ADVANCED LUMITECH INC
10-K405/A, 2000-05-17
BLANK CHECKS
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<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20459

                              ___________________

                 INTEGRATED ANNUAL REPORT TO STOCKHOLDERS AND
                                  FORM 10-K/A

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 1999
                      Commission file number 033-55254-27

                            ADVANCED LUMITECH, INC.
            (Exact name of registrant as specified in its charter)

           Nevada                                         87-0438637
(State or other jurisdiction of                          (IRS Employer
 incorporation or organization)                       Identification Number)

         1601 Trapelo Road
            Waltham, MA                                      02451
(Address of principle executive offices)                   (Zip Code)

                                 781-890-2200
             (Registrant's telephone number, including area code)

                              ___________________

        Securities registered pursuant to Section 12(b) of the Act: None
         Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, par value $.001

                              ___________________

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X   No ___
                                              ---

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K   X
                ---

     As of March 31, 2000, the market value of the voting stock of the
Registrant held by non-affiliates of the Registrant was $ 39,260,259.

     The number of shares of the Registrant's common stock, par value $.001 per
share, outstanding as of March 31, 2000 was 32,697,770.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's Proxy Statement for the 2000 Annual Meeting of
Stockholders are incorporated by reference into Part III of this Form 10-K.
<PAGE>

                             ADVANCED LUMITECH, INC.
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                    Page
                                                                    ----
<S>                                                                 <C>
PART I.
   Item 1.  Business                                                  1
   Item 2.  Properties                                                4
   Item 3.  Legal Proceedings                                         4
   Item 4.  Submission of Matters to a Vote of Security Holders       4

PART II.
   Item 5.  Market for Registrant's Common Equity and Related
             Stockholder Matters                                      5
   Item 6.  Selected Financial Data                                   6
   Item 7.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations                     7
   Item 8.  Financial Statements and Supplementary Data              12
   Item 9.  Changes in and Disagreements with Accountants
              on Accounting and Financial Disclosure                 25

PART III.
   Item 10. Directors and Executive Officers                         25
   Item 11. Executive Compensation                                   26
   Item 12. Security Ownership of Certain Beneficial Owners
              and Management                                         26
   Item 13. Certain Relationships and Related Transactions

PART IV.
   Item 14. Exhibits, Financial Statement Schedules, and
              Reports on Form 8-K                                    29

Signatures                                                           31
</TABLE>
<PAGE>

Note Regarding Forward Looking Statements:

         Any statements contained in this Form 10-K that do not describe
historical facts, including without limitation statements concerning expected
revenues, earnings, product introductions and general market conditions, may
constitute forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Any such forward-looking statements
contained herein are based on current expectations, but are subject to a number
of risks and uncertainties that may cause actual results to differ materially
from expectations. The factors that could cause actual future results to differ
materially from current expectations include the following: the Company's
ability to raise the financing required to support the Company's operations; the
Company's ability to establish the intended operations; fluctuations in demand
for the Company's products and services; the Company's ability to manage its
growth; the Company's ability to develop, market and introduce new and enhanced
products on a timely basis; the Company's lack of customers; and the ability of
the Company to compete successfully in the future. Further information on
factors that could cause actual results to differ from those anticipated is
detailed in various filings made by the Company from time to time with the
Securities and Exchange Commission. Any forward-looking statements should be
considered in light of those factors.

                                     PART 1

Item 1.   Business

The Company

Advanced Lumitech, Inc. ("ADLU" or "the Company") is a development stage
company, which, through its subsidiary, Lumitech SA ("Swiss Lumitech"), has
developed and patented a luminescent imaging media (the "Luminescent Product"),
which can be used in a variety of products in numerous fields such as safety and
signs, consumer electronics and color printing. The Company will market its
Luminescence product and related products under the brand name `Brightec'. The
Company plans to use only the most advanced and environmentally friendly
luminescent materials in its products. Currently, the Company uses a new
generation of high yield luminescent material, based on alkaline earth
chemistry, which provides significantly greater luminescence than traditional
zinc sulphide luminescent material.

The Company will manufacture, market and sell luminescent sheets and substances
that are specially designed for state-of-the-art digital printing using pigments
with the greatest light intensity. There are various categories and sizes of
luminescent sheets, which will permit wide-spread applications in photography,
color printing, textiles, decoration and different printing technologies. The
luminescent substances are targeted for industrial and commercial applications
such as paints, inks and compounds.

During the fourth quarter of 1999, the Company moved its corporate offices to
the United States, assembled an executive team, identified preliminary market
opportunities and established a sales and distribution network. Although the
Company has not commenced commercial manufacturing or marketing of Brightec and
has generated no revenues to date, it expects, although there are no assurances,
that manufacturing, sales and marketing activities will commence in the second
half of 2000. The manufacturing, marketing and selling of Brightec products is
dependent upon the Company's successful raising of financing, as described in
"Management's Discussion and Analysis - Liquidity and Capital Resources". As
discussed in Note 1 to the Consolidated Financial Statements, these conditions,
among others, raise substantial doubts about the Company's ability to continue
as a going concern.

The Company was incorporated on April 16, 1986 as Hyena Capital, Inc., a Nevada
corporation. For the period from incorporation to August 13, 1998, the Company
had no operations of any kind. On August 13, 1998, the Company acquired 100% of
the then outstanding common stock of Swiss Lumitech, a company founded in
Switzerland in 1992, which had developed and patented the Luminescence
technology.

                                       1
<PAGE>

For accounting purposes, the acquisition of Swiss Lumitech was treated as a
reverse acquisition of the Company by Swiss Lumitech. However, the Company was
the legal acquirer and accordingly, the acquisition was effected by the issuance
of 4,000,000 newly issued common shares ($ 0.001 par value) of the Company. As a
result of this transaction, the shareholders of Swiss Lumitech became majority
shareholders of the Company, owning 80% of the Company's then issued 5,000,000
voting common shares. On August 14, 1998, the Company's Board of Directors
authorized the change of the Company's name from Hyena Capital, Inc. to Advanced
Lumitech, Inc. and authorized a five-for-one split of the Company's then issued
common stock, increasing the Company's common stock to 25,000,000.

Prior to developing the Luminescence product, Swiss Lumitech's operations
consisted of unrelated activities including the publication and marketing of a
book written by Swiss Lumitech's co-founders. From that point until its
acquisition by the Company, Swiss Lumitech engaged in the development of the
Luminescence product and utilized it to develop a range of luminescent watches,
which it distributed through an affiliated company, Lumitech BV (the
"Netherlands Affiliate").

Strategy
The Company's objective is to become the innovator and worldwide market leader
in Luminescence products. The Company's strategy is to generate revenues from
the commercial sale of the luminescent products, which will be sold under the
brand name "Brightec". The Company's current business strategy is twofold.
Initially, the Company expects to market and sell its luminescent sheets in
retailing establishments through OEM's and over the internet. The Company
expects this to provide short-term revenue to fund the research and development
necessary to capitalize on the commercial marketplace.

Sales and Marketing
The Company expects to market its products using both a direct sales and a
broker network, who have access to retail channels, that reports to its Vice
President of Sales. The Company also intends to sell its product over the
internet using sites that are popular with its target markets. Currently, the
Company does not have formal arrangements in place with distributors or third
parties.

To deliver short-term revenue, the Company plans to capitalize on the rapidly
growing ink-jet media market for recreational printing. It believes that its
state of the art luminescence technology coupled with the ability of users to
customize the product by using their own images will be a successful combination
in the area of recreational printing that is being driven by personalization and
creativity.

Research and Development
Currently, the Company's development resources are focused on the final stages
of commercialization of the luminescent sheets, including product testing and
establishment of manufacturing capabilities in the U.S. In 1999, research and
development expenses of approximately $674,000 were related to salaries and
supplies to further develop the luminescence products and product testing. The
Company intends to expend approximately the same amounts in FY 2000 for research
and development activities to improve and broaden the Company's Luminescence
products. In this regard, the Company expects to establish a laboratory in the
U.S. and use its current lab in Switzerland for limited creative research.
However, such expenditures are dependent on the Company's ability to
successfully raise additional capital, as described in `Management's Discussion
and Analysis -Liquidity and Capital Resources'. If the Company is unable to
successfully raise such funds and is unable to invest further in research and
development, the Company may be unable to develop new products or enter new
markets and such inability may have an adverse effect on the Company's results
of operations.

In 1999, the Company and Socol SA ("Socol"), a shareholder of the Company, which
is a Swiss based private company which had worked with the Company in developing
the Luminescence products, entered into a definitive collaboration agreement,
the terms of which are set forth in a letter agreement (the "Socol Letter
Agreement"). In the Letter Agreement, the Company agreed to issue 2,500,000
shares of its common stock to Socol; and Socol agreed to the following: (i) its
agreement to accept such shares in full consideration for Socol's participation
and efforts in connection with the Luminescence product, (ii) its disclaimer of
any interest or right in or to the Company's Brightec products, the Luminescence
product Patent or proprietary information and know how relating to said patents
and Brightec

                                       2
<PAGE>

products and (iii) its agreement to transfer all know how relating to said
patent and Brightec products and proprietary information to Lumitech. The
Company also has a non-exclusive manufacturing agreement with Socol whereby
Socol will provide to the Company certain luminescent substances at cost.

Manufacturing
In 1999, the Company decided to outsource its manufacturing to a U.S based
coating company. To this end, the Company entered into an agreement for the
commercial manufacture of both the fluids and the luminescent sheets used in the
manufacturing of the Luminescent Products. During the first half of this
calendar year, the "know how" for the manufacture of the Luminescent Products
will be transferred from Switzerland to the Company's U.S. based coating
manufacturer. Formulation changes required for the scale up will be jointly
handled between the two sites. The manufacturing process itself is being
designed to allow multiple products to be generated from substantially the same
product mix, thus allowing the Company to maintain lower levels of finished
goods inventory than otherwise possible. The formulations of the fluids will
continue to be provided by Socol. The plan, although there can be no assurances,
is to be manufacturing products for sale by the end of the third quarter
depending on the Company's ability to successfully raise additional capital, as
described in `Management's Discussion and Analysis - Liquidity and Capital
Resources'.

Source of Raw Materials
To date, all materials in the Luminescent product have been purchased from third
party suppliers through Socol. The Company anticipates that with its move to
establish a U.S. based manufacturing process, the Company will assume
responsibility for purchases from third parties. All raw materials used in the
product are manufactured by leading companies in Europe, Japan and the U.S. The
Company, although there can be no assurances, does not anticipate any problems
obtaining materials used in the manufacturing process, including the luminescent
pigments. The suppliers of these materials have assured the Company that they
are capable of meeting the proposed manufacturing schedule and quantities.

Patents
The Company first received a patent for the Luminescence product in France in
August 1997 (the "Luminescence Technology Patent"). This patent covered the
processes for all types of luminescent pictures (photographic, textile and
decoration), as well as the products resulting from the implementation of such
processes. The Company received a patent in Singapore in May 1999 and the
European patent (including Germany, Austria, Belgium, Denmark, France, Spain,
Greece, Ireland, Italy, Netherlands, Portugal, Great Britain, Sweden and
Switzerland) has been approved for issuance as well as the patent for Poland.
The Company expects that all of these patents will be delivered in the first
half of 2000. The Company has also registered applications for the Luminescence
Technology Patent in nine other countries including the United States of
America, Canada, Brazil, Mexico Turkey, Federation of Russia, Japan, China and
Hong Kong. The Company expects successful registration of the Luminescence
Technology Patent in those remaining countries to take from six months to five
years, depending on the country of application. The life of the Luminescence
Technology Patent will vary from country to country, but at a minimum will
extend to 2016. The inability to register the Luminescence product Patent in any
of the above mentioned countries may have a material adverse effect on the
Company's business, financial condition and results of operations.

On March 31, 1999, the Company and the co-inventor of the Luminescence product
executed and delivered an agreement amending a prior agreement dated January 26,
1996 (the "Patent Assignment Agreement"). The Patent Assignment Agreement
eliminates a requirement in the prior agreement that the Company pay royalties
calculated as a percentage of product sales based upon the Luminescence product
to the co-inventor and instead provides for the payment to said co-inventor of
$160,000, and the issuance to said co-inventor of 800,000 shares of the
Company's common stock. With respect to the cash payment obligation, the Company
paid the co-inventor $25,000 in 1998 and $57,000 in 1999. The balance is payable
from time to time as the Company's liquidity and other commitments permits. The
800,000 shares of the Company's common stock, with a value of $300,000 and the
$160,000, payable in cash, were charged to expense in 1999. Accounts payable and
accrued expenses at December 31, 1999 include approximately $78,000 of expenses
related to the patent assignment agreement.

                                       3
<PAGE>

Seasonality
Although it has not begun to market or sell its Brightec products, the Company
does not anticipate any seasonality in its revenues.

Competition
The Company is not aware of any competing product that offers the same features
as Brightec. The Company does not intend for Brightec derived products to
compete against other potentially cheaper, non-photographic quality products,
based on existing zinc sulphide technology. Existing products, however, are
manufactured using processes and technologies supported by companies which may
have significantly greater resources and have been established and known in the
luminescence field for a number of years. Although, such "glow in the dark"
products are well known by the consumer and are already well established at
certain of the Company's intended sales outlet channels, the Company believes
its products are unique and will compete favorably with existing product
offerings.

As in any technology industry, there are numerous new technologies being
developed in imaging laboratories or by individual inventors, which technologies
may render the Company's technology obsolete. The Company is not aware of any
such competing technology under development or which has been developed.

Regulation
No government authorization is required to offer the Company's products.

Employees
As of December 31, 1999, the Company had 7 full time employees. As of March 31,
2000, the Company had 6 full time employees. The Company believes its future
success will depend in part on its continued ability to recruit and retain
highly qualified technical and managerial personnel.

Item 2.   Properties

At December 31, 1999, the Company's only property was its office space located
at 36 Avenue Cardinal Mermillod, Carouge, Switzerland. This office is leased
under an agreement that allows the Company to terminate the lease at the end of
each 12-month period. In conjunction with the Company's plan to launch its
operations in the United States, the Company entered into a lease for its
corporate office at 1601 Trapelo Road, Waltham, MA in January 2000. The Company
currently occupies approximately 2,500 square feet at the Waltham location under
the terms of a lease expiring in January 2002, with annual rent of approximately
$83,000.

Item 3.   Legal Proceedings

There are no material legal proceedings pending to which the Company is a party
or to which any of its properties are subject.

Item 4.   Submission of Matters to a Vote of Security Holders

None

                                       4
<PAGE>

                                     PART II

Item 5.   Market for Registrant's Common Stock and Related Stockholder Matters

From inception to the date of the acquisition of Swiss Lumitech on August 13,
1998, there was no trading market for the Company's $.001 par value common
stock. Since August 13, 1998, the Company's common stock has been traded
Over-the-Counter Bulletin Board (US OTC-BB) under the symbol "ADLU".

The following table sets forth, on a per share basis, the range of high and low
bid information for the common stock for each quarter since August 13, 1998 and
reflect a five-for-one stock split effective August 14, 1998:

<TABLE>
<CAPTION>
                                                                    High        Low
                                                                    ----        ---
         <S>                                                      <C>         <C>
         Fourth quarter ended December 31, 1999                   $ 3.75      $ 0.43
         Third quarter ended September 30, 1999                     1.02        0.28
         Second quarter ended June 30, 1999                         0.65        0.24
         First quarter ended March 31, 1999                         1.10        0.06

         Period from August 13, 1998 thru September 30, 1998        1.25        0.25
         Fourth quarter ended December 31, 1998                     1.42        0.56
</TABLE>

On March 31, 2000, the reported last sale price of the common stock on the US
OTC-BB was $2.44 per share and there were 671 holders of record of common stock.

These price quotations represent prices between dealers and do not include
retail mark ups, mark downs or commissions and may not necessarily represent
actual transactions. Since its organization, the Company has not paid dividends
on its capital stock. The Board of Directors does not contemplate declaring
dividends in the near future.

The following securities were sold by the Company during the last three years
and were not registered under the Securities Act of 1933, as amended (the
"Securities Act").

In March 1999, the Company issued 800,000 shares of its common stock to
Jacques-Charles Collet, the co-inventor of the Company's luminescence
technology, in exchange for the co-inventor's release of all ownership rights in
the technology. These shares were valued at approximately $300,000 based on the
last price of the Company's common stock on the date of transfer.

In October 1999, the Company agreed to issue 2,500,000 shares of its common
stock to Socol in exchange for the transfer of production processes and know-how
to manufacture the Luminescent Products. These shares were valued at $1,875,000.

In November 1999, the Company sold a $375,000 unit of its common stock resulting
in the issuance of 500,000 shares of its common stock and a warrant to purchase
500,000 shares of common stock at $1.00 per share.

In January 2000, the Company sold a $375,000 unit of its common stock resulting
in the issuance of 500,000 shares of its common stock and a warrant to purchase
500,000 shares of common stock at $1.00 per share.

The Company relied on Regulation S and Regulation D promulgated under the
Securities Act in connection with the security transactions described above.

                                       5
<PAGE>

Item 6.   Selected Consolidated Financial Data

The following selected consolidated financial data for the five years ended
December 31, 1999 have been derived from the Company's Consolidated Financial
Statements, which have been audited by Ernst & Young LLP. The selected financial
data presented below should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations", which is
included elsewhere in this 10-K.

<TABLE>
<CAPTION>
                                                            Fiscal Year Ended December 31,
                                     -------------------------------------------------------------------------
                                           1999           1998           1997          1996          1995
                                           ----           ----           ----          ----          ----
<S>                                <C>                <C>           <C>           <C>            <C>
Statement of Operations Data
- ----------------------------
   Sales                             $        --       $      --    $   148,352      $  54,688      $  91,219
   Net loss                           (4,274,710)       (340,115)      (219,531)      (308,771)      (225,351)
   Basic and diluted
      net loss per share                   (0.16)          (0.02)         (0.01)         (0.01)         (0.01)

Balance Sheet Data
- ------------------
   Total assets                          537,984         244,325         77,416         60,059        285,069
   Long-term borrowings
(Consists of notes payable to            321,273         255,809        361,476        372,493        295,474
directors and related parties)
    Stockholders' deficit            $(1,031,978)      $(772,302)   $(1,067,637)     $(919,365)     $(735,639)
</TABLE>

                                       6
<PAGE>

Item 7.   Management's Discussion and Analysis of Financial Condition and
Results of Operations

Factors That May Affect Future Results

         Any statements contained in this Form 10-K that do not describe
historical facts, including without limitation statements concerning expected
revenues, earnings, product introductions and general market conditions, may
constitute forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Any such forward-looking statements
contained herein are based on current expectations, but are subject to a number
of risks and uncertainties that may cause actual results to differ materially
from expectations. The factors that could cause actual future results to differ
materially from current expectations include the following: the Company's
ability to raise the financing required to support the Company's operations; the
Company's ability to establish the intended operations; fluctuations in demand
for the Company's products and services; the Company's ability to manage its
growth; the Company's ability to develop, market and introduce new and enhanced
products on a timely basis; the Company's lack of customers; and the ability of
the Company to compete successfully in the future. Further information on
factors that could cause actual results to differ from those anticipated is
detailed in various filings made by the Company from time to time with the
Securities and Exchange Commission. Any forward-looking statements should be
considered in light of those factors.

General
Advanced Lumitech, Inc. ("ADLU" or "the Company") is a development stage
company, which, through its subsidiary, Lumitech SA ("Swiss Lumitech"), has
developed and patented an exclusive new luminescent imaging media (the
"Luminescent product"), which can be used in a variety of products in numerous
fields such as safety and signs, consumer electronics and color printing. The
Company will market its Luminescence product and related products under the
brand name `Brightec'. The Company plans to use only the most advanced and
environmentally friendly luminescent materials in its products. Currently, the
Company uses a new generation of high yield luminescent material, based on
alkaline earth chemistry, which provides significantly greater luminescence than
traditional zinc sulphide luminescent material.

The Company will manufacture, market and sell luminescent sheets and substances
that are specially designed for state-of-the-art digital printing using pigments
with the greatest light intensity. There are various categories and sizes of
luminescent sheets, which will permit wide-spread applications in photography,
color printing, textiles, decoration and different printing technologies. The
luminescent substances are targeted for industrial and commercial applications
such as paints, inks and compounds.

During the fourth quarter of 1999, the Company moved its corporate offices to
the United States, assembled an executive team, identified preliminary market
opportunities and established a sales and distribution network. Although the
Company has not commenced commercial manufacturing or marketing of Brightec and
has generated no revenues to date, it expects manufacturing, sales and marketing
activities to commence in the second half of 2000. The manufacturing, marketing
and selling of Brightec products is dependent upon the Company's successful
raising of financing, as described in "Management's Discussion and Analysis -
Liquidity and Capital Resources'. If the Company is unable to successfully raise
such funds or market Brightec or manufacture Brightec products, there is
substantial doubt as to the Company's ability to continue as a going concern.

The Company was incorporated on April 16, 1986 as Hyena Capital, Inc., a Nevada
corporation. For the period from incorporation to August 13, 1998, the Company
had no operations of any kind. On August 13, 1998, the Company acquired 100% of
the then outstanding common stock of Swiss Lumitech, a company founded in
Switzerland in 1992, which had developed and patented the Luminescence
Technology.

Prior to developing the Luminescence product, Swiss Lumitech's operations
consisted of unrelated activities including the publication and marketing of a
book written by Swiss Lumitech's co-founders. From that point until its
acquisition by the Company, Swiss Lumitech engaged in the development of the
Luminescence product and utilized it to develop a range of luminescent watches,
which it distributed through an affiliated company, Lumitech BV (the
"Netherlands Affiliate").

                                       7
<PAGE>

For accounting purposes, the acquisition of Swiss Lumitech was treated as a
reverse acquisition of the Company by Swiss Lumitech. Accordingly, the following
discussion reflects the combined operations of the Company and Swiss Lumitech
from the inception date of Swiss Lumitech to December 31, 1999.

The Company's strategy is to generate revenues from the commercial sale of the
luminescent sheets and substances, which will be sold under the brand name
"Brightec". Initially, the Company will market and sell its luminescent sheets
in retailing establishments through OEM's and over the internet. To deliver
short-term revenue, the Company plans to capitalize on the rapidly growing
ink-jet media market for recreational printing. This will provide a revenue
stream to fund the research and development necessary to capitalize on the
commercial marketplace. At December 31, 1999, the Company had not begun
commercial marketing of Brightec and has accumulated losses of $5,811,742. The
Company's current liabilities exceed its current assets by $749,066. The Company
is in the process of raising approximately $5.0 million in a private placement
of its shares and warrants. At December 31, 1999, the Company had successfully
placed a $375,000 unit of its common stock resulting in the issuance of 500,000
shares of its common stock and a warrant to purchase 500,000 shares of its
common stock at $1.00 per share. In January 2000, the Company placed the second
unit for $375,000 resulting in the issuance of 500,000 shares of its common
stock and a warrant to purchase 500,000 shares of its common stock at $1.00 per
share. The Company believes it has the ability to complete the $5.0 million
private placement, however, there can be no assurances that the Company will be
able to raise the funds it requires. As a result of these factors, substantial
doubt exists about the ability of the Company to continue to operate as a going
concern and cannot be predicted at this time. The Company's ability to continue
as a going concern is primarily dependent upon the Company's ability to obtain
the necessary financing to enable it to successfully market Brightec and then
upon future profitable operations. See `Liquidity and Capital and Capital
Resources - Ability to Continue as a Going Concern'.

Results of Operation for Years ended 1999, 1998 and 1997.

Revenues:
The Company had no revenues in 1999 or 1998 due to the change in the Company's
operations as described above. During 1997, the Company's revenues and related
cost of sales were generated exclusively from sales of Luminescence product
watches to the Netherlands Affiliate. The Company expects future revenues, if
any, to come from the sale of luminescent substances and sheets.

Gross Profit:
Due to the Company's change in strategy described above, the Company recorded no
revenues and therefore no gross profit in 1999 or 1998. For the year ended
December 31, 1997, the Company recorded negative gross profit of $75,439, which
was due in part to an inventory write-off of approximately $72,000 resulting
from the disposal of all Luminescence product watches. The Company expects that
future gross margins, if any, will result from the sale of Brightec products.
Historical results are not indicative of expected future results.

Research and Development Expenses:
Research and development expenses were $674,332 in 1999. The expenses in 1999
are related to salaries and supplies involved in the development efforts to
further develop the luminescence product and related Brightec products and
product testing. The Company intends to expend approximately the same funds in
FY 2000 for research and development activities to improve and broaden the
Company's Luminescence products. In this regard, the Company expects to
establish a laboratory in the U.S. and maintain a creative laboratory in
Switzerland.

Selling and Marketing Expenses:
Selling and marketing expenses consist primarily of compensation, marketing and
promotional materials and an allocation of facility related expenses. Selling
and marketing expenses increased $196,307 in 1999 to $266,688 from $70,381 in
1998. Selling and marketing expenses increased $44,366 in 1998 to $70,381 from
$26,015 in 1997. The increase in 1999 consists primarily of expenses incurred
for marketing materials to support the launch of the Brightec brand name and
expenses incurred in connection with establishing a sales and distribution
network in the U.S. The increase in 1998 in selling and marketing expenses is
primarily attributable to expenses incurred

                                       8
<PAGE>

for marketing materials to support the launch of the Brightec brand name. The
Company expects that selling and marketing expenses will continue to increase in
dollar amount as the Company introduces and promotes products.

General and Administrative:
General and administrative expenses consist primarily of compensation of
executive personnel, legal and accounting costs and an allocation of facility
related expenses. General and administrative expenses increased $3,035,833 in
1999 to $3,256,907 from $221,074 in 1998. General and administrative expenses
increased $153,899 in 1998 to $221,074 from $67,175 in 1997. The increase in
general and administrative expenses in 1999 is due primarily to non-cash charges
of $2,175,000 relating to the shares issued to the co-inventor and to Socol for
the transfer of technology and know-how and approximately $800,000 in
compensation expense related to the issuance of stock and stock options to
consultants. The increase in general and administrative expenses in 1998 is
primarily due to patent and patent application costs associated with the
Company's Luminescence product and the costs of being a public company. The
Company expects that, exclusive of the costs related to the agreement with the
co-inventor and with Socol, general and administrative expenses will continue to
increase in dollar amount as a result of an expansion in the Company's
administrative staff to support its operations and as a result of being a public
company.

Interest Expense
Interest expense incurred on amounts due to related parties and the bank line of
credit was $76,783, $48,660 and $50,902 in the years ended December 31, 1999,
1998 and 1997, respectively.

Income Taxes
The Company has fully reserved for the tax benefits of its net operating losses
at December 31, 1999 and 1998. At December 31, 1999 and 1998, the Company had
federal net operating loss carryforwards of approximately $4.3 million and $0,
respectively, which will expire in varying amounts through 2017 and foreign net
operating losses of approximately $1.5 million at December 31, 1999 and 1998,
which begin to expire in varying amounts through 2006, if not utilized.
Utilization of net operating loss and tax credit carryforwards will be subject
to substantial annual limitations provided by the Internal Revenue Code of 1986,
as amended. The annual limitation may result in the expiration of net operating
loss and tax credit carryforwards before full utilization

Liquidity and Capital Resources:
Since inception, the Company has financed its working capital requirements
primarily through private sales of its debt and equity securities. The Company
has raised, from inception through December 31, 1999, cumulative net cash
proceeds from the sale of common stock and exercise of stock options of
approximately $1.5 million. The Company's net working capital deficit at
December 31, 1999 was $749,066 compared to a deficit of $543,002 in 1998.

Cash and cash equivalents increased to $490,276 at December 31, 1999 from
$207,938 at December 31, 1998. Net cash used in operating activities for the
year ended December 31, 1999 was $677,818. The net cash used in operating
activities during the year ended December 31, 1999 was principally the result of
the net loss of $4,274,710, adjusted for non cash expenses of approximately
$3,068,917 associated with stock based compensation, partially offset by an
increase in accounts payable and accrued liabilities.

Net cash used in investing activities for the year ended December 31, 1999 was
approximately $16,707, consisting of capital expenditures for property and
equipment.

