NETRIX CORP
LEASE AGREEMENT, DATED MAY 18, 2000
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>LEASE AGREEMENT, DATED MAY 18, 2000
<TEXT>

<PAGE>










                                 LEASE AGREEMENT


                                     Between

                            WATER TOWER CAMPBELL, LLC
                            -------------------------

                     A CALIFORNIA LIMITED LIABILITY COMPANY
                     --------------------------------------

                                   As Landlord

                                       And

                               Netrix Corporation
                             a Delaware Corporation
                       doing business as Nx Networks, Inc.


                                    As Tenant

                                   Dated as of

                                  May 18, 2000





















         PROPERTY:

         307 Orchard City Drive
         Campbell, California  95008


<PAGE>

                  THIS AGREEMENT made this 18th day of May, 2000.

                  BETWEEN:

                                            WATER   TOWER   CAMPBELL,    LLC   A
                                            California     limited     liability
                                            company,  and having a local  office
                                            at 1690  Dell  Avenue in the City of
                                            Campbell, California

                                            (hereinafter called the "Landlord")

                                                              OF THE FIRST PART,
                                            --- and ---

                                            Netrix Corporation,,
                                            A   Delaware    corporation    doing
                                            business as Nx Networks,  Inc.having
                                            an office at 13595 Dallas Technology
                                            Drive,  Suite  100  in the  City  of
                                            Herndon, Virginia 20171

                                            (hereinafter called the "Tenant")

                                                             OF THE SECOND PART,

                      In  consideration  of the rents,  covenants and agreements
                  hereinafter contained, the Landlord and Tenant hereby agree as
                  follows:

                               1. LEASED PREMISES

LEASED PREMISES            The Landlord does demise and lease to  the Tenant the
                    premises (the "Leased Premises") located in  a building (the
                    "Building") having a municipal address of  307 Orchard  City
                    Drive, in the city of Campbell,  and known as Suites 350 and
                    309, Water Tower II  (the  Leased  Premises,  the  Building,
                    together with the lands  described in Schedule  "A" attached
                    hereto and present and  future  improvements,  additions and
                    changes thereto  being herein  called  the  "Property"). The
                    Leased Premises are  located  on  the  Third  floor and  the
                    approximate location is  outlined  in heavy  black and cross
                    hatched  on  the  plan or  plans   marked   Schedule(s) "B1"
                    attached  hereto.  The parties  agree that the Rentable Area
                    of  the  Leased Premises   is eight   thousand  five hundred
                    thirty-six  (8,536)  square feet and has   been  measured in
                    accordance with the  provisions   of Schedule  "B"  attached
                    hereto.
                                     2. TERM

TERM                (a) TO HAVE AND TO HOLD the Leased  Premises  for and during
                    the term of seven (7) years  and 0 days (the  "Term")  to be
                    computed  from  the 1st day of June  2000,  and to be  fully
                    complete  and  ended  on the 31st  day of May  2007,  unless
                    otherwise terminated. Suite 350 shall be delivered to Tenant
                    June 1, 2000 and Suite 309 shall be delivered to Tenant July
                    1, 2000.

DELAY               (b)  If  the Leased  Premises or  any part  thereof  are not
IN OCCUPANCY        ready  for  occupancy  on  the date of  commencement  of the
                    Term, no part of  the  "Rent" (as  hereinafter   defined) or
                    only a  proportionate  part  thereof,  in the event that the
                    Tenant shall occupy a part of the Leased Premises,  shall be
                    payable  for the  period  prior to the date when the  entire
                    Leased  Premises are ready for  occupancy  and the full Rent
                    shall accrue only after such last mentioned date. The Tenant
                    agrees  to  accept  any  such  abatement  of  Rent  in  full
                    settlement  of all claims which the Tenant  might  otherwise
                    have by reason of the Leased  Premises  not being  ready for
                    occupancy on the date of commencement of the Term,  provided
                    that when the Landlord has  completed  construction  of such
                    part of the Leased  Premises as it is obliged  hereunder  to
                    construct, the Tenant shall not be entitled to any abatement
                    of Rent  for any  delay  in  occupancy  due to the  Tenant's
                    failure or delay to provide plans or to complete any special
                    installations or other work required for its purposes or due
                    to any other reason, nor shall the Tenant be entitled to any
                    abatement of Rent for any delay in occupancy if the Landlord
                    has been  unable  to  complete  construction  of the  Leased
                    Premises by reason of such failure or delay by the Tenant. A
                    certificate  of the  Landlord  as to  the  date  the  Leased
                    Premises were ready for occupancy and such  construction  as
                    the  Landlord  is  obliged  to  complete  is   substantially
                    completed,  or as to the date upon which the same would have
                    been ready for occupancy and completed  respectively but for
                    the failure or delay of the Tenant,  shall be conclusive and
                    binding  on the  Tenant  and Rent in full  shall  accrue and
                    become   payable   from   the  date  set  out  in  the  said
                    certificate.  Notwithstanding  any delay in  occupancy,  the
                    expiry date of this Lease shall remain unchanged.

                                      2
<PAGE>

OVER-HOLDING        (c)   If at the expiration of the Term or sooner termination
                    hereof, the  Tenant shall remain  in possession  without any
                    further  written   agreement or in   circumstances  where  a
                    tenancy would thereby be created  by  implication of  law or
                    otherwise, a tenancy from year to year  shall not be created
                    by implication of law or otherwise, but  the Tenant shall be
                    deemed to be a monthly  tenant only,  at double "Basic Rent"
                    (as hereinafter defined)  payable monthly  in  advance  plus
                    "Additional Rent"  (as  hereinafter  defined) and  otherwise
                    upon and subject to  the same terms and conditions as herein
                    contained,  excepting  provisions  for renewal  (if any) and
                    leasehold  improvement allowance (if any), contained herein,
                    and nothing,  including  the acceptance of  any Rent  by the
                    Landlord, for  periods  other  than  monthly periods,  shall
                    extend  this  Lease to the  contrary except  an agreement in
                    writing  between the  Landlord and the Tenant and the Tenant
                    hereby authorizes the  Landlord to apply any moneys received
                    from   the   Tenant in   payment  of  such   monthly   Rent.
                    Notwithstanding the  foregoing, in the event that the Tenant
                    shall hold over after  the  expiration  of  the Term and the
                    Landlord shall  desire to  regain  possession  of the Leased
                    Premises promptly  at the  expiration of  the Term, then the
                    Landlord, at  its  sole  option, may  forthwith re-enter and
                    take possession  of the Leased  premises without process, or
                    by any  legal  process  in  force,   Tenant hereby expressly
                    waiving any and all notices to cure or vacate or to quit the
                    Leased  Premises provided by  current or  future law (except
                    for those notices specifically outlined in this Lease).

                                     3. RENT

FIRST MONTHLY      (a) (i) The Tenant shall  without  demand, deduction or right
BASIC RENT          of offset pay to the Landlord  (herein called "Basic Rent"),
                    the  sum   of Thirty-Seven  Thousand Five  Hundred Fifty-Two
                    and 56/100  Dollars ($37,552.56) of  lawful  money  of   the
                    jurisdiction  in  which  the  Leased  Premises  are  located
                    upon execution of the lease,  for Suite 350 for the month of
                    June, 2000.

BASIC RENT             (ii)  Commencing  on   the  1st day of  July,  2000   and
                    continuing  until the  31st day of May, 2001, the Basic Rent
                    shall be increased to Five Hundred Sixty-Five Thousand  Four
                    Hundred  Twenty-Four and  64/100 dollars  ($565,424.64)  per
                    annum  of  lawful   money of the  jurisdiction  in which the
                    Leased   Premises  are  located  payable in   equal  monthly
                    installments  of Forty-Seven  Thousand  One Hundred Eighteen
                    and 72/100 dollars ($47,118.72) each in advance on the first
                    day of each month  during the  Term, the first payment to be
                    made on the 1st day of July, 2000.

INCREASE IN            (iii)  Commencing   on   the   1st  day of June, 2001 and
BASIC RENT          continuing  until the 31st day of May,  2002, the Basic Rent
                    shall be increased to Five Hundred Ninety-Three Thousand Six
                    Hundred  Ninety-Five and  87/100  dollars ($593,695.87)  per
                    annum  of  lawful  money of the  jurisdiction in  which  the
                    Leased   Premises   are  located   payable in  equal monthly
                    installments   of  Forty - Nine   Thousand    Four   Hundred
                    Seventy-Four and 66/100 dollars ($49,474.66) each in advance
                    on the first day of each month  during  the Term,  the first
                    payment to be made on the 1st day of June, 2001.

INCREASE IN            (iv)  Commencing   on   the 1st  day of  June,   2002 and
BASIC RENT          continuing   until the 31st day of  May,  2003,  the   Basic
                    Rent shall be increased to Six Hundred Twenty-Three Thousand
                    Three Hundred Eighty and  64/100  dollars ($623,380.64)  per
                    annum of lawful  money of  the   jurisdiction  in  which the
                    Leased  Premises  are   located  payable in  equal   monthly
                    installments  of   Fifty - One   Thousand    Nine    Hundred
                    Forty-Eight and 39/100 dollars  ($51,948.39) each in advance
                    on the first day of each month  during  the Term,  the first
                    payment to be made on the 1st day of June, 2002.

INCREASE IN            (v) Commencing  on  the  1st   day  of   June,   2003 and
BASIC RENT          continuing until the 31st day of May,  2004,  the Basic Rent
                    shall be  increased  to  Six undred Fifty-Four Thousand Five
                    Hundred Forty-Nine  and  70/100  dollars  ($654,549.70)  per
                    annum of lawful  money  of  the  jurisdiction in   which the
                    Leased  Premises   are   located   payable in  equal monthly
                    installments   of  Fifty - Four    housand    Five   Hundred
                    Forty-Five and 81/100 dollars  ($54,545.81)  each in advance
                    on the first day of each month  during  the Term,  the first
                    payment to be made on the 1st day of June, 2003.

