accordance with this Lease; or (3) the Termination Date.
If Landlord transfers its interest in the Premises, Landlord may assign the
Security Deposit to the transferee and, following the assignment, Landlord shall
have no further liability for the return of the Security Deposit. Landlord shall
not be required to keep the Security Deposit separate from its other accounts.

                                       6

<PAGE>
VII.     SERVICES TO BE FURNISHED BY LANDLORD.

     A.  Landlord agrees to furnish Tenant with the following services: (1)
         Water service for use in the lavatories on each floor on which the
         Premises are located; (2) Heat and air conditioning in season during
         Normal Business Hours, at such temperatures and in such amounts as are
         standard for comparable buildings or as required by governmental
         authority. Tenant, upon such advance notice as is reasonably required
         by Landlord, shall have the right to receive HVAC service during hours
         other than Normal Business Hours. Tenant shall pay Landlord the
         standard charge for the additional service as reasonably determined by
         Landlord from time to time; (3) Maintenance and repair of the Property
         as described in Section IX.B.; (4) Janitor service on Business Days. If
         Tenant's use, floor covering or other improvements require special
         services in excess of the standard services for the Building, Tenant
         shall pay the additional cost attributable to the special services; (5)
         Elevator service; (6) Electricity to the Premises for general office
         use, in accordance with and subject to the terms and conditions in
         Article X; and (7) such other services as Landlord reasonably
         determines are necessary or appropriate for the Property.

     B.  Landlord's failure to furnish, or any interruption or termination of,
         services due to the application of Laws, the failure of any equipment,
         the performance of repairs, improvements or alterations, or the
         occurrence of any event or cause beyond the reasonable control of
         Landlord (a "Service Failure") shall not render Landlord liable to
         Tenant, constitute a constructive eviction of Tenant, give rise to an
         abatement of Rent, nor relieve Tenant from the obligation to fulfill
         any covenant or agreement. However, if the Premises, or a material
         portion of the Premises, is made untenantable for a period in excess of
         3 consecutive Business Days as a result of the Service Failure, then
         Tenant, as its sole remedy, shall be entitled to receive an abatement
         of Rent payable hereunder during the period beginning on the 4th
         consecutive Business Day of the Service Failure and ending on the day
         the service has been restored. If the entire Premises has not been
         rendered untenantable by the Service Failure, the amount of abatement
         that Tenant is entitled to receive shall be prorated based upon the
         percentage of the Premises rendered untenantable and not used by
         Tenant. In no event, however, shall Landlord be liable to Tenant for
         any loss or damage, including the theft of Tenant's Property (defined
         in Article XV), arising out of or in connection with the failure of any
         security services, personnel or equipment.

VIII.    LEASEHOLD IMPROVEMENTS.

         All improvements to the Premises (collectively, "Leasehold
Improvements") shall be owned by Landlord and shall remain upon the Premises
without compensation to Tenant. However, Landlord, by written notice to
Tenant within 30 days prior to the Termination Date, may require Tenant to
remove, at Tenant's expense: (1) Cable (defined in Section IX.A) installed by
or for the exclusive benefit of Tenant and located in the Premises or other
portions of the Building; and (2) any Leasehold Improvements that are
performed by or for the benefit of Tenant and, in Landlord's reasonable
judgment, are of a nature that would require removal and repair costs that
are materially in excess of the removal and repair costs associated with
standard office improvements (collectively referred to as "Required
Removables"). Without limitation, it is agreed that Required Removables
include internal stairways, raised floors, personal baths and showers,
vaults, rolling file systems and structural alterations and modifications of
any type. The Required Removables designated by Landlord shall be removed by
Tenant before the Termination Date, provided that upon prior written notice
to Landlord, Tenant may remain in the Premises for up to 5 days after the
Termination Date for the sole purpose of removing the Required Removables.
Tenant's possession of the Premises shall be subject to all of the terms and
conditions of this Lease, including the obligation to pay Rent on a per diem
basis at the rate in effect for the last month of the Term. Tenant shall
repair damage caused by the installation or removal of Required Removables.
If Tenant fails to remove any Required Removables or perform related repairs
in a timely manner, Landlord, at Tenant's expense, may remove and dispose of
the Required Removables and perform the required repairs. Tenant, within 30
days after receipt of an invoice, shall reimburse Landlord for the reasonable
costs incurred by Landlord. Notwithstanding the foregoing, Tenant, at the
time it requests approval for a proposed Alteration (defined in Section
IX.C), may request in writing that Landlord advise Tenant whether the
Alteration or any portion of the Alteration will be designated as a Required
Removable. Within 10 days after receipt of Tenant's request, Landlord shall
advise Tenant in writing as to which portions of the Alteration, if any, will
be considered to be Required Removables.
                                       7
<PAGE>
IX.      REPAIRS AND ALTERATIONS.

     A.  TENANT'S REPAIR OBLIGATIONS. Tenant shall, at its sole cost and
         expense, promptly perform all maintenance and repairs to the Premises
         that are not Landlord's express responsibility under this Lease, and
         shall keep the Premises in good condition and repair, reasonable wear
         and tear excepted. Tenant's repair obligations include, without
         limitation, repairs to: (1) floor covering; (2) interior partitions;
         (3) doors; (4) the interior side of demising walls; (5) electronic,
         phone and data cabling and related equipment (collectively, "Cable")
         that is installed by or for the exclusive benefit of Tenant and located
         in the Premises or other portions of the Building; (6) supplemental air
         conditioning units, private showers and kitchens, including hot water
         heaters, plumbing, and similar facilities serving Tenant exclusively;
         and (7) Alterations performed by contractors retained by Tenant,
         including related HVAC balancing. All work shall be performed in
         accordance with the rules and procedures described in Section IX.C.
         below. If Tenant fails to make any repairs to the Premises for more
         than 15 days after notice from Landlord (although notice shall not be
         required if there is an emergency), Landlord may make the repairs, and
         Tenant shall pay the reasonable cost of the repairs to Landlord within
         30 days after receipt of an invoice, together with an administrative
         charge in an amount equal to 10% of the cost of the repairs.

     B.  LANDLORD'S REPAIR OBLIGATIONS. Landlord shall keep and maintain in good
         repair and working order and make repairs to and perform maintenance
         upon: (1) structural elements of the Building; (2) mechanical
         (including HVAC), electrical, plumbing and fire/life safety systems
         serving the Building in general; (3) Common Areas; (4) the roof of the
         Building; (5) exterior windows of the Building; and (6) elevators
         serving the Building. Landlord shall promptly make repairs (considering
         the nature and urgency of the repair) for which Landlord is
         responsible.

     C.  ALTERATIONS. Tenant shall not make alterations, additions or
         improvements to the Premises or install any Cable in the Premises or
         other portions of the Building (collectively referred to as
         "Alterations") without first obtaining the written consent of Landlord
         in each instance, which consent shall not be unreasonably withheld or
         delayed. However, Landlord's consent shall not be required for any
         Alteration that satisfies all of the following criteria (a "Cosmetic
         Alteration"): (1) is of a cosmetic nature such as painting,
         wallpapering, hanging pictures and installing carpeting; (2) is not
         visible from the exterior of the Premises or Building; (3) will not
         affect the systems or structure of the Building; and (4) does not
         require work to be performed inside the walls or above the ceiling of
         the Premises. However, even though consent is not required, the
         performance of Cosmetic Alterations shall be subject to all the other
         provisions of this Section IX.C. Prior to starting work, Tenant shall
         furnish Landlord with plans and specifications reasonably acceptable to
         Landlord; names of contractors reasonably acceptable to Landlord
         (provided that Landlord may designate specific contractors with respect
         to Building systems); copies of contracts; necessary permits and
         approvals; evidence of contractor's and subcontractor's insurance in
         amounts reasonably required by Landlord; and any security for
         performance that is reasonably required by Landlord. Changes to the
         plans and specifications must also be submitted to Landlord for its
         approval. Alterations shall be constructed in a good and workmanlike
         manner using materials of a quality that is at least equal to the
         quality designated by Landlord as the minimum standard for the
         Building. Landlord may designate reasonable rules, regulations and
         procedures for the performance of work in the Building and, to the
         extent reasonably necessary to avoid disruption to the occupants of the
         Building, shall have the right to designate the time when Alterations
         may be performed. Tenant shall reimburse Landlord within 30 days after
         receipt of an invoice for sums paid by Landlord for third party
         examination of Tenant's plans for non-Cosmetic Alterations. In
         addition, within 30 days after receipt of an invoice from Landlord,
         Tenant shall pay Landlord a fee for Landlord's oversight and
         coordination of any non-Cosmetic Alterations equal to 10% of the cost
         of the non-Cosmetic Alterations. Upon completion, Tenant shall furnish
         "as-built" plans (except for Cosmetic Alterations), completion
         affidavits, full and final waivers of lien and receipted bills covering
         all labor and materials. Tenant shall assure that the Alterations
         comply with all insurance requirements and Laws. Landlord's approval of
         an Alteration shall not be a representation by Landlord that the
         Alteration complies with applicable Laws or will be adequate for
         Tenant's use.
                                       8
<PAGE>

