LEASE AMENDMENT NO. 5

                                 LEASE AMENDMENT
                                      NO. 5


         THIS  LEASE  AMENDMENT  No. 5, made and  entered  into this 17th day of
December,  1996,  by and  between  Xxxxx-Xxxxxxxx(R)  Incorporated,  a Minnesota
Corporation,  (hereinafter  referred to as  "Landlord")  and  Datakey,  Inc.,  a
Minnesota Corporation (hereinafter referred to as "Tenant");

         WITNESSETH THAT:

         WHEREAS,  Landlord  is leasing  to Tenant  and  Tenant is leasing  from
Landlord  certain  premises  commonly  known as 000-000  Xxxx  Xxxxxxxxx  Xxxxx,
Xxxxxxxxxx,  Xxxxxxxxx and located in the,  Gateway  Business Park, (the "Leased
Premises")  pursuant to written Lease  Agreement  dated June 3, 1987, as amended
February  10, 1988,  December 23, 1988,  February 13, 1992 and April 1, 1992 and
(collectively referred to as the "Lease");

         WHEREAS,  the parties hereto now desire to amend certain  provisions of
the Lease;

         NOW THEREFORE,  in consideration of mutual agreements contained herein,
it is hereby agreed to amend the Lease as follows:

1.       ARTICLE 1.  PREMISES AND TERM:

         The term of this lease is hereby  extended for an additional  two years
         commencing July 1, 1997 through June 30, 0000, (xxx "Xxxxxxxxx Xxxx").

2.       ARTICLE 3.  BASE RENT AND SECURITY DEPOSIT:

         The annual base rent,  Article 3, Section 1 during the  Extension  Term
         shall be as follows:

         Annual  Base Rent for July 1, 1997  through  June 30, 1998 shall be One
         Hundred  Twenty  Eight  Thousand  Four  Hundred  Ninety One Dollars and
         60/100  ($128,491.56)  payable in monthly  installments of Ten Thousand
         Seven Hundred Seven and 63/100 ($10,707.63).

         Annual  Base Rent for July 1, 1998  through  June 30, 1999 shall be One
         Hundred   Thirty  Four  Thousand   Thirty  Eight  and  96/100   Dollars
         ($134,038.96)  payable in monthly  installments  of Eleven Thousand One
         Hundred Sixty Nine and 83/100 ($11,169.83).

3.       Except as herein  specifically  modified and  amended,  the Lease shall
         remain in full force and effect and unaltered hereby.


IN WITNESS  WHEREOF the parties  hereto have caused this Lease  Amendment  to be
executed the day and year first above written.

XXXXX-XXXXXXXX, INCORPORATED                DATAKEY, INC.

By: /s/ Xxxxxx X. Xxxxxxxx                  By:  /s/ Xxxx Xxxxxx

Its: President                              Its: Vice President
         Landlord                                   Tenant