INCREASE IN            (vi)  Commencing  on   the  1st day of  June,   2004  and
BASIC RENT          continuing   until the   31st day of May,  2005,  the  Basic
                    Rent shall be increased to Six Hundred Eighty-Seven Thousand
                    Two Hundred Seventy-Seven and 18/100  dollars  ($687,277.18)
                    per   annum   of    lawful   money  of   the    jurisdiction
                    in which the Leased  Premises  are located  payable in equal
                    monthly  installments  of  Fifty-Seven  Thousand Two Hundred
                    Seventy-Three  and  10/100  dollars   ($57,273.10)  each  in
                    advance on the first day of each month during the Term,  the
                    first payment to be made on the 1st day of June, 2004.

INCREASE IN            (vii)  Commencing  on the   1st day of  June,  2005   and
BASIC RENT          continuing  until the 31st day of May, 2006, the Basic  Rent
                    shall be increased to Seven Hundred Twenty-One Thousand  Six
                    Hundred  Forty-One  and  04/100 dollars   ($721,641.04)  per
                    annum   of   lawful   money  of  the   jurisdiction in which
                    the Leased  Premises  are located  payable in equal  monthly
                    installments of  Sixty   Thousand   One   Hundred Thirty-Six
                    and  75/100  dollars  ($60,136.75)  each in  advance on  the
                    first  day  of  each month   during   the  Term,  the  first
                    payment to be made on the 1st day of June, 2005.

                                      3
<PAGE>

INCREASE IN            (viii)  Commencing  on the  1st  day  of  June,  2006 and
BASIC RENT          continuing until  the 31st day of May, 2007, the Basic  Rent
                    shall  be  increased  to Seven Hundred  Fifty-Seven Thousand
                    Seven Hundred Twenty-Three  and 10/100 dollars ($757,723.10)
                    per annum of lawful money of the  jurisdiction in which  the
                    Leased   Premises  are  located  payable  in  equal  monthly
                    installments   of   Sixty - Three  Thousand    One   Hundred
                    Forty-Three and 58/100 dollars  ($63,143.58) each in advance
                    on the first day of each month  during  the Term,  the first
                    payment to be made on the 1st day of June, 2006.

ADDITIONAL          (b) The Tenant  shall,  without  deduction  or right of
RENT                offset pay to the Landlord  yearly and every year during the
                    Term as additional rental (herein called "Additional Rent")

                       (i)    the amounts of any Taxes payable by the Tenant to
                              the  Landlord   pursuant to  the   provisions  of
                              Schedule "C" attached hereto; and

                       (ii)   the  amounts   required  to  be  paid  to  the
                              Landlord   pursuant  to  the   provisions   of
                              Schedule "D" attached hereto.

PAYMENT -           (c)  Additional  Rent  shall  be  paid  and   adjusted  with
ADDITIONAL RENT     reference to a fiscal period of twelve (12) calendar  months
                    ("Fiscal Period"), which shall be a calendar year unless the
                    Landlord shall from  time to  time  have  selected a  Fiscal
                    Period which is not a calendar year by written notice to the
                    Tenant.

                           The  Landlord  shall  advise the Tenant in writing of
                    its  estimate  of the  Additional  Rent to be payable by the
                    Tenant  during the Fiscal  Period (or broken  portion of the
                    Fiscal  Period,  as the case may be,  if  applicable  at the
                    commencement  or end of the term or  because  of a change in
                    Fiscal Period) which commenced upon the commencement date of
                    the Term and for each  succeeding  Fiscal  Period  or broken
                    portion  thereof  which  commences  during  the  Term.  Such
                    estimate  shall in every case be a reasonable  estimate and,
                    if  requested  by  the  Tenant,   shall  be  accompanied  by
                    reasonable  particulars  of  the  manner  in  which  it  was
                    calculated.  The Additional Rent payable by the Tenant shall
                    be paid in equal monthly installments in advance at the same
                    time as payment of Basic Rent is due hereunder  based on the
                    Landlord's  estimate as  aforesaid.  From time to time,  the
                    Landlord may re-estimate,  on a reasonable basis, the amount
                    of Additional  Rent for any Fiscal Period or broken  portion
                    thereof,  in which case the Landlord shall advise the Tenant
                    in writing  of such  re-estimate  and fix new equal  monthly
                    installments for the remaining balance of such Fiscal Period
                    or broken portion thereof. After the end of each such Fiscal
                    Period or broken portion  thereof the Landlord shall provide
                    the Tenant with a statement  of the actual  Additional  Rent
                    payable in respect of such Fiscal  Period or broken  portion
                    thereof  and a  calculation  of the  amounts  by  which  the
                    Additional  Rent  payable by the  Tenant  exceeds or is less
                    than (as the case may be) the aggregate installments paid by
                    the  Tenant on account of  Additional  Rent for such  Fiscal
                    Period.

                           Within thirty (30) days after the  submission of such
                    statement  either the Tenant  shall pay to the  Landlord any
                    amount by which the amount found  payable by the Tenant with
                    respect  to such  Fiscal  Period or broken  portion  thereof
                    exceeds the aggregate of the monthly  payments made by it on
                    account  thereof during such Fiscal Period or broken portion
                    thereof,  or the Landlord shall pay to the Tenant any amount
                    by which the amount found  payable as aforesaid is less than
                    the aggregate of such monthly payments.

RECOVERY OF RENT    (d) In this Lease "Rent" means all amounts  required
                    to be paid by the Tenant  pursuant  to this Lease  including
                    without limitation Basic Rent and Additional Rent.

ACCRUAL OF RENT     (e) Basic Rent and  Additional  Rent shall be  considered as
                    accruing  from day to day,  and for an  irregular  period of
                    less than one year or less than one calendar  month shall be
                    apportioned  and  adjusted  by the  Landlord  for the Fiscal
                    Periods of the Landlord in which the tenancy  created hereby
                    commences and expires.  Where the  calculation of Additional
                    Rent for a period cannot be made until after the termination
                    of  this  Lease,   the  obligation  of  the  Tenant  to  pay
                    Additional  Rent shall  survive the  termination  hereof and
                    Additional  Rent for such  period  shall be  payable  by the
                    Tenant upon demand by the Landlord. If the Term commences or
                    expires on any day other than the first or the last day of a
                    month, Basic Rent and Additional Rent for such fraction of a
                    month shall be  apportioned  and adjusted as  aforesaid  and
                    paid by the  Tenant  on the  commencement  date of the Term.

LIMITATIONS         (f)  The  information  set  out in  statements,
                    documents  or  other  writings  setting  out the  amount  of
                    Additional Rent submitted to the Tenant under or pursuant to
                    this  Lease  shall be binding on the Tenant and deemed to be
                    accepted by it and shall not be subject to amendment for any
                    reason unless the Tenant gives written  notice (the "Dispute
                    Notice")  to the  Landlord  within  sixty  (60)  days of the
                    Landlord's  submission  of  such  statement,   document,  or
                    writing identifying the statement, document, or writing. The
                    Dispute Notice shall set out in reasonable detail the reason
                    why  such  statement,  document  or  writing  is in error or
                    otherwise should not be binding on the Tenant. If the Tenant
                    disputes the amount of the Additional Rent as aforesaid, and
                    if such  dispute is not  resolved  within  thirty  (30) days
                    after the

                                      4
<PAGE>

                    Tenant delivers the Dispute Notice to the Landlord, then the
                    Landlord shall cause an audited statement of Additional Rent
                    to be prepared by an independent  nationally recognized firm
                    of chartered  accountants.  The statement of Additional Rent
                    as prepared by such  accountants  shall be final and binding
                    upon the parties  hereto and within  fifteen (15) days after
                    delivery of such statement of Additional Rent to the parties
                    by the  accountants  the Landlord and Tenant shall  readjust
                    Additional Rent as contemplated by section 3(c). The cost of
                    preparation of such audited  statement  shall be paid by the
                    Tenant as Rent unless the amount of Additional  Rent payable
                    by the  Tenant  as  set  forth  in  such  audited  financial
                    statement is at least 4% less than the amount of  Additional
                    Rent  demanded  by  the  Landlord  in  accordance  with  the
                    statement delivered to the Tenant pursuant to section 3(c).


                               4. SECURITY DEPOSIT

SECURITY DEPOSIT    The Tenant  shall pay to the  Landlord on  execution of this
                    Lease  by the  Tenant  the  sum of  One  Hundred  Twenty-Six
                    Thousand  Two  Hundred   Eighty-Seven   and  18/100  Dollars
                    ($126,287.18)  as a  deposit  to the  Landlord  to  stand as
                    security  for  the  payment  by the  Tenant  of any  and all
                    present and future  debts and  liabilities  of the Tenant to
                    the Landlord and for the performance by the Tenant of all of
                    its  obligations  arising under or in  connection  with this
                    Lease  (the  "Debts,  Liabilities  and  Obligations").   The
                    Landlord shall not be required to keep the deposit  separate
                    from  its  general  funds.  In the  event  of  the  Landlord
                    disposing of its interest in this Lease,  the Landlord shall
                    credit the deposit to its successor and thereupon shall have
                    no liability to the Tenant to repay the security  deposit to
                    the Tenant.  Subject to the  foregoing and to the Tenant not
                    being in default under this Lease,  the Landlord shall repay
                    the security  deposit to the Tenant without  interest at the
                    end of the Term or sooner  termination of the Lease provided
                    that all Debts, Liabilities and Obligations of the Tenant to
                    the Landlord are paid and  performed in full,  failing which
                    the Landlord may on notice to the Tenant elect to retain the
                    security  deposit and to apply it in reduction of the Debts,
                    Liabilities  and  Obligations  and the Tenant  shall  remain
                    fully liable to the Landlord for payment and  performance of
                    the remaining Debts, Liabilities and Obligations.

                              5. GENERAL COVENANTS

LANDLORD'S          (a)    The Landlord covenants with the Tenant:
COVENANT

                           (i)  for quiet enjoyment; and

                           (ii) to observe and perform all the covenants and
                                obligations of the Landlord herein.