X.       USE OF ELECTRICAL SERVICES BY TENANT.

         A.       Tenant shall pay Landlord as Additional Rent Tenant's Pro Rata
                  Share of Electrical Costs (defined below) for each applicable
                  calendar year or portion thereof during the Term. Before the
                  Commencement Date and January 1 of each calendar year, or as
                  soon thereafter as practical, Landlord shall make a good faith
                  estimate of Electrical Costs for the applicable calendar year
                  and Tenant's Pro Rata Share. On or before the first day of
                  each month during the calendar year, Tenant shall pay
                  Landlord, as Additional Rent, a monthly installment equal to
                  one-twelfth of Tenant's Pro Rata Share of Landlord's estimate
                  of Electrical Costs. Landlord shall have the right from time
                  to time to revise the estimate of Electrical Costs for the
                  year and provide Tenant with a revised statement, and the
                  amount Tenant shall pay each following month shall be based
                  upon the revised estimate. If Landlord does not provide Tenant
                  with an estimate of the Electrical Costs by January 1 of a
                  calendar year, Tenant shall continue to pay monthly based on
                  the previous year's estimate until Landlord provides Tenant
                  with the new estimate. Upon receipt of the new estimate, an
                  adjustment shall be made for any month during the current year
                  for which Tenant paid monthly installments of Additional Rent
                  based on the previous year's estimate. Tenant shall pay
                  Landlord the amount of any underpayment within 30 days after
                  demand. Any overpayment shall, at Landlord's option, be
                  refunded to Tenant or credited against the installment of
                  Additional Rent next due. Amounts paid by Tenant based on any
                  estimate shall be subject to adjustment pursuant to the
                  immediately following paragraph when actual Electrical Costs
                  are determined for the calendar year.

                  Following the end of each calendar year, Landlord shall
                  furnish Tenant with a statement of actual Electrical Costs for
                  the previous calendar year. If the amount of estimated
                  Electrical Costs paid by Tenant for the prior year is greater
                  than Tenant's Pro Rata Share of actual Electrical Costs for
                  the prior year, Landlord shall apply the overpayment against
                  Additional Rent next due or becoming due, provided that if the
                  Term expires before the determination of the overpayment,
                  Landlord shall refund the overpayment to Tenant after first
                  deducting the amount of Rent due. Likewise, Tenant shall pay
                  Landlord, within 30 days after demand, any underpayment for
                  the prior year, whether or not the Lease has terminated prior
                  to receipt by Tenant of a statement for the underpayment. This
                  clause shall survive the expiration or earlier termination of
                  the Lease.

         B.       "Electrical Costs" means: (i) charges paid by Landlord for
                  electricity; (ii) costs incurred in connection with an energy
                  management program for the Building or Property, including
                  costs incurred for the replacement of lights and ballasts and
                  the purchase and installation of sensors and other energy
                  saving equipment; and (iii) if and to the extent permitted by
                  Law, a reasonable fee for the services provided by Landlord in
                  connection with the selection of utility companies and the
                  negotiation and administration of contracts for electricity,
                  provided that such fee shall not exceed 50% of any savings
                  obtained by Landlord. Electrical Costs shall be adjusted as
                  follows: (a) amounts received by Landlord as reimbursement for
                  above standard electrical consumption shall be deducted from
                  Electrical Costs, and (b) the cost of electricity incurred to
                  provide overtime HVAC to specific tenants (as reasonably
                  estimated by Landlord) shall be deducted from Electrical
                  Costs. Landlord shall have the exclusive right to select any
                  company providing electrical service to the Premises, to
                  aggregate the electrical service for the Building and Premises
                  with other buildings, to purchase electricity through a broker
                  and/or buyers group and to change the providers and manner of
                  purchasing electricity.

         C.       Tenant's use of electrical service shall not exceed, either in
                  voltage, rated capacity, use beyond Normal Business Hours or
                  overall load, that which Landlord deems to be standard for the
                  Building. If Tenant requests permission to consume excess
                  electrical service, Landlord may refuse to consent or may
                  condition consent upon conditions that Landlord reasonably
                  elects (including, without limitation, the installation of
                  utility service upgrades, meters, submeters, air handlers or
                  cooling units), and the additional usage (to the extent
                  permitted by Law), installation and maintenance cost shall be
                  paid for by Tenant. Landlord shall have the right to
                  separately meter electrical usage for the Premises and to

                                       9

<PAGE>

                  measure electrical usage by survey or other methods that
                  Landlord, in its reasonable judgment, deems appropriate.

XI.      ENTRY BY LANDLORD.

         Landlord, its agents, contractors and representatives may enter the
Premises to inspect or show the Premises, to clean and make repairs, alterations
or additions to the Premises, and to conduct or facilitate repairs, alterations
or additions to any portion of the Building, including other tenants' premises.
Except in emergencies or to provide janitorial and other Building services after
Normal Business Hours, Landlord shall provide Tenant with reasonable prior
notice of entry into the Premises, which may be given orally. If reasonably
necessary for the protection and safety of Tenant and its employees, Landlord
shall have the right to temporarily close all or a portion of the Premises to
perform repairs, alterations and additions. However, except in emergencies,
Landlord will not close the Premises if the work can reasonably be completed on
weekends and after Normal Business Hours. Entry by Landlord shall not constitute
constructive eviction or entitle Tenant to an abatement or reduction of Rent.

XII.     ASSIGNMENT AND SUBLETTING.

     A.  Except in connection with a Permitted Transfer (defined in Section
         XII.E. below), Tenant shall not assign, sublease, transfer or encumber
         any interest in this Lease or allow any third party to use any portion
         of the Premises (collectively or individually, a "Transfer") without
         the prior written consent of Landlord, which consent shall not be
         unreasonably withheld if Landlord does not elect to exercise its
         termination rights under Section XII.B below. Without limitation, it is
         agreed that Landlord's consent shall not be considered unreasonably
         withheld if: (1) the proposed transferee's financial condition does not
         meet the criteria Landlord uses to select Building tenants having
         similar leasehold obligations; (2) the proposed transferee's business
         is not suitable for the Building considering the business of the other
         tenants and the Building's prestige, or would result in a violation of
         another tenant's rights; (3) the proposed transferee is a governmental
         agency or occupant of the Building; (4) Tenant is in default after the
         expiration of the notice and cure periods in this Lease; or (5) any
         portion of the Building or Premises would likely become subject to
         additional or different Laws as a consequence of the proposed Transfer.
         Tenant shall not be entitled to receive monetary damages based upon a
         claim that Landlord unreasonably withheld its consent to a proposed
         Transfer and Tenant's sole remedy shall be an action to enforce any
         such provision through specific performance or declaratory judgment.
         Any attempted Transfer in violation of this Article shall, at
         Landlord's option, be void. Consent by Landlord to one or more
         Transfer(s) shall not operate as a waiver of Landlord's rights to
         approve any subsequent Transfers. In no event shall any Transfer or
         Permitted Transfer release or relieve Tenant from any obligation under
         this Lease.

     B.  As part of its request for Landlord's consent to a Transfer, Tenant
         shall provide Landlord with financial statements for the proposed
         transferee, a complete copy of the proposed assignment, sublease and
         other contractual documents and such other information as Landlord may
         reasonably request. Landlord shall, by written notice to Tenant within
         30 days of its receipt of the required information and documentation,
         either: (1) consent to the Transfer by the execution of a consent
         agreement in a form reasonably designated by Landlord or reasonably
         refuse to consent to the Transfer in writing; or (2) exercise its right
         to terminate this Lease with respect to the portion of the Premises
         that Tenant is proposing to assign or sublet. Any such termination
         shall be effective on the proposed effective date of the Transfer for
         which Tenant requested consent. Tenant shall pay Landlord a review fee
         of $750.00 for Landlord's review of any Permitted Transfer or requested
         Transfer, provided if Landlord's actual reasonable costs and expenses
         (including reasonable attorney's fees) exceed $750.00, Tenant shall
         reimburse Landlord for its actual reasonable costs and expenses in lieu
         of a fixed review fee.

     C.  Tenant shall pay Landlord 50% of all rent and other consideration which
         Tenant receives as a result of a Transfer that is in excess of the Rent
         payable to Landlord for the portion of the Premises and Term covered by
         the Transfer. Tenant shall pay Landlord for Landlord's share of any
         excess within 30 days after Tenant's receipt of such excess
         consideration. Tenant may deduct from the excess all reasonable and
         customary expenses directly incurred by Tenant attributable to the
         Transfer (other than Landlord's review fee), including brokerage fees,
         legal fees and construction costs. If Tenant is in Monetary Default
         (defined in Section XIX.A. below), Landlord may require that all
         sublease payments be made

                                      10

<PAGE>

         directly to Landlord, in which case Tenant shall receive a credit
         against Rent in the amount of any payments received (less Landlord's
         share of any excess).

     D.  Except as provided below with respect to a Permitted Transfer, if
         Tenant is a corporation, limited liability company, partnership, or
         similar entity, and if the entity which owns or controls a majority of
         the voting shares/rights at any time changes for any reason (including
         but not limited to a merger, consolidation or reorganization), such
         change of ownership or control shall constitute a Transfer. The
         foregoing shall not apply so long as Tenant is an entity whose
         outstanding stock is listed on a recognized security exchange, or if at
         least 80% of its voting stock is owned by another entity, the voting
         stock of which is so listed.