Net cash provided by financing activities for the year ended December 31, 1999
was approximately $855,746. The net cash provided of $855,746 was primarily the
result of cash received in the Company's financing and cash received in the
exercise of stock options.

Ability to Continue as a Going Concern
At December 31, 1999, the Company had not begun to commercially market Brightec
and generate revenues therefrom and the Company's operations to date have
generated accumulated losses of $5,811,742. The Company's current liabilities
exceed its current assets by $749,066 at December 31, 1999. Also, at December
31, 1999 the Company exceeded the borrowings available under the line-of-credit
with a bank by approximately

                                       9
<PAGE>

$75,000. In addition, at December 31, 1999, Swiss Lumitech was not in
compliance with certain statutory capital requirements under Swiss law. The
Company's ability to remedy this condition is uncertain due to the Company's
current financial condition. As of March 31, 2000 the Company has approximately
$200,000 of funds available. These conditions raise substantial doubts about the
Company's ability to continue as a going concern. The Company believes it has
the ability to obtain additional funds from its principal stockholders or by
raising additional debt or equity securities as described below. However, there
can be no assurances that the Company will be able to raise the funds it
requires, or that if such funds are available, that they will be available on
commercially reasonable terms.

In order to generate future revenues from the sale of Brightec products, the
Company anticipates making significant investments in personnel and resources
over the next 12-month period. The Company also intends to repay a significant
amount of debt, including the bank line-of-credit. The Company expects that it
may require up to approximately $5.0 million of cash or available credit during
the next 12-month period to finance payment of existing liabilities, including
the bank line-of-credit, purchases of raw materials and operating expenses. The
Company is continuing discussions with investors in its effort to obtain
additional financing.

The ability of the Company to continue to operate as a going concern is
primarily dependent upon the ability of the Company to raise the necessary
financing, to effectively market and produce Brightec products, to establish
profitable operations and to generate positive operating cash flows. If the
Company fails to raise funds, or the Company's line-of-credit is reduced or
terminated, or the Company is unable to generate operating profits and positive
cash flows, there are no assurances that the Company will be able to continue as
a going concern and it may be unable to recover the carrying value of its
assets.

In November 1999, the Company successfully placed a $375,000 equity unit
resulting in the issuance of 500,000 shares of its common stock and a warrant to
purchase 500,000 shares of its common stock at $1.00 per share. In January 2000,
the Company placed a second unit for $375,000 resulting in the issuance of
500,000 shares of its common stock and a warrant to purchase 500,000 shares of
its common stock at $1.00 per share. Management believes that it will be
successful in raising the necessary financing to fund the Company's operations
through the 2000 calendar year. Accordingly, management believes that no
adjustments or reclassifications of recorded assets and liabilities are
necessary at this time.

Credit Availability
The Company, through Swiss Lumitech, has borrowings under a line-of-credit with
a Swiss bank. Pursuant to the terms of the bank line-of-credit, the Company may
borrow up to $300,000, at the December 31, 1999 rate of exchange. At December
31, 1999 and 1998, the Company had exceeded such limit, but in each instance,
the bank granted the Company a temporary extension, with no stated expiration
date, to exceed the limit by the bank. The line-of-credit agreement contains
terms and conditions, restricting Swiss Lumitech's ability to pledge its assets
as security for separate borrowings and requiring the payment of interest each
quarter. In addition, any and all accounts receivable generated by the Company
are automatically pledged to the bank pursuant to the terms of the
line-of-credit agreement. At December 31, 1999, the borrowings under the bank
line-of-credit carries interest at 6.35%. The line-of-credit is guaranteed up to
available borrowings by a relative of certain directors.

Should the Company's line-of-credit be reduced or terminated, or if the Company
is unable to generate operating profits and positive cash flows, there are no
assurances that the Company will be able to continue as a going concern and it
may be unable to recover the carrying value of its assets. The Company does not
believe the bank line-of-credit will be reduced or terminated in the near future
and intends to repay it in full during 2000.

Commitments
The Company had no material capital expenditure commitments as of December 31,
1999.

Effects of Inflation
Management believes that financial results have not been significantly impacted
by inflation and price changes.

Euro Currency
The participating member countries of the European Union have adopted the Euro
as its common legal currency on January 1, 1999. At this early stage of its
assessment the Company cannot predict the impact of the conversion to the Euro.

                                       10
<PAGE>

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

The Company faces exposure to financial market risks, including adverse
movements in foreign currency exchange rates and changes in interest rates.
These exposures may change over time as business practices evolve and could have
a material adverse impact on the Company's financial results. The Company's
primary exposure has been related to local currency revenue and operating
expenses in Europe. Historically, the Company has not hedged specific currency
exposures as gains and losses on foreign currency transactions have not been
material to date.

                                       11
<PAGE>

Item 8.   Financial Statements and Supplementary Data

                             ADVANCED LUMITECH, INC.
                   Index to Consolidated Financial Statements

<TABLE>
<CAPTION>
                                                                                    Page
                                                                                    ----
<S>                                                                                 <C>
Report of Independent Auditors                                                       13

Consolidated Balance Sheets at December 31, 1999 and 1998                            14

Consolidated Statements of Operations for the years ended
     December 31, 1999, 1998 and 1997 and for the period
     from inception (February 7, 1992) to December 31, 1999                          15

Consolidated Statements of Cash Flows for the years ended
     December 31, 1999, 1998 and 1997 and for the period
     from inception (February 7, 1992) to December 31, 1999                          16

Consolidated Statements of Stockholders' Deficit for the
     years ended December 31, 1999, 1998 and 1997
     and for the period from inception (February 7, 1992)
     to December 31, 1999                                                            17

Notes to Consolidated Financial Statements                                           18
</TABLE>

                                       12
<PAGE>

                        Report of Independent Auditors

Board of Directors and Stockholders
Advanced Lumitech, Inc.

We have audited the accompanying consolidated balance sheets of Advanced
Lumitech, Inc. (a development stage company) as of December 31, 1999 and 1998
and the related consolidated statements of operations, stockholders' deficit,
and cash flows for each of the three years in the period ended December 31, 1999
and for the period from inception (February 7, 1992) to December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of Advanced Lumitech, Inc. (a development stage company) at
December 31, 1999 and 1998 and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31, 1999
and for the period from inception (February 7, 1992) to December 31, 1999, in
conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue to operate as a going concern. As more fully
described in Note 1, the Company has incurred recurring operating losses since
inception, has generated an accumulated deficit of $5,811,742 since inception
and has a working capital deficit of $749,066 at December 31, 1999. In addition,
the Company has limited cash resources and borrowings exceed the line-of-credit
established with its bank. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.




                                                           /s/ Ernst & Young LLP


Boston, Massachusetts
April 5, 2000

                                       13
<PAGE>

                            ADVANCED LUMITECH, INC.
                       (A DEVELOPMENT STAGE ENTERPRISE)
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    December 31, 1999      December 31, 1998
                                                                    -------------------   -------------------
<S>                                                                 <C>                   <C>
Assets
Current assets:
   Cash and cash equivalents                                             $   490,276          $   207,938
   Prepaid expenses and other assets                                           9,347                9,878
                                                                         -----------          -----------
Total current assets                                                         499,623              217,816

Office and photographic equipment                                             76,815               60,108
Less accumulated depreciation                                                (38,454)             (33,599)
                                                                         -----------          -----------
                                                                              38,361               26,509
                                                                         -----------          -----------
Total assets                                                             $   537,984          $   244,325
                                                                         ===========          ===========

Liabilities and stockholders' deficit
Current liabilities:
   Borrowings under bank line-of-credit                                  $   376,828          $   408,641
   Accounts payable                                                          157,885              101,699
   Accrued liabilities                                                       551,874               50,000
   Accounts payable to affiliated companies                                  120,941              156,412
   Notes payable to related party                                             41,161               44,066
                                                                         -----------          -----------
Total current liabilities                                                  1,248,689              760,818

Notes payable to directors                                                   321,273              255,809
                                                                         -----------          -----------
Total liabilities                                                          1,569,962            1,016,627

Stockholders' deficit:
   Common stock, $0.001 par value;
      100,000,000 shares authorized;
      31,997,770 shares in 1999 and 25,000,000
      shares in 1998 issued and outstanding                                   31,998               25,000
   Additional paid-in capital                                              4,678,775               45,426
   Stock subscriptions receivable                                            (34,965)             (34,965)
   Stock subscribed                                                             --                688,347
   Deferred compensation                                                     (58,083)                --
   Deficit accumulated during the development stage                       (5,811,742)          (1,537,032)
   Cumulative translation adjustment                                         162,039               40,922
                                                                         -----------          -----------
Total stockholders' deficit                                               (1,031,978)            (772,302)
                                                                         -----------          -----------
Total liabilities and stockholders' deficit                              $   537,984          $   244,325
                                                                         ===========          ===========
</TABLE>

          See accompanying notes to consolidated financial statements

                                       14
<PAGE>

                            ADVANCED LUMITECH, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                 Period from
                                                                                                  inception
                                                                                                 (February 7,
                                                          Year ended                            1992) through
                                                         December 31,                            December 31,
                                  --------------------------------------------------------------------------------
                                         1999                1998                1997                1999
                                  --------------------------------------------------------------------------------
<S>                               <C>                  <C>                <C>                 <C>
Sales to third parties              $       --          $       --          $       --            $    814,540
Sales to affiliated company                 --                  --               148,352               203,040
                                    ------------------------------------------------------------------------------
                                            --                  --               148,352             1,017,580

   Cost of sales                            --                  --               223,791             1,005,756
                                    ------------------------------------------------------------------------------

Gross profit (loss)                         --                                   (75,439)               11,824

Operating expenses:
Research and development                 674,332                --                  --                 674,332
Selling and marketing                    266,688              70,381              26,015               437,015
General and administrative             3,256,907             221,074              67,175             4,399,985
                                    ------------------------------------------------------------------------------
                                       4,197,927             291,455              93,190             5,511,332
                                    ------------------------------------------------------------------------------

Operating loss                        (4,197,927)           (291,455)           (168,629)           (5,499,508)
Interest expense, net                     76,783              48,660              50,902               312,234
                                    ------------------------------------------------------------------------------
Net loss                            $ (4,274,710)       $   (340,115)       $   (219,531)         $ (5,811,742)
                                    ==============================================================================

Basic and diluted net loss per
  share                             $      (0.16)       $      (0.02)       $      (0.01)
                                    ============        ============        ============

Weighted average number of shares
  used in computation of basic      27,535,735          21,458,000          20,000,000
  and diluted net loss per share    ============        ============        ============


</TABLE>

          See accompanying notes to consolidated financial statements

                                       15
<PAGE>

                            ADVANCED LUMITECH, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                                 Period from
                                                                                                                  inception
                                                                                                             (February 7, 1992)
                                                                           Year Ended                            through
                                                                           December 31,                         December 31,
                                                    ----------------------------------------------------------------------------
                                                           1999               1998               1997               1999
                                                    ----------------------------------------------------------------------------
<S>                                                 <C>                  <C>                 <C>             <C>
Operating activities
Net loss                                              $(4,274,710)       $  (340,115)         $  (219,531)      $(5,811,742)
Adjustments to reconcile net loss to net cash
   used in operating activities:
     Inventory written-off                                   --                 --                 72,079            72,079
     Depreciation                                           4,855              6,628                4,729            40,722
     General and administrative expense associated
        with stock based charges                        3,068,917               --                   --           3,068,917
     Changes in operating assets and liabilities:
        Accounts receivable from affiliated company          --               66,672              (66,672)             --
        Prepaid expenses and other current assets             531             (7,608)                 186            (9,347)
        Inventory                                            --                 --                (25,811)          (72,079)
        Accounts payable and accrued liabilities          558,060            (76,072)              31,629           709,759
        Accounts payable to affiliated companies          (35,471)           (23,513)             142,612           120,941
                                                      ---------------------------------------------------------------------
Net cash used in operating activities                    (677,818)          (374,008)             (60,779)       (1,880,750)

Investing activities
   Proceeds from disposal of property and equipment          --                 --                   --              10,216
   Purchase of property and equipment                     (16,707)           (25,157)              (7,495)          (89,299)
                                                      ---------------------------------------------------------------------
Net cash used in investing activities                     (16,707)           (25,157)              (7,495)          (79,083)

Financing activities
   Net change in bank line of credit                      (31,813)            32,760                2,408           376,828
   Change in notes payable to directors                    65,464            (66,188)             (10,571)          321,273
   Change in note payable to related party                 (2,905)             4,587                 (446)           41,161
   Cash received for sale of common stock and
     exercise of stock options                            825,000            688,347                 --           1,548,808
                                                      ---------------------------------------------------------------------
Net cash provided by (used in) financing activities       855,746            659,506               (8,609)        2,288,070

Effects of changes in foreign exchange rates              121,117            (52,897)              71,259           162,039
                                                      ---------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents          282,338            207,444               (5,624)          490,276
Cash and cash equivalents at beginning of period          207,938                494                6,118              --
                                                      ---------------------------------------------------------------------
Cash and cash equivalents at end of period            $   490,276        $   207,938          $       494       $   490,276
                                                      =====================================================================

Supplemental disclosure of cash flow information:
   Interest paid                                      $    15,514        $    29,854          $    27,320       $   212,152
                                                      ===========        ===========          ===========       ===========
</TABLE>

          See accompanying notes to consolidated financial statements

                                       16
<PAGE>

                            ADVANCED LUMITECH, INC.
                         (A DEVELOPMENT STAGE COMPANY)
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
                                                                                                                         Deficit
                                                                                                                        Accumulated
                                                                      Additional                Deferred    Stock Sub-  During the
                                                Common Stock           Paid-in       Stock       Compen-    scriptions  Development
                                            Shares       Par Value     Capital     Subscribed    sation     Receivable     Stage
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>           <C>          <C>          <C>         <C>         <C>
Issuance of Stock in February 1992         20,000,000   $    20,000   $  15,461    $        -   $      -    $        -  $        -
Net loss for the period February 7,
1992 to December 31, 1992                           -             -           -             -          -             -     (30,528)
Foreign currency translation adjustment             -             -           -             -          -             -           -
Comprehensive loss                                  -             -           -             -          -             -           -
                                           ---------------------------------------------------------------------------------------
Balance at December 31, 1992               20,000,000        20,000      15,461             -          -             -     (30,528)
Net loss for year                                   -             -           -             -          -             -    (212,727)
Foreign currency translation adjustment             -             -           -             -          -             -           -
Comprehensive loss                                  -             -           -             -          -             -           -
                                           ---------------------------------------------------------------------------------------
Balance at December 31, 1993               20,000,000        20,000      15,461             -          -             -    (243,255)
Net loss for year                                   -             -           -             -          -             -    (200,009)
Foreign currency translation adjustment             -             -           -             -          -             -           -
Comprehensive loss                                  -             -           -             -          -             -           -
                                           ---------------------------------------------------------------------------------------
Balance at December 31, 1994               20,000,000        20,000      15,461             -          -             -    (443,264)
Net loss for year                                   -             -           -             -          -             -    (225,351)
Foreign currency translation adjustment             -             -           -             -          -             -           -
Comprehensive loss                                  -             -           -             -          -             -           -
                                           ---------------------------------------------------------------------------------------
Balance at December 31, 1995               20,000,000        20,000      15,461             -          -             -    (668,615)
Net loss for year                                   -             -           -             -          -             -    (308,771)
Foreign currency translation adjustment             -             -           -             -          -             -           -
Comprehensive loss                                  -             -           -             -          -             -           -
                                           ---------------------------------------------------------------------------------------
Balance at December 31, 1996               20,000,000        20,000      15,461             -          -             -    (977,386)
Unpaid subscriptions for stock                      -             -      34,965             -    (34,965)            -           -
Net loss for year                                   -             -           -             -          -             -    (219,531)
Foreign currency translation adjustment             -             -           -             -          -             -           -
Comprehensive loss                                  -             -           -             -          -             -           -
                                           ---------------------------------------------------------------------------------------
Balance at December 31, 1997               20,000,000        20,000      50,426             -    (34,965)            -  (1,196,917)
Receipt of subscriptions for 1,867,602
     common shares of stock                         -             -           -             -          -       688,347           -
Issuance of shares in connection with
     acquisition of the Company             5,000,000         5,000      (5,000)            -          -             -           -
                                           ---------------------------------------------------------------------------------------
Net loss for year                                   -             -           -             -          -             -    (340,115)
Foreign currency translation adjustment             -             -           -             -          -             -           -
Comprehensive loss                                  -             -           -             -          -             -           -
                                           ---------------------------------------------------------------------------------------
<CAPTION>
                                            Accumulated
                                               Other             Total
                                              Compre-        Stockholders'
                                              hensive           Equity
                                            Income(loss)       (Deficit)
- -------------------------------------------------------------------------
<S>                                        <C>               <C>
Issuance of Stock in February 1992         $          -      $     35,461
Net loss for the period February 7,
1992 to December 31, 1992                             -           (30,528)
Foreign currency translation adjustment            (378)             (378)
                                                             ------------
Comprehensive loss                                    -           (30,906)
                                           ------------------------------
Balance at December 31, 1992                       (378)            4,555
Net loss for year                                     -          (212,727)
Foreign currency translation adjustment             (31)              (31)
                                                             ------------
Comprehensive loss                                    -          (212,758)
                                           ------------------------------
Balance at December 31, 1993                       (409)         (208,203)
Net loss for year                                     -          (200,009)
Foreign currency translation adjustment         (34,590)          (34,590)
                                                             ------------
Comprehensive loss                                    -          (234,599)
                                           ------------------------------
Balance at December 31, 1994                    (34,999)         (442,802)
Net loss for year                                     -          (225,351)
Foreign currency translation adjustment         (67,486)          (67,486)
                                                             ------------
Comprehensive loss                                    -          (292,837)
                                           ------------------------------
Balance at December 31, 1995                   (102,485)         (735,639)
Net loss for year                                     -          (308,771)
Foreign currency translation adjustment         125,045           125,045
                                                             ------------
Comprehensive loss                                    -          (183,726)
                                           ------------------------------
Balance at December 31, 1996                     22,560          (919,365)
Unpaid subscriptions for stock                        -                 -
Net loss for year                                     -          (219,531)
Foreign currency translation adjustment          71,259            71,259
                                                             ------------
Comprehensive loss                                               (148,272)
                                           ------------------------------
Balance at December 31, 1997                     93,819        (1,067,637)
Receipt of subscriptions for 1,867,602
     common shares of stock                           -           688,347
Issuance of shares in connection with
     acquisition of the Company                       -                 -
Net loss for year                                     -          (340,115)
Foreign currency translation adjustment         (52,897)          (52,897)
                                                             ------------
Comprehensive loss                                    -          (393,012)
                                           ------------------------------

<CAPTION>
                                                                                                                        Deficit
                                                                                                                      Accumulated
                                                                      Additional                Deferred  Stock Sub-   During the
                                                Common Stock           Paid-in       Stock       Compen-  scriptions   Development
                                            Shares       Par Value     Capital     Subscribed    sation   Receivable      Stage
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>           <C>          <C>       <C>         <C>
Balance at December 31, 1998               25,000,000        25,000       45,426      688,347    (34,965)          -    (1,537,032)
Issuance of stock to co-inventor
(March 1999)                                  800,000           800      299,200                                   -
Issuance of stock in exchange for
   consulting services (August 1999)          420,168           420      149,580            -          -           -             -
Obligation for stock issuance in
exchange for technology transfer
(October 1999)                              2,500,000         2,500    1,872,500            -          -           -             -
Issuance of stock in connection with
   1998 subscriptions for 1,877,602
   shares of common stock                   1,877,602         1,878      686,469     (688,347)         -           -             -
Stock options issued to non
   employees (September 1999)                       -             -      802,000            -          -     (58,083)            -
Exercise of options to purchase
   900,000 shares at $0.50 (October -
   December 1999)                             900,000           900      449,100            -          -           -             -
Issuance of stock at $0.75 in
   connection with mezzanine
   financing  (November 1999)                 500,000           500      374,500            -          -           -             -
Net loss for the year                               -             -            -            -          -           -    (4,274,710)
Foreign currency translation adjustment             -             -            -            -          -
Comprehensive loss                                  -             -            -            -          -           -
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999               31,997,770   $    31,998  $ 4,678,775   $        -   $(34,965) $  (58,083) $ (5,811,742)
- ----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                            Accumulated
                                               Other             Total
                                              Compre-        Stockholders'
                                              hensive           Equity
                                            Income(loss)       (Deficit)
- -------------------------------------------------------------------------
<S>                                        <C>               <C>
Balance at December 31, 1998                    40,922          (772,302)
Issuance of stock to co-inventor
(March 1999)                                                     300,000
Issuance of stock in exchange for
   consulting services (August 1999)                 -           150,000
Obligation for stock issuance in
exchange for technology transfer
(October 1999)                                       -         1,875,000
Issuance of stock in connection with
   1998 subscriptions for 1,877,602
   shares of common stock                            -                 -
Stock options issued to non
   employees (September 1999)                        -           743,917
Exercise of options to purchase
   900,000 shares at $0.50 (October -
   December 1999)                                    -           450,000
Issuance of stock and warrants for cash
   in connection with equity
   financing  (November 1999)                        -           375,000
Net loss for the year                                         (4,274,710)
Foreign currency translation adjustment        121,117           121,117
                                                             -----------
Comprehensive loss                                   -        (4,153,593)
- ------------------------------------------------------------------------
Balance at December 31, 1999               $   162,039       $(1,031,978)
- ------------------------------------------------------------------------
</TABLE>

         See accompanying notes to consolidated financial statements

                                      17
<PAGE>

                            ADVANCED LUMITECH, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The Company and its Ability to Continue as a Going Concern
The Company is a development stage company, which, through its subsidiary, Swiss
Lumitech, has developed and patented an exclusive new Luminescence product,
which can be applied to a variety of objects in numerous applications. The
Company will market the Luminescence product and related products under the
brand name "Brightec". Although the Company believes it has developed the
Brightec products to a marketable form, it has yet to commercially market the
Brightec products and generate revenues therefrom.

From the period January 1, 1996 to December 31, 1997, the Company's business
strategy was to sell watch dials, on to which the Luminescence product had been
applied, to an affiliated company. Effective December 31, 1997, the Company
ceased such activities and focused its efforts on further developing the
Luminescence product and Brightec products and raising funds to finance its new
business strategy. Accordingly, the Company is classified as a development stage
company in accordance with Statement of Financial Accounting Standards No. 7,
"Accounting and Reporting by Development Stage Enterprises."

The consolidated financial statements have been prepared on the basis that the
Company will continue to operate as a going concern, including the realization
of its assets and settlement of its liabilities at their carrying values in the
ordinary course of business for the foreseeable future. At December 31, 1999,
the Company has yet to commercially market Brightec and generate revenues
therefrom and the Company's operations to date have generated accumulated losses
of $5,811,742. At December 31, 1999, the Company's current liabilities exceed
its current assets by $749,066 and the Company had outstanding advances of
approximately $75,000 above the limit available to it under its line-of-credit
arrangements with a Swiss bank. In addition, at December 31, 1999, Swiss
Lumitech was not in compliance with certain statutory capital requirements under
Swiss law. The Company's ability to remedy this condition is uncertain due to
the Company's current financial condition.

In order to generate future revenues from the sale of Brightec products, the
Company anticipates making significant investments in personnel and resources
over the next 12-month period. The Company also intends to repay a significant
amount of debt, including the bank line-of-credit. The Company expects that it
may require up to approximately $5.0 million of cash or available credit during
the next 12-month period to finance payment of existing liabilities, including
the bank line-of-credit, purchases of raw materials and operating expenses. The
Company is continuing discussions with institutional investors in its effort to
obtain additional financing; however, there is no assurance that such financing
can be obtained.

The ability of the Company to continue to operate as a going concern is
primarily dependent upon the ability of the Company to raise the necessary
financing, to effectively market and produce Brightec products, to establish
profitable operations and to generate positive operating cash flows. If the
Company fails to raise funds, or the Company's line-of-credit is reduced or
terminated, or the Company is unable to generate operating profits and positive
cash flows, there are no assurances that the Company will be able to continue as
a going concern and it may be unable to recover the carrying value of its
assets.

In November 1999, the Company sold an equity unit consisting of 500,00 shares of
its common stock and a warrant to purchase 500,000 shares of common stock at
$1.00 per share for cash of $375,000. In January 2000, the Company sold an
equity unit consisting of 500,000 shares of its common stock and a warrant to
purchase 500,000 shares of common stock at $1.00 per share for cash of $375,000.
Management believes that it will be successful in raising the necessary
financing to fund the Company's operations through the 2000 calendar year,
however, there can be no assurances that such financing can be obtained.
Accordingly, management believes that no adjustments or reclassifications of
recorded assets and liabilities are necessary at this time.

                                       18
<PAGE>

2.  Restatement of 1999 Third Quarter Results of Operations
During the fourth quarter of 1999, the Company recorded a non cash charge of
$893,917 for compensation expense associated with options and common stock
granted to consultants, which principally vested upon grant in the third quarter
ended September 30, 1999. A summary of the impact of such restatement for the
three and nine-months ended September 30, 1999 is as follows:

<TABLE>
<CAPTION>
                                         Three months ended         Nine months ended
                                         September 30, 1999        September 30, 1999
                                       ----------------------     ---------------------
                                       Previously       As        Previously       As
                                        Reported     Restated      Reported    Restated
                                       ----------------------     ---------------------
            <S>                       <C>          <C>          <C>          <C>
            Operating loss            $  172,561   $1,066,478   $  967,463   $1,861,380

            Net loss                  $  180,790   $1,074,707   $  991,472   $1,885,389

            Basic and diluted
            loss per share            $     0.00   $     0.04   $     0.04   $     0.07
</TABLE>

3.  Summary of Significant Accounting Policies
Basis of Presentation: The accompanying consolidated financial statements
include the accounts of Advanced Lumitech, Inc. and its wholly owned subsidiary,
Lumitech SA. All significant intercompany accounts and transactions have been
eliminated in consolidation.

Effective August 13, 1998, the Company acquired 100% of the then outstanding
common stock of Swiss Lumitech for consideration of 4,000,000 newly issued
common shares ($ 0.001 par value) of the Company. As a result of this
transaction, the shareholders of Swiss Lumitech became majority shareholders of
the Company, owning 80% of the Company's then issued 5,000,000 voting common
shares before giving effect to the previously disclosed 5 for 1 stock split.

For accounting purposes, the acquisition of Swiss Lumitech was treated as a
purchase (reverse acquisition) of the Company by Swiss Lumitech. In a reverse
acquisition, the historical shareholders' equity of the acquiror prior to the
merger is retroactively restated (a recapitalization) for the equivalent number
of shares received in the merger after giving effect to any difference in par
value of the issuers and acquirer's stock by an offset to paid in capital. All
share and per-share information has been presented in the accompanying
consolidated financial statements as if recapitalization had occurred as of the
first day presented in the financial statements. Accordingly, the accompanying
consolidated financial statements and related notes reflect the operations of
the Company combined with the operations of Swiss Lumitech from February 7,
1992, the inception date of Swiss Lumitech, to December 31, 1999.

Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents: All short-term investments which have an original
maturity of 90 days or less, and are valued at cost plus accrued interest which
approximates market, are considered to be cash equivalents.

Revenue Recognition: The Company recognizes revenue upon product shipment or
when title passes.

Concentrations of Credit Risk: Credit risk results from the possibility that a
loss may occur from the failure of another party to perform according to the
terms of a contract. Financial instruments that potentially subject the

                                       19
<PAGE>

Company to concentrations of credit risk consist principally of cash and cash
equivalents. The Company places its available cash with high quality financial
institutions to mitigate the risk of material loss in this regard. Accordingly,
management believes the likelihood of incurring material losses due to
concentration of credit risk is remote.

Office and Photographic Equipment: Office and photographic equipment are stated
at cost, less accumulated depreciation, which is computed using the
straight-line method over the estimated useful life of the related assets, which
the Company has determined to be five years.

Foreign Currency: From inception to date, the Company's revenues and expenses
have been generated and incurred by Swiss Lumitech, which operates within
Switzerland. Accordingly, the functional currency of the Company is the Swiss
Franc. Foreign currency denominated assets and liabilities are translated into
U.S. dollar equivalents based on exchange rates prevailing at the end of each
period. Revenues and expenses are translated at average exchange rates during
the period. Aggregate foreign exchange gains and losses arising from the
translation of foreign currency denominated assets and liabilities are included
as a component of comprehensive loss. Such realized gains and losses have not
been material to date.

