INDUSTRIAL LEASE BETWEEN
                     GRAHAM INDUSTRIAL ASSOCIATION, INC. AND
                          CAVALIER MANUFACTURING, INC.
                            (With Option to Purchase)


         This  lease is made  and  executed  by and  between  GRAHAM  INDUSTRIAL
ASSOCIATION,  INC., a Texas Corporation exempt from tax under IRC ss.501 (c)(4),
referred to in this lease as "Lessor" and CAVALIER  MANUFACTURING,  INC. (Town &
Country Homes Division), referred to in this lease as "Lessee."

                                    Section I

                             Description of Premises

          In  consideration  of the mutual covenants and agreements set forth in
this lease, and other good and valuable consideration, Lessor demises and leases
to Lessee,  and Lessee  leases from Lessor,  the premises  situated at 216 North
Ohio  Street,  and  232  North  Colorado,  Graham,  Young  County,  Texas,  more
particularly described as follows:

                  TRACT ONE:

                  All of that 14.80 acre tract  described in  that Warranty Deed
                  from Otis  Engineering  Corporation to The  Graham  Industrial
                  Association,  Inc.,  filed of record in  Volume  769,  at Page
                  864, of the Deed  Records of Young  County,  Texas,  SAVE  AND
                  EXCEPT Tract two described below, leaving  approximately  6.46
                  acres for Tract One, more or less.

                  TRACT TWO:

                  A tract of land  containing 8.33 acres and being the East 8.33
                  acres of the 9.89 acre tract  described  in a deed from Graham
                  Homes to Otis  Engineering  Co.,  recorded in Volume 546, Page
                  232 of the Deed Records of Young County,  Texas,  and the 0.13
                  acre tract described in a deed from Richard  Scheriger to Otis
                  Engineering  Co. recorded in Volume 559, Page 702, of the Deed
                  records of Young County,  Texas,  and being more  particularly
                  described as follows:

                  BEGINNING  at the  intersection  of the  north  line  of  U.S.
                  Highway  No. 380,  and the west line of Ohio Street  being the
                  southeast  corner of said 9.89 acre  tract;  THENCE  along the
                  north line of U.S.  Highway  No.  380,  West for a distance of
                  143.30 feet to the  beginning of a curve to the right;  THENCE
                  along said curve to the right  having a radius of 5675.00 feet
                  and an arc length of 327.94 feet,  being  subtended by a chord
                  of North 88 degrees 20 minutes 40 seconds  West for a distance
                  of 327.94 feet;  THENCE North for a distance of 648.24 feet to
                  a  point  in  the  southeast  R.O.W.  line  of  the  abandoned
                  railroad; THENCE with said line North 45 degrees 56 minutes 00
                  seconds  East  for a  distance  of  310.96  feet  to the  most
                  northerly  corner  of said 0.13 acre  tract;  THENCE  South 33
                  degrees 17 minutes  00 seconds  East for a distance  of 109.00
                  feet to the most  easterly  corner of said  0.13  acre  tract;
                  THENCE  with the north and east  lines of said 9.89 acre tract
                  South 78 degrees 25 minutes 00 seconds  East for a distance of
                  177.74 feet, South 15 degrees 12 minutes 00 seconds East for a
                  distance of 52.20 feet, and South a distance of 696.80 feet to
                  the point of beginning.

                  TRACT THREE

                  2.24 acres out of the Paul Pier Survey A-219, in Young County,
                  Texas, described as follows:

                  Beginning  at corner in North  line of Avenue F being  1,574.1
                  feet south and 670.2 feet west of the most easterly  Northeast
                  corner of said Paul Pier  Survey;  THENCE  north 295,4 feet to
                  South  line  of  Powell   Drive;   THENCE  east  330  feet  to
                  intersection  of West line of Colorado  Avenue;  THENCE  south
                  295.4 feet to North line of Avenue F;  THENCE west 330 feet to
                  place of beginning.

                                   Section II

                                      Term

          (a) Primary Term. The primary term of this lease shall be for a period
of twenty (20) years, commencing on the 1st day of June, 1997, and ending on the
31st day of May, 2017, unless sooner terminated as provided in this lease.