     E.  Tenant may assign its entire interest under this Lease to a successor
         to Tenant by purchase, merger, consolidation or reorganization without
         the consent of Landlord, provided that all of the following conditions
         are satisfied (a "Permitted Transfer"): (1) Tenant is not in default
         under this Lease; (2) Tenant's successor shall own all or substantially
         all of the assets of Tenant; (3) Tenant's successor shall have a net
         worth which is at least equal to the greater of Tenant's net worth at
         the date of this Lease or Tenant's net worth as of the day prior to the
         proposed purchase, merger, consolidation or reorganization; (4) the
         Permitted Use does not allow the Premises to be used for retail
         purposes; and (5) Tenant shall give Landlord written notice at least 30
         days prior to the effective date of the proposed purchase, merger,
         consolidation or reorganization. Tenant's notice to Landlord shall
         include information and documentation showing that each of the above
         conditions has been satisfied. If requested by Landlord, Tenant's
         successor shall sign a commercially reasonable form of assumption
         agreement.

XIII.    LIENS.

         Tenant shall not permit mechanic's or other liens to be placed upon the
Property, Premises or Tenant's leasehold interest in connection with any work or
service done or purportedly done by or for benefit of Tenant. If a lien is so
placed, Tenant shall, within 10 days of notice from Landlord of the filing of
the lien, fully discharge the lien by settling the claim which resulted in the
lien or by bonding or insuring over the lien in the manner prescribed by the
applicable lien Law. If Tenant fails to discharge the lien, then, in addition to
any other right or remedy of Landlord, Landlord may bond or insure over the lien
or otherwise discharge the lien. Tenant shall reimburse Landlord for any amount
paid by Landlord to bond or insure over the lien or discharge the lien,
including, without limitation, reasonable attorneys' fees (if and to the extent
permitted by Law) within 30 days after receipt of an invoice from Landlord.

XIV.     INDEMNITY AND WAIVER OF CLAIMS.

     A.  Except to the extent caused by the negligence or willful misconduct of
         Landlord or any Landlord Related Parties (defined below), Tenant shall
         indemnify, defend and hold Landlord, its trustees, members, principals,
         beneficiaries, partners, officers, directors, employees, Mortgagee(s)
         (defined in Article XXVI) and agents ("Landlord Related Parties")
         harmless against and from all liabilities, obligations, damages,
         penalties, claims, actions, costs, charges and expenses, including,
         without limitation, reasonable attorneys' fees and other professional
         fees (if and to the extent permitted by Law), which may be imposed
         upon, incurred by or asserted against Landlord or any of the Landlord
         Related Parties and arising out of or in connection with any damage or
         injury occurring in the Premises or any acts or omissions (including
         violations of Law) of Tenant, the Tenant Related Parties (defined
         below) or any of Tenant's transferees, contractors or licensees.

     B.  Except to the extent caused by the negligence or willful misconduct of
         Tenant or any Tenant Related Parties (defined below), Landlord shall
         indemnify, defend and hold Tenant, its trustees, members, principals,
         beneficiaries, partners, officers, directors, employees and agents
         ("Tenant Related Parties") harmless against and from all liabilities,
         obligations, damages, penalties, claims, actions, costs, charges and
         expenses, including, without limitation, reasonable attorneys' fees and
         other professional fees (if and to the extent permitted by Law), which
         may be imposed upon, incurred by or asserted against Tenant or any of
         the Tenant Related Parties and arising out of or in connection with the
         acts or omissions (including violations of Law) of Landlord, the
         Landlord Related Parties or any of Landlord's contractors.

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<PAGE>

     C.  Landlord and the Landlord Related Parties shall not be liable for, and
         Tenant waives, all claims for loss or damage to Tenant's business or
         loss, theft or damage to Tenant's Property or the property of any
         person claiming by, through or under Tenant resulting from: (1) wind or
         weather; (2) the failure of any sprinkler, heating or air-conditioning
         equipment, any electric wiring or any gas, water or steam pipes; (3)
         the backing up of any sewer pipe or downspout; (4) the bursting,
         leaking or running of any tank, water closet, drain or other pipe; (5)
         water, snow or ice upon or coming through the roof, skylight, stairs,
         doorways, windows, walks or any other place upon or near the Building;
         (6) any act or omission of any party other than Landlord or Landlord
         Related Parties; and (7) any causes not reasonably within the control
         of Landlord. Tenant shall insure itself against such losses under
         Article XV below.

XV.      INSURANCE.

         Tenant shall carry and maintain the following insurance ("Tenant's
Insurance"), at its sole cost and expense: (1) Commercial General Liability
Insurance applicable to the Premises and its appurtenances providing, on an
occurrence basis, a minimum combined single limit of $2,000,000.00; (2) All Risk
Property/Business Interruption Insurance, including flood and earthquake,
written at replacement cost value and with a replacement cost endorsement
covering all of Tenant's trade fixtures, equipment, furniture and other personal
property within the Premises ("Tenant's Property"); (3) Workers' Compensation
Insurance as required by the state in which the Premises is located and in
amounts as may be required by applicable statute; and (4) Employers Liability
Coverage of at least $1,000,000.00 per occurrence. Any company writing any of
Tenant's Insurance shall have an A.M. Best rating of not less than A-VIII. All
Commercial General Liability Insurance policies shall name Tenant as a named
insured and Landlord (or any successor), Equity Office Properties Trust, a
Maryland real estate investment trust, EOP Operating Limited Partnership, a
Delaware limited partnership, and their respective members, principals,
beneficiaries, partners, officers, directors, employees, and agents, and other
designees of Landlord as the interest of such designees shall appear, as
additional insureds. All policies of Tenant's Insurance shall contain
endorsements that the insurer(s) shall give Landlord and its designees at least
30 days' advance written notice of any change, cancellation, termination or
lapse of insurance. Tenant shall provide Landlord with a certificate of
insurance evidencing Tenant's Insurance prior to the earlier to occur of the
Commencement Date or the date Tenant is provided with possession of the Premises
for any reason, and upon renewals at least 15 days prior to the expiration of
the insurance coverage. So long as the same is available at commercially
reasonable rates, Landlord shall maintain so called All Risk property insurance
on the Building at replacement cost value, as reasonably estimated by Landlord.
Except as specifically provided to the contrary, the limits of either party's'
insurance shall not limit such party's liability under this Lease.

XVI.     SUBROGATION.

         Notwithstanding anything in this Lease to the contrary, Landlord and
Tenant shall cause their respective insurance carriers to waive any and all
rights of recovery, claim, action or causes of action against the other and
their respective trustees, principals, beneficiaries, partners, officers,
directors, agents, and employees, for any loss or damage that may occur to
Landlord or Tenant or any party claiming by, through or under Landlord or
Tenant, as the case may be, with respect to Tenant's Property, the Building, the
Premises, any additions or improvements to the Building or Premises, or any
contents thereof, INCLUDING ALL RIGHTS OF RECOVERY, CLAIMS, ACTIONS OR CAUSES OF
ACTION ARISING OUT OF THE NEGLIGENCE OF LANDLORD OR ANY LANDLORD RELATED PARTIES
OR THE NEGLIGENCE OF TENANT OR ANY TENANT RELATED PARTIES, which loss or damage
is (or would have been, had the insurance required by this Lease been carried)
covered by insurance.

XVII.    CASUALTY DAMAGE.

     A.  If all or any part of the Premises is damaged by fire or other
         casualty, Tenant shall immediately notify Landlord in writing. During
         any period of time that all or a material portion of the Premises is
         rendered untenantable as a result of a fire or other casualty, the Rent
         shall abate for the portion of the Premises that is untenantable and
         not used by Tenant. Landlord shall have the right to terminate this
         Lease if: (1) the Building shall be damaged so that, in Landlord's
         reasonable judgment, substantial alteration or reconstruction of the
         Building shall be required (whether or not the Premises has been
         damaged); (2) Landlord is not permitted by Law to rebuild the Building
         in substantially

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<PAGE>

         the same form as existed before the fire or casualty; (3) the
         Premises have been materially damaged and there is less than 2
         years of the Term remaining on the date of the casualty; (4) any
         Mortgagee requires that the insurance proceeds be applied to the
         payment of the mortgage debt; or (5) a material uninsured loss to the
         Building occurs. Landlord may exercise its right to terminate this
         Lease by notifying Tenant in writing within 90 days after the date of
         the casualty. If Landlord does not terminate this Lease, Landlord shall
         commence and proceed with reasonable diligence to repair and restore
         the Building and the Leasehold Improvements (excluding any Alterations
         that were performed by Tenant in violation of this Lease). However, in
         no event shall Landlord be required to spend more than the insurance
         proceeds received by Landlord. Landlord shall not be liable for any
         loss or damage to Tenant's Property or to the business of Tenant
         resulting in any way from the fire or other casualty or from the repair
         and restoration of the damage. Landlord and Tenant hereby waive the
         provisions of any Law relating to the matters addressed in this
         Article, and agree that their respective rights for damage to or
         destruction of the Premises shall be those specifically provided in
         this Lease.