TENANT'S COVENANT   (b)    The Tenant covenants with the Landlord:

                           (i)  to pay Rent; and

                           (ii) to observe and perform all the covenants and
                                obligations of the Tenant herein.

                              6. USE AND OCCUPANCY

USE                 The Tenant covenants with the Landlord:

                    (a) not to use the Leased  Premises  for any  purpose  other
                    than an office  for the  conduct  of the  Tenant's  business
                    which is  general  office  and such use shall be  consistent
                    with the character of the Property and  compatible  with the
                    other uses of the Property;

WASTE,  NUISANCE,   (b) not to commit, or permit, any waste, injury or damage to
ETC.                the Property  including the Leasehold   Improvements and
                    any  trade  fixtures  therein,  any  loading  of the  floors
                    thereof in excess of the maximum degree


<PAGE>

                    of loading as determined by the Landlord acting  reasonably,
                    any  nuisance  therein  or any use or manner of use  causing
                    annoyance to other  tenants and occupants of the Property or
                    to the Landlord;

INSURANCE RISKS     (c)  not  to do, omit or permit to  be done or omitted to be
                    done upon the Property   anything  which  would cause  to be
                    increased the  Landlord's  cost of insurance or the costs of
                    insurance of another  tenant of the Property  against perils
                    as to which the Landlord or such other tenant has insured or
                    which shall cause any policy of insurance on the Property to
                    be subject to cancellation;

COMPLIANCE  WITH    (d) to comply at its own expense with all governmental laws,
LAW                 regulations   and  requirements  (1)  related   to  Tenant's
                    specific  manner of use of the Premises,  Tenant's change in
                    use of the Premises, Tenant's alterations,

                                       5
<PAGE>

                    additions,   or  improvements  to  the  Premises,   Tenant's
                    application for governmental approvals,  licenses or permits
                    or  Tenant's   negligence  of  willful   misconduct  or  (2)
                    pertaining to the  condition of the Leasehold  Improvements,
                    trade fixtures,  furniture and equipment  installed by or on
                    behalf of the Tenant in the  Premises  and the making by the
                    Tenant of any repairs,  changes or improvements therein. The
                    foregoing  shall  not  be  a  limitation  to  any  Operating
                    Expenses Tenant is responsible for pursuant to Schedule "D".


ENVIRONMENTAL       (e) (i) to conduct and maintain its business and  operations
COMPLIANCE          at the Leased  Premises so as to comply in all respects with
                    common  law and  with  all  present  and  future  applicable
                    federal, provincial/ state, local,

                    municipal, governmental or quasi-governmental laws, by-laws,
                    rules,   regulations,    licenses,    orders,    guidelines,
                    directives,  permits,  decisions or requirements  concerning
                    occupational  or public health and safety or the environment
                    and any order, injunction,  judgment, declaration, notice or
                    demand issued  thereunder,  ("Environmental  Laws"), in each
                    case to the  extent  applicable  to  Tenant's  business  and
                    operations at the Leased Premises;

                    (ii)  not  to  permit  or  suffer  any  substance  which  is
                    hazardous  or  is  prohibited,   restricted,   regulated  or
                    controlled under any  Environmental Law to be present at, on
                    or in the Leased Premises,  excluding normal office supplies
                    in  customary  quantities,  unless it has received the prior
                    written  consent  of  the  Landlord  which  consent  may  be
                    arbitrarily withheld;

 RULES AND          (f)  to observe  and  perform,  and to cause its  employees,
 REGULATIONS        invitees and others over whom the Tenant can reasonably
                    be expected to exercise control to observe and perform,  the
                    Rules and Regulations  contained in Schedule "E" hereto, and
                    such further and other  reasonable rules and regulations and
                    amendments and additions therein as may hereafter be made by
                    the Landlord  and notified in writing to the Tenant,  except
                    that no change or addition may be made that is  inconsistent
                    with this Lease  unless as may be required  by  governmental
                    regulation  or  unless  the  Tenant  consents  thereto.  The
                    imposition of such Rules and Regulations shall not create or
                    imply any  obligation  of the  Landlord  to enforce  them or
                    create   any   liability   of   the   Landlord   for   their
                    non-enforcement or otherwise.

                    6A. LANDLORD REPRESENTATION OF COMPLIANCE

                    Landlord  represents to Tenant that, to the actual knowledge
                    of  Scott  Trobbe  and Jim  Mair  (and  without  any duty of
                    investigation  or inquiry),  the Leased Premises comply with
                    all applicable building codes and other laws and regulations
                    in effect at the time the applicable improvements comprising
                    the  Leased  Premises  were  constructed.  Landlord  further
                    represents to Tenant that, to the actual  knowledge of Scott
                    Trobbe and Jim Mair (and  without any duty of  investigation
                    or inquiry),  Landlord  has received no written  notice from
                    any  governmental  agency  that the Leased  Premises  are in
                    violation of any applicable  building codes or other laws in
                    effect as of the date of this Lease.

                                      6
<PAGE>

                          7. ASSIGNMENT AND SUB-LETTING

NO ASSIGNMENT       (a) The Tenant covenants that it will not assign this Lease
AND SUB-LETTING     or sublet  all or any  part of the  Leased  Premises    or
                    mortgage  or encumber  this Lease or the Leased  Premises or
                    any part  thereof,  or suffer or permit the occupation of
                    all or any part  thereof  by others  (each of
                    which is a "Transfer")  without the prior written consent of
                    the Landlord,  which  consent the Landlord  covenants not to
                    withhold  unreasonably (i) as to any assignee,  subtenant or
                    occupant  (the   "Transferee")  who  is  in  a  satisfactory
                    financial  condition,  agrees to use the Leased Premises for
                    those  purposes  permitted  hereunder,  and  (ii)  as to any
                    portion  of the Leased  Premises  which,  in the  Landlord's
                    reasonable  judgment,  is a proper and rational  division of
                    the  Leased  Premises,  subject to the  Landlord's  right of
                    termination  arising under this paragraph.  This prohibition
                    against a  Transfer  shall  not be  construed  to  include a
                    prohibition  against any  Transfer by  operation  of law. As
                    used herein  "Transfer"  shall not include any assignment by
                    Tenant to a  subsidiary  of the  Tenant so long as  Sections
                    7(d) and 7(e) hereof are  complied  with by the Tenant,  and
                    provided  said  subsidiary  has a net  worth of at least Ten
                    Million Dollars ($10,000,000.00).

ASSIGNMENT OR       (b) The Tenant shall not effect a Transfer unless:
SUB-LETTING
PROCEDURES          (i) it shall have  received or procured a bona fide  written
                    offer  to  take  an  assignment  or  sublease  which  is not
                    inconsistent  with the Lease,  and the  acceptance  of which
                    would  not  breach  any  provision  of  this  Lease  if this
                    paragraph  is  complied   with  and  which  the  Tenant  has
                    determined  to  accept  subject  to  this  paragraph   being
                    complied with, and

                           (ii) it shall have first  requested  and obtained the
                    consent in  writing  of the  Landlord  thereto  pursuant  to
                    Section 7(a).

                    Any request for consent shall be in writing and  accompanied
                    by a copy of the offer  certified  by the  Tenant to be true
                    and  complete,  and the Tenant shall furnish to the Landlord

                                      6
<PAGE>

                    all  information  available  to the  Tenant  and  reasonably
                    requested  by  the   Landlord  as  to  the   responsibility,
                    financial standing and business of the proposed  Transferee.
                    Notwithstanding  the provisions of sub-paragraph (a), within
                    twenty (20) days after the  receipt by the  Landlord of such
                    request  for  consent  and  of  all  information  which  the
                    Landlord shall have requested hereunder,  the Landlord shall
                    have the right upon written notice of termination  submitted
                    to the  Tenant,  if the  request is to assign  this Lease or
                    sublet  the whole of the  Leased  Premises,  to  cancel  and
                    terminate this Lease,  or if the request is to sublet a part
                    of the Leased  Premises  only, to cancel and terminate  this
                    Lease  with  respect  to such  part,  in  each  case as of a
                    termination   date  to  be   stipulated  in  the  notice  of
                    termination  which shall be not less than sixty (60) days or
                    more than  ninety  (90) days  following  the  giving of such
                    notice.  In such event the Tenant shall  surrender the whole
                    or part,  as the  case may be,  of the  Leased  Premises  in
                    accordance  with such notice of  termination  and Basic Rent
                    and  Additional  Rent shall be  apportioned  and paid to the
                    date of surrender and, if a part only of the Leased Premises
                    is  surrendered,  Basic Rent and Additional Rent shall after
                    the date of surrender abate proportionately. If such consent
                    shall be given the Tenant  shall  effect the  Transfer  only
                    upon  the  terms  set  out in  the  offer  submitted  to the
                    Landlord as aforesaid and not  otherwise.  Any consent shall
                    be given without  prejudice to the  Landlord's  rights under
                    the Lease and shall be limited to the particular Transfer in
                    respect  of which it was given and shall not be deemed to be
                    an  authorization  for or  consent  to any  further or other
                    Transfer.