Income Taxes: Deferred tax assets and liabilities are recognized based on
temporary differences between the financial statements and tax basis of assets
and liabilities using enacted tax rates in effect for the year in which the
temporary differences are expected to reverse. A valuation allowance is applied
against net deferred tax assets if, based on available evidence, it is more
likely than not that some or all to the deferred assets will not be realized.

Patent and Patent Applications: The Company capitalizes patent and patent
application costs as incurred, if recoverability is reasonably assured. Such
costs were $169,531 for the year ended December 31, 1999 and $216,535 for the
period from February 7, 1992 to December 31, 1999. These costs have been
expensed due to the uncertainty as to recoverability.

Stock Splits: On August 14, 1998, the Company's Board of Directors approved a
5-for-1 stock split of the Company's issued and outstanding common shares (the
"Stock Split"). Accordingly, the Company's then issued and outstanding share
capital of 5,000,000 shares was increased to 25,000,000. All share and per share
information have been retroactively restated to reflect the stock split.

Earnings Per Share: Earnings per share are presented in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
128"), which requires the presentation of "basic" earnings per share and
"diluted" earnings per share. Basic earnings per share is computed by dividing
income available to common shareholders by the weighted-average shares of common
stock outstanding during the period. For purposes of computing diluted earnings
per share the denominator includes both the weighted-average shares of common
stock outstanding during the period and the weighted average number of potential
shares of common stock, if any. There is no difference between basic and diluted
net loss per share for the Company, since it has incurred losses since
inception.

Segment Information: Effective January 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131, establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. If also establishes standards for related disclosures about
products and services, geographic areas and major customers. During the periods
presented in the consolidated financial statements, the Company has operated in
only one operating segment - Luminescence product development. Long-lived assets
are principally located in Switzerland.

Stock Based Compensation: The Company has elected to follow Accounting
Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to
Employees" in accounting for its stock-based employee compensation plans, rather
than the alternative fair value accounting method provided for under Statement
of Financial Accounting Standard (SFAS) No. 123, "Accounting for Stock-Based
Compensation," as this alternative requires the use of option

                                       20
<PAGE>

valuation models that were not developed for use in valuing employee stock
options. Under APB No. 25, since the exercise price of options granted to
employees under these plans equals the market price of the underlying stock on
the date of grant, no compensation expense is recognized for such grants. Stock-
based compensation represents the cost, based on SFAS 123, of granting options
to consultants in 1999, measured under variable plan accounting and recognized
over the vesting period of the options. The Company recognized compensation
expense of $743,917 in 1999 and has $58,083 of unamortized deferred compensation
at December 31, 1999. Under variable plan accounting, the value of unvested
options will be re-measured and recognized in income at each reporting date
until vesting occurs.

4.   New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 will become effective in 2001.
SFAS 133 requires that all derivative instruments be recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are recorded
each period in current earnings or other comprehensive income, depending on
whether a derivative is designated as part of a hedge transaction and, if it is,
the type of hedge transaction. To date the Company has not utilized derivative
instruments or hedging activities and, therefore, the adoption of SFAS 133 is
not expected to have a material impact on the Company's financial position or
results of operations.

5.   Related Party Transactions
The balance sheet classification "Accounts payable to affiliated companies"
includes amounts owed to a Netherlands company whose principal shareholder is a
shareholder of the Company (the "Netherlands Affiliate") for the repurchase of
certain licenses granted by the Company to the Netherlands Affiliate for the use
and exploitation of the Company's Luminescence product (the "Netherlands
Affiliate Product Rights"). In addition, at December 31, 1997, accounts payable
to affiliated companies include amounts owed to a separate entity ("Lumicorp")
controlled by the Company's directors, for the repurchase of certain other
rights relating to the Luminescence product (the "Lumicorp Product Rights"),
which the Company had previously sold or licensed to these entities. At December
31, 1998, the Company had informally agreed to repurchase the Netherlands
Affiliate Product Rights at the equivalent amount the Netherlands Affiliate had
paid to acquire them, plus an additional $70,000 for costs and expenses the
Netherlands Affiliate paid or incurred in the development of processes, products
and markets. The Company repurchased the Lumicorp Product Rights during 1998 for
the equivalent amount Lumicorp previously paid to acquire them. The decision to
repurchase the Product Rights was a direct result of the change in the Company's
strategy, as discussed in Note 1.

During 1999, the Company entered into a technology transfer agreement with Socol
S.A. ("Socol"), whose major shareholder is a shareholder of the Company. This
agreement, which is effective October 1999, provides for the transfer of
production processes and know how developed by Socol using the Lumicorp Products
rights to the Company in exchange for an obligation to issue 2.5 million shares
of common stock with a value of $1,875,000. As of December 31, 1999, and from
the effective date of October 30, 1999, the 2.5 million shares have been
reflected in the accompanying financial statements as outstanding. The shares
were issued in February 2000. The value of the shares has been expensed due to
the uncertainty of the Company's ability to develop production capabilities and
produce product on a commercially viable basis.

The balance sheet classification "Note payable to related party" represents
amounts owed to a director of one of the Company's former significant suppliers.
The note has no stated maturity and has an interest rate of 7%. The borrowings
under this note payable are not secured.

The balance sheet classification "Notes payable to directors" represents amounts
owed to the Company's directors, pursuant to three separate agreements (the
"Director's Note Agreements"). The Director's Note Agreements have no stated
maturity and have an interest rate of 7%. The borrowings under the Director's
Note Agreements are not secured, and the note holders have agreed not to require
payment in cash before January 1, 2001.

                                       21
<PAGE>

6.   Income Taxes
The Company has fully reserved for the tax benefits of its net operating losses
at December 31, 1999 because of uncertainty about realization. At December 31,
1999, the Company had net operating loss carryforwards for U.S. federal income
tax purposes of approximately $4.3 million which will expire in varying amounts
through 2017 and foreign net operating losses of approximately $1.5 million at
December 31, 1999 which begin to expire in varying amounts through 2006, if not
utilized. Utilization of net operating loss and tax credit carryforwards will be
subject to substantial annual limitations provided by the Internal Revenue Code
of 1986, as amended. The annual limitation may result in the expiration of net
operating loss and tax credit carryforwards before full utilization.

7.   Line of Credit
The Company, through Swiss Lumitech, has a line-of-credit with a Swiss bank.
Pursuant to the terms of the bank line-of-credit, the Company may borrow up to
$300,000, at the December 31, 1999 rate of exchange. At December 31, 1999, the
Company had exceeded such borrowing limit by approximately $75,000. However, the
bank granted a temporary extension, with no stated expiration date, to exceed
the limit by the bank. The line-of-credit agreement contains terms and
conditions, restricting the Swiss Lumitech's ability to pledge its assets as
security for other borrowings and requiring the payment of interest each
quarter. In addition, all accounts receivable generated by the Company are
automatically pledged to the bank pursuant to the terms of the line-of-credit
agreement. At December 31, 1999, the borrowings under the bank line-of-credit
carries interest at 6.35%. The line-of-credit is guaranteed up to the amount
available under the line of credit by a relative of certain directors.

8.   Accrued Expenses
At December 31, 1999 and 1998, accrued expenses consists of the following:

                                                   December 31,
                                                1999         1998
                                            ------------------------

          Selling and marketing expenses     $391,329      $ 25,000
          Professional fees                    70,000        25,000
          Employee related costs               53,770            --
          Other                                36,775            --
                                             --------      --------
                                             $551,874      $ 50,000
                                             ========      ========


9.   Common Stock
At December 31, 1998, the Company and the co-inventor of the Luminescence
product had agreed in principle to an amendment to their agreement that would,
among other things, eliminate an obligation of the Company to pay the co-
inventor royalties calculated as a percentage of sales of products based upon
the Luminescence product, and instead provide for the issuance of common stock
of the Company and the making of cash payments to said co-inventor. On March 31,
1999, the Company and the co-inventor entered into an agreement amending the
earlier royalty agreement pursuant to which the Company (i) agreed to a cash
payment of $160,000 of which the Company has paid the co-inventor $57,000 and
$25,000 in 1999 and 1998, respectively, and committed to pay an additional
$78,000 from time to time as the Company's liquidity and working capital
requirements permit, and (ii) agreed to issue 800,000 shares of the Company's
common stock to the co-inventor. The 800,000 shares of the Company's common
stock were issued on March 31, 1999. The 800,000 shares of the Company's common
stock, with a value of $300,000, and the $125,000 were charged to expense in the
three months ended March 31, 1999. Accounts payable and accrued expenses at
December 31, 1999 include the $78,000 of expenses related to the patent
assignment agreement.

During 1999, the Company issued 2.5 million shares of common stock to Socol (see
Note 5) valued at $1,875,000 in connection with a technology transfer agreement
for production processes and know how. In 1999, the Company also issued 420,168
shares of common stock valued at $150,000 and options to purchase 2.1 million
shares of common stock valued at $802,000 to various consultants for services.

                                       22
<PAGE>

In November 1999, the Company sold an equity unit consisting of 500,000 shares
of its common stock and a warrant to purchase 500,000 shares of common stock at
$1.00 per share for cash of $375,000. In January 2000, the Company sold an
equity unit consisting of 500,000 shares of its common stock and a warrant to
purchase 500,000 shares of common stock at $1.00 per share for cash of $375,000.

10.   Stock Options
Stock Option Plan. On September 10, 1999, the Board of Directors adopted the
1999 Stock Option/Stock Issuance Plan (the "Plan"). Pursuant to the Plan,
options to purchase up to 5,000,000 shares of Common Stock were reserved for
issuance to employees and consultants of the Company. Options granted under the
Plan may be either Incentive Stock Options or Non-Qualified Stock Options for
purposes of federal income tax law. Options are generally subject to vesting
over a period of five years from the date of grant and are exercisable only to
the extent vested from time to time. The selection of individuals to receive
awards of options under the Plan and the amount and terms of such awards may be
determined by the Board of Directors of the Company.

Option activity during 1999 was as follows:

<TABLE>
<CAPTION>
                                                         Weighted Avg.
                                                        Exercise price          Number
                                                           Per share           of Shares
                                                        --------------        -----------
<S>                                                     <C>                   <C>
Options granted                                            $  0.74              3,850,000
Options exercised                                             0.50               (900,000)
Options canceled                                              1.00               (150,000)
                                                                                ---------
Options outstanding at December 31, 1999                      0.80              2,800,000
                                                                                ---------
Shares reserved for future grants                                               1,300,000
                                                                                ---------
Options exercisable at December 31, 1999                      0.50              1,100,000
                                                                                ---------
</TABLE>

The weighted-average fair value of options granted during fiscal year 1999 was
$0.73.

Pursuant to the requirements of SFAS 123, pro forma net loss and basic and
diluted net loss per share for fiscal 1999 were not materially different from
the reported loss per share and the reported basic and diluted loss per share.
Options exercisable of 1.1 million, held by a consultant, have been excluded
from the calculation as they have been reflected in compensation expense.

The fair value for these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions for fiscal year 1999; risk-free interest rate of 6%; no dividend
yield; the volatility factor of the expected market price of the Company's
common stock of 250% and a weighted average expected life of the options of 4
years.

The Company has 8.0 million shares of common stock reserved at December 31, 1999
for the exercise of stock options, commitments to issue common stock and
warrants at December 31, 1999.

                                       23
<PAGE>

11.   Commitments
The Company leases office space in Switzerland and the United States under
operating leases. The Swiss lease is cancelable at the end of each 12-month
period ending December. At December 31, 1999, lease commitments under this
agreement amounted to $11,881. The U.S. lease expires in January 2002 and
requires annual rent of $83,000. Future lease commitments are as follows:

Year ending December 31, 2000            $83,000
                         2001             83,000
                         2002             83,000

                                       24
<PAGE>

ITEM 9   Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

    None

                                    Part III

Item 10   Directors and Executive Officers of the Registrant

The positions held by each Director and Officer of the Company as of March 31,
2000 are stated below:

<TABLE>
<CAPTION>
          Name                                       Age           Position with the Company
          ----                                       ---           -------------------------
<S>                                                  <C>           <C>
Patrick Planche  ..........................          36            Chief Executive Officer, President,
                                                                      Treasurer and Director

Francois Planche ..........................          43            Secretary and Director

Jose Canales la Rosa.......................          43            Director
</TABLE>

     Mr. Patrick Planche has been Chief Executive Officer, President and a
director of the Company since August 1998. He is the President, a director and
co-founder of the Company's wholly owned subsidiary, Lumitech S.A. which was
organized in 1992 under the name OTWD On Time Diffusion S.A. Swiss Lumitech was
engaged in the international publication and distribution of the book A Guide to
Swatchwatches, before redirecting its activities in 1993 to the field of
photoluminescence and graphic arts. Patrick Planche is the brother of Francois
Planche.

     Mr. Francois Planche has been secretary and a director of the Company since
August 1998; and is a director and co-founder of the Company's wholly owned
subsidiary, Swiss Lumitech. He is the author of the reference book, A Guide to
Swatchwatches, which was published and distributed by Swiss Lumitech prior to
its change in strategic direction in 1993 to the field of photoluminescence and
graphic arts. Francois Planche is the brother of Patrick Planche.

     Mr. Jose Canales la Rosa has been a director of the Company since August
1998; and, since 1997 has collaborated with Swiss Lumitech in the development of
luminescent pictures for textiles, as well as the industrialization of
manufacturing processes for luminescent printing sheets. Since 1987, Mr. Canales
has been a co-director of Widemax B.V. (Holland), a leading company in the
manufacture of textiles.

     All directors are elected each year at the annual meeting of shareholders.
All officers are elected at the first meeting of the Board following the annual
meeting of shareholders and hold office for one year.

Compensation Committee Report on Executive Compensation

The Board of Directors of the Company has not constituted a Compensation
Committee from its members and accordingly the following is the report of the
entire Board of Directors. The Board is responsible for reviewing the
compensation of the executive officers of the Company.

Compensation Philosophy. The Company has not developed a formal plan for the
compensation management, as its primary focus, and application of working
capital, is the development of its products and markets. In structuring any
compensation program for management, however, the Board of Directors will seek
to establish compensation policies that provide management with a performance
incentive, and that align the interests of senior management with stockholder
interests. Such program will include salary and annual incentives as its basic
components and, in

                                       25
<PAGE>

establishing the total amount and mix of these components of compensation, the
Board expects to consider the past performance and anticipated future
contribution of each executive officer.

Salary. The salaries of the executive officers (including the Chief Executive
Officer) are reviewed annually by the Board of Directors. The Board has not
considered compensation levels for comparable positions at similar companies in
determining compensation levels for management. Instead, compensation levels for
executive officers have been based on the Board's assessment of the Company's
liquidity and corresponding ability to compensate its executive officers at any
level.

Annual Incentives. The Board historically has never approved or, thus far, even
considered an executive incentive plan which would provide executive officers
(including the Chief Executive Officer) with the opportunity to earn specified
percentages of their base salary based upon targeted financial goals or the
achievement of individual objectives and a subjective assessment of the
executive's performance. There were no incentive awards or bonuses paid in the
1999 fiscal year.

Compensation of the Chief Executive Officer. Mr. Patrick Planche's salary for
fiscal 1999 was determined by the Board based upon the Company's working capital
limitations, and was not intended to reflect the Board's view of his value to
the Company.

Item 11   Executive Compensation

Director Compensation
- ---------------------
The Company does not currently pay cash compensation to its directors.

Executive Compensation
- ----------------------
The following table sets forth the aggregate cash compensation paid by the
Company with respect to the fiscal years ended December 31, 1999, 1998 and 1997
to the Chief Executive Officer.

Name and Position             Year       Salary      Bonus    Other
- -----------------             ----       ------      -----    -----

Patrick Planche               1999      $ 7,500        $0       $0
 Chief Executive Officer      1998       14,000         0        0
 President and Treasurer      1997        8,000         0        0


Compensation of Executive Officers: There are no employment contracts or
agreements in effect for any officer of the Company. The compensation for
executive officers is reviewed annually. The Board has not considered
compensation levels for comparable positions at similar companies in determining
compensation levels for management. Instead, compensation levels for executive
officers have been based on the Board's assessment of the Company's liquidity
and corresponding ability to compensate its executive officers at any level.

Item 12    Security Ownership of Certain Beneficial Owners

The following table sets forth certain information regarding the Company's
Common Stock owned as of December 31, 1999 by (i) each person (or group of
affiliated persons) known by the Company to be the beneficial owner of more than
5% of the Company's Common Stock (ii) each of the Company's directors, (iii) the
Chief Executive Officer and each of the other individuals named in the Summary
Compensation Table (hereinafter referred to as the "Named Executive Officers")
and (iv) all current executive officers and directors as a group. Except as
otherwise indicated in the footnotes to this table, the Company believes that
each of the person or entities named in this table has sole voting and
investment power with respect to all the shares or Common Stock indicated.

                                       26
<PAGE>

<TABLE>
<CAPTION>
                                                                     Number of Shares Beneficially
Directors and Named Executive Officers                              Owned                      Percent
- --------------------------------------                              -----                      -------
<S>                                                             <C>                          <C>
Patrick Planche
   17A Mocassin Path
   South Natick, MA                                                7,283,750                     22.8%

Francois Planche
   36 Avenue Cardinal-Mermillod,
   1227 Courage, Switzerland                                       7,283,750                     22.8%

Jose Canales la Rosa
   Oostrikkerdijk 21 A
   5595 SC Leende
   The Netherlands                                                 2,040,000                      6.4%

All executives officers and directors as a group (3 persons)      16,607,500                     51.9%

Additional 5% Stockholders

Holding Canales B.V. (1)
   Oostrikkerdijk 21A
   5595 SC Leende
   The Netherlands                                                 4,000,000                     12.5%

Mexor B.V. (1)
   Spaarpot 5
   5667 KV Geldrop
   The Netherlands                                                 1,960,000                      6.1%

Orfedor S.A. (1)
   23 Rue du Maillard
   Senia 410
   94567 Rungis Cedex
   France                                                          1,960,000                      6.1%

Dikran Meguerditch Gabrache (1)
  23 Rue du Maillard
   Senia 410
   94567 Rungis Cedex
   France                                                          1,764,000                      5.5%

Socol
   Rue du Lac 24
   1020 Renens
   Switzerland                                                     2,500,000                      7.8%
</TABLE>

   (1)  As reported in, and based solely upon, a Schedule 13D, filed with the
        Securities and Exchange Commission on April 26, 1999, by Holding Canales
        B.V. and others (the "Canales Schedule 13D"). According to the Canales
        Schedule 13D, of the 4,000,000 shares of the Company's common stock
        owned by Holding Canales B.V., (the "Holding Canales Shares"), (i)
        Holding Canales B.V. beneficially owns all 4,000,000 of the Holding
        Canales Shares, (ii) Jose Canales la Rosa beneficially owns 2,040,000 of
        the Holding Canales Shares, (iii) Mexor B.V. beneficially owns 1,960,000
        of the Holding Canales Shares, (iv) Orfedor S.A. beneficially owns
        1,960,000 of the Holding Canales Shares, and (v) Dikran Meguerditch
        Gabrache beneficially owns 1,764,000 of the Holding Canales Shares. In
        each case, the beneficial owner listed above shares voting and
        dispositive power over such shares.

                                       27
<PAGE>

Item 13.  Certain Relationships and Related Transactions

At December 31, 1998, a company controlled by Jose Canales la Rosa ("Canales"),
one of the Company's directors, had agreed to terminate and cancel a license
arrangement dated June 30, 1997 pursuant to which the he had obtained an
exclusive license to use and exploit the Company's luminescence technology in a
territory comprised of the European countries. Pursuant to said informal
agreement, the Company agreed to the payment of $170,000 to Canales of which
$70,000 was reimbursement for costs and expenses it paid or incurred in the
development of processes, products and markets. By agreement dated March 31,
1999, Canales formally agreed to the termination of its exclusive license in
consideration for which the Company confirmed its agreement to pay $70,000 in
reimbursement of the costs and expenses of Canales, and further agreed to repay
Canales the $100,000 paid by the him to the Company in 1997. Said agreement
contemplates the payment for such amounts, without interest, at any time on or
before March 31, 2004.

During 1999, the Company entered into a technology transfer agreement with Socol
S.A. ("Socol") whose major shareholder is a shareholder of the Company, in which
production processes and know how developed by Socol using the Lumicorp Products
rights was acquired in exchange for an obligation to issue 2.5 million shares of
common stock with a value of $1,875,000.

At December 31, 1999, the Company has amounts owed to two of the Company's
directors, Francois Planche and Jose Canales la Rosa in the amounts of $115,000
and $166,500, respectively, pursuant to two separate agreements (the "Director's
Note Agreements"). The Director's Note Agreements have no stated maturity and
have an interest rate of 7%. The borrowings under the Director's Note Agreements
are not secured, and the note holders have agreed not to require payment in cash
before January 1, 2001.

                                       28
<PAGE>

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(A)    1.  Financial Statements

   The financial statements are listed under Part II, Item 8 of this Report.

       2.  Financial Statement Schedules

   None.

       3.  Exhibits

    The exhibits are listed below under Part IV, Item 14(c) of this Report.

(B)    Reports on Form 8-K

     No reports on Form 8-K were filed during the quarter ended December 31,
1999.

(C)    Exhibits

         The following exhibits are filed as part of this report:

         EXHIBIT NUMBER      DESCRIPTION
         --------------      -----------

             3.1             Articles of Incorporation of Advanced Lumitech,
                             Inc. and all amendments and modifications thereto,
                             filed with the Secretary of State of the State of
                             Nevada as of March 29, 1999 (filed as Exhibit 3.1
                             to the Company's 1998 Form 10-K).

             3.2             By-laws of Advanced Lumitech, Inc. (filed as
                             Exhibit 3.2 to the Company's 1998 Form 10-K).

             4               Specimen Certificate representing the Company's
                             Common Stock (filed as Exhibit 4 to the Company's
                             1998 Form 10-K).

             10.1            Merger Agreement dated as of August 12, 1998, by
                             and among the company, Lumitech, S.A. and Patrick
                             Planche, pursuant to which the Company acquired
                             100% of the issued and outstanding shares of the
                             common stock of Lumitech, S.A. (filed as Exhibit
                             10.1 to the Company's 1998 Form 10-K)

             10.2            Patent Assignment Agreement respecting the
                             Company's luminescence technology dates as of
                             January 16, 1996, as amended on March 31, 1999,
                             between Jacques-Charles Collett and Lumitech S.A.
                             (formerly known as OTWD On Time Diffusion S.A.)
                             (Filed as Exhibit 10.2 to the Company's 1998 Form
                             10-K)

             10.3            Agreement dated as of March 31, 1999, between
                             Lumitech, S.A. and Luminescent Europe Technologies
                             B.V. (the "Netherlands Affiliate"), providing for
                             the termination for all rights and interests of the
                             Netherlands Affiliate with respect to the Company's
                             luminescence technology (filed as Exhibit 10.3 to
                             the Company's 1998 Form 10-K).

                                       29
<PAGE>

          10.4     Socol Agreement dated as of March 31, 1999, between the
                   Company and Socol S.A., pursuant to which Socol disclaims any
                   interest in the Company's Luminescence product technology
                   (filed as Exhibit 10.4 to the Company's 1998 Form 10-K).

          10.5     Credit Agreement dates as of August 6, 1997, as amended on
                   September 9, 1998, between Lumitech, S.A. and Credit Suisse
                   (filed as Exhibit 10.5 to the Company's 1998 Form 10-K).

          10.6     Agreement dated as of December 28, 1998, between Lumitech,
                   S.A. and Lumi Corp., providing for the termination of all
                   rights and interests of Lumi Corp. with respect to the
                   Company's luminescence technology (filed as Exhibit 10.6 to
                   the Company's 1998 Form 10-K).

          10.7     Lease by and between Boston Properties Limited Partnership
                   and Advanced Lumitech, Inc. for corporate office space in
                   Waltham, MA. (filed herewith)

          10.8     Subscription Agreement (filed herewith)

          10.9     Warrant Agreement (filed herewith)

          23.1     Consent of Independent Auditors (filed herewith)

          25       List of Subsidiaries

          27       Financial Data Schedule (filed herewith)

                                       30
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                          ADVANCED LUMITECH, INC.


Date: May 16, 2000                        /s/ Patrick Planche
                                          -------------------------------------
                                          Patrick Planche
                                          Principal  Executive, Financial and
                                          Accounting Officer

Date: May 16, 2000                        /s/ Francois Planche
                                          -------------------------------------
                                          Francois Planche
                                          Director

Date: May 16, 2000                        /s/ Jose Canales la Rosa
                                          -------------------------------------
                                          Jose Canales la Rosa
                                          Director

                                       31

<PAGE>

                                                                    Exhibit 10.7

                               RESERVOIR PLACE II
                             WALTHAM, MASSACHUSETTS

                                      LEASE

      THIS INSTRUMENT IS AN INDENTURE OF LEASE in which the Landlord and the
Tenant are the parties hereinafter named, and which relates to space in a
certain building (the "Building") known as Reservoir Place II and with an
address at 1601 Trapelo Road, Waltham, Massachusetts.

      The parties to this Indenture of Lease hereby agree with each other as
follows:

                                    ARTICLE I

                                 REFERENCE DATA

1.1   Subjects Referred To:

      Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this Article:

DATE OF LEASE:              January 18, 2000

LANDLORD:                   Boston Properties Limited Partnership, a Delaware
                            limited partnership, the general partner of which is
                            Boston Properties, Inc., a Delaware corporation

LANDLORD'S ORIGINAL         c/o Boston Properties, Inc.
ADDRESS:                    800 Boylston Street, Suite 400
                            Boston, Massachusetts 02199-8001

TENANT:                     Advanced Lumitech, Inc.

TENANT'S ORIGINAL           92 High Rock Street
ADDRESS:                    Needham, MA 02492

TENANT'S CONSTRUCTION
REPRESENTATIVE:             _________________

COMMENCEMENT DATE:          See Section 2.4

RENT COMMENCEMENT


                                      -1-
<PAGE>

DATE:                       The earlier of (x) February 1, 2000 or (y) the date
                            upon which Tenant commences to use the Premises for
                            the Permitted Use

TERM OR LEASE TERM
(SOMETIMES CALLED
THE ORIGINAL TERM):         Twenty-Four (24) calendar months (plus the partial
                            month, if any, immediately following the
                            Commencement Date), unless extended or sooner
                            terminated as provided in this Lease.

EXTENSION OPTION:           Not applicable

THE SITE:                   That certain parcel of land located on Trapelo Road,
                            Waltham, Middlesex County, Massachusetts, being more
                            particularly described in Exhibit A attached hereto.

THE BUILDING:               The Building known as Reservoir Place II, and
                            numbered 1601 Trapelo Road, Waltham, Massachusetts,
                            located on the site and containing the Total
                            Rentable Floor Area set forth below.

THE ADDITIONAL BUILDING:    The other Building known as Reservoir Place I
                            located on the Site and containing the Total
                            Rentable Floor Area set forth below.

THE BUILDINGS:              The Building and the Additional Building.

THE COMPLEX:                The Building and the Additional Building together
                            with all parking areas, garage, and structures and
                            the Site.

TENANT'S SPACE:             A portion of the second (2nd) floor of the Building
                            in accordance with the floor plan annexed hereto as
                            Exhibit D and incorporated herein by reference.

NUMBER OF                   Privileges for parking ten (10) automobiles, four
PARKING PRIVILEGES:         (4) of which are located in the garage below the
                            Building, and six (6) of which will be located on
                            the outdoor surface lot.

ANNUAL FIXED RENT:          During the Original Term of this Lease at the annual
                            rate of Eighty-Three Thousand Sixty-One and


                                      -2-
<PAGE>

                            00/100 Dollars ($83,061.00) (being the product of
                            (i) 33.00 and (ii) the "Rentable Floor Area of
                            Tenant's Space" (hereinafter defined in this Section
                            1.1). The monthly installment of annual fixed rent
                            during the Original Term is $6,921.75.