     B.  If all or any portion of the Premises shall be made untenantable by
         fire or other casualty, Landlord shall, with reasonable promptness,
         cause an architect or general contractor selected by Landlord to
         provide Landlord and Tenant with a written estimate of the amount of
         time required to substantially complete the repair and restoration of
         the Premises and make the Premises tenantable again, using standard
         working methods ("Completion Estimate"). If the Completion Estimate
         indicates that the Premises cannot be made tenantable within 270 days
         from the date the repair and restoration is started, then regardless of
         anything in Section XVII.A above to the contrary, either party shall
         have the right to terminate this Lease by giving written notice to the
         other of such election within 10 days after receipt of the Completion
         Estimate. Tenant, however, shall not have the right to terminate this
         Lease if the fire or casualty was caused by the negligence or
         intentional misconduct of Tenant, Tenant Related Parties or any of
         Tenant's transferees, contractors or licensees.

XVIII.   CONDEMNATION.

         Either party may terminate this Lease if the whole or any material
part of the Premises shall be taken or condemned for any public or
quasi-public use under Law, by eminent domain or private purchase in lieu
thereof (a "Taking"). Landlord shall also have the right to terminate this
Lease if there is a Taking of any portion of the Building or Property which
would leave the remainder of the Building unsuitable for use as an office
building in a manner comparable to the Building's use prior to the Taking. In
order to exercise its right to terminate the Lease, Landlord or Tenant, as
the case may be, must provide written notice of termination to the other
within 45 days after the terminating party first receives notice of the
Taking. Any such termination shall be effective as of the date the physical
taking of the Premises or the portion of the Building or Property occurs. If
this Lease is not terminated, the Rentable Square Footage of the Building,
the Rentable Square Footage of the Premises and Tenant's Pro Rata Share
shall, if applicable, be appropriately adjusted. In addition, Rent for any
portion of the Premises taken or condemned shall be abated during the
unexpired Term of this Lease effective when the physical taking of the
portion of the Premises occurs. All compensation awarded for a Taking, or
sale proceeds, shall be the property of Landlord, any right to receive
compensation or proceeds being expressly waived by Tenant. However, Tenant
may file a separate claim at its sole cost and expense for Tenant's Property
and Tenant's reasonable relocation expenses, provided the filing of the claim
does not diminish the award which would otherwise be receivable by Landlord.

XIX.     EVENTS OF DEFAULT.

     Tenant shall be considered to be in default of this Lease upon the
occurrence of any of the following events of default:

     A.  Tenant's failure to pay when due all or any portion of the Rent, if the
         failure continues for 3 days after written notice to Tenant ("Monetary
         Default").

     B.  Tenant's failure (other than a Monetary Default) to comply with any
         term, provision or covenant of this Lease, if the failure is not cured
         within 10 days after written notice to Tenant. However, if Tenant's
         failure to comply cannot reasonably be cured within 10 days, Tenant
         shall be allowed additional time (not to exceed 60 days) as is
         reasonably necessary to cure the failure so long as: (1) Tenant
         commences to cure the failure within

                                      13

<PAGE>

         10 days, and (2) Tenant diligently pursues a course of action that
         will cure the failure and bring Tenant back into compliance with the
         Lease. However, if Tenant's failure to comply creates a hazardous
         condition, the failure must be cured immediately upon notice to
         Tenant. In addition, if Landlord provides Tenant with notice of
         Tenant's failure to comply with any particular term, provision or
         covenant of the Lease on 3 occasions during any 12 month period,
         Tenant's subsequent violation of such term, provision or covenant
         shall, at Landlord's option, be an incurable event of default by
         Tenant.

     C.  Tenant or any Guarantor becomes insolvent, makes a transfer in fraud of
         creditors or makes an assignment for the benefit of creditors, or
         admits in writing its inability to pay its debts when due.

     D.  The leasehold estate is taken by process or operation of Law.

     E   In the case of any ground floor or retail Tenant, Tenant does not take
         possession of, or abandons or vacates all or any portion of the
         Premises.

     F.  Tenant is in default beyond any notice and cure period under any other
         lease or agreement with Landlord, including, without limitation, any
         lease or agreement for parking.

XX.      REMEDIES.

     A.  Upon any default, Landlord shall have the right without notice or
         demand (except as provided in Article XIX) to pursue any of its rights
         and remedies at Law or in equity, including any one or more of the
         following remedies:

         1.   Terminate this Lease, in which case Tenant shall immediately
              surrender the Premises to Landlord. If Tenant fails to surrender
              the Premises, Landlord may, in compliance with applicable Law and
              without prejudice to any other right or remedy, enter upon and
              take possession of the Premises and expel and remove Tenant,
              Tenant's Property and any party occupying all or any part of the
              Premises. Tenant shall pay Landlord on demand the amount of all
              past due Rent and other losses and damages which Landlord may
              suffer as a result of Tenant's default, whether by Landlord's
              inability to relet the Premises on satisfactory terms or
              otherwise, including, without limitation, all Costs of Reletting
              (defined below) and any deficiency that may arise from reletting
              or the failure to relet the Premises. "Costs of Reletting" shall
              include all costs and expenses incurred by Landlord in reletting
              or attempting to relet the Premises, including, without
              limitation, reasonable legal fees, brokerage commissions, the cost
              of alterations and the value of other concessions or allowances
              granted to a new tenant.

         2.   Terminate Tenant's right to possession of the Premises and change
              the locks, without judicial process, and, in compliance with
              applicable Law, expel and remove Tenant, Tenant's Property and any
              parties occupying all or any part of the Premises. If Landlord
              terminates Tenant's possession of the Premises under this Section
              XX.A.2., Landlord shall have no obligation to post any notice and
              Landlord shall have no obligation whatsoever to tender to Tenant a
              key for new locks installed in the Premises. Landlord may (but
              shall not be obligated to) relet all or any part of the Premises,
              without notice to Tenant, for a term that may be greater or less
              than the balance of the Term and on such conditions (which may
              include concessions, free rent and alterations of the Premises)
              and for such uses as Landlord in its absolute discretion shall
              determine. Landlord may collect and receive all rents and other
              income from the reletting. Tenant shall pay Landlord on demand all
              past due Rent, all Costs of Reletting and any deficiency arising
              from the reletting or failure to relet the Premises. Landlord
              shall not be responsible or liable for the failure to relet all or
              any part of the Premises or for the failure to collect any Rent.
              The re-entry or taking of possession of the Premises shall not be
              construed as an election by Landlord to terminate this Lease
              unless a written notice of termination is given to Tenant.

         3.   In lieu of calculating damages under Sections XX.A.1 or XX.A.2
              above, Landlord may elect to receive as damages the sum of (a) all
              Rent accrued through the date of termination of this Lease or
              Tenant's right to possession, and (b) an amount equal to the total
              Rent that Tenant would have been required to pay for the remainder
              of the Term discounted to present value at the Prime Rate (defined
              in Section XX.B. below)

                                      14

<PAGE>

              then in effect, minus the then present fair rental value of the
              Premises for the remainder of the Term, similarly discounted,
              after deducting all anticipated Costs of Reletting.

     B.  Unless expressly provided in this Lease, the repossession or
         re-entering of all or any part of the Premises shall not relieve Tenant
         of its liabilities and obligations under the Lease. No right or remedy
         of Landlord shall be exclusive of any other right or remedy. Each right
         and remedy shall be cumulative and in addition to any other right and
         remedy now or subsequently available to Landlord at Law or in equity.
         If Landlord declares Tenant to be in default, Landlord shall be
         entitled to receive interest on any unpaid item of Rent at a rate equal
         to the Prime Rate plus 4%. For purposes hereof, the "Prime Rate" shall
         be the per annum interest rate publicly announced as its prime or base
         rate by a federally insured bank selected by Landlord in the state in
         which the Building is located. Forbearance by Landlord to enforce one
         or more remedies shall not constitute a waiver of any default.

XXI.     LIMITATION OF LIABILITY.

         NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE
LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) TO TENANT SHALL BE LIMITED
TO THE INTEREST OF LANDLORD IN THE PROPERTY. TENANT SHALL LOOK SOLELY TO
LANDLORD'S INTEREST IN THE PROPERTY FOR THE RECOVERY OF ANY JUDGMENT OR AWARD
AGAINST LANDLORD. NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE
PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY. BEFORE FILING SUIT FOR AN
ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S)
(DEFINED IN ARTICLE XXVI BELOW) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES
(DEFINED IN ARTICLE XXVI BELOW) ON THE PROPERTY, BUILDING OR PREMISES, NOTICE
AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT.

XXII.    NO WAIVER.

         Either party's failure to declare a default immediately upon its
occurrence, or delay in taking action for a default shall not constitute a
waiver of the default, nor shall it constitute an estoppel. Either party's
failure to enforce its rights for a default shall not constitute a waiver of its
rights regarding any subsequent default. Receipt by Landlord of Tenant's keys to
the Premises shall not constitute an acceptance or surrender of the Premises.

XXIII.  QUIET ENJOYMENT.

         Tenant shall, and may peacefully have, hold and enjoy the Premises,
subject to the terms of this Lease, provided Tenant pays the Rent and fully
performs all of its covenants and agreements. This covenant and all other
covenants of Landlord shall be binding upon Landlord and its successors only
during its or their respective periods of ownership of the Building, and shall
not be a personal covenant of Landlord or the Landlord Related Parties.