EXCESS  TRANSFER    (c) In the  event the   Landlord  consents to any  Transfer,
RENT                the Tenant shall p ay to the  Landlord, as and when  amounts
                    on account are due or paid by the  Transferee to the Tenant,
                    50 of  all  excess  Transfer rents (hereinafter  called  the
                    "Excess  Transfer  Rent"),  if  any,  as  Rent.  The  Excess
                    Transfer  Rent  shall be  determined  in accordance with the
                    following:

                    It  shall  be a  condition  to  Landlord's  consent  to  any
                    subleasing,  assignment or other  transfer of part or all of
                    Tenant's interest in the Premises  (hereinafter  referred to
                    as  a  "Transfer")  that  upon  Landlord's  consent  to  any
                    Transfer, Tenant shall pay and continue to pay as Additional
                    Rent over the term of the sublease or assignment to Landlord
                    fifty  percent  (505%)  of all  consideration  of  any  kind
                    whatsoever  (including,  but  not by way  of  limitation,  a
                    premium  rental for a sublease  or lump sum  payment  for an
                    assignment,  and/or the value of any stock warrants or stock
                    options  given  as   consideration   for  an  assignment  or
                    subletting,  and/or  any  consideration  or  money  paid  in
                    consideration   of  or  for   any   leasehold   improvements
                    constructed  or installed by or for Tenant at Tenant's cost,
                    or any portion of such leasehold improvements constructed by
                    or for Tenant,  and/or consideration or other money paid (in
                    excess  of the  fair  market  value  thereof)  for  Tenant's
                    fixtures, trade fixtures, equipment and/or personal property
                    used in  connection  with the  Premises)  in  excess  of the
                    rental  and other  charges  due  Landlord  under  this Lease
                    (prorated in the event of a sublease of less than the entire
                    Premises),  paid to or on account of Tenant,  after Tenant's
                    deduction therefrom of all reasonable brokerage  commissions
                    and reasonable  attorney's fees to effect such assignment or
                    subletting.

                    The Tenant agrees to promptly  furnish such information with
                    regard  to the  Excess  Transfer  Rent as the  Landlord  may
                    reasonably request from time to time.

ASSUMPTION OF       (d) No  Transfer  shall be effective  unless the  Transferee
OBLIGATIONS         shall   execute   an  agreement  on the   Landlord's   form,
                    assuming  all the obligations  of the Tenant  hereunder, and
                    shall  have  paid  to the  Landlord  its  reasonable fee for
                    processing the Transfer.

TENANT'S            (e) The Tenant agrees that any consent to a  Transfer  shall
CONTINUING          not thereby release the Tenant of its obligations hereunder.
OBLIGATIONS

CHANGE OF CONTROL   (f) If the Tenant or occupant of the Leased Premises at  any
                    time is a corporation, it is  acknowledged  and agreed  that
                    the  transfer  of the  majority  of the  issued apital stock
                    of   the   corporation   or   the   transfer   or   issuance
                    of any  capital  stock  of  the  corporation  sufficient  to
                    transfer  effective  voting  control of the  corporation  to
                    others than the shareholder or shareholders having effective
                    voting control of the corporation  immediately prior to such
                    transfer or  issuance,  shall be deemed for all  purposes of
                    this  paragraph  7 to  be a  Transfer  and,  accordingly,  a
                    violation of this paragraph 7 respecting  assignment of this
                    Lease  unless the prior  written  consent of the Landlord is
                    first obtained,  and the Landlord shall have all of the same
                    rights in respect  thereof as though  any such  transfer  or
                    issuing  of shares or  proposed  transferring  or issuing of
                    shares were a Transfer.  The  Landlord  shall have access at
                    all times to the corporate  books and records of the Tenant,
                    and the Tenant shall make the same available to the Landlord
                    or its  representatives  upon request,  for  inspection  and
                    copying  at all times in order to  ascertain  whether or not
                    there has at any time  during  the Term of this Lease been a
                    transfer or issuing of shares  sufficient  to  constitute  a
                    change in the effective  voting control of the Tenant.  This
                    subparagraph  7 (f) shall not apply to the Tenant if and for
                    so long as the  Tenant is a  corporation  whose  shares  are
                    listed and traded on any recognized stock exchange in Canada
                    or the United  States,  and shall not apply to a corporation
                    that  controls  the Tenant if such  controlling  corporation
                    itself is a  corporation  with a net worth of at least Fifty
                    Million  Dollars  ($50,000,000.00).  Tenant  agrees that any

                                      7
<PAGE>

                    consent of  transfer  or change of control  does not release
                    Tenant from its obligations hereunder.

                    (g) Notwithstanding  anything in this Lease to the contrary,
                    the  Tenant  shall  not be  permitted  without  the  written
                    consent of the Landlord pursuant to this Section 7 to effect
                    a  Transfer  to  tenants  currently  occupying  space in the
                    Property.  Landlord  consents  to a sublease  to the current
                    tenant,  Nick Talesfore,  dba Talesfore Design,  pursuant to
                    Section  7 (a),  provided  that  Tenant  complies  with  the
                    remaining  provisions of this Section 7 with respect to such
                    transfer.

                               8. REPAIR & DAMAGE

LANDLORD'S          (a) The  Landlord  covenants  with the  Tenant to  keep in a
REPAIRS  TO         good and reasonable  state of repair  and  decoration:
BUILDING &
PROPERTY                (i) those portions  of  the  Property  consisting of the
                        entrance,   lobbies,  stairways,  corridors,  landscaped
                        areas,  parking areas, and other facilities from time to
                        time provided for use in common  by the Tenant and other
                        tenants of the Building  or  Property, and  the exterior
                        portions  (including  foundations  and   roofs)  of  all
                        buildings  and structures from time to time forming part
                        of the Property and affecting its general appearance;
                        and

                        (ii) the  Building  (other than the  Leased Premises and
                        premises of  other  tenants)  including the systems  for
                        interior  climate  control, the elevators and escalators
                        (if any),  entrance lobbies,  stairways,  corridors  and
                        washrooms from time to time  provided  for use in common
                        by   the   Tenant  and  other   tenants  of  Building or
                        Property and the systems  provided for use in  common by
                        the   Tenant  and   other  tenants  of  the  Building or
                        Property and the systems provided for bringing utilities
                        to the Leased Premises.

LANDLORD'S          (b) The  Landlord  covenants  with the Tenant to  repair, so
REPAIRS TO THE      far  as   reasonably   feasible,  and   as  expeditiously as
LEASED  PREMISES    reasonably feasible, defects in  standard  demising walls or
                    in structural elements,  exterior   walls of the   Building,
                    suspended     ceiling,      electrical    and     mechanical
                    installations   standard   to the Building  installed by the
                    Landlord in the Leased  Premises  (if and to the extent that
                    such  defects are  sufficient  to impair the Tenant's use of
                    the Leased Premises while using them in a manner  consistent
                    with this Lease) and "Insured  Damage" (as herein  defined).
                    The  Landlord  shall in no event be required to make repairs
                    to  Leasehold  Improvements  made by the  Tenant,  or by the
                    Landlord  on behalf of the  Tenant or  another  tenant or to
                    make repairs to wear and tear within the Leased Premises.

Tenant's Repairs    (c)  The Tenant  covenants  with  the  Landlord  to  repair,
                    maintain  and  keep at the Tenant's own cost, except insofar
                    as the obligation to repair rests upon the Landlord pursuant
                    to this paragraph, the Leased Premises,  including Leasehold
                    Improvements in good and substantial repair, reasonable wear
                    and tear excepted,  provided that  this obligation shall not
                    extend  to  structural  elements or to  exterior glass or to
                    repairs  which the  Landlord would be required to make under
                    this  paragraph but for  the  exclusion therefrom of defects
                    not   sufficient to  impair the  Tenant's use of  the Leased
                    Premises while using them in a  manner  consistent with this
                    Lease. The  Landlord  may enter the Leased  Premises  at all
                    reasonable  times and  view the  condition  thereof  and the
                    Tenant  covenants with  the Landlord to repair, maintain and
                    keep  the  Leased Premises  in  good  and substantial repair
                    according  to  notice  in  writing, reasonable wear and tear
                    excepted. If  the  Tenant shall  fail to repair as aforesaid
                    after  reasonable  notice  to do so, the Landlord may effect
                    the  repairs  and  the Tenant  shall pay the reasonable cost
                    thereof to the Landlord on demand. The Tenant covenants with
                    the Landlord that the Tenant  will   at the  expiration   of
                    the  Term  or sooner termination thereof peaceably surrender
                    the   Leased   Premises  and  appurtenances  in   good   and
                    substantial  repair and  condition, reasonable wear and tear
                    excepted.

Indemnification     (d) If any  part  of the  Property  becomes  out of  repair,
                    damaged or destroyed  through the  negligence  of, or misuse
                    by, the Tenant or its employees,  agents, invitees or others
                    under its  control,  the Tenant  shall pay the  Landlord  on
                    demand the expense of repairs or replacements, including the
                    Landlord's   reasonable   administration   charge   thereof,
                    necessitated by such negligence or misuse.

DAMAGE AND          (e)    It is agreed between the Landlord and the Tenant
DESTRUCTION                that:

                           (i) in the event of damage to the  Property or to any
                           part  thereof,  if in the  reasonable  opinion of the
                           Landlord the damage is such that the Leased  Premises
                           or any  substantial  part  thereof  is  rendered  not
                           reasonably capable of use and occupancy by the Tenant
                           for the  purposes of its  business  for any period of
                           time in excess of ten (10) days, then

                                  (1)   unless  the  damage  was  caused  by the
                                        fault or negligence of the Tenant or its
                                        employees,  agents,  invitees  or others
                                        under  its  control,  from  the  date of
                                        occurrence  of the  damage and until the
                                        Leased  Premises  are  again  reasonably
                                        capable   for  use  and   occupancy   as
                                        aforesaid,  the Rent payable pursuant to
                                        this Lease shall abate from time to time
                                        in  proportion  to the  part or parts of


                                        8
<PAGE>

                                        the  Leased   Premises  not   reasonably
                                        capable of such use and occupancy, and

                                  (2)   unless  this  Lease  is   terminated  as
                                        hereinafter  provided,  the  Landlord or
                                        the Tenant as the case may be (according
                                        to the  nature of the  damage  and their
                                        respective   obligations  to  repair  as
                                        provided in sub-paragraphs  (a), (b) and
                                        (c) of this paragraph) shall repair such
                                        damage  with all  reasonable  diligence,
                                        but to the  extent  that any part of the
                                        Leased   Premises   is  not   reasonably
                                        capable  of such  use and  occupancy  by
                                        reason  of damage  which  the  Tenant is
                                        obligated  to  repair   hereunder,   any
                                        abatement  of Rent to which  the  Tenant
                                        would  otherwise  be entitled  hereunder
                                        shall not extend  later than the time by
                                        which, in the reasonable  opinion of the
                                        Landlord, repairs by the Tenant ought to
                                        have  been  completed  with   reasonable
                                        diligence;