          (b) Early  Termination.  This  lease  may  be   terminated at any time
after the  expiration  of four years from date  hereof,  provided  Lessee  gives
12-months written notice to lessor.
                                   Section III

                                      Rent

          (a) Fixed Rent. Subject   to the   other  provisions    hereof, Lessee
agrees to pay to Lessor, as rent for the use and occupancy of the premises,  the
sum of $6,000.00 per month on or before the first day of each month,  commencing
June 1,1997,  and continuing up to and including May 1, 2017. All rent due under
the terms of this agreement is payable on or before the first day of each month.
Lessee agrees to pay the fixed rent to Lessor at P. 0. Box 1465,  Graham,  Young
County,  Texas, or at such other location or locations as Lessor shall from time
to time designate by written notice to Lessee.

          (b) Taxes and Assessments as Additional Rent

          i. In addition to the fixed rent specified in 111(a), Lessee shall pay
          the full amount of all real property taxes, special  assessments,  and
          governmental charges of every character imposed on the leased premises
          during  the term of this  lease,  including  any  special  assessments
          imposed  on,  or  against,   the  premises  for  the  construction  or
          improvement  of public works.  This  additional  rent shall be payable
          directly to the entity imposing the tax, assessment or charge at least
          thirty (30) days prior to the date on which the payment is due. Lessee
          shall provide  Lessor with a receipt or other  evidence of payment for
          each such tax,  assessment,  or  charge  paid as soon as a receipt  or
          other evidence is available to Lessee.

          ii. Lessee may, at its own expense,  contest any tax or assessment for
          which Lessee is  responsible  under  lll(a)(i).  Except as provided in
          lll(b)(iii),  Lessee need not pay the tax, assessment or charge during
          the pendency of the contest. Except as provided in lll(b)(iii), Lessee
          may  prevent  Lessor from  paying any tax,  assessment  or charge that
          Lessee is contesting  pursuant to this subsection,  pending resolution
          of the contest,  by depositing  with Lessor the full amount of the tax
          or  assessment,  plus the amount of any penalty  that might be imposed
          for failure to make timely payment and one (1) year of interest at the
          rate imposed by the entity levying the tax for assessment.  Upon final
          resolution  of the tax or  assessment,  Lessor shall pay to the entity
          entitled to receive them such funds plus any penalty or interest,  due
          under the final  resolution,  and keep the balance of the deposit,  if
          any. If the deposit is insufficient to pay these amounts,  Lessee must
          immediately  pay the  balance  due to the  entity  imposing  the  tax,
          assessment or charge.

          iii The  provisions of lll(b)(ii)  notwithstanding, Lessor may pay, or
          require  Lessee to pay, any tax, assessment or charge for which Lessee
          is responsible under lll(b)(i), pending resolution of Lessee's contest
          of the tax, assessment or charge,  if  payment is demanded by a holder
          of a mortgage on the leased premises or if failure to pay will subject
          all or part of the leased premises to forfeiture or loss.

                                   Section IV

                                 Use of Premises

          The premises are leased to be used for the  manufacturing and assembly
of Lessee's  associated products and equipment and related activities and for no
other purpose without the written consent of Lessor,  which consent shall not be
unreasonably withheld.

                                    Section V

                               Property Insurance

          Lessee  must,  at its own  expense  during  the lease  term,  keep all
buildings and  improvements  on the premises  insured  against loss or damage by
fire or theft and  extended  coverage if  obtainable  to include  direct loss by
windstorm,  hail,  explosion,  riot or riot attending a strike, civil commotion,
aircraft,  vehicles, and smoke, in the total amounts of not less than 80% of the
replacement cost of the building and improvements as determined by the insurance
company.  The  insurance  is to be  carried by one or more  insurance  companies
licensed to do business in Texas and approved by Lessor. The insurance policy or
policies must name both Lessee and Lessor as insureds. The policies must provide
that any proceeds for loss or damage to buildings or to improvements are payable
solely  to  Lessor,  who  will or may use the  sum for  repair  and  restoration
purposes as provided herein.