XXIV. RELOCATION.

         Landlord, at its expense, at any time before or during the Term, may
relocate Tenant from the Premises to reasonably comparable space ("Relocation
Space") within the Building or adjacent buildings within the same project upon
60 days' prior written notice to Tenant. From and after the date of the
relocation, "Premises" shall refer to the Relocation Space into which Tenant has
been moved and the Base Rent and Tenant's Pro Rata Share shall be adjusted based
on the rentable square footage of the Relocation Space. Landlord shall pay
Tenant's reasonable costs for moving Tenant's furniture and equipment and
printing and distributing notices to Tenant's customers of Tenant's change of
address and one month's supply of stationery showing the new address.

XXV.     HOLDING OVER.

         Except for any permitted occupancy by Tenant under Article VIII, if
Tenant fails to surrender the Premises at the expiration or earlier termination
of this Lease, occupancy of the Premises after the termination or expiration
shall be that of a tenancy at sufferance. Tenant's occupancy of the Premises
during the holdover shall be subject to all the terms and provisions of this
Lease and Tenant shall pay an amount (on a per month basis without reduction for
partial

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<PAGE>

months during the holdover) equal to 150% of the greater of: (1) the sum of
the Base Rent and Additional Rent due for the period immediately preceding
the holdover; or (2) the fair market gross rental for the Premises as
reasonably determined by Landlord. No holdover by Tenant or payment by Tenant
after the expiration or early termination of this Lease shall be construed to
extend the Term or prevent Landlord from immediate recovery of possession of
the Premises by summary proceedings or otherwise. In addition to the payment
of the amounts provided above, if Landlord is unable to deliver possession of
the Premises to a new tenant, or to perform improvements for a new tenant, as
a result of Tenant's holdover and Tenant fails to vacate the Premises within
15 days after Landlord notifies Tenant of Landlord's inability to deliver
possession, or perform improvements, Tenant shall be liable to Landlord for
all damages, including, without limitation, consequential damages, that
Landlord suffers from the holdover.

XXVI.    SUBORDINATION TO MORTGAGES; ESTOPPEL CERTIFICATE.

         Tenant accepts this Lease subject and subordinate to any
mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or
subsequently arising upon the Premises, the Building or the Property, and to
renewals, modifications, refinancings and extensions thereof (collectively
referred to as a "Mortgage"). The party having the benefit of a Mortgage
shall be referred to as a "Mortgagee". This clause shall be self-operative,
but upon request from a Mortgagee, Tenant shall execute a commercially
reasonable subordination agreement in favor of the Mortgagee. In lieu of
having the Mortgage be superior to this Lease, a Mortgagee shall have the
right at any time to subordinate its Mortgage to this Lease. If requested by
a successor-in-interest to all or a part of Landlord's interest in the Lease,
Tenant shall, without charge, attorn to the successor-in-interest. Landlord
and Tenant shall each, within 10 days after receipt of a written request from
the other, execute and deliver an estoppel certificate to those parties as
are reasonably requested by the other (including a Mortgagee or prospective
purchaser). The estoppel certificate shall include a statement certifying
that this Lease is unmodified (except as identified in the estoppel
certificate) and in full force and effect, describing the dates to which Rent
and other charges have been paid, representing that, to such party's actual
knowledge, there is no default (or stating the nature of the alleged default)
and indicating other matters with respect to the Lease that may reasonably be
requested.

XXVII.   ATTORNEYS' FEES.

         If either party institutes a suit against the other for violation of
or to enforce any covenant or condition of this Lease, or if either party
intervenes in any suit in which the other is a party to enforce or protect
its interest or rights, the prevailing party shall be entitled to all of its
costs and expenses, including, without limitation, reasonable attorneys' fees.

XXVIII. NOTICE.

         If a demand, request, approval, consent or notice (collectively
referred to as a "notice") shall or may be given to either party by the
other, the notice shall be in writing and delivered by hand or sent by
registered or certified mail with return receipt requested, or sent by
overnight or same day courier service at the party's respective Notice
Address(es) set forth in Article I, except that if Tenant has vacated the
Premises (or if the Notice Address for Tenant is other than the Premises, and
Tenant has vacated such address) without providing Landlord a new Notice
Address, Landlord may serve notice in any manner described in this Article or
in any other manner permitted by Law. Each notice shall be deemed to have
been received or given on the earlier to occur of actual delivery or the date
on which delivery is refused, or, if Tenant has vacated the Premises or the
other Notice Address of Tenant without providing a new Notice Address, three
(3) days after notice is deposited in the U.S. mail or with a courier service
in the manner described above. Either party may, at any time, change its
Notice Address by giving the other party written notice of the new address in
the manner described in this Article.

XXIX. EXCEPTED RIGHTS.

         This Lease does not grant any rights to light or air over or about
the Building. Landlord excepts and reserves exclusively to itself the use of:
(1) roofs, (2) telephone, electrical and janitorial closets, (3) equipment
rooms, Building risers or similar areas that are used by Landlord for the
provision of Building services, (4) rights to the land and improvements below
the floor of the Premises, (5) the improvements and air rights above the
Premises, (6) the improvements and air rights outside the demising walls of
the Premises, and (7) the areas within the Premises used for the installation
of utility lines and other installations serving occupants of the Building.
Landlord has the right to change the Building's name or address. Landlord
also has the right to

                                      16

<PAGE>

make such other changes to the Property and Building as Landlord deems
appropriate, provided the changes do not materially affect Tenant's ability
to use the Premises for the Permitted Use. Landlord shall also have the right
(but not the obligation) to temporarily close the Building if Landlord
reasonably determines that there is an imminent danger of significant damage
to the Building or of personal injury to Landlord's employees or the
occupants of the Building. The circumstances under which Landlord may
temporarily close the Building shall include, without limitation, electrical
interruptions, hurricanes and civil disturbances. A closure of the Building
under such circumstances shall not constitute a constructive eviction nor
entitle Tenant to an abatement or reduction of Rent.

XXX. SURRENDER OF PREMISES.

         At the expiration or earlier termination of this Lease or Tenant's
right of possession, Tenant shall remove Tenant's Property (defined in Article
XV) from the Premises, and quit and surrender the Premises to Landlord, broom
clean, and in good order, condition and repair, ordinary wear and tear excepted.
Tenant shall also be required to remove the Required Removables in accordance
with Article VIII. If Tenant fails to remove any of Tenant's Property within 2
days after the termination of this Lease or of Tenant's right to possession,
Landlord, at Tenant's sole cost and expense, shall be entitled (but not
obligated) to remove and store Tenant's Property. Landlord shall not be
responsible for the value, preservation or safekeeping of Tenant's Property.
Tenant shall pay Landlord, upon demand, the expenses and storage charges
incurred for Tenant's Property. In addition, if Tenant fails to remove Tenant's
Property from the Premises or storage, as the case may be, within 30 days after
written notice, Landlord may deem all or any part of Tenant's Property to be
abandoned, and title to Tenant's Property shall be deemed to be immediately
vested in Landlord.

XXXI. MISCELLANEOUS.

     A.  This Lease and the rights and obligations of the parties shall be
         interpreted, construed and enforced in accordance with the Laws of the
         state in which the Building is located and Landlord and Tenant hereby
         irrevocably consent to the jurisdiction and proper venue of such state.
         If any term or provision of this Lease shall to any extent be invalid
         or unenforceable, the remainder of this Lease shall not be affected,
         and each provision of this Lease shall be valid and enforced to the
         fullest extent permitted by Law. The headings and titles to the
         Articles and Sections of this Lease are for convenience only and shall
         have no effect on the interpretation of any part of the Lease.

     B.  Tenant shall not record this Lease or any memorandum without Landlord's
         prior written consent.

     C.  Landlord and Tenant hereby waive any right to trial by jury in any
         proceeding based upon a breach of this Lease.

     D.  Whenever a period of time is prescribed for the taking of an action by
         Landlord or Tenant, the period of time for the performance of such
         action shall be extended by the number of days that the performance is
         actually delayed due to strikes, acts of God, shortages of labor or
         materials, war, civil disturbances and other causes beyond the
         reasonable control of the performing party ("Force Majeure"). However,
         events of Force Majeure shall not extend any period of time for the
         payment of Rent or other sums payable by either party or any period of
         time for the written exercise of an option or right by either party.

     E.  Landlord shall have the right to transfer and assign, in whole or in
         part, all of its rights and obligations under this Lease and in the
         Building and/or Property referred to herein, and upon such transfer
         Landlord shall be released from any further obligations hereunder, and
         Tenant agrees to look solely to the successor in interest of Landlord
         for the performance of such obligations.

     F.  Tenant represents that it has dealt directly with and only with the
         Broker as a broker in connection with this Lease. Tenant shall
         indemnify and hold Landlord and the Landlord Related Parties harmless
         from all claims of any other brokers claiming to have represented
         Tenant in connection with this Lease. Landlord agrees to indemnify and
         hold Tenant and the Tenant Related Parties harmless from all claims of
         any brokers claiming to have represented Landlord in connection with
         this Lease.