BASE OPERATING
EXPENSES:                   Landlord's Operating Expenses (as hereinafter
                            defined in Section 2.6) for calendar year 2000,
                            being January 1, 2000 through December 31, 2000.

BASE TAXES:                 Landlord's Tax Expenses (as hereinafter defined in
                            Section 2.7) for fiscal tax year 2000, being July 1,
                            1999 through June 30, 2000.

TENANT ELECTRICITY:         Initially as provided in Section 2.8 subject to
                            adjustment as provided in Section 2.8.

RENTABLE FLOOR AREA         2,517 square feet.
OF TENANT'S SPACE
(SOMETIMES ALSO
CALLED RENTABLE FLOOR
AREA OF THE PREMISES):

TOTAL RENTABLE FLOOR        368,257 square feet.
AREA OF THE BUILDING:

TOTAL RENTABLE FLOOR        161,734 square feet.
AREA OF THE ADDITIONAL
BUILDING:

TOTAL RENTABLE FLOOR        529,991 square feet.
AREA OF THE BUILDINGS:

PERMITTED USE:              General office purposes.

INITIAL MINIMUM
LIMITS OF TENANT'S
COMMERCIAL GENERAL
LIABILITY INSURANCE:        $2,000,000.00 combined single limit per occurrence
                            on a per location basis

CO-BROKERS:                 Grubb & Ellis, Inc. and Spaulding & Slye Colliers
                            International


                                      -3-
<PAGE>

SECURITY DEPOSIT:  $13,843.50

1.2   Exhibits. There are incorporated as part of this Lease:

      EXHIBIT A Description of Site

      EXHIBIT B Tenant Plan and Working Drawing Requirements

      EXHIBIT C Landlord's Services

      EXHIBIT D Floor Plan

      EXHIBIT E Commencement Date Agreement

      EXHIBIT F Intentionally Omitted

      EXHIBIT G List of Mortgages

1.3   Table of Articles and Sections

                            ARTICLE I-REFERENCE DATA

1.1   Subjects Referred to

      1.2   Exhibits

      1.3   Table of Articles and Sections

                ARTICLE II-THE BUILDINGS, PREMISES, TERM AND RENT

2.1   The Premises

      2.1.1 Relocation of Tenant's Space

2.2   Rights To Use Common Facilities

      2.2.1 Tenant's Parking

2.3   Landlord's Reservations

2.4   Habendum

2.5   Monthly Fixed Rent Payments


                                      -4-
<PAGE>

2.6   Adjustment for Operating Expenses

2.7   Adjustment for Real Estate Taxes

2.8   Tenant Electricity

              ARTICLE III-CONDITION OF PREMISES; TENANT ALTERATIONS

3.1   Condition of Premises

3.2   Intentionally Omitted

3.3   Tenant Alterations and Additions

3.4   General Provisions Applicable to Construction

3.5.  Special Allowance

            ARTICLE IV-LANDLORD'S COVENANTS; INTERRUPTIONS AND DELAYS

4.1   Landlord's Covenants

      4.1.1 Services Furnished by Landlord

      4.1.2 Additional Services Available to Tenant

      4.1.3 Roof, Exterior Wall, Floor Slab and Common Facility Repairs

      4.1.4 Door Signs

4.2   Interruptions and Delays in Services and Repairs, etc.

                          ARTICLE V-TENANT'S COVENANTS

5.1   Payments

5.2   Repair and Yield Up

5.3   Use

5.4   Obstructions; Items Visible From Exterior; Rules and Regulations

5.5   Safety Appliances; Licenses


                                      -5-
<PAGE>

5.6   Assignment; Sublease

5.7   Indemnity; Insurance

5.8   Personal Property at Tenant's Risk

5.9   Right of Entry

5.10  Floor Load; Prevention of Vibration and Noise

5.11  Personal Property Taxes

5.12  Compliance with Laws

5.13  Payment of Litigation Expenses

                         ARTICLE VI-CASUALTY AND TAKING

6.1   Fire and Casualty-Termination or Restoration; Rent Adjustment

6.2   Uninsured Casualty

6.3   Eminent Domain-Termination or Restoration

6.4   Eminent Domain Damages Reserved

                              ARTICLE VII-DEFAULT

7.1   Tenant's Default

7.2   Landlord's Default

                      ARTICLE VIII-MISCELLANEOUS PROVISIONS

8.1   Extra Hazardous Use

8.2   Waiver

8.3   Cumulative Remedies

8.4   Quiet Enjoyment

8.5   Notice To Mortgagee and Ground Lessor


                                      -6-
<PAGE>

8.6   Assignment of Rents

8.7   Surrender

8.8   Brokerage

8.9   Invalidity of Particular Provisions

8.10  Provisions Binding, Etc.

8.11  Recording

8.12  Notices

8.13  When Lease Becomes Binding

8.14  Section Headings

8.15  Rights of Mortgagee

8.16  Status Report and Financial Statements

8.17  Self-Help

8.18  Holding Over

8.19  Non-Subrogation

8.20  Intentionally Omitted

8.21  Security Deposit

8.22  Late Payment

8.23  Governing Law

8.24  Additional Rent


                                      -7-
<PAGE>

                                   ARTICLE II

                        BUILDING, PREMISES, TERM AND RENT

2.1   Landlord hereby demises and leases to Tenant, and Tenant hereby hires and
      accepts from Landlord, Tenant's Space in the Building excluding exterior
      faces of exterior walls, the common stairways and stairwells, elevators
      and elevator wells, fan rooms, electric and telephone closets, janitor
      closets, freight elevator vestibules, and pipes, ducts, conduits, wires
      and appurtenant fixtures serving exclusively or in common other parts of
      the Building and if Tenant's Space includes less than the entire rentable
      area of any floor, excluding the common corridors, elevator lobbies and
      toilets located on such floor.

      Tenant's Space with such exclusions is hereinafter sometimes referred to
      as the "Premises". The term "Building" means the Building identified on
      the first page, and which is the subject of this Lease and being one of
      the two (2) Buildings erected on the Site by the Landlord; the term "Site"
      means all, and also any part, of the Land described in Exhibit A, plus any
      additions or reductions thereto resulting from the change of any abutting
      street line and all parking areas and structures. The terms "Property" or
      "Complex" means the two (2) Buildings and the Site.

2.1.1 Tenant hereby agrees with Landlord that, upon the request of Landlord made
      from time to time, Tenant shall relocate from the Premises then demised to
      Tenant under this Lease (the "Original Premises") to other premises (the
      "Relocated Premises") within the Building and upon such relocation the
      Relocated Premises shall become the premises demised under this Lease and
      wherever the term "Premises" is used herein the same thereafter shall mean
      and refer to the Relocated Premises. Landlord, at its sole cost and
      expense, shall perform the partitioning of the Relocated Premises and
      shall place the same into substantially equivalent condition to that in
      which the Original Premises were in prior to such relocation, and Landlord
      shall also reimburse Tenant for Tenant's reasonable out-of-pocket moving
      expenses in so relocating to the Relocated Premises upon billing therefor
      from Tenant, which billing shall include reasonable evidence thereof in
      the form of paid invoices, receipts and the like. Tenant shall not be
      required to vacate the Original Premises and to relocate to the Relocated
      Premises until the Relocated Premises shall be substantially complete
      subject to punch list items and items of long lead time. Upon any such
      relocation the Tenant shall enter into an amendment to this Lease
      confirming such relocation, but the Tenant's failure to enter into such
      amendment shall not affect in any manner the relocation of the Premises
      demised under this Lease from the Original Premises to the Relocated
      Premises.


                                      -8-
<PAGE>

2.2   Subject to Landlord's right to change or alter any of the following in
      Landlord's discretion as herein provided, Tenant shall have, as
      appurtenant to the Premises, the non-exclusive right to use in common with
      others, but not in a manner or extent that would materially interfere with
      the normal operation and use of the Building as a multi-tenant office
      building and subject to reasonable rules of general applicability to
      tenants of the Building from time to time made by Landlord of which Tenant
      is given notice: (a) the common lobbies, corridors, stairways, and
      elevators of the Building, and the pipes, ducts, shafts, conduits, wires
      and appurtenant meters and equipment serving the Premises in common with
      others, (b) the loading areas serving the Building and the common walkways
      and driveways necessary for access to the Building, and (c) if the
      Premises include less than the entire rentable floor area of any floor,
      the common toilets, corridors and elevator lobby of such floor.
      Notwithstanding anything to the contrary herein, Landlord has no
      obligation to allow any particular telecommunication service provider to
      have access to the Building or the Premises. If Landlord permits such
      access, Landlord may condition such access upon the payment to Landlord by
      the service provider of fees assessed by Landlord in its sole discretion.

      2.2.1 In addition, Landlord shall provide to Tenant monthly privileges in
            the number specified in Section 1.1 for the parking of automobiles,
            in common with use by other tenants from time to time of the
            Complex, and on a first-come, first-served basis, and Landlord shall
            not be obligated to furnish stalls or spaces on the Site
            specifically designated for Tenant's use. Tenant covenants and
            agrees that it and all persons claiming by, through and under it,
            shall at all times abide by all reasonable rules and regulations
            promulgated by Landlord with respect to the use of the parking areas
            on the Site. The parking privileges granted herein are
            non-transferable except to a permitted assignee or subtenant as
            provided in Section 5.6 through Section 5.6.5. Further, Landlord
            assumes no responsibility whatsoever for loss or damage due to fire,
            theft or otherwise to any automobile(s) parked on the Site or to any
            personal property therein, however caused, and Tenant covenants and
            agrees, upon request from Landlord from time to time, to notify its
            officers, employees, agents and invitees of such limitation of
            liability. Tenant acknowledges and agrees that a license only is
            hereby granted, and no bailment is intended or shall be created.

2.3   Landlord reserves the right from time to time, without unreasonable
      interference with Tenant's use: (a) to install, use, maintain, repair,
      replace and relocate for service to the Premises and other parts of the
      Building, or either, pipes, ducts, conduits, wires and appurtenant
      fixtures, wherever located in the Premises or Building, and (b) to alter
      or relocate any other common facility, provided that substitutions are
      substantially equivalent or better. Installations, replacements and
      relocations referred to in clause (a) above shall be located so far as
      practicable in


                                      -9-
<PAGE>

      the central core area of the Building, above ceiling surfaces, below floor
      surfaces or within perimeter walls of the Premises. Except in the case of
      emergencies, Landlord agrees to use its best efforts to give Tenant
      reasonable advance notice of any of the foregoing activities which require
      work in the Premises.

2.4   The Term of this Lease shall be the period specified in Section 1.1 hereof
      as the "Lease Term", unless sooner terminated or extended as herein
      provided. If Section 1.1 provides for a fixed Commencement Date, then the
      Commencement Date of the Lease Term hereof shall be such date. Otherwise,
      the Lease Term hereof shall commence on, and the Commencement Date shall
      be the day on which the Premises are delivered by Landlord to Tenant.

      In the case where the Premises are to be delivered in their AS-IS
      condition, the day on which the Premises are delivered by Landlord to
      Tenant shall be the date on which the Landlord delivers the Premises to
      Tenant free and clear of all other tenants and occupants.

      As soon as may be convenient after the Commencement Date has been
      determined, Landlord and Tenant agree to join with each other in the
      execution, in the form of Exhibit E hereto, of a written Commencement Date
      Agreement in which the Commencement Date and specified Lease Term of this
      Lease shall be stated. If Tenant shall fail to execute such Agreement, the
      Commencement Date and Lease Term shall be as reasonably determined by
      Landlord in accordance with the terms of this Lease.

2.5   Tenant agrees to a to Landlord, or as directed by Landlord, at P.O. Box
      3557, Boston. MA 02241-3557 or at such other place as Landlord shall from
      time to time designate by notice, on the Rent Commencement Date (defined
      in Section 1.1 hereof) and thereafter monthly, in advance, on the first
      day of each and every calendar month during the Original Term, a sum equal
      to one twelfth (1/12th) of the Annual Fixed Rent (sometimes hereinafter
      referred to as "fixed rent") and on the first day of each and every
      calendar month during the extension option period (if exercised), a sum
      equal to one twelfth (1/12th) of the annual fixed rent as determined in
      Section 8.20 for the applicable extension option period

      Annual Fixed Rent for any partial month shall be paid by Tenant to
      Landlord at such rate on a pro rata basis, and, if the Rent Commencement
      Date is a day other than the first day of a calendar month, the first
      payment which Tenant shall make to Landlord shall be a payment equal to a
      proportionate part of such monthly Annual Fixed Rent for the partial month
      from the Rent Commencement Date to the first day of the succeeding
      calendar month.


                                      -10-
<PAGE>

      Other charges payable by Tenant on a monthly basis, as hereinafter
      provided, likewise shall be prorated, and the first payment on account
      thereof shall be determined in similar fashion but shall commence on the
      Rent Commencement Date; and other provisions of this Lease calling for
      monthly payments shall be read as incorporating this undertaking by
      Tenant.

      The Annual Fixed Rent and all other charges for which provision is herein
      made shall be paid by Tenant to Landlord, without offset, deduction or
      abatement except as otherwise specifically set forth in this Lease.

2.6   "Landlord's Operating Expenses" means the cost of operation of the
      Building and the Site which shall exclude costs of special services
      rendered to tenants (including Tenant) for which a separate charge is
      made, but shall include, without limitation, the following: premiums for
      insurance carried with respect to the Building and the Site (including,
      without limitation, liability insurance, insurance against loss in case of
      fire or casualty and insurance of monthly installments of fixed rent and
      any additional rent which may be due under this Lease and other leases of
      space in the Building for not more than 12 months in the case of both
      fixed rent and additional rent and if there be any first mortgage of the
      Property, including such insurance as may be required by the holder of
      such first mortgage); compensation and all fringe benefits, workmen's
      compensation insurance premiums and payroll taxes paid to, for or with
      respect to all persons engaged in the operating, maintaining, managing,
      insuring or cleaning of the Building or Site, water, sewer, electric, gas,
      oil and telephone charges (excluding heating, ventilating and air
      conditioning, electricity and utility charges separately chargeable to
      tenants); cost of building and cleaning supplies and equipment; cost of
      maintenance, cleaning and repairs (other than repairs not properly
      chargeable against income or reimbursed from contractors under
      guarantees); cost of snow removal and care of landscaping; payments under
      service contracts with independent contractors; payments by the Landlord
      to the town in which the Complex is located relating to traffic safety,
      fire safety, and other governmental services and programs; management fees
      at reasonable rates consistent with the type of occupancy and the service
      rendered; and all other reasonable and necessary expenses paid in
      connection with the operation, cleaning, management, insuring and
      maintenance of the Building and the Site and properly chargeable against
      income; provided, however, there shall be included (a) depreciation for
      capital expenditures made by Landlord (i) to reduce operating expenses if
      Landlord shall have reasonably determined that the annual reduction in
      operating expenses shall exceed depreciation therefor or (ii) to comply
      with applicable laws, rules, regulations, requirements, statutes,
      ordinances, by-laws and court decisions of all public authorities which
      are now or hereafter in force (herein collectively called "Legal
      Requirements"); plus (b) in the case of both (i) and (ii) an interest
      factor, reasonably determined by Landlord, as being the interest rate then
      charged for long term mortgages by institutional lenders on like
      properties within the


                                      -11-
<PAGE>

      locality in which the Building is located; depreciation in the case of
      both (i) and (ii) shall be determined by dividing the original cost of
      such capital expenditure by the number of years of useful life of the
      capital item acquired and the useful life shall be reasonably determined
      by Landlord in accordance with generally accepted accounting principles
      and practices in effect at the time of acquisition of the capital item;
      and further provided, however, if Landlord reasonably concludes on the
      basis of engineering estimates that a particular capital expenditure will
      effect savings in other Operating Expenses, including, without limitation,
      energy related costs, and that such projected savings will, on an annual
      basis ("Projected Annual Savings"), exceed the annual depreciation
      therefor, then and in such event the amount of depreciation for such
      capital expenditure shall be increased to an amount equal to the Projected
      Annual Savings; and in such circumstance, the increased depreciation (in
      the amount of the Projected Annual Savings) shall be made for such period
      of time as it would take to fully amortize the cost of the item in
      question, together with interest thereon at the interest rate as aforesaid
      in equal monthly payments, each in the amount of 1/12th of the Projected
      Annual Savings, with such payment to be applied first to interest and the
      balance to principal.

      "Operating Expenses Allocable to the Premises" shall mean (a) the same
      proportion of Landlord's Operating Expenses for and pertaining to the
      Building as the Rentable Floor Area of Tenant's Space bears to the Total
      Rentable Floor Area of the Building plus (b) the same proportion of
      Landlord's Operating Expenses for and pertaining to the Site as the
      Rentable Floor Area of Tenant's Space bears to the Total Rentable Floor
      Area of the Buildings.

      "Base Operating Expenses" is hereinbefore defined in Section 1.1.

      "Base Operating Expenses Allocable to the Premises" means (i) the same
      proportion of Base Operating Expenses for and pertaining to the Building
      as the Rentable Floor Area of Tenant's Space bears to the Rentable Floor
      Area of the Building plus (ii) the same proportion of Base Operating
      Expenses for and pertaining to the Site as the Rentable Floor Area of
      Tenant's Space bears to the Rentable Floor Area of the Buildings.

      If with respect to any calendar year falling within the Term, or fraction
      of a calendar year falling within the Term at the beginning or end
      thereof, the Operating Expenses Allocable to the Premises (a) for a full
      calendar year exceed Base Operating Expenses Allocable to the Premises, or
      for any such fraction of a calendar year exceed the corresponding fraction
      of Base Operating Expenses Allocable to the Premises, or (b) for a full
      calendar year are less than Base Operating Expenses Allocable to the
      Premises, or for any such fraction of a calendar year are less than the
      corresponding fraction of Base Operating Expenses Allocable to the
      Premises then, in the case of (a) Tenant shall pay to Landlord, as
      Additional Rent, the amount of such excess, or in the case of (b) Landlord
      shall


                                      -12-
<PAGE>

      credit eighty percent (80%) of such difference against monthly
      installments of fixed rent next thereafter coming due or against any sums
      then due from Tenant to Landlord under this Lease (or refund such eighty
      percent (80%) if the Term has ended and Tenant has no further obligation
      to Landlord). Such payments shall be made at the times and in the manner
      hereinafter provided in this Section 2.6. The Base Operating Expenses
      Allocable to the Premises do not include any costs in respect of
      electricity and HVAC, provision for the payment of which is made in
      Section 2.8 of this Lease.

      Not later than one hundred twenty (120) days after the end of the first
      calendar year or fraction thereof ending December 31 and of each
      succeeding calendar year during the Term or fraction thereof at the end of
      the Term, Landlord shall render Tenant a statement in reasonable detail
      and according to usual accounting practices certified by a representative
      of Landlord, showing for the preceding calendar year or fraction thereof,
      as the case may be, Landlord's Operating Expenses and Operating Expenses
      Allocable to the Premises. Said statement to be rendered to Tenant shall
      also show for the preceding year or fraction thereof as the case may be
      the amounts of operating expenses already paid by Tenant as additional
      rent, and the amount of operating expenses remaining due from, or overpaid
      by, Tenant for the year or other period covered by the statement. Within
      thirty (30) days after the date of delivery of such statement, Tenant
      shall pay to Landlord the balance of the amounts, if any, required to be
      paid pursuant to the above provisions of this Section 2.6 with respect to
      the preceding year or fraction thereof, or Landlord shall credit any
      amounts due from it to Tenant pursuant to the above provisions of this
      Section 2.6 against (i) monthly installments of fixed rent next thereafter
      coming due or (ii) any sums then due from Tenant to Landlord under this
      Lease (or refund such portion of the overpayment as aforesaid if the Term
      has ended and Tenant has no further obligation to Landlord).

      In addition, Tenant shall make payments monthly on account of Tenant's
      share of increases in Landlord's Operating Expenses anticipated for the
      then current year at the time and in the fashion herein provided for the
      payment of Annual Fixed Rent. The amount to be paid to Landlord shall be
      an amount reasonably estimated annually by Landlord to be sufficient to
      cover, in the aggregate, a sum equal to Tenant's share of such increases
      in Landlord's Operating Expenses for each calendar year during the Term.

      Notwithstanding the foregoing provisions, no decrease in Landlord's
      Operating Expenses shall result in a reduction of the amount otherwise
      payable by Tenant if and to the extent said decrease is attributable to
      vacancies in the Buildings rather than to any other causes.

2.7   If with respect to any full Tax Year or fraction of a Tax Year falling
      within the Term, Landlord's Tax Expenses Allocable to the Premises as
      hereinafter defined


                                      -13-
<PAGE>

      (a) for a full Tax Year exceed Base Taxes Allocable to the Premises, or
      for any such fraction of a Tax Year exceed the corresponding fraction of
      Base Taxes Allocable to the Premises, or (b) for a full Tax Year
      subsequent to the date of full assessment are less than Base Taxes
      Allocable to the Premises, or for any such fraction of a Tax Year
      subsequent to the date of full assessment are less than the corresponding
      fraction of Base Taxes Allocable to the Premises; then, on or before the
      thirtieth (30th) day following receipt by Tenant of the certified
      statement referred to below in this Section 2.7, in the case of (a) Tenant
      shall pay to Landlord, as Additional Rent, the amount of such excess, or
      in the case of (b) Landlord shall credit such difference against monthly
      installments of fixed rent next thereafter coming due (or refund such
      overpayment if the Term has ended and Tenant has no further obligation to
      Landlord). In addition, payments by Tenant on account of increases in real
      estate taxes anticipated for the then current year shall be made monthly
      at the time and in the fashion herein provided for the payment of fixed
      rent. The amount so to be paid to Landlord shall be an amount reasonably
      estimated by Landlord to be sufficient to provide Landlord, in the
      aggregate, a sum equal to Tenant's share of such increases, at least ten
      (10) days before the day on which such payments by Landlord would become
      delinquent. Not later than one hundred twenty (120) days after Landlord's
      Tax Expenses Allocable to the Premises are determined for the first such
      Tax Year or fraction thereof and for each succeeding Tax Year or fraction
      thereof during the Term, Landlord shall render Tenant a statement in
      reasonable detail certified by a representative of Landlord showing for
      the preceding year or fraction thereof, as the case may be, real estate
      taxes on the Building and the Site and abatements and refunds of any taxes
      and assessments. Expenditures for legal fees and for other expenses
      incurred in obtaining the tax refund or abatement may be charged against
      the tax refund or abatement before the adjustments are made for the Tax
      Year.

      To the extent that real estate taxes shall be payable to the taxing
      authority in installments with respect to periods less than a Tax Year,
      the foregoing statement shall be rendered and payments made on account of
      such installments. Notwithstanding the foregoing provisions, no decrease
      in Landlord's Tax Expenses with respect to any Tax Year shall result in a
      reduction of the amount otherwise payable by Tenant if and to the extent
      said decrease is attributable to vacancies in the Building or partial
      completion of the Building rather than to any other causes.

      Terms used herein are defined as follows:

      (i)   "Tax Year" means the twelve-month period beginning July 1 each year
            during the Term or if the appropriate governmental tax fiscal period
            shall begin on any date other than July 1, such other date. If
            during the Lease Term the Tax Year is changed by applicable law to
            less than a full 12-


                                      -14-
<PAGE>

            month period, the Base Taxes and Base Taxes Allocable to the
            Premises shall each be proportionately reduced.

      (ii)  "Landlord's Tax Expenses Allocable to the Premises" shall mean (a)
            the same proportion of Landlord's Tax Expenses for and pertaining to
            the Building as the Rentable Floor Area of Tenant's Space bears to
            the Total Rentable Floor Area of the Building plus (b) the same
            proportion of Landlord's Tax Expenses for and pertaining to the Site
            as the Rentable Floor Area of Tenant's Space bears to the Total
            Rentable Floor Area of the Buildings.

      (iii) "Landlord's Tax Expenses" with respect to any Tax Year means the
            aggregate real estate taxes on the Building and Site with respect to
            that Tax Year, reduced by any abatement receipts with respect to
            that Tax Year.

      (iv)  "Base Taxes" is hereinbefore defined in Section 1.1.

      (v)   "Base Taxes Allocable to the Premises" means (i) the same proportion
            of Base Taxes for and pertaining to the Building as the Rentable
            Floor Area of Tenant's Space bears to the Total Rentable Floor Area
            of the Building, plus (ii) the same proportion of Base Taxes for and
            pertaining to the Site as the Rentable Floor Area of Tenant's Space
            bears to the Total Rentable Floor Area of the Buildings.

      (vi)  "Real estate taxes" means all taxes and special assessments of every
            kind and nature assessed by any governmental authority on the
            Building or Site which the Landlord shall become obligated to pay
            because of or in connection with the ownership, leasing and
            operation of the Site, the Building and the Property (including
            without limitation, if applicable, the excise prescribed by Mass
            Gen. Laws (Ter Ed) Chapter 121A, Section 10 and amounts in excess
            thereof paid to the City of Waltham pursuant to agreement between
            Landlord and the City) and reasonable expenses of any proceedings
            for abatement of taxes. The amount of special taxes or special
            assessments to be included shall be limited to the amount of the
            installment (plus any interest, other than penalty interest, payable
            thereon) of such special tax or special assessment required to be
            paid during the year in respect of which such taxes are being
            determined. There shall be excluded from such taxes all income,
            estate, succession, inheritance and transfer taxes; provided,
            however, that if at any time during the Term the present system of
            ad valorem taxation of real property shall be changed so that in
            lieu of the whole or any part of the ad valorem tax on real property
            there shall be assessed on Landlord a capital levy or other tax on
            the gross rents received with respect to the Site or Building or
            Property, or a federal,


                                      -15-
<PAGE>

            state, county, municipal, or other local income, franchise, excise
            or similar tax, assessment, levy or charge distinct from any now in
            effect in the jurisdiction in which the Property is located)
            measured by or based, in whole or in part, upon any such gross
            rents, then any and all of such taxes, assessments, levies or
            charges, to the extent so measured or based, shall be deemed to be
            included within the term "real estate taxes" but only to the extent
            that the same would be payable if the Site and Buildings were the
            only property of Landlord.

2.8   Tenant shall pay to Landlord, as Additional Rent, Tenant's Proportionate
      Share (hereinafter defined) of the cost incurred by the Landlord in
      furnishing electricity and heating, ventilating and air conditioning
      ("HVAC") to the Building and the Site, including common areas and
      facilities and space occupied by tenants, (but expressly excluding utility
      charges separately chargeable to tenants for additional or special
      services), and Tenant shall pay on account thereof, at the time that
      monthly installments of Annual Fixed Rent are due and payable, as
      Additional Rent, an amount equal to 1/12th (prorated for any partial
      month) of the amount estimated by Landlord from time to time as the
      Tenant's Proportionate Share of the annual cost thereof. If with respect
      to any calendar year falling within the Term or fraction of a calendar
      year falling within the Term at the beginning or end thereof, the Tenant's
      Proportionate Share of the cost of furnishing electricity and HVAC to the
      Building and the Site exceeds the amounts payable on account thereof, then
      Tenant shall pay to Landlord, as Additional Rent, on or before the
      thirtieth (30th) day following receipt by Tenant of the statement referred
      to below in this Section 2.8, Tenant's Proportionate Share of the amount
      of such excess. For and with respect to the electricity and HVAC of the
      Building, the Tenant's Proportionate Share shall be a fraction, the
      numerator of which is the Rentable Floor Area of Tenant's Space and the
      denominator of which is the Total Rentable Floor Area of the Building, and
      for and with respect to the electricity for the Site the Tenant's
      Proportionate Share shall be a fraction, the numerator of which is the
      Rentable Floor Area of Tenant's Space and the denominator of which is the
      Total Rentable Floor Area of the Buildings.

      Not later than one hundred twenty (120) days after the end of the first
      calendar year or fraction thereof ending December 31 and of each
      succeeding calendar year during the Term or fraction thereof at the end of
      the Term, Landlord shall render Tenant a reasonably detailed accounting
      certified by a representative of Landlord showing for the preceding
      calendar year, or fraction thereof, as the case may be, the costs of
      furnishing electricity and HVAC to the Building and the Site. Said
      statement to be rendered to Tenant also shall show for the preceding year
      or fraction thereof, as the case may be, the amount already paid by Tenant
      on account of electricity and HVAC, and the amount remaining due from, or
      overpaid by, Tenant for the year or other period covered by the statement.