          Lessee must furnish Lessor with certificates of all insurance required
by this  article.  If Lessee does not provide  the  certificates  within 30 days
after  obtaining  possession,  or if Lessor allows any insurance  required under
this article to lapse,  Lessor may, at its option, take out and pay the premiums
on the  necessary  insurance  to comply  with  Lessee's  obligations  under this
article.  Lessor is entitled to reimbursement  from Lessee for all amounts spent
to procure and maintain the insurance, with interest at the rate of 10% annually
from the date Lessee receives Lessor's notice of payment until reimbursement.

                                   Section VI

                               Limitations on Use

          (a) Prohibition  against   Waste.  Nuisance,  or  Unlawful Use. Lessee
shall not commit, or allow to be committed, any waste on the premises, create or
allow any nuisance to exist on the premises,  or use or allow the premises to be
used for any unlawful purpose.

          (b) Sale of Alcoholic Beverages  Prohibited. Lessee shall not display,
stock,  offer to sell or sell,  or permit the  display,  stocking,  offering for
sale, or sale of any alcoholic  beverages,  including  beer and wine,  in, on or
from the leased premises.

          (c) Livestock on  Leases  Premises  Prohibited. Lessee shall not allow
any  livestock,  pets or  other  live  animal  of any  kind in or on the  leased
premises.   Lessee  shall  enforce  this   prohibition   insofar  as  reasonably
practicable,  and  Lessee's  failure to do so shall be deemed a total  breach of
this lease.

                                   Section VII

                    Effect of Delay in Delivering Possession

          This  lease  shall  not be  rendered  void  or  voidable  by  Lessor's
inability to deliver  possession  to Lessee at the  beginning of the lease term,
nor shall such  inability to deliver  render Lessor liable to Lessee for loss or
damage suffered thereby. If Lessor cannot deliver the premises at such time, the
rent for the period  between the  beginning of the term and the time when Lessor
can deliver  possession  will be deducted  from the total rent of the lease.  No
extension of the lease shall result from a delay in delivering possession.

                                  Section VIII

                    Payment of Utilities and Garbage Removal

          (a) Utility  Charges.  Lessee shall pay all utility charges for water,
electricity,  heat,  gas, and  telephone  services  used in and about the leased
premises  during  the term of the lease,  all such  charges to be paid by Lessee
directly to the utility company or municipality  furnishing the same, before the
same shall become delinquent.

          (b) Garbage  Removal.  Lessee shall pay for the removal of all garbage
and rubbish from the leased  premises  during the term of the lease.

                                   Section IX

                             Repairs and Maintenance

          (a) Lessor's and Lessee's Duty to Repair. Lessee, at Lessee's expense,
shall maintain and keep the premises,  including  without  limitation,  windows,
doors, skylights,  adjacent sidewalks,  storefront,  and interior walls, in good
repair.  Lessee shall also  maintain in good  condition  the  building  root and
exterior wails.  All maintenance and repairs  required of Lessee by this section
must be performed  promptly  when  required and in a manner which will not cause
depreciation in the value of the premises.

          (b) Lessee's Failure to Repair or Maintain.  In the event Lessee fails
to perform its  obligation  to repair or maintain,  as set forth in IX(a) above,
after  notice  from Lessor of the need for such  repair or  maintenance  and the
passage of a reasonable amount of time for performance after such notice, Lessor
may enter the  premises and make such  repairs or perform  such  maintenance  or
cause such repairs to be made or  maintenance  to be performed,  at Lessor's own
expense.  Upon  Lessor's  notice to Lessee  of the  performance  and cost of any
maintenance  or  repairs  pursuant  to this  section,  Lessee  must  immediately
reimburse  Lessor for any  reasonable  cost incurred by Lessor  pursuant to this
section,  together  with interest on any such sum at the highest legal rate from
the date of the notice until the date paid by Lessee to Lessor.