                                      17
<PAGE>

     G.  Tenant covenants, warrants and represents that: (1) each individual
         executing, attesting and/or delivering this Lease on behalf of Tenant
         is authorized to do so on behalf of Tenant; (2) this Lease is binding
         upon Tenant; and (3) Tenant is duly organized and legally existing in
         the state of its organization and is qualified to do business in the
         state in which the Premises are located. If there is more than one
         Tenant, or if Tenant is comprised of more than one party or entity, the
         obligations imposed upon Tenant shall be joint and several obligations
         of all the parties and entities. Notices, payments and agreements given
         or made by, with or to any one person or entity shall be deemed to have
         been given or made by, with and to all of them.

     H.  Time is of the essence with respect to Tenant's exercise of any
         expansion, renewal or extension rights granted to Tenant. This Lease
         shall create only the relationship of landlord and tenant between the
         parties, and not a partnership, joint venture or any other
         relationship. This Lease and the covenants and conditions in this Lease
         shall inure only to the benefit of and be binding only upon Landlord
         and Tenant and their permitted successors and assigns.

     I.  The expiration of the Term, whether by lapse of time or otherwise,
         shall not relieve either party of any obligations which accrued prior
         to or which may continue to accrue after the expiration or early
         termination of this Lease. Without limiting the scope of the prior
         sentence, it is agreed that Tenant's obligations under Sections IV.A,
         IV.B., VIII, XIV, XX, XXV and XXX shall survive the expiration or early
         termination of this Lease.

     J.  Landlord has delivered a copy of this Lease to Tenant for Tenant's
         review only, and the delivery of it does not constitute an offer to
         Tenant or an option. This Lease shall not be effective against any
         party hereto until an original copy of this Lease has been signed by
         such party.

     K.  All understandings and agreements previously made between the parties
         are superseded by this Lease, and neither party is relying upon any
         warranty, statement or representation not contained in this Lease. This
         Lease may be modified only by a written agreement signed by Landlord
         and Tenant.

     L.  Tenant, within 15 days after request, shall provide Landlord with a
         current financial statement and such other information as Landlord may
         reasonably request in order to create a "business profile" of Tenant
         and determine Tenant's ability to fulfill its obligations under this
         Lease. Landlord, however, shall not require Tenant to provide such
         information unless Landlord is requested to produce the information in
         connection with a proposed financing or sale of the Building. Upon
         written request by Tenant, Landlord shall enter into a commercially
         reasonable confidentiality agreement covering any confidential
         information that is disclosed by Tenant.

     M.  TENANT HEREBY WAIVES ALL RIGHTS TO PROTEST THE APPRAISED VALUE OF THE
         PROPERTY OR TO APPEAL THE SAME AND ALL RIGHTS TO RECEIVE NOTICES OF
         REAPPRAISALS AS SET FORTH IN SECTIONS 41.413 AND 42.015 OF THE TEXAS
         TAX CODE.

     N.  TENANT HEREBY WAIVES ALL ITS RIGHTS UNDER THE TEXAS DECPTIVE TRADE
         PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET. SEQ. OF THE
         TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL
         RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF TENANT'S
         OWN SELECTION, TENANT VOLUNTARILY CONSENTS TO THIS WAIVER.

XXXII. ENTIRE AGREEMENT.

         This Lease and the following exhibits and attachments constitute the
entire agreement between the parties and supersede all prior agreements and
understandings related to the Premises, including all lease proposals,
letters of intent and other documents: EXHIBIT A (Outline and Location of
Premises) EXHIBIT A-1 (Temporary Premises), EXHIBIT B (Rules and
Regulations), EXHIBIT C (Commencement Letter), EXHIBIT D (Work Letter
Agreement, if required), EXHIBIT D-1 (The Plans), EXHIBIT E (Additional
Provisions).

                                      18

<PAGE>

         Landlord and Tenant have executed this Lease as of the day and year
first above written.

                          LANDLORD:

                          STERLING PLAZA LIMITED
                          PARTNERSHIP, A DELAWARE LIMITED
                          PARTNERSHIP, DOING BUSINESS IN
                          TEXAS AS DALLAS STERLING PLAZA
                          LIMITED PARTNERSHIP

                          By:    EOP-Sterling Plaza Limited Partnership, a
                                   Delaware limited partnership, its general
                                   Partner

                            By:  EOP-Sterling Plaza GP, L.L.C., a Delaware
                                 limited liability company, its general
                                 partner

                                 By:   EOP-Franklin Street Limited
                                       Partnership, an Illinois limited
                                       partnership, its sole member

                                    By:     EOP-Franklin Street GP, L.L.C., a
                                            Delaware limited liability
                                            company, its general partner

                                       By:  EOP Operating Limited Partnership,
                                            a Delaware limited partnership,
                                            its sole member

                                            By:  Equity Office Properties Trust,
                                                 a Maryland real estate
                                                 investment Trust, its
                                                 managing general Partner

                                             By: _______________________

                                             Name:  Brad Fricks

                                             Title:  Vice President - Leasing

                              TENANT:      DIGITAL RECORDERS, INC., A NORTH
                                           CAROLINA CORPORATION

                              By:
                                  ----------------------------------------------

                              Name: David L. Turney

                              Title: Chairman & CEO
<PAGE>

                                    EXHIBIT A

                                    PREMISES

         This Exhibit is attached to and made a part of the Lease dated as of
__________, _____, by and between STERLING PLAZA LIMITED PARTNERSHIP, A
DELAWARE LIMITED PARTNERSHIP, DOING BUSINESS IN TEXAS AS DALLAS STERLING
PLAZA LIMITED PARTNERSHIP ("Landlord") and DIGITAL RECORDERS, INC., A NORTH
CAROLINA CORPORATION ("Tenant") for space in the Building located at 5949
Sherry Lane, Dallas, Texas 75225.

                                       1
<PAGE>

                                    EXHIBIT B

                         BUILDING RULES AND REGULATIONS

         The following rules and regulations shall apply, where applicable, to
the Premises, the Building, the parking garage (if any), the Property and the
appurtenances. Capitalized terms have the same meaning as defined in the Lease.

1.       Sidewalks, doorways, vestibules, halls, stairways and other similar
         areas shall not be obstructed by Tenant or used by Tenant for any
         purpose other than ingress and egress to and from the Premises. No
         rubbish, litter, trash, or material shall be placed, emptied, or thrown
         in those areas. At no time shall Tenant permit Tenant's employees to
         loiter in Common Areas or elsewhere about the Building or Property.

2.       Plumbing fixtures and appliances shall be used only for the purposes
         for which designed, and no sweepings, rubbish, rags or other unsuitable
         material shall be thrown or placed in the fixtures or appliances.
         Damage resulting to fixtures or appliances by Tenant, its agents,
         employees or invitees, shall be paid for by Tenant, and Landlord shall
         not be responsible for the damage.

3.       No signs, advertisements or notices shall be painted or affixed to
         windows, doors or other parts of the Building, except those of such
         color, size, style and in such places as are first approved in writing
         by Landlord. All tenant identification and suite numbers at the
         entrance to the Premises shall be installed by Landlord, at Tenant's
         cost and expense, using the standard graphics for the Building. Except
         in connection with the hanging of lightweight pictures and wall
         decorations, no nails, hooks or screws shall be inserted into any part
         of the Premises or Building except by the Building maintenance
         personnel.

4.       Landlord may provide and maintain in the first floor (main lobby) of
         the Building an alphabetical directory board or other directory device
         listing tenants, and no other directory shall be permitted unless
         previously consented to by Landlord in writing.

5.       Tenant shall not place any lock(s) on any door in the Premises or
         Building without Landlord's prior written consent and Landlord shall
         have the right to retain at all times and to use keys to all locks
         within and into the Premises. A reasonable number of keys to the locks
         on the entry doors in the Premises shall be furnished by Landlord to
         Tenant at Tenant's cost, and Tenant shall not make any duplicate keys.
         All keys shall be returned to Landlord at the expiration or early
         termination of this Lease.

6.       All contractors, contractor's representatives and installation
         technicians performing work in the Building shall be subject to
         Landlord's prior approval and shall be required to comply with
         Landlord's standard rules, regulations, policies and procedures, which
         may be revised from time to time.

7.       Movement in or out of the Building of furniture or office equipment, or
         dispatch or receipt by Tenant of merchandise or materials requiring the
         use of elevators, stairways, lobby areas or loading dock areas, shall
         be restricted to hours designated by Landlord. Tenant shall obtain
         Landlord's prior approval by providing a detailed listing of the
         activity. If approved by Landlord, the activity shall be under the
         supervision of Landlord and performed in the manner required by
         Landlord. Tenant shall assume all risk for damage to articles moved and
         injury to any persons resulting from the activity. If equipment,
         property, or personnel of Landlord or of any other party is damaged or
         injured as a result of or in connection with the activity, Tenant shall
         be solely liable for any resulting damage or loss.

8.       Landlord shall have the right to approve the weight, size, or location
         of heavy equipment or articles in and about the Premises. Damage to the
         Building by the installation, maintenance, operation, existence or
         removal of property of Tenant shall be repaired at Tenant's sole
         expense.

9.       Corridor doors, when not in use, shall be kept closed.

<PAGE>

10.      Tenant shall not: (1) make or permit any improper, objectionable or
         unpleasant noises or odors in the Building, or otherwise interfere in
         any way with other tenants or persons having business with them; (2)
         solicit business or distribute, or cause to be distributed, in any
         portion of the Building, handbills, promotional materials or other
         advertising; or (3) conduct or permit other activities in the Building
         that might, in Landlord's sole opinion, constitute a nuisance.