                                      -16-
<PAGE>

                                  ARTICLE III

                  CONDITION OF PREMISES; ALTERATIONS BY TENANT

3.1   SUBSTANTIAL COMPLETION.

      (A) Tenant shall accept the Premises in their AS-IS condition without any
      obligation on the Landlord's part to perform any additions, alterations,
      improvements, demolition or other work therein or pertaining thereto.
      Tenant, at its sole cost and expense, shall perform all work necessary to
      prepare the Premises for Tenant's occupancy in accordance with plans and
      specifications prepared by an architect, licensed by the Commonwealth of
      Massachusetts and reasonably approved by Landlord, such plans and
      specifications to be subject to the reasonable approval of the Landlord.
      Tenant shall submit to Landlord a detailed floor plan layout together with
      working drawings (the "Tenant's Submission") for work to be performed by
      Tenant to prepare the Premises for Tenant's occupancy. Such floor plan
      layout and working drawings (the "Plans") shall contain at least the
      information required by, and shall conform to the requirements of, Exhibit
      B. Provided that the Plans contain at least the information required by,
      and conform to the requirements of, said Exhibit B, Landlord's approval of
      the Plans shall not be unreasonably withheld or delayed; however,
      Landlord's determination of matters relating to aesthetic issues relating
      to alterations or changes which are visible outside the Premises shall be
      in Landlord's sole discretion. If Landlord disapproves of any Plans, then
      Tenant shall promptly have the Plans revised by its architect to
      incorporate all objections and conditions presented by Landlord and shall
      resubmit such plans to Landlord no later than five (5) days after Landlord
      has submitted to Tenant its objections and conditions. Such process shall
      be followed until the Plans shall have been approved by the Landlord
      without objection or condition.

      Once the Plans have been approved by Landlord, Tenant, at its sole cost
      and expense, shall promptly, and with all due diligence, perform the work
      necessary to prepare the Premises for Tenant's occupancy as set forth on
      the Plans, and, in connection therewith, the Tenant shall obtain all
      necessary governmental permits and approvals for such work. All of such
      work shall be performed strictly in accordance with the Plans and in
      accordance with applicable Legal Requirements (as defined in Section 3.3
      hereof) and Insurance Requirements (as defined in Section 3.3 hereof).
      Tenant shall have such work performed by contractors, reasonably approved
      by Landlord, which contractors shall provide to Landlord such insurance as
      the Landlord may reasonably require. Landlord shall have the right to
      provide such rules and regulations relative to the performance of such
      work and any other work which the Tenant may perform under this Lease and
      Tenant shall abide by all such reasonable rules and regulations and shall
      cause all of its contractors to so abide. It shall be Tenant's obligation
      to obtain a certificate


                                      -17-
<PAGE>

      of occupancy or other like governmental approval for the use and occupancy
      of the Premises, and Tenant shall not open for business in the Premises
      until and unless it has obtained such approval and has submitted to
      Landlord a copy of the same together with waivers of lien from all of
      Tenant's contractors in form adequate for recording purposes. Tenant shall
      also prepare and submit to Landlord promptly after the Tenant's work is
      substantially complete a set of as-built plans showing the work performed
      by Tenant to the Premises.

3.2   Intentionally Omitted.

3.3   This Section 3.3 shall apply before and during the Term. All construction
      work required or permitted by this Lease shall be done in a good and
      workmanlike manner and in compliance with all applicable laws, ordinances,
      rules, regulations, statutes, by-laws, court decisions, and orders and
      requirements of all public authorities ("Legal Requirements") and all
      Insurance Requirements (as defined in this Section 3.3 hereof). All of
      Tenant's work shall be coordinated with any work being performed by or for
      Landlord and in such manner as to maintain harmonious labor relations.
      Each party may inspect the work of the other at reasonable times and shall
      promptly give notice of observed defects. Each party authorizes the other
      to rely in connection with design and construction upon approval and other
      actions on the party's behalf by any Construction Representative of the
      party named in Section 1.1 or any person hereafter designated in
      substitution or addition by notice to the party relying. Tenant shall not
      make alterations and additions to Tenant's space except in accordance with
      plans and specifications therefor first approved by Landlord, which
      approval shall not be unreasonably withheld. However, Landlord's
      determination of matters relating to aesthetic issues relating to
      alterations, additions or improvements which are visible outside the
      Premises shall be in Landlord's sole discretion. Without limiting such
      standard Landlord shall not be deemed unreasonable for withholding
      approval of any alterations or additions (including, without limitation,
      any alterations or additions to be performed by Tenant under Section 3.1)
      which (a) involve or, in Landlord's opinion, might affect any structural
      or exterior element of the Building, any area or element outside of the
      Premises, or any facility serving any area of the Building outside of the
      Premises, or (b) will delay completion of the Premises or Building, or (c)
      will require unusual expense to readapt the Premises to normal office use
      on Lease termination or increase the cost of construction or of insurance
      or taxes on the Building or of the services called for by Section 4.1
      unless Tenant first gives assurance acceptable to Landlord for payment of
      such increased cost and that such readaptation will be made prior to such
      termination without expense to Landlord, or (d) are inconsistent, in
      Landlord's judgment, with alterations satisfying Landlord's standards for
      new alterations in the Building. Landlord's review and approval of any
      such plans and specifications and consent to perform work described
      therein shall not be deemed an agreement by Landlord that such plans,


                                      -18-
<PAGE>

      specifications and work conform with applicable Legal Requirements and
      requirements of insurers of the Building (herein called "Insurance
      Requirements") nor deemed a waiver of Tenant's obligations under this
      Lease with respect to applicable Legal Requirements and Insurance
      Requirements nor impose any liability or obligation upon Landlord with
      respect to the completeness, design sufficiency or compliance of such
      plans, specifications and work with applicable Legal Requirements and
      Insurance Requirements. All alterations and additions shall be part of the
      Building unless and until Landlord shall specify the same for removal
      pursuant to Section 5.2. All of Tenant's alterations and additions and
      installation of furnishings shall be coordinated with any work being
      performed by Landlord and in such manner as to maintain harmonious labor
      relations and not to damage the Buildings or Site or interfere with
      construction or operation of the Buildings and other improvements to the
      Site and, except for installation of furnishings, shall be performed by
      Landlord's general contractor or by contractors or workmen first approved
      by Landlord. Except for work by Landlord's general contractor, Tenant,
      before its work is started, shall secure all licenses and permits
      necessary therefor; deliver to Landlord a statement of the names of all
      its contractors and subcontractors and the estimated cost of all labor and
      material to be furnished by them and security satisfactory to Landlord
      protecting Landlord against liens arising out of the furnishing of such
      labor and material; and cause each contractor to carry workmen's
      compensation insurance in statutory amounts covering all the contractor's
      and subcontractor's employees and commercial general liability insurance
      or comprehensive general liability insurance with a broad form
      comprehensive liability endorsement with such limits as Landlord may
      reasonably require, but in no event less than $5,000,000.00 combined
      single limit per occurrence on a per location basis (all such insurance to
      be written in companies approved by Landlord and naming and insuring
      Landlord and Landlord's managing agent as additional insureds and insuring
      Tenant as well as the contractors), and to deliver to Landlord
      certificates of all such insurance. Tenant agrees to pay promptly when due
      the entire cost of any work done on the Premises by Tenant, its agents,
      employees, or independent contractors, and not to cause or permit any
      liens for labor or materials performed or furnished in connection
      therewith to attach to the Premises or the Buildings or the Site and
      immediately to discharge any such liens which may so attach. Tenant shall
      pay, as additional rent, 100% of any real estate taxes on the Complex
      which shall, at any time after commencement of the Term, result from any
      alteration, addition or improvement to the Premises made by Tenant.

3.4   All construction work required or permitted by this Lease shall be done in
      a good and workmanlike manner and in compliance with all applicable Legal
      Requirements and Insurance Requirements now or hereafter in force. Each
      party may inspect the work of the other at reasonable times and shall
      promptly give notice of observed defects.


                                      -19-
<PAGE>

                                   ARTICLE IV

                 LANDLORD'S COVENANTS; INTERRUPTIONS AND DELAYS

4.1   Landlord covenants:

      4.1.1 To furnish services, utilities, facilities and supplies set forth in
            Exhibit C equal to those customarily provided by landlords in high
            quality buildings in the Boston West Suburban Market subject to
            escalation reimbursement in accordance with Section 2.6.

      4.1.2 To furnish, at Tenant's expense, reasonable additional Building
            operation services which are usual and customary in similar office
            buildings in the Boston West Suburban Market upon reasonable advance
            request of Tenant at reasonable and equitable rates from time to
            time established by Landlord.

      4.1.3 Subject to the escalation provisions of Section 2.6 and except as
            otherwise provided in Article VI, (i) to make such repairs to the
            roof, exterior walls, floor slabs and common areas and facilities as
            may be necessary to keep them in serviceable condition and (ii) to
            maintain the Building (exclusive of Tenant's responsibilities under
            this Lease) in a first class manner comparable to the maintenance of
            similar properties in the Boston West Suburban Market.

      4.1.4 To provide and install, at Landlord's expense for the initial
            installation (all changes thereafter at Tenant's expense), letters
            or numerals on doors in the Premises to identify Tenant's official
            name and Building address; all such letters and numerals shall be in
            the building standard graphics and no others shall be used or
            permitted on the Premises.

4.2   Landlord shall not be liable to Tenant for any compensation or reduction
      of rent by reason of inconvenience or annoyance or for loss of business
      arising from the necessity of Landlord or its agents entering the Premises
      for any of the purposes in this Lease authorized, or for repairing the
      Premises or any portion of the Building or Site however the necessity may
      occur. In case Landlord is prevented or delayed from making any repairs,
      alterations or improvements, or furnishing any services or performing any
      other covenant or duty to be performed on Landlord's part by reason of any
      cause reasonably beyond Landlord's control, including without limitation
      strike, lockout, breakdown, accident, order or regulation of or by any
      Governmental authority, or failure of supply, or inability by the exercise
      of reasonable diligence to obtain supplies, parts or employees necessary
      to furnish such services, or because of war or other emergency, or for any
      cause due to any act or neglect of Tenant or Tenant's servants, agents,


                                      -20-
<PAGE>

      employees, licensees or any person claiming by, through or under Tenant,
      or other causes reasonably beyond Landlord's control, Landlord shall not
      be liable to Tenant therefor, nor, except as expressly otherwise provided
      in Article VI, shall Tenant be entitled to any abatement or reduction of
      rent by reason thereof, nor shall the same give rise to a claim in
      Tenant's favor that such failure constitutes actual or constructive, total
      or partial, eviction from the Premises.

      Landlord reserves the right to stop any service or utility system, when
      necessary by reason of accident or emergency, or until necessary repairs
      have been completed; provided, however, that in each instance of stoppage,
      Landlord shall exercise reasonable diligence to eliminate the cause
      thereof. Except in case of emergency repairs, Landlord will give Tenant
      reasonable advance notice of any contemplated stoppage and will use
      reasonable efforts to avoid unnecessary inconvenience to Tenant by reason
      thereof.

                                    ARTICLE V

                               TENANT'S COVENANTS

      Tenant covenants during the term and such further time as Tenant occupies
any part of the Premises:

5.1   To pay when due all fixed rent and additional rent and all charges for
      utility services rendered to the Premises (except as otherwise provided in
      Exhibit C) and, as further additional rent, all charges for additional
      services rendered pursuant to Section 4.1.2.

5.2   Except as otherwise provided in Article VI and Section 4.1.3 to keep the
      Premises in good order, repair and condition, reasonable wear and tear
      only excepted, and all glass in windows (except glass in exterior walls
      unless the damage thereto is attributable to Tenant's negligence or
      misuse) and doors of the Premises whole and in good condition with glass
      of the same type and quality as that injured or broken, damage by fire or
      taking under the power of eminent domain only excepted, and at the
      expiration or termination of this Lease peaceably to yield up the Premises
      all construction, work, improvements, and all alterations and additions
      thereto in good order, repair and condition, reasonable wear and tear only
      excepted, first removing all goods and effects of Tenant and, to the
      extent specified by Landlord by notice to Tenant given at least ten (10)
      days before such expiration or termination, the wiring for Tenant's
      computer, telephone and other communication systems and equipment and all
      alterations and additions made by Tenant and all partitions, and repairing
      any damage caused by such removal and restoring the Premises and leaving
      them clean and neat. Tenant shall not permit or commit any waste, and
      Tenant shall be responsible for the cost of repairs which may be made
      necessary by reason of damage to common areas in the Building, to


                                      -21-
<PAGE>

      the Site or to the other building caused by Tenant, Tenant's agents,
      employees, contractors, sublessees, licensees, concessionaires or
      invitees. Tenant shall maintain all its equipment, furniture and
      furnishings in good order and repair.

5.3   Continuously from the commencement of the Term to use and occupy the
      Premises for the Permitted Uses only, and not to injure or deface the
      Premises, Building, the Additional Building, the Site or any other part of
      the Complex nor to permit in the Premises or on the Site any auction sale,
      vending machine, or inflammable fluids or chemicals, or nuisance, or the
      emission from the Premises of any objectionable noise or odor, nor to use
      or devote the Premises or any part thereof for any purpose other than the
      Permitted Uses, nor any use thereof which is inconsistent with the
      maintenance of the Building as an office building of the first class in
      the quality of its maintenance, use and occupancy, or which is improper,
      offensive, contrary to law or ordinance or liable to invalidate or
      increase the premiums for any insurance on the Building or its contents or
      liable to render necessary any alteration or addition to the Building.
      Further, (i) Tenant shall not, nor shall Tenant permit its employees,
      invitees, agents, independent contractors, contractors, assignees or
      subtenants to, keep, maintain, store or dispose of (into the sewage or
      waste disposal system or otherwise) or engage in any activity which might
      produce or generate any substance which is or may hereafter be classified
      as a hazardous material, waste or substance (collectively "Hazardous
      Materials"), under federal, state or local laws, rules and regulations,
      including, without limitation, 42 U.S.C. Section 6901 et seq., 42 U.S.C.
      Section 9601 et seq., 42 U.S.C. Section 2601 et seq., 49 U.S.C. Section
      1802 et seq. and Massachusetts General Laws, Chapter 21E and the rules and
      regulations promulgated under any of the foregoing, as such laws, rules
      and regulations may be amended from time to time (collectively "Hazardous
      Materials Laws"), (ii) Tenant shall immediately notify Landlord of any
      incident in, on or about the Premises, the Building or the Site that would
      require the filing of a notice under any Hazardous Materials Laws, (iii)
      Tenant shall comply and shall cause its employees, invitees, agents,
      independent contractors, contractors, assignees and subtenants to comply
      with each of the foregoing and (iv) Landlord shall have the right to make
      such inspections (including testing) as Landlord shall elect from time to
      time to determine that Tenant is complying with the foregoing.

5.4   Not to obstruct in any manner any portion of the Building not hereby
      leased or any portion thereof or of the other building or of the Site used
      by Tenant in common with others; not without prior consent of Landlord to
      permit the painting or placing of any signs, curtains, blinds, shades,
      awnings, aerials or flagpoles, or the like, visible from outside the
      Premises; and to comply with all reasonable Rules and Regulations now or
      hereafter made by Landlord, of which Tenant has been given notice, for the
      care and use of the Building and Site and their facilities and approaches;
      Landlord shall not be liable to Tenant for the failure of other occupants
      of the Buildings to conform to such rules and regulations.


                                      -22-
<PAGE>

5.5   To keep the Premises equipped with all safety appliances required by any
      public authority because of any use made by Tenant other than normal
      office use, and to procure all licenses and permits so required because of
      such use and, if requested by Landlord, to do any work so required because
      of such use, it being understood that the foregoing provisions shall not
      be construed to broaden in any way Tenant's Permitted Use.

5.6   Except as otherwise expressly provided herein, Tenant covenants and agrees
      that it shall not assign, mortgage, pledge, hypothecate or otherwise
      transfer this Lease and/or Tenant's interest in this Lease or sublet
      (which term, without limitation, shall include granting of concessions,
      licenses or the like) the whole or any part of the Premises. Any
      assignment, mortgage, pledge, hypothecation, transfer or subletting not
      expressly permitted in or consented to by Landlord under Sections
      5.6.1-5.6.5 shall be void, ab initio; shall be of no force and effect; and
      shall confer no rights on or in favor of third parties. In addition,
      Landlord shall be entitled to seek specific performance of, and other
      equitable relief with respect to, the provisions hereof.

      5.6.1 Notwithstanding the foregoing provisions of Section 5.6 above and
            the provisions of Section 5.6.2 below, but subject to the provisions
            of Sections 5.6.3, 5.6.4 and 5.6.5, below Tenant shall have the
            right to assign this Lease or to sublet the Premises (in whole or in
            part) to any parent or subsidiary corporation of Tenant or to any
            corporation into which Tenant may be converted or with which it may
            merge, provided that the entity to which this Lease is so assigned
            or which so sublets the Premises has a credit worthiness (e.g.
            assets on a pro forma basis using generally accepted accounting
            principles consistently applied and using the most recent financial
            statements) which is the same or better than the Tenant as of the
            Date of this Lease. If any parent or subsidiary corporation of
            Tenant to which this Lease is assigned or the Premises sublet (in
            whole or in part) shall cease to be such a parent or subsidiary
            corporation, such cessation shall be considered an assignment or
            subletting requiring Landlord's consent.

            5.6.1.1   Notwithstanding the provisions of Section 5.6 above, in
                      the event Tenant desires to assign this Lease or to sublet
                      the whole (but not part) of the Premises (no partial
                      subletting being permitted other than as provided in
                      Section 5.6.1), Tenant shall notify Landlord thereof in
                      writing and Landlord shall have the right at its sole
                      option, to be exercised within thirty (30) days after
                      receipt of Tenant's notice, to terminate this Lease as of
                      a date specified in a notice to Tenant, which date shall
                      not be earlier than sixty (60) days nor later than one
                      hundred and twenty (120) days after


                                      -23-
<PAGE>

                      Landlord's notice to Tenant; provided, however, that upon
                      the termination date as set forth in Landlord's notice,
                      all obligations relating to the period after such
                      termination date (but not those relating to the period
                      before such termination date) shall cease and promptly
                      upon being billed therefor by Landlord, Tenant shall make
                      final payment of all rent and additional rent due from
                      Tenant through the termination date. In the event that
                      Landlord shall not exercise its termination rights as
                      aforesaid, or shall fail to give any or timely notice
                      pursuant to this Section the provisions of Sections
                      5.6.2-5.6.5 shall be applicable. This Section 5.6.1.1
                      shall not be applicable to an assignment or sublease
                      pursuant to Section 5.6.1.

      5.6.2 Notwithstanding the provisions of Section 5.6 above but subject to
            the provisions of this Section 5.6.2 and the provisions of Sections
            5.6.3, 5.6.4 and 5.6.5 below, in the event that Landlord shall not
            have exercised the termination right as set forth in Section
            5.6.1.1, or shall have failed to give any or timely notice under
            Section 5.6.1.1, then for a period of ninety (90) days (i) after the
            receipt of Landlord's notice stating that Landlord does not elect
            the termination right, or (ii) after the expiration of the thirty
            (30) day period referred to in Section 5.6.1.1 in the event Landlord
            shall not give any or timely notice under Section 5.6.1.1, as the
            case may be, Tenant shall have the right to assign this Lease or
            sublet the whole (but not part) of the Premises in accordance with
            Tenant's notice to Landlord given as provided in Section 5.6.3
            provided that, in each instance, Tenant first obtains the express
            prior written consent of Landlord, which consent shall not be
            unreasonably withheld or delayed. Without limiting the foregoing
            standard, Landlord shall not be deemed to be unreasonably
            withholding its consent to such a proposed assignment or subleasing
            if:

            (a) the proposed assignee or subtenant is not of a character
            consistent with the operation of a first class office building (by
            way of example Landlord shall not be deemed to be unreasonably
            withholding its consent to an assignment or subleasing to any
            governmental agency), or

            (b) the proposed assignee or subtenant is not of good character and
            reputation, or

            (c) the proposed assignee or subtenant does not possess adequate
            financial capability to perform the Tenant obligations as and when
            due or required, or

            (d) the assignee or subtenant proposes to use the Premises (or part
            thereof) for a purpose other than the purpose for which the Premises
            may be used as stated in Section 1.1 hereof, or


                                      -24-
<PAGE>

            (e) the character of the business to be conducted or the proposed
            use of the Premises by the proposed subtenant or assignee shall (i)
            be likely to increase Landlord's Operating Expenses beyond that
            which Landlord now incurs for use by Tenant; (ii) be likely to
            increase the burden on elevators or other Building systems or
            equipment over the burden prior to such proposed subletting or
            assignment; or (iii) violate or be likely to violate any provisions
            or restrictions contained herein relating to the use or occupancy of
            the Premises, or

            (f) there shall be existing an Event of Default (defined in Section
            7.1) or

            (g) the proposed subtenant or assignee is a tenant or subtenant of
            any portion of the Property (or any entity affiliated or related to
            a tenant or subtenant of the Property) or is (or within the previous
            sixty (60) days has been) in active negotiation with Landlord or any
            affiliate of Landlord for other premises in the Site or in buildings
            nearby the Site.

      5.6.3 Tenant shall give Landlord prior notice of any proposed sublease or
            assignment, and said notice shall specify the provisions of the
            proposed assignment or subletting, including (a) the name and
            address of the proposed assignee or subtenant, (b) in the case of a
            proposed assignment or subletting pursuant to Section 5.6.2, such
            information as to the proposed assignee's or proposed subtenant's
            net worth and financial capability and standing as may reasonably be
            required for Landlord to make the determination referred to in
            Section 5.6.2 above (provided, however, that Landlord shall hold
            such information confidential having the right to release same to
            its officers, accountants, attorneys and mortgage lenders on a
            confidential basis), (c) all of the terms and provisions upon which
            the proposed assignment or subletting is to be made, (d) in the case
            of a proposed assignment or subletting pursuant to Section 5.6.2,
            all other information necessary to make the determination referred
            to in Section 5.6.2 above and (e) in the case of a proposed
            assignment or subletting pursuant to Section 5.6.1 above, such
            information as may be reasonably required by Landlord to determine
            that such proposed assignment or subletting complies with the
            requirements of said Section 5.6.1. No partial subletting shall be
            permitted.

            If Landlord shall consent to the proposed assignment or subletting,
            as the case may be, then, in such event, Tenant may thereafter
            sublease (the whole but (except in the case of a partial sublease
            under Section 5.6.1) not part of the Premises) or assign pursuant to
            Tenant's notice, as given hereunder; provided, however, that if such
            assignment or sublease shall


                                      -25-
<PAGE>

            not be executed and delivered to Landlord within ninety (90) days
            after the date of Landlord's consent, the consent shall be deemed
            null and void and the provisions of Section 5.6.1.1 shall be
            applicable.

      5.6.4 In addition, in the case of any assignment or subleasing as to which
            Landlord may consent (other than an assignment or subletting
            permitted under Section 5.6.1 hereof) such consent shall be upon the
            express and further condition, covenant and agreement, and Tenant
            hereby covenants and agrees that, in addition to the Annual Fixed
            Rent, additional rent and other charges to be paid pursuant to this
            Lease, one hundred percent (100%) of the "Assignment/Sublease
            Profits" (hereinafter defined), if any, shall be paid to Landlord.

            The "Assignment/Sublease Profits" shall be the excess, if any, of
            (a) the "Assignment/Sublease Net Revenues" as hereinafter defined
            over (b) the Annual Fixed Rent and additional rent and other charges
            provided in this Lease (provided, however, that for the purpose of
            calculating the Assignment/Sublease Profits in the case of a
            sublease, appropriate proportions in the applicable Annual Fixed
            Rent, additional rent and other charges under this Lease shall be
            made based on the percentage of the Premises subleased and on the
            terms of the sublease). The "Assignment/Sublease Net Revenues" shall
            be the fixed rent, additional rent and all other charges and sums
            payable either initially or over the term of the sublease or
            assignment plus all other profits and increases to be derived by
            Tenant as a result of such subletting or assignment, less the
            reasonable costs of Tenant incurred in such subleasing or assignment
            (the definition of which shall include but not necessarily be
            limited to rent concessions, brokerage commissions and alteration
            allowances) amortized over the term of the sublease or assignment.

            All payments of the Assignment/Sublease Profits due Landlord shall
            be made within ten (10) days of receipt of same by Tenant.

      5.6.5 (A) It shall be a condition of the validity of any assignment or
            subletting permitted under Section 5.6.1 above, or consented to
            under Section 5.6.2 above, that both Tenant and the assignee or
            sublessee agree directly with Landlord in a separate written
            instrument reasonably satisfactory to Landlord which contains terms
            and provisions reasonably required by Landlord, including, without
            limitation, the agreement of the assignee or sublessee to be bound
            by all the obligations of the Tenant hereunder, including, without
            limitation, the obligation to pay the rent and other amounts
            provided for under this Lease (but in the case of a partial
            subletting pursuant to Section 5.6.1, such subtenant shall agree on
            a pro rata basis to be so bound) including the provisions of
            Sections 5.6 through


                                      -26-
<PAGE>

            5.6.5 hereof, but such assignment or subletting shall not relieve
            the Tenant named herein of any of the obligations of the Tenant
            hereunder, Tenant shall remain fully and primarily liable therefor
            and the liability of Tenant and such assignee (or subtenant, as the
            case may be) shall be joint and several. Further, and
            notwithstanding the foregoing, the provisions hereof shall not
            constitute a recognition of the assignment or the assignee
            thereunder or the sublease or the subtenant thereunder, as the case
            may be, and at Landlord's option, upon the termination of the Lease,
            the assignment or sublease shall be terminated.

            (B) As Additional Rent, Tenant shall reimburse Landlord promptly for
            reasonable out of pocket legal and other expenses incurred by
            Landlord in connection with any request by Tenant for consent to
            assignment or subletting.

            (C) If this Lease be assigned, or if the Premises or any part
            thereof be sublet or occupied by anyone other than Tenant, Landlord
            may upon prior notice to Tenant, at any time and from time to time,
            collect rent and other charges from the assignee, sublessee or
            occupant and apply the net amount collected to the rent and other
            charges herein reserved, but no such assignment, subletting,
            occupancy or collection shall be deemed a waiver of this covenant,
            or a waiver of the provisions of Sections 5.6 through 5.6.5 hereof,
            or the acceptance of the assignee, sublessee or occupant as a tenant
            or a release of Tenant from the further performance by Tenant of
            covenants on the part of Tenant herein contained, the Tenant herein
            named to remain primarily liable under this Lease.

            (D) No an assignment or subletting under any of the provisions of
            Sections 5.6.1 or 5.6.2 shall in any way be construed to relieve
            Tenant from obtaining the express consent in writing to Landlord to
            any further assignment or subletting.

5.7   To defend with counsel first approved by Landlord (which approval shall
      not be unreasonably withheld or delayed), save harmless, and indemnify
      Landlord from any liability for injury, loss, accident or damage to any
      person or property, and from any claims, actions, proceedings and expenses
      and costs in connection therewith (including without limitation reasonable
      counsel fees) (i) arising from or claimed to have arisen from (a) the
      omission, fault, willful act, negligence or other misconduct of Tenant or
      Tenant's contractors, licensees, invitees, agents, servants, independent
      contractors or employees or (b) any use made or thing done or occurring on
      the Premises not due to the omission, fault, willful act, negligence or
      other misconduct of Landlord, or (ii) resulting from the failure of Tenant
      to perform and discharge its covenants and obligations under this Lease;
      to maintain commercial general liability insurance or comprehensive
      general liability


                                      -27-
<PAGE>

      insurance written on an occurrence basis with a broad form comprehensive
      liability endorsement covering the Premises insuring Landlord and
      Landlord's managing agent (and such persons as are in privity of estate
      with Landlord and Landlord's managing agent as may be set out in notice
      from time to time) as additional insureds as well as Tenant with limits
      which shall, at the commencement of the Term, be at least equal to those
      stated in Section 1.1 and from time to time during the Term shall be for
      such higher limits, if any, as are customarily carried in Greater Boston
      with respect to similar properties or which may reasonably be required by
      Landlord, and workmen's compensation insurance with statutory limits
      covering all of Tenant's employees working in the Premises, and to deposit
      with Landlord on or before the Commencement Date and concurrent with all
      renewals thereof, certificates for such insurance bearing the endorsement
      that the policies will not be canceled until after thirty (30) days'
      written notice to Landlord. All insurance required to be maintained by
      Tenant pursuant to this Lease shall be maintained with responsible
      companies qualified to do business, and in good standing, in the
      Commonwealth of Massachusetts and which have a rating of at least "A-" and
      are within a financial size category of not less than "Class VIII" in the
      most current Best's Key Rating Guide or such similar rating as may be
      reasonably selected by Landlord if such Guide is no longer published.