                             (ii) if the damage is such that the Leased Premises
                           are rendered  untenantable,  in whole or in part, and
                           if, in the opinion of the Landlord, the damage cannot
                           be  repaired  with  reasonable  diligence  within one
                           hundred and eighty  (180) days from the  happening of
                           the damage, then the Landlord may, within thirty (30)
                           days  after the date of the  damage,  terminate  this
                           Lease by  notice  to the  Tenant.  Upon the  Landlord
                           giving such notice, this Lease shall be terminated as
                           of the date of the  damage and the Rent and all other
                           payments  for  which the  Tenant is liable  under the
                           terms of this Lease shall be apportioned  and paid in
                           full  to the  date  of  the  damage.  If  the  Leased
                           Premises are not  repaired  within 180 days after the
                           date of damage,  the Tenant may, within 30 days after
                           such 180th day, terminate this Lease by notice to the
                           Landlord.  Upon the Tenant  giving such notice,  this
                           Lease  shall be  terminated  as of the date of damage
                           and the Rent and all  other  payments  for  which the
                           Tenant is liable  under the terms of this Lease shall
                           be  apportioned  and  paid  in  full  to the  date of
                           damage;

                           (iii) the Landlord shall not be required to use plans
                           and  specifications  and working drawings used in the
                           original  construction of the Building and nothing in
                           this  Section  requires  the  Landlord to rebuild the
                           Building  in the  condition  and state  that  existed
                           before the damage, but the Building, as rebuilt, will
                           have  reasonably  similar  facilities and services to
                           those in the Building prior to the damage; and

                           (iv) if  premises  whether  of the  Tenant  or  other
                           tenants of the Property  comprising  in the aggregate
                           half or more of the total  number  of square  feet of
                           rentable  office area in the Property or half or more
                           of the total number of square feet of rentable office
                           area in the Building (as  determined by the Landlord)
                           or portions of the Property  which  affect  access or
                           services essential thereto, are substantially damaged
                           or  destroyed  by any cause and if in the  reasonable
                           opinion of the Landlord the damage cannot  reasonably
                           be repaired  within one hundred and eighty (180) days
                           after the occurrence thereof,  then the Landlord may,
                           by written  notice to the Tenant given within  thirty
                           (30) days  after  the  occurrence  of such  damage or
                           destruction,  terminate  this  Lease,  in which event
                           neither the Landlord nor the Tenant shall be bound to
                           repair as provided in sub-paragraphs  (a) (b) and (c)
                           of this  paragraph,  and  the  Tenant  shall  instead
                           deliver up possession  of the Leased  Premises to the
                           Landlord with reasonable  expedition but in any event
                           within sixty (60) days after  delivery of such notice
                           of  termination,  and Rent shall be  apportioned  and
                           paid  to  the  date  upon  which   possession  is  so
                           delivered up (but  subject to any  abatement to which
                           the Tenant may be entitled  under  sub-paragraph  (e)
                           (i) of this paragraph).

                           9. INSURANCE AND LIABILITY

LANDLORD'S          (a) The  Landlord  shall take out and keep in force  during
INSURANCE           the Term insurance  with  respect to the  Property    except
                    for the  "Leasehold Improvements" (as hereinafter defined)
                    in the Leased Premises.  The insurance to be
                    maintained by the Landlord shall be in respect of perils and
                    in amounts  and on terms and  conditions  which from time to
                    time are  insurable  at a  reasonable  premium and which are
                    normally insured by reasonable  prudent owners of properties
                    similar to the Property, all as from time to time determined
                    at reasonable  intervals by insurance  advisors  selected by
                    the Landlord, and whose opinion shall be conclusive.  Unless
                    and until the insurance  advisors  shall state that any such
                    perils  are not  customarily  insured  against  by owners of
                    properties similar to the Property, the perils to be insured
                    against by the Landlord shall include,  without  limitation,
                    public liability,  boilers and machinery,  fire and extended
                    perils and may include at the option of the Landlord  losses
                    suffered by the Landlord in its capacity as Landlord through
                    business interruption. The insurance to be maintained by the
                    Landlord shall contain a waiver by the insurer of any rights
                    of  subrogation  or  indemnity or any other claim over which
                    the insurer might  otherwise be entitled  against the Tenant
                    or the agents or employees of the Tenant.

TENANT'S            (b) The Tenant  shall take out and keep in force during the
INSURANCE           Term:

                    (i)    comprehensive general public  liability  insurance
                           all on an  occurrence basis  with  respect  to the
                           business carried on in or from the Leased Premises
                           and the Tenant's use and occupancy of the

                                      9
<PAGE>

                            Leased Premises and of any other part of the
                            Property, with coverage for any one occurrence or
                            claim of not less than Five Million Dollars
                            ($5,000,000) or such other amount as the Landlord
                            may reasonably require upon not less than one (1)
                            month notice at any time during the Term, which
                            insurance shall include the Landlord as a named
                            insured and shall contain a cross liability
                            clause protecting the Landlord in respect of claims
                            by the Tenant as if the Landlord were separately
                            insured; and,

                           (ii)   insurance  against  such  other  perils and in
                                  such  amounts as the Landlord may from time to
                                  time  reasonably  require  upon not less  than
                                  ninety  (90)  days'   written   notice,   such
                                  requirement  to be made on the basis  that the
                                  required  insurance  is  customary at the time
                                  for similarly  situated  tenants of properties
                                  similar to the Property.

                    All insurance  required to be maintained by the Tenant shall
                    be on terms and with insurers  satisfactory to the Landlord.
                    Each policy  shall  contain:  (A) a waiver by the insurer of
                    any rights of  subrogation  or  indemnity or any other claim
                    over to  which  the  insurer  might  otherwise  be  entitled
                    against  the  Landlord  or the  agents or  employees  of the
                    Landlord,   (B)  a  cross   liability   clause  and  (C)  an
                    undertaking  by the insurer that no material  change adverse
                    to the  Landlord or the Tenant will be made,  and the policy
                    will not lapse or be  canceled,  except  after not less than
                    thirty  (30) days'  written  notice to the  Landlord  of the
                    intended  change,  lapse or  cancellation.  The Tenant shall
                    furnish to the  Landlord,  if and whenever  requested by it,
                    certificates or other  evidences  acceptable to the Landlord
                    as to the insurance from time to time effected by the Tenant
                    and its  renewal or  continuation  in force,  together  with
                    evidence  as  to  the  method  of   determination   of  full
                    replacement  cost of the  Tenant's  Leasehold  Improvements,
                    trade fixtures, furniture and equipment, and if the Landlord
                    reasonably concludes that the full replacement cost has been
                    underestimated,  the Tenant shall forthwith  arrange for any
                    consequent increase in coverage required under sub-paragraph
                    (b). If the Tenant shall fail to take out, renew and keep in
                    force such insurance,  or if the evidences  submitted to the
                    Landlord  are  unacceptable  to the  Landlord  (or  no  such
                    evidences  are  submitted  within a reasonable  period after
                    request  therefor by the  Landlord),  then the  Landlord may
                    give to the Tenant written notice requiring  compliance with
                    this  sub-paragraph and specifying the respects in which the
                    Tenant is not then in compliance with this sub-paragraph. If
                    the Tenant does not within  forty-eight  (48) hours  provide
                    appropriate  evidence of compliance with this sub-paragraph,
                    the Landlord may (but shall not be obligated to) obtain some
                    or all of the additional  coverage or other  insurance which
                    the Tenant shall have failed to obtain, without prejudice to
                    any  other  rights  of the  Landlord  under  this  Lease  or
                    otherwise,  and the Tenant  shall pay all premiums and other
                    reasonable expenses incurred by the Landlord to the Landlord
                    on demand.

LIMITATION  OF      (c) The  Tenant   agrees  that  the  Landlord  shall  not be
LANDLORD'S          liable for any  bodily injury or death of, or loss or damage
LIABILITY           to any  property belonging  to, the Tenant or its employees,
                    invitees  or licensees or any other  person in, on  or about
                    the  Property  unless  resulting  from  the  actual  willful
                    misconduct or gross negligence  of  the  Landlord or its own
                    employees;  provided  however, under no circumstances  shall
                    Landlord  be liable for any claims of lost profits,  loss of
                    income or lost business. In no event shall the  Landlord  be
                    liable  for  any   damage,  including  indirect,  special or
                    consequential damages,  which is  caused  by  steam,  water,
                    rain  or snow or other thing which may leak  into,  issue or
                    flow  from  any  part of the  Property  or from the pipes or
                    plumbing   works,  including  the sprinkler system  (if any)
                    therein or from any other  place or for any damage caused by
                    or  attributable  to  the  condition  or  arrangement of any
                    electric or  other  wiring or of  sprinkler   heads (if any)
                    or for any such damage caused by anything done or omitted by
                    any other  tenant,  except to the extent the same arise from
                    the actual  willful  misconduct  or gross  negligence of the
                    Landlord or its employees. In the event Tenant has any claim
                    against Landlord under this Lease,  such claim shall only be
                    against  Landlord's  interest in the Property and Landlord's
                    members shall have no liability hereunder.

INDEMNITY OF        (d) Except with respect to claims or  liabilities in respect
LANDLORD            of any  damage   which is Insured  Damage to the   extent of
                    the cost of repairing such Insured Damage, the Tenant agrees
                    to indemnify and save harmless the Landlord in respect of:

                           (i)    all  claims   for  bodily   injury  or  death,
                                  property   damage  or  other  loss  or  damage
                                  arising  from the  conduct  of any work or any
                                  act or omission of the Tenant or any assignee,
                                  sub-tenant,   agent,   employee,   contractor,
                                  invitee  or  licensee  of the  Tenant,  and in
                                  respect of all costs, expenses and liabilities
                                  incurred by the Landlord in connection with or
                                  arising out of all such claims,  including the
                                  expenses   of   any   action   or   proceeding
                                  pertaining thereto; and

                           (ii)   any   loss,    cost,    (including,    without
                                  limitation,  lawyers' fees and disbursements),
                                  expense  or damage  suffered  by the  Landlord
                                  arising  from any  breach by the Tenant of any
                                  of its  covenants and  obligations  under this
                                  Lease.