11.      No animals, except those assisting handicapped persons, shall be
         brought into the Building or kept in or about the Premises.

12.      No inflammable, explosive or dangerous fluids or substances shall be
         used or kept by Tenant in the Premises, Building or about the Property.
         Tenant shall not, without Landlord's prior written consent, use, store,
         install, spill, remove, release or dispose of, within or about the
         Premises or any other portion of the Property, any asbestos-containing
         materials or any solid, liquid or gaseous material now or subsequently
         considered toxic or hazardous under the provisions of 42 U.S.C. Section
         9601 et seq. or any other applicable environmental Law which may now or
         later be in effect. Tenant shall comply with all Laws pertaining to and
         governing the use of these materials by Tenant, and shall remain solely
         liable for the costs of abatement and removal.

13.      Tenant shall not use or occupy the Premises in any manner or for any
         purpose which might injure the reputation or impair the present or
         future value of the Premises or the Building. Tenant shall not use, or
         permit any part of the Premises to be used, for lodging, sleeping or
         for any illegal purpose.

14.      Tenant shall not take any action which would violate Landlord's labor
         contracts or which would cause a work stoppage, picketing, labor
         disruption or dispute, or interfere with Landlord's or any other
         tenant's or occupant's business or with the rights and privileges of
         any person lawfully in the Building ("Labor Disruption"). Tenant shall
         take the actions necessary to resolve the Labor Disruption, and shall
         have pickets removed and, at the request of Landlord, immediately
         terminate any work in the Premises that gave rise to the Labor
         Disruption, until Landlord gives its written consent for the work to
         resume. Tenant shall have no claim for damages against Landlord or any
         of the Landlord Related Parties, nor shall the date of the commencement
         of the Term be extended as a result of the above actions.

15.      Tenant shall not install, operate or maintain in the Premises or in any
         other area of the Building, electrical equipment that would overload
         the electrical system beyond its capacity for proper, efficient and
         safe operation as determined solely by Landlord. Tenant shall not
         furnish cooling or heating to the Premises, including, without
         limitation, the use of electronic or gas heating devices, without
         Landlord's prior written consent. Tenant shall not use more than its
         proportionate share of telephone lines and other telecommunication
         facilities available to service the Building.

16.      Tenant shall not operate or permit to be operated a coin or token
         operated vending machine or similar device (including, without
         limitation, telephones, lockers, toilets, scales, amusement devices and
         machines for sale of beverages, foods, candy, cigarettes and other
         goods), except for machines for the exclusive use of Tenant's
         employees, and then only if the operation does not violate the lease of
         any other tenant in the Building.

17.      Bicycles and other vehicles are not permitted inside the Building or on
         the walkways outside the Building, except in areas designated by
         Landlord.

18.      Landlord may from time to time adopt systems and procedures for the
         security and safety of the Building, its occupants, entry, use and
         contents. Tenant, its agents, employees, contractors, guests and
         invitees shall comply with Landlord's systems and procedures.

19.      Landlord shall have the right to prohibit the use of the name of the
         Building or any other publicity by Tenant that in Landlord's sole
         opinion may impair the reputation of the Building or its desirability.
         Upon written notice from Landlord, Tenant shall refrain from and
         discontinue such publicity immediately.

20.      Tenant shall not canvass, solicit or peddle in or about the Building or
         the Property.

<PAGE>

21.      Neither Tenant nor its agents, employees, contractors, guests or
         invitees shall smoke or permit smoking in the Common Areas, unless the
         Common Areas have been declared a designated smoking area by Landlord,
         nor shall the above parties allow smoke from the Premises to emanate
         into the Common Areas or any other part of the Building. Landlord shall
         have the right to designate the Building (including the Premises) as a
         non-smoking building.

22.      Landlord shall have the right to designate and approve standard window
         coverings for the Premises and to establish rules to assure that the
         Building presents a uniform exterior appearance. Tenant shall ensure,
         to the extent reasonably practicable, that window coverings are closed
         on windows in the Premises while they are exposed to the direct rays of
         the sun.

23.      Deliveries to and from the Premises shall be made only at the times, in
         the areas and through the entrances and exits designated by Landlord.
         Tenant shall not make deliveries to or from the Premises in a manner
         that might interfere with the use by any other tenant of its premises
         or of the Common Areas, any pedestrian use, or any use which is
         inconsistent with good business practice.

24.      The work of cleaning personnel shall not be hindered by Tenant after
         5:30 P.M., and cleaning work may be done at any time when the offices
         are vacant. Windows, doors and fixtures may be cleaned at any time.
         Tenant shall provide adequate waste and rubbish receptacles to prevent
         unreasonable hardship to the cleaning service.

25.      Tenant shall not take any action to protest the appraised value of the
         Building for ad valorem tax purposes without Landlord's express
         consent.

<PAGE>

                                    EXHIBIT C

                               COMMENCEMENT LETTER
                                    (EXAMPLE)

Date:

Tenant:  Digital Recorders, Inc.

Address:  5949 Sherry Lane
                 Suite 1050
                 Dallas, Texas  75225

Re:      Commencement Letter with respect to that certain Lease dated as of by
         and between STERLING PLAZA LIMITED PARTNERSHIP, A DELAWARE LIMITED
         PARTNERSHIP, DOING BUSINESS IN TEXAS AS DALLAS STERLING PLAZA LIMITED
         PARTNERSHIP, as Landlord, and DIGITAL RECORDERS, INC., A NORTH CAROLINA
         CORPORATION, as Tenant, for 2,206 square feet of Rentable Area on the
         tenth (10th) floor of the Building located at 5949 Sherry Lane, Dallas,
         Texas 75225.

Dear:  :

         In accordance with the terms and conditions of the above referenced
Lease, Tenant accepts possession of the Premises and agrees:

         1.       The Commencement Date of the Lease is               ;

         2.       The Termination Date of the Lease is                .

         Please acknowledge your acceptance of possession and agreement to the
terms set forth above by signing all 3 counterparts of this Commencement Letter
in the space provided and returning 2 fully executed counterparts to my
attention.

Sincerely,

--------------------------------------------
Property Manager

Agreed and Accepted:
               Tenant:  DIGITAL RECORDERS, INC., a North Carolina corporation
               By:
               Name:
               Title:
               Date:

<PAGE>

                                    EXHIBIT D

                                   WORK LETTER

         This Exhibit is attached to and made a part of the Lease dated as of
_________________, _____, by and between STERLING PLAZA LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP, DOING BUSINESS IN TEXAS AS DALLAS STERLING
PLAZA LIMITED PARTNERSHIP ("Landlord") and DIGITAL RECORDERS, INC., A NORTH
CAROLINA CORPORATION ("Tenant") for space in the Building located at 5949
Sherry Lane, Dallas, Texas 75225.

1.       Landlord, at its sole cost and expense (subject to the terms and
         provisions of Section 2 below) shall perform improvements to the
         Premises in accordance with the following work list (the "Work List")
         using Building standard methods, materials and finishes. The
         improvements to be performed in accordance with the Work List are
         hereinafter referred to as the "Landlord Work". Landlord shall enter
         into a direct contract for the Landlord Work with a general contractor
         selected by Landlord. In addition, Landlord shall have the right to
         select and/or approve of any subcontractors used in connection with the
         Landlord Work.

                                    WORK LIST
         ITEM

1.       Paint walls using building standard materials as selected by Tenant
         over existing wallcovering. If wallcovering will not accept paint in a
         manner that will provide a professional finish, remove wallcovering.
2.       Paint walls using building standard materials as selected by Tenant
         over existing wallcovering. If wallcovering will not accept paint in a
         manner that will provide a professional finish, remove wallcovering.
3.       Paint walls using building standard materials as selected by Tenant
         over existing wallcovering. Prepare surface as necessary to insure that
         colors do not bleed-through. If wallcovering will not accept paint in a
         manner that will provide a professional finish, remove wallcovering.
4.       Touch-up and refinish wood floor in entry as needed.
5.       Construct new wall as shown on Exhibit D-1.
6.       Furnish and install stain grade door to match existing.
7.       Furnish and install base to match existing on new wall. Strip, clean
         and polish existing VCT floor.
8.       Furnish and install a pair of 30" stain grade raised panel doors,
         stained to match the existing doors. Tenant must approve the profile of
         these doors prior to order. Hardware to be selected by Tenant.
9.       Paint walls using building standard materials as selected by Tenant
         over existing wallcovering. If wallcovering will not accept paint in a
         manner that will provide a professional finish, remove wallcovering.
10.      All existing cabinetry to remain "as-is".
11.      Strip, clean and polish existing VCT floor in kitchen area.
12.      Furnish and install building standard carpet over pad in all areas
         except those currently containing VCT or wood in a color selected by
         Tenant.
13.      In addition, those listed in items 1,2 & 3 above, repaint the premises
         using building standard materials in a color selected by Tenant.
14.      Switch all individual rooms separately.
15.      Furnish and install four (4) duplex outlets as shown on Exhibit D-1.
16.      Furnish and install three (3) telephone outlets as shown on
         Exhibit D-1.
17.      Furnish and install fire strobes and horns in compliance with code.
18.      Generally clean the premises throughout in preparation for occupancy.