5.8   That all of the furnishings, fixtures, equipment, effects and property of
      every kind, nature and description of Tenant and of all persons claiming
      by, through or under Tenant which, during the continuance of this Lease or
      any occupancy of the Premises by Tenant or anyone claiming under Tenant,
      may be on the Premises or elsewhere in the Building or on the Site, shall
      be at the sole risk and hazard of Tenant, and if the whole or any part
      thereof shall be destroyed or damaged by fire, water or otherwise, or by
      the leakage or bursting of water pipes, steam pipes, or other pipes, by
      theft or from any other cause, no part of said loss or damage is to be
      charged to or be borne by Landlord, except that Landlord shall in no event
      be indemnified or held harmless or exonerated from any liability to Tenant
      or to any other person, for any injury, loss, damage or liability to the
      extent such indemnity, hold harmless or exoneration is prohibited by law.
      Further, Tenant, at Tenant's expense, shall maintain at all times during
      the Term of this Lease insurance against loss or damage covered by the
      so-called "all risk" type insurance coverage with respect to Tenant's
      fixtures, equipment, goods, wares and merchandise, tenant improvements
      made by or paid for by Tenant, and other property of Tenant (collectively
      "Tenant's Property"). Such insurance shall be in an amount at least equal
      to the full replacement cost of Tenant's Property.

5.9   To permit Landlord and its agents to examine the Premises at reasonable
      times and, if Landlord shall so elect, to make any repairs or replacements
      Landlord may deem necessary; to remove, at Tenant's expense, any
      alterations, addition, signs, curtains, blinds, shades, awnings, aerials,
      flagpoles, or the like not consented to in


                                      -28-
<PAGE>

      writing; and to show the Premises to prospective tenants during the eleven
      (11) months preceding expiration of the Term and to prospective purchasers
      and mortgagees at all reasonable times.

5.10  Not to place a load upon the Premises exceeding an average rate of 70
      pounds of live load per square foot of floor area (partitions shall be
      considered as part of the live load); and not to move any safe, vault or
      other heavy equipment in, about or out of the Premises except in such
      manner and at such time as Landlord shall in each instance authorize;
      Tenant's business machines and mechanical equipment which cause vibration
      or noise that may be transmitted to the Building structure or to any other
      space in the Building shall be so installed, maintained and used by Tenant
      so as to eliminate such vibration or noise.

5.11  To pay promptly when due all taxes which may be imposed upon Tenant's
      Property in the Premises to whomever assessed.

5.12  To comply with all applicable Legal Requirements now or hereafter in force
      which shall impose a duty on Landlord or Tenant relating to or as a result
      of the use or occupancy of the Premises; provided that Tenant shall not be
      required to make any alterations or additions to the structure, roof,
      exterior and load bearing walls, foundation, structural floor slabs and
      other structural elements of the Building unless the same are required by
      such Legal Requirements as a result of or in connection with Tenant's use
      or occupancy of the Premises beyond normal use of space of this kind.
      Tenant shall promptly pay all fines, penalties and damages that may arise
      out of or be imposed because of its failure to comply with the provisions
      of this Section 5.12.

5.13  As Additional Rent, to pay all reasonable costs, counsel and other fees
      incurred by Landlord in connection with the successful enforcement by
      Landlord of any obligations of Tenant under this Lease or in connection
      with any bankruptcy case involving Tenant or any guarantor.

                                   ARTICLE VI

                               CASUALTY AND TAKING

6.1   In case during the Lease Term the Building is damaged by fire or casualty
      and such fire or casualty damage cannot, in the ordinary course,
      reasonably be expected to be repaired within one hundred twenty (120) days
      from the time that repair work would commence as reasonably determined by
      Landlord, Landlord may, at its election, terminate this Lease by notice
      given to Tenant within sixty (60) days after the date of such fire or
      other casualty, specifying the effective date of termination. The
      effective date of termination specified by Landlord shall not


                                      -29-
<PAGE>

      be less than thirty (30) days nor more than forty-five (45) days after the
      date of notice of such termination.

      In case during the last year of the Lease Term, the Premises are damaged
      by fire or casualty and such fire or casualty damage cannot, in the
      ordinary course, reasonably be expected to be repaired within one hundred
      fifty (150) days (and/or as to special work or work which requires long
      lead time then if such work cannot reasonably be expected to be repaired
      within such additional time as is reasonable under the circumstances given
      the nature of the work) from the time that repair work would commence as
      reasonably determined by Landlord, Tenant may, at its election, terminate
      this Lease by notice given to Landlord within sixty (60) days after the
      date of such fire or other casualty, specifying the effective date of
      termination. The effective date of termination specified by Tenant shall
      be not less than thirty (30) days nor more than forty-five (45) days after
      the date of notice of such termination.

      Unless terminated pursuant to the foregoing provisions, this Lease shall
      remain in full force and effect following any such damage subject,
      however, to the following provisions.

      If the Building or any part thereof is damaged by fire or casualty and
      this Lease is not so terminated, or Landlord or Tenant have no right to
      terminate this Lease, and in any such case the holder of any mortgage
      which includes the Building as a part of the mortgaged premises or any
      ground lessor of any ground lease which includes the Site as part of the
      demised premises allows the net insurance proceeds to be applied to the
      restoration of the Building (and/or the Site), Landlord promptly after
      such damage and the determination of the net amount of insurance proceeds
      available shall use due diligence to restore the Premises and the Building
      in the event of damage thereto (excluding Tenant's Property) into proper
      condition for use and occupation and a just proportion of the Annual Fixed
      Rent, Tenant's share of Operating Costs and Tenant's share of real estate
      taxes according to the nature and extent of the injury to the Premises
      shall be abated until the Premises shall have been put by Landlord
      substantially into such condition except for punch list items and long
      lead items. Notwithstanding anything herein contained to the contrary,
      Landlord shall not be obligated to expend for such repair and restoration
      any amount in excess of the net insurance proceeds.

      Where Landlord is obligated or otherwise elects to effect restoration of
      the Premises, unless such restoration is completed within one (1) year
      from the date of the casualty or taking, such period to be subject,
      however, to extension where the delay in completion of such work is due to
      causes beyond Landlord's reasonable control (but in no event beyond
      eighteen (18) months from the date of the casualty or taking), Tenant
      shall have the right to terminate this Lease at any


                                      -30-
<PAGE>

      time after the expiration of such one-year (as extended) period until the
      restoration is substantially completed, such termination to take effect as
      of the thirtieth (30th) day after the date of receipt by Landlord of
      Tenant's notice, with the same force and effect as if such date were the
      date originally established as the expiration date hereof unless, within
      thirty (30) days after Landlord's receipt of Tenant's notice, such
      restoration is substantially completed, in which case Tenant's notice of
      termination shall be of no force and effect and this Lease and the Lease
      Term shall continue in full force and effect.

6.2   Notwithstanding anything to the contrary contained in this Lease, if the
      Building or the Premises shall be substantially damaged by fire or
      casualty as the result of a risk not covered by the forms of casualty
      insurance at the time maintained by Landlord and such fire or casualty
      damage cannot, in the ordinary course, reasonably be expected to be
      repaired within thirty (30) days from the time that repair work would
      commence, Landlord may, at its election, terminate the Term of this Lease
      by notice to the Tenant given within thirty (30) days after such loss. If
      Landlord shall give such notice, then this Lease shall terminate as of the
      date of such notice with the same force and effect as if such date were
      the date originally established as the expiration date hereof.

6.3   If the entire Building, or such portion of the Premises as to render the
      balance (if reconstructed to the maximum extent practicable in the
      circumstances) unsuitable for Tenant's purposes, shall be taken by
      condemnation or right of eminent domain, Landlord or Tenant shall have the
      right to terminate this Lease by notice to the other of its desire to do
      so, provided that such notice is given not later than thirty (30) days
      after Tenant has been deprived of possession. If either party shall give
      such notice, then this Lease shall terminate as of the date of such notice
      with the same force and effect as if such date were the date originally
      established as the expiration date hereof.

      Further, if so much of the Building or Site shall be so taken that
      continued operation of the Building would be uneconomic as a result of the
      taking, Landlord shall have the right to terminate this Lease by giving
      notice to Tenant of Landlord's desire to do so not later than thirty (30)
      days after Tenant has been deprived of possession of the Premises (or such
      portion thereof as may be taken). If Landlord shall give such notice, then
      this Lease shall terminate as of the date of such notice with the same
      force and effect as if such date were the date originally established as
      the expiration date hereof

      Should any part of the Premises be so taken or condemned during the Lease
      Term hereof, and should this Lease not be terminated in accordance with
      the foregoing provisions, and the holder of any mortgage which includes
      the Premises as part of the mortgaged premises or any ground lessor of any
      ground lease which includes the Site as part of the demised premises
      allows the net condemnation proceeds to


                                      -31-
<PAGE>

      be applied to the restoration of the Building, Landlord agrees that after
      the determination of the net amount of condemnation proceeds available to
      Landlord, Landlord shall use due diligence to put what may remain of the
      Premises into proper condition for use and occupation as nearly like the
      condition of the Premises prior to such taking as shall be practicable
      (excluding Tenant's Property). Notwithstanding the foregoing, Landlord
      shall not be obligated to expend for such repair and restoration any
      amount in excess of the net condemnation proceeds made available to it.

      If the Premises shall be affected by any exercise of the power of eminent
      domain, then the Annual Fixed Rent, Tenant's share of operating costs and
      Tenant's share of real estate taxes shall be justly and equitably abated
      and reduced according to the nature and extent of the loss of use thereof
      suffered by Tenant; and in case of a taking which permanently reduces the
      Rentable Floor Area of the Premises, a just proportion of the Annual Fixed
      Rent, Tenant's share of operating costs and Tenant's share of real estate
      taxes shall be abated for the remainder of the Lease Term.

6.4   Landlord shall have and hereby reserves to itself any and all rights to
      receive awards made for damages to the Premises, the Buildings, the
      Complex and the Site and the leasehold hereby created, or any one or more
      of them, accruing by reason of exercise of eminent domain or by reason of
      anything lawfully done in pursuance of public or other authority. Tenant
      hereby grants, releases and assigns to Landlord all Tenant's rights to
      such awards, and covenants to execute and deliver such further assignments
      and assurances thereof as Landlord may from time to time request, and if
      Tenant shall fail to execute and deliver the same within fifteen (15) days
      after notice from Landlord, Tenant hereby covenants and agrees that
      Landlord shall be irrevocably designated and appointed as its
      attorney-in-fact to execute and deliver in Tenant's name and behalf all
      such further assignments thereof which conform with the provisions hereof.

      Nothing contained herein shall be construed to prevent Tenant from
      prosecuting in any condemnation proceeding a claim for the value of any of
      Tenant's usual trade fixtures installed in the Premises by Tenant at
      Tenant's expense and for relocation and moving expenses, provided that
      such action and any resulting award shall not affect or diminish the
      amount of compensation otherwise recoverable by Landlord from the taking
      authority.

                                   ARTICLE VII

                                     DEFAULT

7.1   (a) If at any time subsequent to the date of this Lease any one or more of
      the following events (herein sometimes called an "Event of Default") shall
      occur:


                                      -32-
<PAGE>

            (i) Tenant shall fail to pay any installment of the Annual Fixed
      Rent, Additional Rent or other charges for which provision is made herein
      on or before the date on which the same become due and payable, and the
      same continues for five (5) business days after notice from Landlord
      thereof, or

            (ii) Landlord having rightfully given the notice specified in
      subdivision (a) above three times in any calendar year, Tenant shall
      thereafter in the same calendar year fail to pay the Annual Fixed Rent,
      Additional Rent or any other monetary amount due under this Lease on or
      before the date on which the same become due and payable, or,

            (iii) Tenant shall neglect or fail to perform or observe any other
      requirement, term, covenant or condition of this Lease (not hereinabove in
      this Section 7.1(a) specifically referred to) on Tenant's part to be
      performed or observed and Tenant shall fail to remedy the same within
      thirty (30) days after notice to Tenant specifying such neglect or
      failure, or if such neglect or failure is of such a nature that Tenant
      cannot reasonably remedy the same within such thirty (30) day period,
      Tenant shall fail to commence promptly to remedy the same and to prosecute
      such remedy to completion with diligence and continuity; or

            (iv) Tenant's leasehold interest in the Premises shall be taken on
      execution or by other process of law directed against Tenant; or

            (v) Tenant shall make an assignment for the benefit of creditors or
      shall file a voluntary petition in bankruptcy or shall be adjudicated
      bankrupt or insolvent, or shall file any petition or answer seeking any
      reorganization, arrangement, composition, readjustment, liquidation,
      dissolution or similar relief for itself under any present or future
      Federal, State or other statute, law or regulation for the relief of
      debtors, or shall seek or consent to or acquiesce in the appointment of
      any trustee, receiver or liquidator of Tenant or of all or any substantial
      part of its properties, or shall admit in writing its inability to pay its
      debts generally as they become due; or

            (vi) A petition shall be filed against Tenant in bankruptcy or under
      any other law seeking any reorganization, arrangement, composition,
      readjustment, liquidation, dissolution, or similar relief under any
      present or future Federal, State or other statute, law or regulation and
      shall remain undismissed or unstayed for an aggregate of sixty (60) days
      (whether or not consecutive), or if any debtor in possession (whether or
      not Tenant) trustee, receiver or liquidator of Tenant or of all or any
      substantial part of its properties or of the Premises shall be appointed
      without the consent or acquiescence of Tenant and such appointment shall
      remain unvacated or unstayed for an aggregate of sixty (60) days (whether
      or not consecutive).


                                      -33-
<PAGE>

      then, and in any of said cases (notwithstanding any license of a former
      breach of covenant or waiver of the benefit hereof or consent in a former
      instance), Landlord lawfully may, immediately or at any time thereafter,
      and without demand or further notice terminate this Lease by notice to
      Tenant, specifying a date not less than five (5) days after the giving of
      such notice on which this Lease shall terminate, and this Lease shall come
      to an end on the date specified therein as fully and completely as if such
      date were the date herein originally fixed for the expiration of the Lease
      Term (Tenant hereby waiving any rights of redemption), and Tenant will
      then quit and surrender the Premises to Landlord, but Tenant shall remain
      liable as hereinafter provided.

      (b) If this Lease shall have been terminated as provided in this Article,
      then Landlord may, without notice, re-enter the Premises, either by force,
      summary proceedings, ejectment or otherwise, and remove and dispossess
      Tenant and all other persons and any and all property from the same, as if
      this Lease had not been made, and Tenant hereby waives the service of
      notice of intention to re-enter or to institute legal proceedings to that
      end.

      (c) In the event that this Lease is terminated under any of the provisions
      contained in Section 7.1 (a) or shall be otherwise terminated by breach of
      any obligation of Tenant, Tenant covenants and agrees forthwith to pay and
      be liable for, on the days originally fixed herein for the payment
      thereof, amounts equal to the several installments of rent and other
      charges reserved as they would, under the terms of this Lease, become due
      if this Lease had not been terminated or if Landlord had not entered or
      re-entered, as aforesaid, and whether the Premises be relet or remain
      vacant, in whole or in part, or for a period less than the remainder of
      the Term, and for the whole thereof, but in the event the Premises be
      relet by Landlord, Tenant shall be entitled to a credit in the net amount
      of rent and other charges received by Landlord in reletting, after
      deduction of all expenses incurred in reletting the Premises (including,
      without limitation, remodeling costs, brokerage fees and the like), and in
      collecting the rent in connection therewith, in the following manner:

      Amounts received by Landlord after reletting shall first be applied
      against such Landlord's expenses, until the same are recovered, and until
      such recovery, Tenant shall pay, as of each day when a payment would fall
      due under this Lease, the amount which Tenant is obligated to pay under
      the terms of this Lease (Tenant's liability prior to any such reletting
      and such recovery not in any way to be diminished as a result of the fact
      that such reletting might be for a rent higher than the rent provided for
      in this Lease); when and if such expenses have been completely recovered,
      the amounts received from reletting by Landlord as have not previously
      been applied shall be credited against Tenant's obligations as of


                                      -34-
<PAGE>

      each day when a payment would fall due under this Lease, and only the net
      amount thereof shall be payable by Tenant. Further, amounts received by
      Landlord from such reletting for any period shall be credited only against
      obligations of Tenant allocable to such period, and shall not be credited
      against obligations of Tenant hereunder accruing subsequent or prior to
      such period; nor shall any credit of any kind be due for any period after
      the date when the term of this Lease is scheduled to expire according to
      its terms.

      (d)   (i) Landlord may elect, as an alternative, to have Tenant pay
            liquidated damages, which election may be made by notice given to
            Tenant at any time after the termination of this Lease under Section
            7.2, above, and whether or not Landlord shall have collected any
            damages as hereinbefore provided in this Article VII, and in lieu of
            all other such damages beyond the date of such notice. Upon such
            notice, Tenant shall promptly pay to Landlord, as liquidated
            damages, in addition to any damages collected or due from Tenant
            from any period prior to such notice and all expenses which Landlord
            may have incurred with respect to the collection of such damages,
            such a sum as at the time of such notice represents the amount of
            the excess, if any, of (a) the discounted present value, at a
            discount rate of 6%, of the Annual Fixed Rent, Additional Rent and
            other charges which would have been payable by Tenant under this
            Lease for the remainder of the Lease Term if the Lease terms had
            been fully complied with by Tenant, over and above (b) the
            discounted present value, at a discount rate of 6%, of the Annual
            Fixed Rent, Additional Rent and other charges that would be received
            by Landlord if the Premises were re- leased at the time of such
            notice for the remainder of the Lease Term at the fair market value
            (including provisions regarding periodic increases in Annual Fixed
            Rent if such are applicable) prevailing at the time of such notice
            as reasonably determined by Landlord.

            (ii) For the purposes of this Article, if Landlord elects to require
            Tenant to pay damages in accordance with the immediately preceding
            paragraph, the total rent shall be computed by assuming that
            Tenant's share of excess taxes, Tenant's share of excess operating
            costs and Tenant's share of excess electrical costs would be, for
            the balance of the unexpired Term from the date of such notice, the
            amount thereof (if any) for the immediately preceding annual period
            payable by Tenant to Landlord.

      (e) In case of any Event of Default, re-entry, dispossession by summary
      proceedings or otherwise, Landlord may (i) re-let the Premises or any part
      or parts thereof, either in the name of Landlord or otherwise, for a term
      or terms which may at Landlord's option be equal to or less than or exceed
      the period which would otherwise have constituted the balance of the Term
      of this Lease and may


                                      -35-
<PAGE>

      grant concessions or free rent to the extent that Landlord considers
      advisable or necessary to re-let the same and (ii) may make such
      alterations, repairs and decorations in the Premises as Landlord in its
      sole judgment considers advisable or necessary for the purpose of
      reletting the Premises; and the making of such alterations, repairs and
      decorations shall not operate or be construed to release Tenant from
      liability hereunder as aforesaid. Landlord shall in no event be liable in
      any way whatsoever for failure to re-let the Premises, or, in the event
      that the Premises are re-let, for failure to collect the rent under
      re-letting. Tenant, for itself and any and all persons claiming through or
      under Tenant, including its creditors, upon the termination of this Lease
      and of the term of this Lease in accordance with the terms hereof, or in
      the event of entry of judgment for the recovery of the possession of the
      Premises in any action or proceeding, or if Landlord shall enter the
      Premises by process of law or otherwise, hereby waives any right of
      redemption provided or permitted by any statute, law or decision now or
      hereafter in force, and does hereby waive, surrender and give up all
      rights or privileges which it or they may or might have under and by
      reason of any present or future law or decision, to redeem the Premises or
      for a continuation of this Lease for the term of this Lease hereby demised
      after having been dispossessed or ejected therefrom by process of law, or
      otherwise.

      (f) The specified remedies to which Landlord may resort hereunder are not
      intended to be exclusive of any remedies or means of redress to which
      Landlord may at any time be entitled lawfully, and Landlord may invoke any
      remedy (including the remedy of specific performance) allowed at law or in
      equity as if specific remedies were not herein provided for. Further,
      nothing contained in this Lease shall limit or prejudice the right of
      Landlord to prove for and obtain in proceedings for bankruptcy or
      insolvency by reason of the termination of this Lease, an amount equal to
      the maximum allowed by any statute or rule of law in effect at the time
      when, and governing the proceedings in which, the damages are to be
      proved, whether or not the amount be greater, equal to, or less than the
      amount of the loss or damages referred to above.

7.2   Landlord shall in no event be in default in the performance of any of
      Landlord's obligations hereunder unless and until Landlord shall have
      failed to perform such obligations within thirty (30) days, or such
      additional time as is reasonably required to correct any such default,
      after notice by Tenant to Landlord properly specifying wherein Landlord
      has failed to perform any such obligation.

                                  ARTICLE VIII

                                  MISCELLANEOUS

8.1   Tenant covenants and agrees that Tenant will not do or permit anything to
      be done in or upon the Premises, or bring in anything or keep anything
      therein, which shall


                                      -36-
<PAGE>

      increase the rate of insurance on the Premises or on the Building above
      the standard rate applicable to premises being occupied for the use to
      which Tenant has agreed to devote the Premises; and Tenant further agrees
      that, in the event that Tenant shall do any of the foregoing, Tenant will
      promptly pay to Landlord, on demand, any such increase resulting
      therefrom, which shall be due and payable as additional rent thereunder.

8.2   Failure on the part of Landlord or Tenant to complain of any action or
      non-action on the part of the other, no matter how long the same may
      continue, shall never be a waiver by Tenant or Landlord, respectively, of
      any of its rights hereunder. Further, no waiver at any time of any of the
      provisions hereof by Landlord or Tenant shall be construed as a waiver of
      any of the other provisions hereof, and a waiver at any time of any of the
      provisions hereof shall not be construed as a waiver at any subsequent
      time of the same provisions. The consent or approval of Landlord or Tenant
      to or of any action by the other requiring such consent or approval shall
      not be construed to waive or render unnecessary Landlord's or Tenant's
      consent or approval to or of subsequent similar act by the other. Further,
      the acceptance by Landlord of Annual Fixed Rent, Additional Rent or any
      other charges paid by Tenant under this Lease shall not be or be deemed to
      be a waiver by Landlord of any default by Tenant, whether or not Landlord
      knows of such default, except for such defaults as to which such payment
      relates.

      No payment by Tenant, or acceptance by Landlord, of a lesser amount than
      shall be due from Tenant to Landlord shall be treated otherwise than as a
      payment on account. The acceptance by Landlord of a check for a lesser
      amount with an endorsement or statement thereon, or upon any letter
      accompanying such check, that such lesser amount is payment in full, shall
      be given no effect, and Landlord may accept such check without prejudice
      to any other rights or remedies which Landlord may have against Tenant.

8.3   The specific remedies to which Landlord may resort under the terms of this
      Lease are cumulative and are not intended to be exclusive of any other
      remedies or means of redress to which such party may be lawfully entitled
      in case of any breach or threatened breach by Tenant of any provisions of
      this Lease. In addition to the other remedies provided in this Lease,
      Landlord shall be entitled to the restraint by injunction of the violation
      or attempted or threatened violation of any of the covenants, conditions
      or provisions of this Lease or to a decree compelling specific performance
      of any such covenants, conditions or provisions.

8.4   Tenant, subject to the terms and provisions of this Lease on payment of
      the rent and observing, keeping and performing all of the terms and
      provisions of this Lease on Tenant's part to be observed, kept and
      performed, shall lawfully, peaceably and quietly have, hold, occupy and
      enjoy the Premises during the Term, without hindrance or ejection by any
      persons lawfully claiming under Landlord to


                                      -37-
<PAGE>

      have title to the Premises superior to Tenant, subject, however, to the
      terms of this Lease; the foregoing covenant of quiet enjoyment is in lieu
      of any other covenant, express or implied; and it is understood and agreed
      that this covenant and any and all other covenants of Landlord contained
      in this Lease shall be binding upon Landlord and Landlord's successors
      only with respect to breaches occurring during Landlord's or Landlord's
      successors' respective ownership of Landlord's interest hereunder,
      including ground or master lessees, to the extent of their respective
      interests, as and when they shall acquire same and then only for so long
      as they shall retain such interest.

      Further, Tenant specifically agrees to look solely to Landlord's then
      equity interest in the Building at the time owned, or in which Landlord
      holds an interest as ground lessee, for recovery of any judgment from
      Landlord; it being specifically agreed that neither Landlord (original or
      successor), nor any beneficiary of any Trust of which any person holding
      Landlord's interest is Trustee, nor any member, manager, partner, director
      or stockholder nor Landlord's managing agent shall ever be personally
      liable for any such judgment, or for the payment of any monetary
      obligation to Tenant. The provision contained in the foregoing sentence is
      not intended to, and shall not, limit any right that Tenant might
      otherwise have to obtain injunctive relief against Landlord or Landlord's
      successors in interest, or any action not involving the personal liability
      of Landlord (original or successor), any successor Trustee to the persons
      named herein as Landlord, or any beneficiary of any Trust of which any
      person holding Landlord's interest is Trustee, or of any manager, member,
      partner, director or stockholder of Landlord or of Landlord's managing
      agent, to respond in monetary damages from Landlord's assets other than
      Landlord's equity interest aforesaid in the Building. In no event shall
      Landlord ever be liable to Tenant for any indirect or consequential
      damages or lost profits suffered by Tenant from whatever cause or loss of
      profits or the like. In the event that Landlord shall be determined to
      have acted unreasonably in withholding any consent or approval under this
      Lease, the sole recourse and remedy of the Tenant in respect thereof shall
      be to specifically enforce Landlord's obligation to grant such consent or
      approval, and in no event shall the Landlord be responsible for any
      damages of whatever nature in respect of its failure to give such consent
      or approval nor shall the same otherwise affect the obligations of the
      Tenant under this Lease or act as any termination of this Lease.

8.5   After receiving notice from any person, firm or other entity that it holds
      a mortgage which includes the Premises as part of the mortgaged premises,
      or that it is the ground lessor under a lease with Landlord, as ground
      lessee, which includes the Premises as a part of the mortgaged premises,
      no notice from Tenant to Landlord shall be effective unless and until a
      copy of the same is given to such holder or ground lessor, and the curing
      of any of Landlord's defaults by such holder or ground lessor within a
      reasonable time thereafter (including a reasonable


                                      -38-
<PAGE>

      time to obtain possession of the premises if the mortgagee or ground
      lessor elects to do so) shall be treated as performance by Landlord. For
      the purposes of this Section 8.5 or Section 8.15, the term "mortgage"
      includes a mortgage on a leasehold interest of Landlord (but not one on
      Tenant's leasehold interest). If any mortgage is listed on Exhibit G then
      the same shall constitute notice from the holder of such mortgage for the
      purposes of this Section 8.5. Further no Annual Fixed Rent or Additional
      Rent may be paid by Tenant more than thirty (30) days in advance except
      with the prior written consent of all holder(s) of such mortgages and
      ground leases, and any such payment without such consent shall not be
      binding on such holder(s).

8.6   With reference to any assignment by Landlord of Landlord's interest in
      this Lease, or the rents payable hereunder, conditional in nature or
      otherwise, which assignment is made to the holder of a mortgage or ground
      lease on property which includes the Premises, Tenant agrees:

      (a) That the execution thereof by Landlord, and the acceptance thereof by
      the holder of such mortgage or the ground lessor, shall never be treated
      as an assumption by such holder or ground lessor of any of the obligations
      of Landlord hereunder, unless such holder, or ground lessor, shall, by
      notice sent to Tenant, specifically otherwise elect; and

      (b) That, except as aforesaid, such holder or ground lessor shall be
      treated as having assumed Landlord's obligations hereunder only upon
      foreclosure of such holder's mortgage and the taking of possession of the
      Premises, or, in the case of a ground lessor, the assumption of Landlord's
      position hereunder by such ground lessor.