                                       10
<PAGE>

DEFINITION OF
"INSURED DAMAGE"    e) For   purposes    of   this   Lease,   "Insured   Damage"
                    means that part of any damage  occurring  to the Property of
                    which the  entire  cost of  repair  (or the  entire  cost of
                    repair other than deductible amount properly  collectable by
                    the  Landlord  as part of the  Additional  Rent) is actually
                    recovered  by the  Landlord  under a policy or  policies  of
                    insurance  from  time  to  time  effected  by  the  Landlord
                    pursuant to sub-paragraph  (a) Where an applicable policy of
                    insurance contains an exclusion for damages recoverable from
                    a third  party,  claims  as to which the  exclusion  applies
                    shall be considered to constitute Insured Damage only if the
                    Landlord successfully recovers from the third party.

                       10. EVENTS OF DEFAULT AND REMEDIES

EVENTS OF DEFAULT   (a)  In   the  event of   the  happening  of  any one of the
AND REMEDIES        following events:



                           (i)    the  Tenant   shall  have  failed  to  pay  an
                                  installment   of  Rent  or  any  other  amount
                                  payable  hereunder  when due, and such failure
                                  shall be continuing  for a period of more than
                                  ten (10) days after the date such  installment
                                  or amount was due;

                           (ii)   there  shall  be a  default  of  or  with  any
                                  condition,   covenant,   agreement   or  other
                                  obligation  on the  part of the  Tenant  to be
                                  kept,  observed or performed  hereunder (other
                                  than the  obligation  to pay Rent or any other
                                  amount of  money)  and such  default  shall be
                                  continuing  for a period of more than  fifteen
                                  (15) days after written notice by the Landlord
                                  to  the  Tenant  specifying  the  default  and
                                  requiring that it be cured;

                           (iii)  if any policy of  insurance  upon the Property
                                  or any part thereof from time to time effected
                                  by the Landlord  shall be canceled or about to
                                  be  canceled  by the  insurer by reason of the
                                  use or  occupation  of the Leased  Premises by
                                  the  Tenant  or any  assignee,  sub-tenant  or
                                  licensee of the Tenant or anyone  permitted by
                                  the Tenant to be upon the Leased  Premises and
                                  the Tenant after  receipt of notice in writing
                                  from the  Landlord  shall have  failed to take
                                  such immediate steps in respect of such use or
                                  occupation  as shall  enable the  Landlord  to
                                  reinstate or avoid  cancellation  (as the case
                                  may be) of such policy of insurance;

                           (iv)   the Leased Premises  shall,  without the prior
                                  written  consent of the  Landlord,  be used by
                                  any  other   persons  than  the  Tenant  or  a
                                  permitted  Transferee or for any purpose other
                                  than  that  for  which  they  were  leased  or
                                  occupied or by any persons whose  occupancy is
                                  prohibited by this Lease;

                           (v)    the  Leased   Premises  shall  be  vacated  or
                                  abandoned,  or remain  unoccupied  without the
                                  prior  written  consent  of the  Landlord  for
                                  fifteen  (15)  consecutive  days or more while
                                  capable of being occupied;

                           (vi)   the  balance  of the Term of this Lease or any
                                  of  the  goods  and  chattels  of  the  Tenant
                                  located in the Leased  Premises,  shall at any
                                  time be seized in execution or attachment; or

                           (vii)  the Tenant shall make any  assignment  for the
                                  benefit of  creditors  or become  bankrupt  or
                                  insolvent  or take the  benefit of any statute
                                  for  bankrupt  or  insolvent  debtors or, if a
                                  corporation,  shall  take any  steps or suffer
                                  any  order  to be made for its  winding-up  or
                                  other termination of its corporate  existence;
                                  or a trustee,  receiver or receiver-manager or
                                  agent or other like person  shall be appointed
                                  of any of the assets of the Tenant;

                    then the  Landlord  shall  have  the  following  rights  and
                    remedies all of which are cumulative and not alternative and
                    not to the exclusion of any other or  additional  rights and
                    remedies  in law or  equity  available  to the  Landlord  by
                    statute or otherwise:

                    (A)    to remedy or  attempt  to remedy  any  default of the
                           Tenant,  and in so doing to make any  payments due or
                           alleged to be due by the Tenant to third  parties and
                           to enter upon the Leased  Premises  to do any work or
                           other   things   therein,   and  in  such  event  all
                           reasonable  expenses of the  Landlord in remedying or
                           attempting to remedy such default shall be payable by
                           the Tenant to the Landlord on demand;

                    (B)    with respect to unpaid  overdue  Rent, to the payment
                           by the Tenant of the Rent and of interest (which said
                           interest shall be deemed  included herein in the term
                           "Rent")  thereon  at a rate  equal to the  lesser  of
                           three  percent (3%) above the prime  commercial  loan
                           rate charged to borrowers  having the highest  credit
                           rating from time to time by the Landlord's  principal
                           bank from the date upon  which the same was due until
                           actual payment thereof and the maximum amount allowed
                           under  the  laws of the  jurisdiction  in  which  the
                           Building is located;

                                     11
<PAGE>

                    (C)    to terminate this Lease forthwith by leaving upon the
                           Leased Premises or by affixing to an entrance door to
                           the Leased Premises notice  terminating the Lease and
                           to  immediately   thereafter  cease  to  furnish  any
                           services hereunder and enter into and upon the Leased
                           Premises or any part thereof in the name of the whole
                           and the same to have again,  re-possess  and enjoy as
                           of  its  former   estate,   anything  in  this  Lease
                           contained to the contrary notwithstanding. The Tenant
                           hereby  expressly  waives any and all notices  (other
                           than  those  notices  specifically  outlined  in this
                           Lease)  to  cure or  vacate  or to  quit  the  Leased
                           Premises provided by current or future law;

                    (D)    to enter the Leased  Premises  as agent of the Tenant
                           and as such agent to re-let  them and to receive  the
                           rent  therefor and as the agent of the Tenant to take
                           possession of any furniture or other property thereon
                           and upon giving ten (10) days' written  notice to the
                           Tenant to store the same at the  expense  and risk of
                           the  Tenant or to sell or  otherwise  dispose  of the
                           same at public or private sale without further notice
                           and to  apply  the  proceeds  thereof  and  any  rent
                           derived  from  re-letting  the Leased  Premises  upon
                           account  of the Rent due and to become due under this
                           Lease and the Tenant  shall be liable to the Landlord
                           for the deficiency if any; and

                    (E)    in the event of any  breach  by the  Tenant of any of
                           the  covenants  or  provisions  of  this  Lease,  the
                           Landlord  shall have the right of injunction  and the
                           right  to  invoke  any  remedy  allowed  at law or in
                           equity,  and mention in this Lease of any  particular
                           remedy shall not preclude the Landlord from any other
                           remedy at law or in equity.  Tenant hereby  expressly
                           waives  any and all  rights of  redemption  or to any
                           notice to quit  granted  by or under any  present  or
                           future   laws  in  the  event  of  this  Lease  being
                           terminated  and/or Landlord  obtaining  possession of
                           the Leased  Premises  pursuant to the  provisions  of
                           this section.

PAYMENT  OF RENT,   (b)    Upon the  giving  by  the   Landlord  of  a notice in
ETC.ON                     writing terminating  this Lease  under  paragraph  10
TERMINATION                (a)(C),  above,  this  Lease  and   the  Term   shall
                           terminate, the  Tenant shall  remain  liable  for and
                           shall pay  on  demand  by   the Landlord (i) the full
                           amount of all Rent which would have accrued until the
                           date on which this Lease would have expired had such
                           such  termination
                           not  occurred,  and any and all damages and  expenses
                           incurred   by  the   Landlord  in   re-entering   and
                           repossessing  the Leased  Premises in making good any
                           default of the Tenant,  in making any  alterations to
                           the Leased  Premises,  and any and all expenses which
                           the Landlord  may incur  during the  occupancy of any
                           new  tenant,  less  (ii)  the  net  proceeds  of  any
                           re-letting of the Leased  Premises which has occurred
                           at the time of the  aforesaid  demand by the Landlord
                           to  the  Tenant.  The  Tenant  agrees  to  pay to the
                           Landlord the  difference  between  items (i) and (ii)
                           above for the period  through and  including the date
                           on which this Lease would have  expired if it had not
                           been  terminated.  The Landlord  shall be entitled to
                           any excess with no credit to the Tenant. The Landlord
                           may,  in its  sole  discretion,  make  demand  on the
                           Tenant as aforesaid on any one or more occasions, and
                           any  suit   brought  by  the   Landlord   to  enforce
                           collection of such difference for any one month shall
                           not  prejudice  the  Landlord's  right to enforce the
                           collection of any difference for any subsequent month
                           or months. In addition to the foregoing,  and without
                           regard to  whether  this  Lease has been  terminated,
                           Tenant shall pay to the  Landlord all costs  incurred
                           by  the  Landlord,  including  reasonable  attorneys'
                           fees,   with   respect  to  any   lawsuit  or  action
                           instituted  or taken by the  Landlord  to enforce the
                           provisions  of this  Lease.  The  Tenant's  liability
                           shall survive the institution of summary  proceedings
                           and the issuance of any warrant hereunder.