2.       All other work and upgrades, subject to Landlord's approval, shall be
         at Tenant's sole cost and expense, plus any applicable state sales or
         use tax thereon, payable upon demand as Additional Rent. Tenant shall
         be responsible for any Tenant Delay in completion of the Premises
         resulting from any such other work and upgrades requested or performed
         by Tenant.

3.       Landlord's supervision or performance of any work for or on behalf of
         Tenant shall not be deemed to be a representation by Landlord that such
         work complies with applicable insurance requirements, building codes,
         ordinances, laws or regulations or that the improvements constructed
         will be adequate for Tenant's use.

<PAGE>

4.       This Exhibit D shall not be deemed applicable to any additional space
         added to the original Premises at any time or from time to time,
         whether by any options under the Lease or otherwise, or to any portion
         of the original Premises or any additions to the Premises in the event
         of a renewal or extension of the original Term of this Lease, whether
         by any options under the Lease or otherwise, unless expressly so
         provided in the Lease or any amendment or supplement to the Lease.

         Landlord and Tenant have executed this exhibit as of the day and year
first above written.

                    LANDLORD:

                    STERLING PLAZA LIMITED
                    PARTNERSHIP, A DELAWARE LIMITED
                    PARTNERSHIP, DOING BUSINESS IN
                    TEXAS AS DALLAS STERLING PLAZA
                    LIMITED PARTNERSHIP

                    By:      EOP-Sterling Plaza Limited Partnership, a
                             Delaware limited partnership, its general
                             Partner

                      By:  EOP-Sterling Plaza GP, L.L.C., a Delaware limited
                           liability company, its general partner

                           By:   EOP-Franklin Street Limited Partnership, an
                                 Illinois limited partnership, its sole member

                              By:     EOP-Franklin Street GP, L.L.C., a Delaware
                                      limited liability company, its general
                                      partner

                                 By:  EOP Operating Limited Partnership,   a
                                      Delaware limited partnership, its sole
                                      member

                                    By:    Equity Office Properties Trust, a
                                           Maryland real estate investment
                                           Trust, its managing general
                                           Partner

                                       By: _______________________

                                       Name:  Brad Fricks

                                       Title:  Vice President - Leasing

                       TENANT:      DIGITAL RECORDERS, INC., A NORTH
                                    CAROLINA CORPORATION

                       By:
                           -----------------------------------------------------

                       Name: David L. Turney

                       Title: Chairman & CEO

<PAGE>

                                   EXHIBIT D-1

                                    THE PLANS

<PAGE>

                                    EXHIBIT E

                              ADDITIONAL PROVISIONS

         This Exhibit is attached to and made a part of the Lease dated as of
_____________________, ______, by and between STERLING PLAZA LIMITED
PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP, DOING BUSINESS IN TEXAS AS
DALLAS STERLING PLAZA LIMITED PARTNERSHIP ("Landlord") and DIGITAL RECORDERS,
INC., A NORTH CAROLINA CORPORATION ("Tenant") for space in the Building
located at 5949 Sherry Lane, Dallas, Texas 75225.

I.       PARKING.

         A. Landlord shall make available to Tenant, provided Tenant is not in
         default under this Lease, throughout the Lease Term up to six (6)
         parking permits (the "Permits") to allow access to the parking garage
         located at the Property (the "Building Garage") which is used in
         connection with the operation of the Building. Tenant shall have the
         right, but not the obligation to use said Permits. Of said six (6)
         Permits granted to Tenant, six (6) Permits shall be standard
         unreserved. In consideration therefor, Tenant will pay to Landlord as
         Additional Base Rental and with each installment of Base Rental due
         under the Lease, the Parking Charge (hereinafter defined) hereinafter
         provided. The Permits shall only be valid between the hours of 5:00
         a.m. and 11:00 p.m. daily and between the hours of 5:00 a.m. and 11:00
         p.m. on Saturdays, Sundays, and Holidays. Except with respect to any
         limited reserved parking that Landlord may establish and for which
         Landlord may increase the Parking Charge, all tenant parking in the
         Building Garage will be on a non-reserved, first-come, first-serve
         basis. Landlord may elect to establish parking zones in the Building
         Garage and if Landlord so elects, the Permits may be issued to
         specifically identified vehicles and the Parking Charge may relate to
         specified zone(s) as determined by Landlord. If Landlord implements a
         system whereby only specifically identified vehicles are granted
         Permits, other vehicles shall not be permitted to use the Building
         Garage without the Landlord's prior written consent. Landlord reserves
         the right upon written notice posted in the Building Garage, to change
         the parking system for the Building Garage to provide special
         requirements for weekend, holiday or after hours usage and to
         temporarily close the Building Garage, or portions thereof to make such
         repairs or alterations as Landlord may deem appropriate.

         B. In consideration for the Permits, Tenant covenants and agrees to pay
         to Landlord during the Lease Term, as Additional Base Rental
         thereunder, a parking charge (the "Parking Charge") equal to the sum of
         $50.00 per month for each Permit issued to Tenant, and such Parking
         Charge shall be paid monthly in advance as hereinabove provided. A pro
         rata portion of such Parking Charge shall be payable for the (i) first
         partial calendar month of the Lease Term in the event the Commencement
         Date occurs on a date other than the first day of a calendar month, and
         (ii) for the last partial calendar month of the Lease Term in the event
         the term hereof expires on a date other than the last day of a calendar
         month. Tenant's obligation to pay the Parking Charge shall be
         considered an obligation to pay Rent for all purposes thereunder and
         shall be secured in like manner as is Tenant's obligation to pay Rent.
         Default in the payment of such Parking Charge shall be deemed to be a
         default in the payment of Rent. As additional consideration for the
         aforesaid Permits, Tenant hereby waives on behalf of itself all claims,
         whether based on negligence or other grounds, against Landlord, its
         agents and employees arising out of any loss or damage to automobiles
         or other property while located in the Building Garage, or arising out
         of any personal injuries sustained in connection with the use of said
         Building Garage.

         C. The failure to timely pay the Parking Charge specified above, or to
         comply with the rules and regulations governing the use of the Building
         Garage, including but not limited to the rules establishing time limits
         on the use of said Permits, shall entitle Landlord, in addition to any
         other remedies provided hereunder, to terminate the Permits and tow any
         vehicles which are in violation of said rules and regulations from the
         Building Garage at the sole cost and expense of Tenant and without
         liability for damages resulting therefrom.

I.       TEMPORARY PREMISES.

         During the period beginning on the full and final execution of this
         Lease by Landlord and

<PAGE>

         Tenant and ending on the day prior to the Commencement Date (the
         "Temporary Premises Term"), Landlord shall allow Tenant to use the
         space shown cross-hatched on Exhibit A-1 to the Lease (the "Temporary
         Premises") for the sole purpose of storing Tenant's furniture,
         equipment or other personal property. In the event Tenant utilizes the
         Temporary Premises for the Permitted Use, such possession of the
         Temporary Premises shall be subject to all the terms and conditions of
         the Lease and Tenant shall pay Base Rent and Additional Rent to
         Landlord for each day of occupancy prior to the Commencement Date.
         Such Temporary Premises shall be accepted by Tenant in its as-is
         condition and configuration, it being agreed that Landlord shall be
         under no obligation to perform any work in the Temporary Premises or to
         incur any costs in connection with Tenant move in, move out or
         occupancy of the Temporary Premises. All costs in connection with
         making the Temporary Premises ready for occupancy by Tenant shall be
         the sole responsibility of Tenant. Tenant's right to use the Temporary
         Premises shall be subject to all of the terms and conditions of this
         Lease, provided that Tenant shall not be required to pay Rent for the
         Premises during the Temporary Space Term.

         Landlord and Tenant have executed this exhibit as of the day and year
first above written.

                      LANDLORD:

                      STERLING PLAZA LIMITED
                      PARTNERSHIP, A DELAWARE LIMITED
                      PARTNERSHIP, DOING BUSINESS IN
                      TEXAS AS DALLAS STERLING PLAZA
                      LIMITED PARTNERSHIP

                      By:      EOP-Sterling Plaza Limited Partnership, a
                               Delaware limited partnership, its general
                               Partner

                        By:  EOP-Sterling Plaza GP, L.L.C., a Delaware limited
                             liability company, its general partner

                             By:   EOP-Franklin Street Limited Partnership, an
                                   Illinois limited partnership, its sole member

                                By:     EOP-Franklin Street GP, L.L.C., a
                                        Delaware limited liability company,
                                        its general partner

                                   By:  EOP Operating Limited Partnership,   a
                                        Delaware limited partnership, its sole
                                        member

                                      By:    Equity Office Properties Trust, a
                                             Maryland real estate investment
                                             Trust, its managing general
                                             Partner

                                         By: _______________________

                                         Name:  Brad Fricks

                                         Title:  Vice President - Leasing

                        TENANT:      DIGITAL RECORDERS, INC., A NORTH
                                     CAROLINA CORPORATION

                        By:
                            ----------------------------------------------------

                        Name: David L. Turney

                        Title: Chairman & CEO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00026-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00026-of-00352.parquet"}]]