      In no event shall the acquisition of title to the Building and the land on
      which the same is located by a purchaser which, simultaneously therewith,
      leases the entire Building or such land back to the seller thereof be
      treated as an assumption by such purchaser-lessor, by operation of law or
      otherwise, of Landlord's obligations hereunder, but Tenant shall look
      solely to such seller-lessee, and its successors from time to time in
      title, for performance of Landlord's obligations hereunder subject to the
      provisions of Section 8.4 hereof. In any such event, this Lease shall be
      subject and subordinate to the lease to such purchaser provided that such
      purchaser agrees to recognize the right of Tenant to use and occupy the
      Premises upon the payment of rent and other charges payable by Tenant
      under this Lease and the performance by Tenant of Tenant's obligations
      hereunder and provided that Tenant agrees to attorn to such purchaser. For
      all purposes, such seller-lessee, and its successors in title, shall be
      the landlord hereunder unless and until Landlord's position shall have
      been assumed by such purchaser-lessor.


                                      -39-
<PAGE>

8.7   (A) No act or thing done by Landlord during the Lease Term shall be deemed
      an acceptance of a surrender of the Premises, and no agreement to accept
      such surrender shall be valid, unless in writing signed by Landlord. No
      employee of Landlord or of Landlord's agents shall have any power to
      accept the keys of the Premises prior to the termination of this Lease,
      provided, however, that the foregoing shall not apply to the delivery of
      keys to Landlord or its agents in its (or their) capacity as managing
      agent or for purpose of emergency access. In any event, however, the
      delivery of keys to any employee of Landlord or of Landlord's agents shall
      not operate as a termination of the Lease or a surrender of the Premises.

      (B) Upon the expiration or earlier termination of the Lease Term, Tenant
      shall surrender the Premises to Landlord in the condition as required by
      Sections 3.3 and 5.2, first removing all goods and effects of Tenant and
      completing such other removals as may be permitted or required pursuant to
      Section 5.2.

8.8   (A) Tenant warrants and represents that Tenant has not dealt with any
      broker in connection with the consummation of this Lease other than the
      broker, person or firm, if any, designated in Section 1.1 hereof; and in
      the event any claim is made against the Landlord relative to dealings by
      Tenant with brokers other than the Brokers, if any, designated in Section
      1.1 hereof, Tenant shall defend the claim against Landlord with counsel of
      Tenant's selection first approved by Landlord (which approval will not be
      unreasonably withheld) and save harmless and indemnify Landlord on account
      of loss, cost or damage which may arise by reason of such claim.

      (B) Landlord warrants and represents that Landlord has not dealt with any
      broker in connection with the consummation of this Lease other than the
      broker, person or firm, if any, designated in Section 1.1 hereof; and in
      the event any claim is made against the Tenant relative to dealings by
      Landlord with brokers other than the Brokers, if any, designated in
      Section 1.1 hereof, Landlord shall defend the claim against Tenant with
      counsel of Landlord's selection and save harmless and indemnify Tenant on
      account of loss, cost or damage which may arise by reason of such claim.
      Landlord agrees that it shall be solely responsible for the payment of
      brokerage commissions to the Broker, if any, designated in Section 1.1
      hereof.

8.9   If any term or provision of this Lease, or the application thereof to any
      person or circumstance shall, to any extent, be invalid or unenforceable,
      the remainder of this Lease, or the application of such term or provision
      to persons or circumstances other than those as to which it is held
      invalid or unenforceable, shall not be affected thereby, and each term and
      provision of this Lease shall be valid and be enforced to the fullest
      extent permitted by law.


                                      -40-
<PAGE>

8.10  The obligations of this Lease shall run with the land, and except as
      herein otherwise provided, the terms hereof shall be binding upon and
      shall inure to the benefit of the successors and assigns, respectively, of
      Landlord and Tenant and, if Tenant shall be an individual, upon and to his
      heirs, executors, administrators, successors and assigns. Each term and
      each provision of this Lease to be performed by Tenant shall be construed
      to be both a covenant and a condition. The reference contained to
      successors and assigns of Tenant is not intended to constitute a consent
      to subletting or assignment by Tenant, but has reference only to those
      instances in which Landlord may have later given consent to a particular
      assignment as required by the provisions of Article V hereof.

8.11  Tenant agrees not to record the within Lease, but each party hereto
      agrees, on the request of the other, to execute a so-called Notice of
      Lease or short form lease in form recordable and complying with applicable
      law and reasonably satisfactory to both Landlord's and Tenant's attorneys.
      In no event shall such document set forth rent or other charges payable by
      Tenant under this Lease; and any such document shall expressly state that
      it is executed pursuant to the provisions contained in this Lease, and is
      not intended to vary the terms and conditions of this Lease.

8.12  Whenever, by the terms of this Lease, notice shall or may be given either
      to Landlord or to Tenant, such notice shall be in writing and shall be
      sent by registered or certified mail postage prepaid:

      If intended for Landlord, addressed to Landlord at the address set forth
      on the first page of this Lease (or to such other address or addresses as
      may from time to time hereafter be designated by Landlord by like notice)
      with a copy to Landlord, Attention: General Counsel.

      If intended for Tenant, addressed to Tenant at the address set forth on
      the second page of this Lease except that from and after the Commencement
      Date the address of Tenant shall be the Premises (or to such other address
      or addresses as may from time to time hereafter be designated by Tenant by
      like notice).

      Except as otherwise provided herein, all such notices shall be effective
      when received; provided, that (i) if receipt is refused, notice shall be
      effective upon the first occasion that such receipt is refused or (ii) if
      the notice is unable to be delivered due to a change of address of which
      no notice was given, notice shall be effective upon the date such delivery
      was attempted.

      Where provision is made for the attention of an individual or department,
      the notice shall be effective only if the wrapper in which such notice is
      sent is addressed to the attention of such individual or department.


                                      -41-
<PAGE>

      Any notice given by an attorney on behalf of Landlord or by Landlord's
      managing agent shall be considered as given by Landlord and shall be fully
      effective.

      Time is of the essence with respect to any and all notices and periods for
      giving notice or taking any action thereto under this Lease.

8.13  Employees or agents of Landlord have no authority to make or agree to make
      a lease or any other agreement or undertaking in connection herewith. The
      submission of this document for examination and negotiation does not
      constitute an offer to lease, or a reservation of, or option for, the
      Premises, and this document shall become effective and binding only upon
      the execution and delivery hereof by both Landlord and Tenant. All
      negotiations, considerations, representations and understandings between
      Landlord and Tenant are incorporated herein and may be modified or altered
      only by written agreement between Landlord and Tenant, and no act or
      omission of any employee or agent of Landlord shall alter, change or
      modify any of the provisions hereof.

8.14  The titles of the Articles throughout this Lease are for convenience and
      reference only, and the words contained therein shall in no way be held to
      explain, modify, amplify or aid in the interpretation, construction or
      meaning of the provisions of this Lease.

8.15  This Lease shall be subject and subordinate to any mortgage now or
      hereafter on the Site or the Building, or both, and to each advance made
      or hereafter to be made under any mortgage, and to all renewals,
      modifications, consolidations, replacements and extensions thereof and all
      substitutions therefor provided that in the case of a future mortgage the
      holder of such mortgage agrees to recognize the rights of Tenant under
      this Lease (including the right to use and occupy the Premises) upon the
      payment of rent and other charges payable by Tenant under this Lease and
      the performance by Tenant of Tenant's obligations hereunder. In
      confirmation of such subordination and recognition, Tenant shall execute
      and deliver promptly such instruments of subordination and recognition as
      such mortgagee may reasonably request. Tenant hereby appoints such
      mortgagee (from time to time) as Tenant's attorney-in-fact to execute such
      subordination upon default of Tenant in complying with such mortgagee's
      (from time to time) request. In the event that any mortgagee or its
      respective successor in title shall succeed to the interest of Landlord,
      then, this Lease shall nevertheless continue in full force and effect and
      Tenant shall and does hereby agree to attorn to such mortgagee or
      successor and to recognize such mortgagee or successor as its landlord. If
      any holder of a mortgage which includes the Premises, executed and
      recorded prior to the date of this Lease, shall so elect, this Lease and
      the rights of Tenant hereunder, shall be superior in right to the rights
      of such holder, with the same force and effect as if this Lease had been
      executed, delivered and recorded, or a statutory Notice hereof recorded,
      prior to the execution, delivery and


                                      -42-
<PAGE>

      recording of any such mortgage. The election of any such holder shall
      become effective upon either notice from such holder to Tenant in the same
      fashion as notices from Landlord to Tenant are to be given hereunder or by
      the recording in the appropriate registry or recorder's office of an
      instrument in which such holder subordinates its rights under such
      mortgage to this Lease.

      If in connection with obtaining financing for the Building or Complex, a
      bank, insurance company, pension trust or other institutional lender shall
      request reasonable modifications in this Lease as a condition to such
      financing, Tenant will not unreasonably withhold, delay or condition its
      consent thereto, provided that such modifications do not increase the
      monetary obligations of Tenant hereunder or materially adversely affect
      the leasehold interest hereby created.

8.16  Recognizing that Landlord may find it necessary to establish to third
      parties, such as accountants, banks, potential or existing mortgagees,
      potential purchasers or the like, the then current status of performance
      hereunder, Tenant, within ten (10) days after the request of Landlord made
      from time to time, will furnish to Landlord, or any existing or potential
      holder of any mortgage encumbering the Premises, the Building, the Site
      and/or the Complex or any potential purchaser of the Premises, the
      Building, the Site and/or the Complex, (each an "Interested Party"), a
      statement of the status of any matter pertaining to this Lease, including,
      without limitation, acknowledgments that (or the extent to which) each
      party is in compliance with its obligations under the terms of this Lease.
      In addition, Tenant shall deliver to Landlord, or any Interested Party
      designated by Landlord, financial statements of Tenant and any guarantor
      of Tenant's obligations under this Lease, as reasonably requested by
      Landlord, including, but not limited to financial statements for the past
      three (3) years. Any such status statement or financial statement
      delivered by Tenant pursuant to this Section 8.16 may be relied upon by
      any Interested Party.

8.17  If Tenant shall at any time default in the performance of any obligation
      under this Lease, Landlord shall have the right, but shall not be
      obligated, to enter upon the Premises and to perform such obligation
      notwithstanding the fact that no specific provision for such substituted
      performance by Landlord is made in this Lease with respect to such
      default. In performing such obligation, Landlord may make any payment of
      money or perform any other act. All sums so paid by Landlord (together
      with interest at the rate of two and one-half percentage points over the
      then prevailing prime or base rate in Boston as set by BankBoston, N.A.,
      or its successor) (but in no event greater than the maximum rate permitted
      by applicable law) and all costs and expenses in connection with the
      performance of any such act by Landlord, shall be deemed to be additional
      rent under this Lease and shall be payable to Landlord immediately on
      demand. Landlord may exercise the foregoing rights without waiving any
      other of its rights or releasing Tenant from any of its obligations under
      this Lease.


                                      -43-
<PAGE>

8.18  Any holding over by Tenant after the expiration of the term of this Lease
      shall be treated as a tenancy at sufferance and shall be on the terms and
      conditions as set forth in this Lease, as far as applicable except that
      Tenant shall pay as a use and occupancy charge an amount equal to the
      greater of (x) 200% of the Annual Fixed Rent and Additional Rent
      calculated (on a daily basis) at the highest rate payable under the terms
      of this Lease or (y) the fair market rental value of the Premises, in each
      case for the period measured from the day on which Tenant's hold-over
      commences and terminating on the day on which Tenant vacates the Premises.
      In addition, Tenant shall save Landlord, its agents and employees harmless
      and will exonerate, defend and indemnify Landlord, its agents and
      employees from and against any and all damages which Landlord may suffer
      on account of Tenant's hold-over in the Premises after the expiration or
      prior termination of the term of this Lease. Nothing in the foregoing nor
      any other term or provision of this Lease shall be deemed to permit Tenant
      to retain possession of the Premises or hold over in the Premises after
      the expiration or earlier termination of the Lease Term. All property
      which remains in the Building or the Premises after the expiration or
      termination of this Lease shall be conclusively deemed to be abandoned and
      may either be retained by Landlord as its property or sold or otherwise
      disposed of in such manner as Landlord may see fit. If any part thereof
      shall be sold, then Landlord may receive the proceeds of such sale and
      apply the same, at its option against the expenses of the sale, the cost
      of moving and storage, any arrears of rent or other charges payable
      hereunder by Tenant to Landlord and any damages to which Landlord may be
      entitled under this Lease and at law and in equity.

8.19  Any insurance carried by either party with respect to the Premises or
      property therein or occurrences thereon shall, if it can be so written
      without additional premium or with an additional premium which the other
      party agrees to pay, include a clause or endorsement denying to the
      insurer rights of subrogation against the other party to the extent rights
      have been waived by the insured prior to occurrence of injury or loss.
      Each party, notwithstanding any provisions of this Lease to the contrary,
      hereby waives any rights of recovery against the other for injury or loss
      due to hazards covered by such insurance to the extent of the
      indemnification received thereunder. This waiver of rights by Tenant shall
      apply to, and be for the benefit of, Landlord's managing agent.

8.20  Intentionally Omitted.

8.21  If; in Section 1.1 hereof, a security deposit is specified, Tenant agrees
      that the same will be paid upon execution and delivery of this Lease, and
      that Landlord shall hold the same, throughout the term of this Lease
      (including any extension thereof), as security for the performance by
      Tenant of all obligations on the part of Tenant to be kept and performed.
      Landlord shall have the right from time to time without prejudice to any
      other remedy Landlord may have on account thereof, to


                                      -44-
<PAGE>

      apply such deposit, or any part thereof; to Landlord's damages arising
      from any default on the part of Tenant. If Landlord so applies all or any
      portion of such deposit, Tenant shall within seven (7) days after notice
      from Landlord deliver cash to Landlord in an amount sufficient to restore
      such deposit to the full amount stated in Section 1.1. Tenant not then
      being in default and having performed all of its obligations under this
      Lease, including the payment of all Annual Fixed Rent, Landlord shall
      return the deposit, or so much thereof as shall not have theretofore been
      applied in accordance with the terms of this Section 8.21, to Tenant on
      the expiration or earlier termination of the term of this Lease and
      surrender possession of the Premises by Tenant to Landlord in the
      condition required in the Lease at such time. While Landlord holds such
      deposit, Landlord shall have no obligation to pay interest on the same and
      shall have the right to commingle the same with Landlord's other funds. If
      Landlord conveys Landlord's interest under this Lease, the deposit, or any
      part thereof not previously applied, may be turned over by Landlord to
      Landlord's grantee, and, if so turned over, Tenant agrees to look solely
      to such grantee for proper application of the deposit in accordance with
      the terms of this Section 8.21, and the return thereof in accordance
      herewith, and Landlord shall have no further liability therefor.

      Neither the holder of any mortgage nor the lessor in any ground lease on
      property which includes the Premises shall ever be responsible to Tenant
      for the return or application of any such deposit, whether or not it
      succeeds to the position of Landlord hereunder, unless such deposit shall
      have been received in hand by such holder or ground lessor.

8.22  If Landlord shall not have received any payment or installment of Annual
      Fixed Rent or Additional Rent on or before the date (the "Due Date") on
      which the same first becomes payable under this Lease, the amount of such
      payment or installment shall bear interest from the Due Date through and
      including the date such payment or installment is received by Landlord, at
      a rate equal to the lesser of (i) the rate announced by BankBoston, N.A.
      or its successor from time to time as its prime or base rate (or if such
      rate is no longer available, a comparable rate reasonably selected by
      Landlord), plus two percent (2%), or (ii) the maximum applicable legal
      rate, if any. Such interest shall be deemed additional rent and shall be
      paid by Tenant to Landlord upon demand.

8.23  This Lease shall be governed exclusively by the provisions hereof and by
      the law of the Commonwealth of Massachusetts, as the same may from time to
      time exist.

8.24  Each and every payment and expenditure, other than Annual Fixed Rent,
      shall be deemed to be Additional Rent hereunder, whether or not the
      provisions requiring payment of such amounts specifically so state, and
      shall be payable, unless otherwise provided in this Lease, within ten (10)
      days after written demand by


                                      -45-
<PAGE>

      Landlord, and in the case of the non-payment of any such amount, Landlord
      shall have, in addition to all of its other rights and remedies, all the
      rights and remedies available to Landlord hereunder or by law in the case
      of non-payment of Annual Fixed Rent. Unless expressly otherwise provided
      in this Lease, the performance and observance by Tenant of all the terms,
      covenants and conditions of this Lease to be performed and observed by
      Tenant shall be at Tenant's sole cost and expense. If Tenant has not
      objected to any statement of Additional Rent which is rendered by Landlord
      to Tenant within ninety (90) days after Landlord has rendered the same to
      Tenant, then the same shall be deemed to be a final account between
      Landlord and Tenant not subject to any further dispute. In the event that
      Tenant shall seek Landlord's consent or approval under this Lease, then
      Tenant shall reimburse Landlord, upon demand, as Additional Rent, for all
      reasonable costs and expenses, including legal and architectural costs and
      expenses, incurred by Landlord in processing such request, whether or not
      such consent or approval shall be given.


                                      -46-
<PAGE>

      EXECUTED as a sealed instrument in two or more counterparts each of which
shall be deemed to be an original.


WITNESS:                            LANDLORD:
                                    BOSTON PROPERTIES LIMITED
                                    PARTNERSHIP
                                    By BOSTON PROPERTIES, INC.,
                                         Its general partner


/s/ S. J. Murphy                    By    /s/ Claude B. Hooper
- ---------------------------               -----------------------------
                                    Name  CLAUDE B. HOOPER
                                          -----------------------------
                                    Title Vice President
                                          -----------------------------


                                    TENANT:
                                    ADVANCED LUMITECH, INC.


                                    By    /s/ Patrick Planche
                                          -----------------------------
                                    Name  PATRICK PLANCHE
                                          -----------------------------
                                    Title PRESIDENT
                                          -----------------------------
                                          (OR VICE PRESIDENT)
                                          -----------------------------
                                          HERETO DULY AUTHORIZED


ATTEST:


/s/ Patrick Planche
- ---------------------------
Name PATRICK PLANCHE                By    /s/ Patrick Planche
     ----------------------               -----------------------------
Title SECRETARY                     Name  PATRICK PLANCHE
     ----------------------               -----------------------------
    (ASSISTANT SECRETARY)           Title TREASURER
                                          -----------------------------
                                          (OR ASSISTANT TREASURER)
                                          -----------------------------
                                          HERETO DULY AUTHORIZED

(CORPORATE SEAL)                          /s/ Alan M. Cregg
                                          -----------------------------
                                    Name  Alan M. Cregg
                                          -----------------------------
                                    Title Attorney for Advanced Lumitech, Inc.
                                          -----------------------------


                                      -47-
<PAGE>

                                    EXHIBIT A

                                   Description

      A parcel of land (the "Land") in Waltham and Lexington, Middlesex County,
Massachusetts containing 34.372 acres and shown on that certain plan entitled
"Plan of Land in Waltham and Lexington, Middlesex Co., Mass.", dated March
6,1986, prepared by Land Surveys Incorporated, recorded with the Middlesex South
District Registry of Deeds (the "Registry") in Book 17090, Page End (the
"Plan"), bounded and described as follows:

EASTERLY                by the Northern Circumferential Highway (Route 128) by
                        two lines measuring 1,067.16 feet and 127.72 feet;

SOUTHEASTERLY
AND SOUTHERLY           by the ramp to Trapelo Road and Trapelo Road by five
                        lines measuring 309.05 feet, 262.57 feet, 122.01 feet,
                        78.18 feet, and 8.38 feet;

NORTHWESTERLY           by land N/F Reservoir Place Realty Trust, 110 feet;

SOUTHERLY               by land N/F Reservoir Place Realty Trust, 96.07 feet,
                        and by land N/F William and Louise Butler, 99 feet;

NORTHWESTERLY           by land N/F Thomas P. and Sandra H. Kehoe, 105 feet;

SOUTHERLY               62 feet,

SOUTHEASTERLY           39.27 feet and 160 feet, and

NORTH-EASTERLY          39.27 feet, all by land of N/F Thomas P, and Sandra H.
                        Kehoe;

SOUTHWESTERLY           by Trapelo Road, 95 feet;

NORTHWESTERLY           39.27 feet and 100 feet, and

SOUTHWESTERLY           102.57 feet, all by land N/F Leonard and Evalyn Weld;

NORTHWESTERLY           275 feet, and

SOUTHWESTERLY           122.35, by land N/F Robert L. and Barbara T. Anderson;


                                      -48-
<PAGE>

NORTHWESTERLY           by two lines measuring 235.15 feet and 284.27 feet, by
                        lands N/F Edward J. and Beverly J. Mirabito, Carol Lane,
                        N/F Charles J. Senior, Jr., N/F Donald and Shirley
                        Gibbs, N/F Raymond R. and Bridget Picard, and N/F Henry
                        F. Miller;

WESTERLY                by five lines measuring 580.06 feet, 25 feet, 128.21
                        feet, 344.66 feet and 9.12 feet, by lands N/F Henry P,
                        Miller, N/F John H. and Nancy Russell, N/F Frederick and
                        Anne Creamer, N/F J.S.C. Realty Trust, N/F Santo and
                        Catherine Lafauci, N/F Jean Yves and Annette Morn, N/F
                        Helen K. Hickey, Priscilla Lane, N/F Stanley C. and
                        Louise H. Whynock, and the City of Waltham;

NORTHEASTERLY           692.16 feet by land N/F The C-R Trust;

EASTERLY                137.39 feet by Route 128;

SOUTHWESTERLY           by two lines measuring 336.67 feet and 286.94 feet by
                        land N/F Tracer Lane Trust;

EASTERLY                by two lines measuring 506.14 feet and 325.94 feet, by
                        land N/F Tracer Lane Trust;

NORTHERLY               45 feet,

WESTERLY                27 feet, and

NORTHERLY               555.01 feet, all by land N/F Tracer Lane Trust.

      Together with the right, in common with others, to use Tracer Lane, a
private way, throughout its entire length over the Land, for access to and from
Trapelo Road, a public way, and for all other purposes for which public ways are
normally used in the City of Waltham and the Town of Lexington, as shown on the
Plan.

      Together with the appurtenant right in common with others to use that
portion of the Land located within the easement granted to Boston Edison Company
by a Grant of Easement dated October 2, 1946 and recorded in the Registry in
Book 7098, Page 118, for all purposes allowed under an Agreement with Boston
Edison Company and Albamont Properties, Inc. dated January 31, 1975 and recorded
in the Registry in Book 12771, Page 538.


                                      -49-
<PAGE>

      Together with the appurtenant right and easement, in common with others,
to discharge surface water contained in an Easement Indenture among Tracerlab,
Inc. et al. dated January 9, 1957 and recorded in the Registry in Book 8892,
Page 112.

      Together with the appurtenant rights and easements, in common with others,
granted to the owner of the Land in (a) an Indenture among Boston Edison Company
et al. Dated September 19, 1966 and recorded in the Registry in Book 11258, Page
79, (b) a Utilities Maintenance Agreement among LFE Inc. et al dated September
19, 1966 and recorded in the Registry in Book 11258, Page 92, and (c) an
Easement Indenture among 128 Realty Corporation et al. dated September 19, 1966
and recorded in the Registry in Book 11258, Page 061.

      Together with the right and easement, in common with others, granted the
owner of the Land in an Agreement dated May 12,1975 and recorded in the Registry
in Book 12892, Page 410.

Together with the right to terminate the Agreement between Leonard N. Weld et
ux. dated April 9,1974 and recorded in the Registry in Book 12627, Page 235.


                                      -50-
<PAGE>

                                    EXHIBIT B

                       TENANT PLAN AND WORKING DRAWING REQUIREMENTS


1. Floor plan indicating location of partitions and doors (details required of
partition and door types).

2. Location of standard electrical convenience outlets and telephone outlets.

3. Location and details of special electrical outlets; (e.g. Xerox), including
voltage, amperage, phase and NEMA configuration of outlets.

4. Reflected ceiling plan showing layout of standard ceiling and lighting
fixtures. Partitions to be shown lightly with switches located indicating
fixtures to be controlled.

5. Locations and details of special ceiling conditions, lighting fixtures,
speakers, etc.

6. Location and heat load in BTU/Hr. of all special air conditioning and
ventilating requirements and all necessary HVAC mechanical drawings.

7. Location and details of special structural requirements, e.g., slab
penetrations and areas with floor loadings exceeding a live load of 70 lbs./s.f.

8. Locations and details of all plumbing fixtures; sinks, drinking fountains,
etc.

9. Location and specifications of floor coverings, e.g., vinyl tile, carpet,
ceramic tile, etc.

10. Finish schedule plan indicating wall covering, paint or paneling with paint
colors referenced to standard color system.

11. Details and specifications of special millwork, glass partitions, rolling
doors and grilles, blackboards, shelves, etc.

12. Hardware schedule indicating door number keyed to plan, size, hardware
required including butts, latchsets or locksets, closures, stops, and any
special items such as thresholds, soundproofing, etc. Keying schedule is
required.

13. Verified dimensions of all built-in equipment (file cabinets, lockers, plan
files, etc).


                                      -51-
<PAGE>

14. Location of any special soundproofing requirements.

15. All drawings to be uniform size (30" X 42") and shall incorporate the
standard project electrical and plumbing symbols and be at a scale of 1/8" = 1'
or larger.

16. Drawing submittal shall include one sepia and one blue line print of each
drawing.


                                      -52-
<PAGE>

                                    EXHIBIT C

                                LANDLORD SERVICES

                                 RESERVOIR PLACE

I.    CLEANING:

            Cleaning and janitor services as provided below:

      A.    OFFICE AREAS:

            Daily: (Monday through Friday, inclusive, holidays excepted).

            1.    Empty all waste receptacles and ashtrays and remove waste
                  material from the Premises; wash receptacles as necessary.

            2.    Sweep and dust mop all uncarpeted areas using a dust-treated
                  mop.

            3-    Vacuum all rugs and carpeted areas.

            4.    Hand dust and wipe clean with treated cloths all horizontal
                  surfaces, including furniture, office equipment, window sills,
                  door ledges, chair rails, and convector tops, within normal
                  reach.

            5.    Wash clean all water fountains and sanitize.

            6.    Move and dust under all desk equipment and telephones and
                  replace same (but not computer terminals, specialized
                  equipment or other materials).

            7.    Wipe clean all chrome and other bright work.

            8.    Hand dust grill work within normal reach.

            9.    Main doors to premises shall be locked and lights shut off
                  upon completion of cleaning.

            Weekly:

            1.    Dust coat racks and the like.

            2.    Spot clean entrance doors, light switches and doorways.


                                      -53-
<PAGE>

            Quarterly:

            1.    Render high dusting not reached in daily cleaning to include:

                  a)    dusting all pictures, frames, charts, graphs and similar
                        wall hangings.

                  b)    dusting of all vertical surfaces, such as walls,
                        partitions, doors and door frames, etc.

                  c)    dusting all pipes, ducts and moldings.

                  d)    dusting of all vertical blinds.

                  e)    dust all ventilating, air conditioning, louvers and
                        grills.

            2.    Spray buff all resilient floors.


      B.    LAVATORIES:

            Daily: (Monday through Friday, inclusive, holidays excepted).

            1.    Sweep and damp mop.

            2.    Clean all mirrors, powder shelves, dispensers and receptacles,
                  bright work, flushometers, piping and toilet seat hinges.

            3.    Wash both sides of all toilet seats.

            4.    Wash all basins, bowls and urinals.

            5.    Dust and clean all powder room fixtures.

            6.    Empty and clean paper towel and sanitary disposal receptacles.

            7.    Remove waste paper and refuse.

            8.    Refill tissue holders, soap dispensers, towel dispensers,
                  sanitary dispensers; materials to be furnished by Landlord,


                                      -54-
<PAGE>

            Monthly:

            1.    Machine scrub lavatory floors.

            2.    Wash all partitions and tile walls in lavatories.

            3.    Dust all lighting fixtures and grills in lavatories.

      C.    MAIN LOBBIES, ELEVATORS, STAIRWELLS AND COMMON CORRIDORS:

            Daily: (Monday through Friday, inclusive, holidays excepted).