                           If the Landlord  determines that it is  impracticable
                           or  extremely  difficult  to fix the actual  damages,
                           then,  as an  alternative  to the remedy set forth in
                           the preceding  paragraph,  the Tenant will pay to the
                           Landlord  on  demand,  liquidated  and  agreed  final
                           damages  for  the  Tenant's  default   calculated  in
                           accordance  with this paragraph.  Liquidated  damages
                           hereunder  shall be an  amount  equal to the  present
                           value at a rate of six percent  (6%) per annum of the
                           excess,  if any, of (i) all Rent  payable  under this
                           Lease from the date of such  demand for what would be
                           the then  unexpired Term of this Lease in the absence
                           of such  termination  over (ii) the then fair  market
                           rental value of the Leased Premises (as determined by
                           the  Landlord).  If any law shall  limit  the  amount
                           agreed upon,  the  Landlord  shall be entitled to the
                           maximum  amount  allowable  under  such law.  Nothing
                           herein shall be construed to affect or prejudice  the
                           Landlord's right to prove, and claim in full,  unpaid
                           rent accrued prior to termination of this Lease. Upon
                           termination  of this  Lease and the Term,  the Tenant
                           shall immediately deliver up possession of the Leased
                           Premises  to  the  Landlord,  and  the  Landlord  may
                           forthwith re-enter and take possession of them.

                    (c)    The Tenant  shall pay to the  Landlord  on demand all
                           costs and expenses, including lawyers' fees, incurred
                           by the Landlord in enforcing  any of the  obligations
                           of the Tenant under this Lease.


                                       12

<PAGE>



                              ADDITIONAL PROVISIONS

COMMON AREAS        11.    The Tenant  acknowledges and  agrees that  the common
                    areas of  the  Property  shall  at  all  times  be   subject
                    to the  exclusive  management  and control of the  Landlord.
                    Without limiting the generality of the foregoing, the Tenant
                    specifically  acknowledges  and agrees that the Landlord may
                    temporarily  close or restrict the use of all or any part of
                    the common  areas of the  Property in an  emergency,  or for
                    security or crowd control  purposes,  to facilitate  tenants
                    moving  in or out of the  building,  or for the  purpose  of
                    making  repairs,  alterations or  renovations.  The Landlord
                    agrees not to  permanently  alter such  common  areas in any
                    manner  which  would  deny  reasonable  access to the Leased
                    Premises.  In the  event of any such  temporary  closure  or
                    restriction  of use or if  changes  are made to such  common
                    areas by the Landlord,  the Landlord shall not be subject to
                    any  liability  nor shall  the  Tenant  be  entitled  to any
                    compensation or any diminution or abatement of Rent and such
                    closures,  restriction and changes shall not be deemed to be
                    a  constructive  or  actual  eviction  or a  breach  of  the
                    Landlord's covenant for quiet enjoyment.


                    12.      [Intentionally omitted]

SUBORDINATION  AND  13. This Lease and all rights of the Tenant hereunder are
ATTORNMENT          subject and subordinate to all underlying leases and
                    charges, or mortgages now or hereafter existing (including
                    charges, and mortgages by way of debenture, note, bond,
                    deeds of trust and mortgage and all instruments supplemental
                    thereto) which may now or hereafter affect the Property or
                    any part thereof and to all renewals, modifications,
                    consolidations, replacements and extensions thereof provided
                    the lessor, chargee, mortgagee or trustee agrees to accept
                    this Lease if not in default; and in recognition of the
                    foregoing the Tenant agrees that it will, whenever
                    requested, attorn to such lessor, chargee, mortgagee as a
                    tenant upon all the terms of this Lease. The Tenant agrees
                    to execute promptly whenever requested by the Landlord or by
                    the holder of any such lease, charge, or mortgage an
                    instrument of subordination or attornment as may be required
                    of it.

CERTIFICATES        14.  The  Tenant  agrees  that it  shall  promptly  whenever
                    requested  by the  Landlord  from time to time  execute  and
                    deliver to the Landlord, and if required by the Landlord, to
                    any lessor, chargee, or mortgagee (including any trustee) or
                    other person  designated by the Landlord,  an acknowledgment
                    in writing as to the then status of this Lease, including as
                    to whether it is in full force and  effect,  is  modified or
                    unmodified,  confirming  the Rent payable  hereunder and the
                    state of the accounts between  Landlord and the Tenant,  the
                    existence  or  non-existence  of  defaults,  and  any  other
                    matters  pertaining  to this Lease as to which the  Landlord
                    shall request an acknowledgment.

INSPECTION OF AND   15. The Landlord shall be permitted at any time and from
ACCESS TO THE       time to time to enter and to have its authorized agents,
LEASED  PREMISES    employees and contractors enter the Leased Premises for the
                    purposes of inspection, window cleaning, maintenance,
                    providing janitor service, making repairs, alterations or
                    improvements to the Leased Premises or the Property, or to
                    have access to utilities and services (including all ducts
                    and access panels (if any), which the Tenant agrees not to
                    obstruct) and the Tenant shall provide free and unhampered
                    access for the purpose, and shall not be entitled to
                    compensation or any diminution or abatement of Rent for any
                    inconvenience, nuisance or discomfort caused thereby. The
                    Landlord and its authorized agents and employees shall be
                    permitted entry to the Leased Premises for the purpose of
                    exhibiting them to prospective tenants. The Landlord in
                    exercising its rights under this paragraph shall do so to
                    the extent reasonably necessary so as to minimize
                    interference with the Tenant's use and enjoyment of the
                    Leased Premises provided that in an emergency the Landlord
                    or persons authorized by it may enter the Leased Premises
                    without regard to minimizing interference.

DELAY               16. Except as herein otherwise  expressly  provided,  if and
                    whenever  and to the extent that either the  Landlord or the
                    Tenant  shall be  prevented,  delayed or  restricted  in the
                    fulfillment  of any  obligation  hereunder in respect of the
                    supply or provision of any service or utility, the making of
                    any repair,  the doing of any work or any other thing (other
                    than the payment of moneys required to be paid by the Tenant
                    to the Landlord hereunder) by reason of:

                           (a)    strikes or work stoppages;
                           (b)    being unable to obtain any material, service,
                                  utility or labor required to fulfill such
                                  obligation;
                           (c)    any  statute,   law  or   regulation   of,  or
                                  inability  to obtain any  permission  from any
                                  government     authority     having     lawful
                                  jurisdiction    preventing,     delaying    or
                                  restricting such fulfillment; -or-
                           (d)    other unavoidable occurrence,

                                       13
<PAGE>

                    the  time  for  fulfillment  of  such  obligation  shall  be
                    extended  during  the  period  in  which  such  circumstance
                    operates  to  prevent,  delay or  restrict  the  fulfillment
                    thereof,  and the  other  party to this  Lease  shall not be
                    entitled to compensation for any inconvenience,  nuisance or
                    discomfort  thereby  occasioned;  provided that nevertheless
                    the Landlord will use its best efforts to maintain  services
                    essential to the use and  enjoyment  of the Leased  Premises
                    and  provided   further  that  if  the  Landlord   shall  be
                    prevented,  delayed or restricted in the  fulfillment of any
                    such   obligation   hereunder   by  reason  of  any  of  the
                    circumstances set out in sub-paragraph (c) of this paragraph
                    15  and  to  fulfill  such  obligation  could  not,  in  the
                    reasonable  opinion of the  Landlord,  be completed  without
                    substantial additions to or renovations of the Property, the
                    Landlord  may on sixty  (60)  days'  written  notice  to the
                    Tenant terminate this Lease.

WAIVER              17. If either the  Landlord  or the Tenant  shall  overlook,
                    excuse,    condone   or   suffer   any   default,    breach,
                    non-observance, improper compliance or non-compliance by the
                    other of any obligation hereunder, this shall not operate as
                    a waiver of such  obligation in respect of any continuing or
                    subsequent default,  breach, or non-observance,  and no such
                    waiver  shall be  implied  but shall  only be  effective  if
                    expressed in writing.

SALE, DEMOLITION    18.  (a)      The  term  "Landlord"  as used in this  Lease,
AND RENOVATION           means  only  the  owner  for  the  time  being  of  the
                         Property,  so that in the event of any sale or sales or
                         transfer or transfers of the Property, or the making of
                         any  lease or leases  thereof,  or the sale or sales or
                         the  transfer  or  transfers  or  the   assignment   or
                         assignments  of any  such  lease  or  leases,  previous
                         landlords  shall  be and  hereby  are  relieved  of all
                         covenants and  obligations  of Landlord  hereunder.  It
                         shall be deemed and construed without further agreement
                         between the parties,  or their  successors in interest,
                         or between the parties and the  transferee or acquirer,
                         at any such sale, transfer or assignment,  or lessee on
                         the  making  of any such  lease,  that the  transferee,
                         acquirer  or lessee has assumed and agreed to carry out
                         any  and  all  of  the  covenants  and  obligations  of
                         Landlord  hereunder  to  Landlord's  exoneration,   and
                         Tenant shall thereafter be bound to and shall attorn to
                         such  transferee,  acquirer or lessee,  as the case may
                         be, as Landlord under this Lease;

                           (b)    Notwithstanding  anything  contained  in  this
                                  Lease  to  the  contrary,  in  the  event  the
                                  Landlord  intends to  demolish  or to renovate
                                  substantially  all  the  Building,   then  the
                                  Landlord,  upon  giving the Tenant one hundred
                                  and eighty (180) days' written  notice,  shall
                                  have the  right to  terminate  this  Lease and
                                  this  Lease  shall  thereupon  expire  on  the
                                  expiration  of one  hundred  and eighty  (180)
                                  days  from  the  date  of the  giving  of such
                                  notice without compensation of any kind to the
                                  Tenant.