            1.    Sweep and damp mop all floors, empty and clean waste
                  receptacles, dispose of waste.

            2.    Clean elevators, wash or vacuum floors, wipe down walls and
                  doors.

            3.    Spot clean any metal work inside lobbies.

            4.    Spot clean any metal work surrounding building entrance doors.

            5.    Sweep all stairwells and dust handrails.

            Monthly:

            1.    All resilient tile floors in public areas to be spray buffed.


      D.    WINDOW CLEANING:

            All exterior windows shall be washed on the inside and outside
            surfaces no less than three (3) times per year.

II.   HVAC:

      A.    Heating, ventilating and air conditioning equipment will be provided
            with sufficient capacity to accommodate a maximum population density
            of one (1) person per one hundred fifty (150) square feet of useable
            floor area served, and a combined lighting and standard electrical
            load of 3.0 watts per square foot of useable floor area. In the
            event Tenant introduces into


                                      -55-
<PAGE>

            the Premises personnel or equipment which overloads the system's
            ability to adequately perform its proper functions, Landlord shall
            so notify Tenant in writing and supplementary system(s) may be
            required and installed by Landlord at Tenant's expense, if within
            fifteen (15) days Tenant has not modified its use so as not to cause
            such overload.

            Operating criteria of the basic system are in accordance with the
            Massachusetts Energy Code and shall not be less than the following:

             i)    Cooling season indoor conditions of not in excess of 78
                   degrees Fahrenheit when outdoor conditions are 91 degrees
                   Fahrenheit drybulb and 73 degrees Fahrenheit wetbulb.

             ii)   Heating season minimum room temperature of 70 degrees
                   Fahrenheit when outdoor conditions are 6 degrees Fahrenheit
                   drybulb.

      B.    Landlord shall provide heating, ventilating and air conditioning as
            normal seasonal charges may require during Normal Building Operating
            Hours (8:00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m.
            to 1:00 p.m. on Saturdays, legal holidays in all cases excepted).

            If Tenant shall require air conditioning (during the air
            conditioning season) or heating or ventilating during any season
            outside Normal Building Operating Hours, Landlord shall use
            landlord's best efforts to furnish such services for the area or
            areas specified by written request of Tenant delivered to the
            Building Superintendent or the Landlord before 3:00 p.m. of the
            business day preceding the extra usage. For such services, Tenant
            shall pay Landlord, as additional rent, upon receipt of billing, a
            sum equal to the cost incurred by Landlord.

III.  ELECTRICAL SERVICES:

      A.    Landlord shall provide electric power for a combined load of 3.0
            watts per square foot of useable area for lighting and for office
            machines through standard receptacles for the typical office space.

      B.    Landlord, at its option, may require separate metering and direct
            billing to Tenant for the electric power required for any special
            equipment (such as computers and reproduction equipment) that
            requires either 3-phase electric power or any voltage other than
            120, or for any other usage in excess of 3.0 watts per square foot.


                                      -56-
<PAGE>

       C.    Landlord will furnish and install, at Tenant's expense, all
             replacement lighting tubes, lamps and ballasts required by Tenant.
             Landlord will clean lighting fixtures on a regularly scheduled
             basis at Tenant's expense.

IV.   ELEVATORS:

            Provide passenger elevator service.

V.    WATER:

            Provide hot water for lavatory purposes and cold water for drinking,
            lavatory and toilet purposes.

VI.   CARD ACCESS SYSTEM:

            Landlord will provide a card access system at one entry door of the
            building.


                                      -57-
<PAGE>

                                    EXHIBIT D

                                    PREMISES


                              [GRAPHIC: FLOOR PLAN]

2,517 RSF

RESERVOIR PLACE II
1601 TRAPELO ROAD - SECOND FLOOR                           [GRAPHIC]
WALTHAM, MA
<PAGE>

                                    EXHIBIT F

                              INTENTIONALLY OMITTED


                                      -60-
<PAGE>

                                    EXHIBIT G

                               LIST OF MORTGAGEES

      Security Agreement and Mortgage Deed, dated 10/30/96 recorded in the South
Middlesex Registry of Deeds at Book 26791, Page 101, affected by Amended and
Restated Mortgage Deed from Landlord to Teachers Insurance and Annuity
Association of America, dated 11/3/98 recorded with said Deeds, said mortgagee
having an address Attn: Joan Herman, Sr. Investment Analyst, 730 Third Avenue,
New York, NY 10017.


                                    -61-

<PAGE>

Exhibit 10.8
- ------------


Exact name of Investor as it
should appear on Stock Certificate:

                            ADVANCED LUMITECH, INC.
                            SUBSCRIPTION AGREEMENT
                            ----------------------

SUBSCRIPTION AGREEMENT by and between the investor named above (the "Investor")
and Advanced Lumitech, Inc., a Nevada corporation with offices at 36 Avenue
Cardinal - Mermillod, Carouge, Switzerland 1227 (the "Company"). This
Subscription Agreement shall be deemed to include the attached Terms and
Conditions which hereby are incorporated by reference.

A.     Aggregate Investment:  $ 375,000 representing the cost to the Investor of
                                the Common Shares described below, plus
                                (assuming exercise in full of the A Warrants) an
                                additional $500,000

       Securities:                    (a)  500,000 shares of the Common Stock,
                                           $.001 par value, of the Company,
                                           priced at $.75 per share (the
                                           "Shares").

                                      (b)  Warrants to purchase 500,000 shares
                                           of the Common Stock of the Company,
                                           exercisable at $1.00 per share (the
                                           "A Warrants").

B.     Address of Principal Office
Or Residence:_____________________

C.     Accredited Investor Status (initial as many as apply):

       _____   The Investor is a natural person whose individual net worth, or
               joint net worth with the Investor's spouse, exceeds $1,000,000;

       _____   The Investor is a natural person who had an individual income in
               excess of $200,000 in each of 1997 and 1998 or joint income with
               that person's spouse in excess of $300,000 in each of those years
               and has a reasonable expectation of reaching the same income
               level in 1999.

       _____   The Investor is a trust or other entity of which each beneficiary
               or equity holder as an individual or joint (together with such
               beneficiary's spouse) net worth in excess of $1,000,000, or (b)
               expects to have an annual income in 1999, and represents that
               such beneficiary had an annual income in each of 1997 and 1998,
               in excess of $200,000 (or joint annual income in excess of
               $300,000).

       _____   The Investor is a trust which has total assets in excess of
               $5,000,000 and which was not formed for the specific purpose of
               acquiring the securities offered hereby, whose purchase is
               directed by a "sophisticated person" (who has completed the
               Investor Questionnaire in connection with this Subscription).

                                      32
<PAGE>

The Investor acknowledges that he has received and reviewed this Agreement in
its entirety, including without limitation the representations and warranties
set out in Section 3 below. The Investor and the Company each executes this
Agreement as an instrument under seal.

__________________________
[Investor's Name and Title]


By: ___________________________
[Signature]


The Company hereby accepts this subscription subject to the terms and conditions
set forth in this Agreement as of this 24 day of January, 2000.


ADVANCED LUMITECH, INC.

                              By: _________________________

                                      33
<PAGE>

1.   Subscription. Subject to the terms and conditions of this Agreement, the
     ------------
Investor irrevocably subscribes for and agrees to purchase the Shares and the A
Warrants (collectively, the "Securities"), described in Section A above for the
purchase price set forth in such Section.

2.   Acceptance of Subscription.
     --------------------------

This Subscription is made subject to the following terms and conditions:

a. This subscription shall be deemed accepted by the Company upon execution by
the Company of the cover page of this Subscription Agreement.

b. Upon the sale by the Company to the Investor of the Securities, the Investor
will receive a copy of this Subscription Agreement executed by an officer on
behalf of the Company.

3.   Representations and Warranties of the Investor. The Investor understands
     ----------------------------------------------
and acknowledges that (a) the Shares are being offered and sold under one or
more of the exemptions from registration provided for in Section 4(2) or Section
3(b) of the Securities Act of 1933, as from time to time amended (the
"Securities Act"), including Regulation D promulgated thereunder, and any
applicable state securities laws, (b) he or it is purchasing the Shares without
being offered or furnished any offering literature or prospectus other than the
reports filed by the Company from time to time with the United States Securities
and Exchange Commission, including the Company's Annual Report on Form 10-K for
the year ended December 31, 1998, and the Company's quarterly reports on Form
10-Q for the quarters and three and six month periods ended March 31, 1999 and
June 30, 1999, respectively (collectively, the "Reports"), and (c) this
transaction has not been reviewed or approved by the United States Securities
and Exchange Commission or by any regulatory authority charged with the
administration of the securities laws of any state or foreign country. The
Investor also represents and warrants as follows:

3.1. Citizenship, Age and Residence. He or it is at least 21 years of age, and
     ------------------------------
is a bona fide resident and domiciliary (not a temporary or transient resident)
of the State or Country and at the address described in Section B and has no
present intention of becoming a resident of any other State or other
jurisdiction.

3.2. Suitability. The Investor understands and has fully considered for purposes
     -----------
of this investment the risks of this investment and understands that (i) this
investment is suitable only for an investor who is able to bear the economic
consequences of losing his or her entire investment, (ii) the purchase of the
Shares and the Shares issuable upon exercise of the Warrants (the "Warrant
Shares") is a speculative investment which involves a high degree of risk of
loss by the Investor of his or its entire investment, and (iii) there are
substantial restrictions on the transferability of the Shares and the Warrant
Shares. Furthermore, the Investor represents that he or it has sufficient liquid
assets so that the lack of liquidity associated with this investment will not
cause any undue financial difficulties or affect the ability of the Investor to
provide for his or its current needs and possible financial contingencies.

3.3. Access to Information. The Investor, in making his decision to purchase the
     ---------------------
Securities, has relied solely upon the Investor's independent investigations and
has, if requested, been given (i) access to all material information of the
Company; (ii) access to all material contracts and documents relating to the
transaction described herein; and (iii) an opportunity to ask questions of, and
to receive answers from, the appropriate executive officers and other persons
acting on behalf of the Company concerning the Company and its prospects and the
terms and conditions of this offering, and to obtain any additional information,
to the extent such persons possess such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the
information set forth in the Reports. The Investor acknowledges that no valid
request to the Company by the Investor for information of any kind about the
Company has been refused or denied by the Company or remains unfulfilled as of
the date of this Agreement.

3.4. Investment Intent. The Shares, and upon their exercise, the Warrant Shares,
     -----------------
are being or will be acquired by the Investor solely for the Investor's own
personal account, for investment purposes only, and not with a view to, or in
connection with, any resale or distribution of the Shares or the Warrant Shares;
the Investor has no contract,

                                      34
<PAGE>

undertaking, understanding, agreement or arrangement, formal or informal, with
any person to sell, transfer or pledge to any person any of the Shares or the
Warrant Shares or any interest or rights in any of the Shares or the Warrant
Shares; the Investor has no present plans to enter into any such obligation; and
the Investor understands the legal consequences of the representations and
warranties made by him or her in this Agreement to mean that he or she must bear
the economic risk of the investment for an indefinite period of time because
neither the Shares nor the Warrant Shares have been registered under the
Securities Act and applicable state securities laws and, therefore, cannot be
sold unless they are subsequently registered under the Securities Act and
applicable state securities laws (which the Company is not obligated, and has no
current intention, to do) or unless an exemption from such registration becomes
available.

          3.5.  Additional Representations. (a) the Investor certifies that it
                --------------------------
is not a natural person resident of the United States, partnership or
corporation organized in the United States, or trust of which the trustee is a
natural person resident of the United States (each of the foregoing, a "U.S.
Person"), and certifies further that it is not acquiring the Shares or the
Warrant Shares for the account or benefit of any U.S. Person or is a U.S. Person
who purchased securities in a transaction that did not require registration
under the Act;

                      (b) the Investor agrees to resell the Shares or the
Warrant Shares only in accordance with the provisions of the Regulation S
promulgated under the Act, pursuant to registration under the Act, or pursuant
to an available exemption from registration;

                      (c) the Investor acknowledges that certificates evidencing
the Shares and the Warrant Shares acquired by such Investor shall contain a
legend to the effect that transfer is prohibited except in accordance with the
provisions of said Regulation S.

          3.6.  No Brokers. The Investor has not engaged any broker, dealer,
                ----------
finder, commission agent or other similar person in connection with the offer,
offer for sale, or sale of the Shares or the Warrant Shares and is not under any
obligation to pay any broker's fee or commission in connection with his
investment.

3.7. Review of Reports. The Investor has carefully read the Reports. In
     -----------------
evaluating the suitability of an investment in the Company, the Investor has not
relied upon any representations or other information (whether oral or written)
other than as set forth in the Reports or as contained in any documents or
answers to questions furnished by the Company.

3.8. Sophistication of Investor. The Investor either (i) has a preexisting
     --------------------------
personal or business relationship with the Company or its controlling persons,
such as would enable a reasonably prudent purchaser to be aware of the character
and general business and financial circumstances of the Company or its
controlling persons, or (ii) by reason of his or her business or financial
experience, individually or in conjunction with his or her unaffiliated
professional advisors, the Investor is capable of evaluating the merits and
risks of an investment in the Shares and the Warrant Shares, making an informed
investment decision and protecting his or her own interests.

3.09. Accuracy of Information. All of the information set forth on the cover
      -----------------------
page of this Agreement, including without limitation the Accredited Investor
Status indicated as applicable to the Investor, is true and correct in all
respects.

3.11. Securities Act Compliance. The Investor understands that the easiest way
      -------------------------
to sell its Shares in the future would be to sell in an underwritten public
offering of the Company's securities (as contemplated by the Registration Rights
Agreement among the Investor, certain other investors and the Company) or to a
purchaser of the entire Company or its business. In the absence of a public
offering or such a sale, however, the Investor may sell his or its Shares or
Warrant Shares in compliance with various private sale exemptions under
applicable securities laws. Accordingly, the Investor understands that neither
the Shares nor the Warrant Shares have been registered under the Securities Act,
by reason of a specific exemption under the provisions of the Securities Act
which depends in part upon the investment intent and the representations and
warranties of the Investor made in this Agreement. The

                                      35
<PAGE>

Investor further understands that the Company may place certain legends on the
certificate(s) for the Shares and the Warrant Shares as required by applicable
laws, including a legend in form substantially as follows:

             The securities represented by this certificate have not been
             registered under the Securities Act of 1933, as amended (the
             "Act"), or applicable state securities laws and none of such
             securities, nor any interest therein, may be sold, transferred,
             assigned, made the subject of any security interest, or otherwise
             disposed of, without an effective registration statement for such
             securities under the Act and applicable state securities laws, or
             an opinion of counsel in form and substance satisfactory to the
             Company that registration is not required under the Act or such
             state securities laws.

         4.   Miscellaneous.
              -------------

4.1. Notices. All notices or other communications given or made hereunder shall
     -------
be in writing and shall be delivered or mailed by registered or first class
mail, postage prepaid or express overnight courier service, to the address set
forth on the cover page hereof.

4.2. Legal Fees. The Company shall be responsible for the reasonable fees and
     ----------
disbursements of Investor's counsel in connection with the transactions
described in or contemplated by this Subscription Agreement.

4.3. Governing Law. This Agreement shall be governed by and construed in
     -------------
accordance with the laws of the Commonwealth of Massachusetts, excluding its
conflicts of laws rules.

4.4. Entire Agreement. This Agreement constitutes the entire agreement between
     ----------------
the parties with respect to the subject matter hereof and may be amended or
superseded only by a writing executed by the parties.

     5. Continuing Effect of Representations, Warranties and Acknowledgments.
        --------------------------------------------------------------------
The Investor agrees that the representations and warranties of Section 3 and
Section 4, respectively, are true and accurate as of the date of this
Subscription Agreement and shall be true and accurate as of the date of delivery
to and acceptance by the Company of this Subscription Agreement, and shall
survive such delivery and acceptance. If in any respect such representations,
warranties and acknowledgements shall not be true and accurate prior to such
delivery and acceptance, the Investor shall give immediate written notice of
such fact to the Company, specifying which representations and warranties and
acknowledgements are not true and accurate and the reasons therefor.

6. Indemnification. The Investor understands the meaning and legal consequences
   ---------------
   of the representations and warranties contained in Section 3, and agrees to
   indemnify and hold harmless the Company, its officers or any of its
   directors, affiliates, controlling shareholders, counsel, agents, or
   employees from and against any and all loss, damage or liability (including
   costs and reasonable attorney's fees) due to or arising out of a breach of
   any representation, warranty or acknowledgment of the Investor contained in
   this Agreement.

                                      36

<PAGE>

                                                                    Exhibit 10.9

                            ADVANCED LUMITECH, INC.

THIS WARRANT AND THE SECURITIES PURCHASED UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

                        Warrant to Purchase_____ shares

                     "A" Warrant to Purchase Common Stock
                                      of
                            ADVANCED LUMITECH, INC.

THIS CERTIFIES that _______________________ or any subsequent holder hereof
("Holder"), has the right to purchase from ADVANCED LUMITECH, INC., a Nevada
corporation (the "Company"), up to ______ fully paid and nonassessable shares of
the Company's common stock, $.001 par value per share, with one "B" Warrant
attached per share ("Common Stock"), subject to adjustment as provided herein,
at a price equal to the Exercise Price as defined in Section 3 below, at any
time beginning on the Date of Issuance (defined below) and ending at 5:00 p.m.,
New York, New York time, on September 30, 1999 (the "Exercise Period").

Holder agrees with the Company that this Warrant to Purchase Common Stock of
Advanced Lumitech, Inc. (this "Warrant") is issued and all rights hereunder
shall be held subject to all of the conditions, limitations and provisions set
forth herein.

     1.   DATE OF ISSUANCE.

     This Warrant shall be deemed to be issued on September 15, 1999 ("Date of
Issuance").

     2.   EXERCISE.

     (a)  MANNER OF EXERCISE. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby upon surrender of this Warrant, with the Exercise Form attached hereto as
Exhibit A (the "Exercise Form") duly executed, together with the full Exercise
Price (as defined below) for each share of Common Stock as to which this Warrant
is exercised, at the office of the Company, Avenue Cardinal-Mermillod 36, 1227
Carouge, Geneva, Switzerland; Attention: President, Telephone No. (41-22) 301-
0360, Telecopy No. (41-22) 301-0361, or at such other office or agency as the
Company may designate in writing, by overnight mail, with an advance copy of the
Exercise Form sent to the Company by facsimile (such surrender and payment of
the Exercise Price hereinafter called the "Exercise of this Warrant").

     (b)  DATE OF EXERCISE. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the Exercise Form is sent by
facsimile to the Company, provided that the original Warrant and

                                                                               1
<PAGE>

Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.

     (c)  CANCELLATION OF WARRANT. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.

     (d)  HOLDER OF RECORD. Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.

     3.   PAYMENT OF WARRANT EXERCISE PRICE.

     The Exercise Price shall equal $0.75 per share ("Exercise Price").

     Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder: cash, certified check, cashiers
check or wire transfer.

     4.   TRANSFER AND REGISTRATION.

     (a)  TRANSFER RIGHTS. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
endorsed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred and Holder shall be entitled to receive a new Warrant as to the
portion hereof retained.

     (b)  REGISTRABLE SECURITIES. The Common Stock issuable upon the exercise of
this Warrant constitutes "Registrable Securities" under that certain
Registration Rights Agreement dated on or about __________________, 1999 between
the Company and the Holders and, accordingly, has the benefit of the
registration rights pursuant to that agreement.

     5.   ANTI-DILUTION ADJUSTMENTS.

     (a)  STOCK DIVIDEND. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Exercise of this Warrant
after the record date for the determination of holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as to which this
Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.

                                                                               2
<PAGE>

     (b)  RECAPITALIZATION OR RECLASSIFICATION. If the Company shall at any time
the Warrants are outstanding effect a recapitalization, reclassification or
other similar transaction of such character that the shares of Common Stock
shall be changed into or become exchangeable for a larger or smaller number of
shares, then upon the effective date thereof, the number of shares of Common
Stock which Holder shall be entitled to purchase upon Exercise of this Warrant
shall be increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of Common Stock by reason of such
recapitalization, reclassification or similar transaction, and the Exercise
Price shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number of shares,
proportionally increased. The Company shall give Holder same notice it provides
to holders of Common Stock of any transaction described in this Section 5 (b).

     (c)  DISTRIBUTIONS. If the Company shall at any time the Warrants are
outstanding distribute for no consideration to holders of Common Stock cash,
evidences of indebtedness or other securities or assets (other than cash
dividends or distributions payable out of earned surplus or net profits for the
current or preceding year) then, in any such case, Holder shall be entitled to
receive, upon Exercise of this Warrant, with respect to each share of Common
Stock issuable upon such exercise, the amount of cash or evidences of
indebtedness or other securities or assets which Holder would have been entitled
to receive with respect to each such share of Common Stock as a result of the
happening of such event had this Warrant been exercised immediately prior to the
record date or other date fixing shareholders to be affected by such event (the
"Determination Date") or, in lieu thereof, if the Board of Directors of the
Company should so determine at the time of such distribution, a reduced Exercise
Price determined by multiplying the Exercise Price on the Determination Date by
a fraction, the numerator of which is the result of such Exercise Price reduced
by the value of such distribution applicable to one share of Common Stock (such
value to be determined by the Board of Directors of the Company in its
discretion) and the denominator of which is such Exercise Price.

     (d)  NOTICE OF CONSOLIDATION OR MERGER. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities or other assets of the Company or another entity or there
is a sale of all or substantially all the Company's assets (a "Corporate
Change"), then this Warrant shall be exercisable into such class and type of
securities or other assets as Holder would have received had Holder exercised
this Warrant immediately prior to such Corporate Change; provided, however, that
Company may not affect any Corporate Change unless it first shall have given
thirty (30) business days notice to Holder hereof of any Corporate Change.

     (e)  EXERCISE PRICE ADJUSTED. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in subsection (a), (b) or (c)
of this Section 5, and thereafter shall mean said price as adjusted from time to
time in accordance with the provisions of said subsection. No such adjustment
under this Section 5 shall be made unless such adjustment would change the
Exercise Price at the time by $.01 or more; provided, however, that all
adjustments not so made shall be deferred and made when the aggregate thereof
would change the Exercise Price at the time by $.01 or more. No adjustment made

                                                                               3
<PAGE>

pursuant to any provision of this Section 5 shall have the net effect of
increasing the Exercise Price. The number of shares of Common Stock subject
hereto shall increase proportionately with each decrease in the Exercise Price.

     (f)  ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event
that at any time, as a result of an adjustment made pursuant to this Section 5,
Holder shall, upon Exercise of this Warrant, become entitled to receive shares
and/or other securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.

     6.   FRACTIONAL INTERESTS.

          No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant,
Holder may purchase only a whole number of shares of Common Stock, if, on
Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.

7.   RESERVATION OF SHARES.

          The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for the Exercise of
this Warrant and payment of the Exercise Price. The Company covenants and agrees
that upon the Exercise of this Warrant, all shares of Common Stock issuable upon
such exercise shall be duly and validly issued, fully paid, nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.

     8.   RESTRICTIONS ON TRANSFER.

     (a)  REGISTRATION OR EXAMINATION REQUIRED. This Warrant has been issued in
a transaction exempt from the registration requirements of the Act by virtue of
Regulation D and is exempt from state registration under applicable state laws.
The Warrant and the Common Stock issuable upon the Exercise of this Warrant may
not be sold except pursuant to an effective registration statement or an
exemption to the registration requirements of the Act and applicable state laws.

     (b)  ASSIGNMENT. If Holder can provide the Company with reasonably
satisfactory evidence that the conditions of (a) above regarding registration or
exemption have been satisfied, Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant, in whole or in part. Holder shall deliver a
written notice to Company, substantially in the form of the Assignment attached
hereto as Exhibit B, indicating the person or persons to whom the Warrant shall
be assigned and the respective number of warrants to be assigned to each
assignee. The Company shall effect the assignment within ten (10) days, and
shall deliver to the assignee(s) designated by Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of shares.

                                                                               4
<PAGE>

     9.   BENEFITS OF THIS WARRANT.

          Nothing in this Warrant shall be construed to confer upon any person
other than the Company and Holder any legal or equitable right, remedy or claim
under this Warrant and this Warrant shall be for the sole and exclusive benefit
of the Company and Holder.

     10.  APPLICABLE LAW.

          This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the state of Nevada, without giving
effect to conflict of law provisions thereof.

     11.  LOSS OF WARRANT.

          Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonable to the Company, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.

     12.  NOTICE OR DEMANDS.

Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to Attention:
_______________________________________________________________________________
_____________. Notices or demands pursuant to this Warrant to be given or made
by the Company to or on Holder shall be sufficiently given or made if sent by
certified or registered mail, return receipt requested, postage prepaid, and
addressed, to the address of Holder set forth in the Company's records, until
another address is designated in writing by Holder.

     IN WITNESS WHEREOF, the undersigned has executed this Warrant as of
the_____day of ____, 19__.

                                ADVANCED LUMITECH, INC.

                                By: ______________________
                                Patrick Planche, President

                                                                               5
<PAGE>

                                   EXHIBIT A

                                 EXERCISE FORM

TO: ADVANCED LUMITECH, INC.

     The undersigned hereby irrevocably exercises the right to purchase the
shares of common stock, with "B" Warrant attached (the "Common Stock") of
ADVANCED LUMITECH, INC., a Nevada corporation (the "Company"), evidenced by the
attached warrant (the "Warrant"), and herewith makes payment of the exercise
price with respect to such shares in full, all in accordance with the conditions
and provisions of said Warrant.

1.   The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock or Warrants obtained on exercise of this Warrant, except
in accordance with the provisions of Section 8 (a) of the Warrant.

2.   The undersigned requests that stock certificates for such shares, with "B"
Warrants attached, be issued , and a warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant in the name of the undersigned
and delivered to the undersigned at the address set forth below:

Dated:

                     _______________________________________
                                  Signature

                     _______________________________________
                                  Print Name

                     _______________________________________
                                  Address

                     _______________________________________

NOTICE

The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.

                                                                               6
<PAGE>

                                   EXHIBIT B

                                  ASSIGNMENT

                   (To be executed by the registered holder
                       desiring to transfer the Warrant)

FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _____ shares, with attached "B" Warrants, of the
common stock of ADVANCED LUMITECH, INC., evidenced by the attached Warrant and
does hereby irrevocably constitute and appoint _________________________
attorney to transfer the said Warrant on the books of the Company, with full
power of substitution in the premises.

Dated:

_______________________________________
               Signature

Fill in for new registration of Warrant:

_______________________________________
               Name

_______________________________________
               Address

_______________________________________
Please print name and address of assignee
(including zip code number)

________________________________________________________________________________


NOTICE

The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.

                                                                               7

<PAGE>

Exhibit 23.1

Consent of Ernst & Young LLP, Independent Auditors

We consent to the incorporation by reference in the Registration Statement (form
S-8 No. 33-88023), pertaining to the 1999 Stock Option/Stock Issuance Plan, of
our report dated April 5, 2000, with respect to the consolidated financial
statements, as amended, of Advanced Lumitech, Inc. included in this Form 10-K/A
for the year ended December 31, 1999.

/s/ Ernst & Young LLP

Boston, Massachusetts
May 16, 2000


<TABLE> <S> <C>

<PAGE>

<ARTICLE> 5

<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                         490,276
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                               499,623
<PP&E>                                          76,815
<DEPRECIATION>                                (38,454)
<TOTAL-ASSETS>                                 537,984
<CURRENT-LIABILITIES>                        1,248,689
<BONDS>                                              0
                                0
                                          0
<COMMON>                                        31,998
<OTHER-SE>                                   4,747,766
<TOTAL-LIABILITY-AND-EQUITY>                   537,984
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                4,197,927
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              76,783
<INCOME-PRETAX>                            (4,274,710)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                        (4,274,710)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                               (4,274,710)
<EPS-BASIC>                                     (0.16)
<EPS-DILUTED>                                   (0.16)


</TABLE>


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