PUBLIC TAKING       19. The Landlord and Tenant shall co-operate,  each with the
                    other,  in  respect  of any  Public  Taking  of  the  Leased
                    Premises or any part  thereof so that the Tenant may receive
                    the  maximum  award  to  which  it is  entitled  in law  for
                    relocation  costs and business  interruption and so that the
                    Landlord  may  receive  the  maximum  award  for  all  other
                    compensation  arising from or relating to such Public Taking
                    (including  all  compensation  for the value of the Tenant's
                    leasehold interest subject to the Public Taking) which shall
                    be the property of the Landlord,  and the Tenant's rights to
                    such  compensation  are hereby assigned to the Landlord.  If
                    the whole or any part of the  Leased  Premises  is  Publicly
                    Taken,  as between  the  parties  hereto,  their  respective
                    rights and obligations under this Lease shall continue until
                    the  day  on  which  the  Public  Taking   authority   takes
                    possession  thereof.  If the whole or any part of the Leased
                    Premises  is Publicly  Taken,  the  Landlord  shall have the
                    option,  to be exercised by written notice to the Tenant, to
                    terminate this Lease and such termination shall be effective
                    on the day the Public Taking  authority takes  possession of
                    the whole or the  portion of the  Property  Publicly  Taken.
                    Rent and all other payments shall be adjusted as of the date
                    of such  termination  and the Tenant  shall,  on the date of
                    such Public Taking, vacate the Leased Premises and surrender
                    the same to the Landlord, with the Landlord having the right
                    to re-enter and re-possess the Leased Premises discharged of
                    this  Lease and to remove  all  persons  therefrom.  In this
                    paragraph,   the  words   "Public   Taking"   shall  include
                    expropriation  and  condemnation and shall include a sale by
                    the Landlord to an authority  with powers of  expropriation,
                    condemnation  or  taking,  in lieu  of or  under  threat  of
                    expropriation  or taking and  "Publicly  Taken" shall have a
                    corresponding meaning.

REGISTRATION OF     20. The Tenant agrees with the Landlord not to register this
LEASE               Lease in any recording  office and not to register notice of
                    this Lease in any form without the prior written  consent of
                    the  Landlord.  If such  consent is provided  such notice of
                    Lease or caveat shall be in such form as the Landlord  shall
                    have approved and upon payment of the Landlord's  reasonable
                    fee for same and all applicable  transfer or recording taxes
                    or  charges.  The  Tenant  shall  remove  and  discharge  at
                    Tenant's expense  registration of such a notice or caveat at
                    the expiry or earlier  termination  of the Term,  and in the
                    event of  Tenant's  failure to so remove or  discharge  such
                    notice or  caveat  after ten (10)  days'  written  notice by
                    Landlord  to  Tenant,  the  Landlord  may in the name and on
                    behalf of the Tenant execute a discharge of such a notice or
                    caveat  in order to  remove  and  discharge  such  notice of
                    caveat  and  for  the  purpose  thereof  the  Tenant  hereby
                    irrevocably  constitutes  and  appoints  any  officer of the
                    Landlord the true and lawful attorney of the Tenant.

LEASE ENTIRE       21. The  Tenant  acknowledges  that there are no  covenants,
AGREEMENT          representations,   warranties,   agreements   or  conditions
                    express or implied,  collateral or otherwise forming part of
                    or in any way  affecting  or  relating to this Lease save as
                    expressly  set  out in this  Lease  and  Schedules  attached
                    hereto and that this Lease and such Schedules constitute the
                    entire agreement between the Landlord and the Tenant and may
                    not be  modified  except as herein  explicitly  provided  or
                    except by agreement in writing  executed by the Landlord and
                    the Tenant.

                                       14
<PAGE>

NOTICES             22. Any  notice,  advice,  document  or writing  required or
                    contemplated  by any  provision  hereof  shall  be  given in
                    writing and if to the Landlord,  either delivered personally
                    to an officer  of the  Landlord  or mailed by  prepaid  mail
                    addressed to the  Landlord at the said local office  address
                    of the Landlord  shown above,  and if to the Tenant,  either
                    delivered  personally to the Tenant (or to an officer of the
                    Tenant,   if  a  corporation)  or  mailed  by  prepaid  mail
                    addressed  to the  Tenant at the Leased  Premises,  or if an
                    address  of the  Tenant is shown in the  description  of the
                    Tenant above,  to such address.  Every such notice,  advice,
                    document or writing  shall be deemed to have been given when
                    delivered  personally,  or if mailed as aforesaid,  upon the
                    fifth day after being mailed.  The Landlord may from time to
                    time by notice in writing to the  Tenant  designate  another
                    address as the address to which  notices are to be mailed to
                    it, or specify  with greater  particularity  the address and
                    persons  to which  such  notices  are to be  mailed  and may
                    require   that  copies  of  notices  be  sent  to  an  agent
                    designated  by it.  The  Tenant  may,  if an  address of the
                    Tenant is shown in the description of the Tenant above, from
                    time to time by notice in writing to the Landlord, designate
                    another  address as the  address to which  notices are to be
                    mailed to it, or  specify  with  greater  particularity  the
                    address to which such notices are to be mailed.

INTERPRETATION      23.   In this  Agreement   "herein",  "hereof"',  "hereby",
                    "hereunder", "hereto", "hereinafter" and similar expressions
                    refer to this  Lease and  not to  any  particular paragraph,
                    clause or other portion thereof, unless  there is  something
                    in the subject matter or context inconsistent therewith; and
                    the parties agree that all of  the  provisions of this Lease
                    are to be  construed as covenants  and  agreements as though
                    words importing such covenants and  agreements were  used in
                    each  separate    paragraph   hereof,   and that  should any
                    provision  or  provisions  of  this  Lease be illegal or not
                    enforceable  it  or  they  shall  be considered separate and
                    severable from  the Lease and its remaining provisions shall
                    remain in force and be binding  upon  the parties hereto  as
                    though the  said  provision  or  provisions  had  never been
                    included,  and   further  that  the   captions appearing for
                    the provisions of this  Lease have been inserted as a matter
                    of convenience and for reference only and in no way  define,
                    limit or enlarge the scope or meaning of this Lease or of
                    any provisions hereof.

EXTENT OF LEASE     24. This   Agreement and everything  herein  contained shall
OBLIGATIONS         enure  to   the   benefit  of  and be  binding    upon   the
                    respective   heirs, executors,  administrators,  successors,
                    assigns  and  other  legal   representatives,    as the case
                    may be, of each and every of the parties hereto,  subject to
                    the granting of consent by the Landlord to any assignment or
                    sublease,  and every  reference  herein to any party  hereto
                    shall   include   the  heirs,   executors,   administrators,
                    successors,  assigns and other legal representatives of such
                    party, and where there is more than one tenant or there is a
                    male or female  party the  provisions  hereof  shall be read
                    with all grammatical  changes thereby rendered necessary and
                    all covenants shall be deemed joint and several.

USE AND             25. If the  Tenant  shall for any  reason  use or occupy the
OCCUPANCY           Leased  Premises in any  way  prior to the   commencement of
PRIOR TO TERM       the Term without  there being an existing lease  between the
                    Landlord  and Tenant under which the Tenant has occupied the
                    Leased  Premises,  then during such  prior use or  occupancy
                    the  Tenant  shall be a Tenant of the Landlord  and shall be
                    subject  to the same  covenants and agreements in this Lease
                    mutatis mutandis.

LIMITATION  ON      26.  Notwithstanding  any other provision of this Lease,  it
LANDLORD LIABILITY  is   expressly  understood  and   agreed   that   the  total
                    liability  of the  Landlord  arising out of or in connection
                    with this  Lease,  the  relationship   of the  Landlord  and
                    the Tenant  hereunder  and/or the Tenant's use of the Leased
                    Premises,  shall be limited to the estate of the Landlord in
                    the Property.  No other property or asset of the Landlord or
                    any  partner  or owner of the  Landlord  shall be subject to
                    levy, execution,  or other enforcement  proceedings or other
                    judicial process for the satisfaction of any judgment or any
                    other  right or remedy of the  Tenant  arising  out of or in
                    connection with this Lease, the relationship of the Landlord
                    and the  Tenant  hereunder  and/or the  Tenant's  use of the
                    Leased Premises.

WAIVER OF JURY      27. The  Tenant  hereby  waives  trial by jury in any claim,
TRIAL               action,   proceeding  or  counterclaim   brought  by  either
                    party against the other  on any matters arising out of or in
                    any  way connected  with this Lease, the relationship of the
                    Landlord and the Tenant, or the Tenant's  use  and occupancy
                    of the Leased Premises.

CHOICE OF LAW       28. This Lease shall be governed by the laws of the State in
                    which  the  Leased  Premises  are  located.  Any  litigation
                    between the Landlord  and the Tenant  concerning this  Lease
                    shall be  initiated  in the county in which the Premises are
                    located.

SCHEDULES           29.  The provisions  of  the  following  Schedules  attached
                    hereto  shall  form  part  of this Lease as if the same were
                    embodied herein:

                                   Schedule "A"          -    Legal Description
                                                                of Property
                                   Schedule "B"          -    Measurement of
                                                                Rentable Area
                                   Schedule "B-1"        -    Location of Leased
                                                                Premises
                                   Schedule "C"          -    Taxes Payable by
                                                                Landlord and
                                                                  Tenant
                                   Schedule "D"          -    Services and Costs
                                   Schedule "E"          -    Rules and
                                                                Regulations
                                   Schedule "F"          -    Leasehold
                                                                Improvements

                                       15
<PAGE>


                    IN WITNESS  WHEREOF the  parties  hereto  have  executed
                    this Agreement. I/We have authority to bind the corporation.

<TABLE>
<CAPTION>
<S>             <C>                                                 <C>
                                                                     Landlord:

                                                                     WATER TOWER CAMPBELL, LLC
                                                                     -------------------------
                                                                     A California limited liability company,
                                                                     --------------------------------------

  Checked       /s/ Paula D. Francis
--------------  --------------------------------------------------  by Signature   /s/  Jim Mair
  Verified              Witness as to signing by Landlord           Title:       Member
--------------


                                                                     Tenant:       Nx Networks, a Delaware corporation

                Witness/Attest

                               /s/ Peter Kendrick                     By Signature   /s/  Jay R. Schifferli
                --------------------------------------------------
                            Witness as to signing by                  Title:         General Counsel
                         Tenant or officer(s) of Tenant               Name:          Jay R. Schifferli

</TABLE>

                                       16
<PAGE>





                    PROPERTY NAME:      307 Orchard City Drive
                                        Campbell, California 95008




                                                             INITIAL
                                                   -----------------------------
                                                   Landlord     |      Tenant
                                                                |
                                                                |




</TEXT>
</DOCUMENT>