          (c) Damage  Arising  from   Lessee's   Activities. In  the  event  the
activities of the Lessee cause any damage to the premises requiring  replacement
of any  portion  thereof or repairs  thereto  or if damage is  sustained  to the
premises  by virtue of the  failure  of the  Lessee to take  reasonable  care to
preserve and maintain said premises then Lessee shall take all steps and pay for
all expense  necessary in order to repair or replace any portion of the premises
so damaged. Any insurance proceeds shall be made available to the Lessee for the
repairs or replacement.  In the event Lessee fails to act after notice by making
repairs or  replacement,  then Lessor may proceed as provided in  paragraph  (b)
above.

                                    Section X

                 Delivery, Acceptance. and Surrender of Premises

          Lessee  agrees to accept the premises on possession as being in a good
state of repair  and in  sanitary  condition.  Lessee  agrees to  surrender  the
premises  to the  Lessor  at the end of the  lease  term,  if the  lease  is not
renewed,  in the same  condition  as when Lessee took  possession,  allowing for
reasonable use and wear,  and damage by acts of God,  including fire and storms.
Lessee agrees to remove all business  signs or symbols placed on the premises by
Lessee  before  redelivery  of the  premises to the  Lessor,  and to restore the
portion of the  premises  on which  they were  placed in the same  condition  as
before their placement.


                                   Section XI

                       Representations as to Use and Zoning

          Lessor makes no warranty or  representation of any kind concerning the
condition  of the leased  premises  or their  fitness  for the use  intended  by
Lessee,  or of their zoning,  and hereby  disclaims any personal  knowledge with
respect to these matters,  it being expressly  understood by the parties to this
lease that Lessee has  personally  inspected  the leased  premises,  knows their
condition, finds them fit for Lessee's intended use, accepts them as is, and has
ascertained that they can, under existing  ordinances,  be used for the purposes
set forth in and limited by, this lease.

                                   Section XII

             Lessor's Right To Inspect, Repair and Maintain Premises

          Lessor reserves the right to enter the premises at reasonable times to
inspect them, to perform all necessary and required  maintenance and repair, and
Lessee agrees to permit  Lessor to do so.  Lessor may, in  connection  with such
maintenance or repairs, erect scaffolding,  fences, and similar structures, post
relevant  notices,  and place movable equipment without any obligation to reduce
Lessee's  rent for the  premises  during  such  period,  and  without  incurring
liability to Lessee for disturbance of quiet enjoyment of the premises,  or loss
of occupation of the premises.

                                  Section XIII

                            Trade Fixtures and Signs

          (a)  Posting of Signs,  Awnings,  or  Marquees  by Lessee.  Lessee may
construct  or place,  or to permit  construction  or  placement  of signs on the
premises.  However, no such signs, awnings,  marquees, or other structures shall
be attached to the building without Lessor's consent.

          (b)  Trade  Fixtures.  Lessee  has the  right at all times to erect or
install shelves, bins, machinery, equipment, or other trade fixtures, in, on, or
about the leased  premises,  provided that Lessee  complies with all  applicable
governmental laws, ordinances,  and regulations regarding such fixtures.  Lessee
has the right to remove all trade  fixtures  at the  termination  of this lease,
provided  Lessee is not in default  under the lease and that the fixtures can be
removed without structural damage to the building. Lessee must repair any damage
to the leased premises caused by removal of trade fixtures, and all such repairs
must be completed prior to the termination of the lease. Any trade fixtures that
have not been removed by Lessee at the termination of this lease shall be deemed
abandoned by the Lessee and shall  automatically  become the property of Lessor.
In the  event  any  trade  fixture  installed  by  Lessee  is  abandoned  at the
termination of the lease, Lessee must pay Lessor any reasonable expense actually
incurred by Lessor to remove the fixture from the premises, provided the fixture
is removed  within thirty (30) days after Lessee has  surrendered  possession of
the premises or prior to the entrance of any subsequent tenant unto the premises
or use of the trade fixtures by Lessor.

                                   Section XIV

                                Mechanic's Liens

          Lessee will not permit any mechanic's  lien or liens to be placed upon
the leased  premises or  improvements  on the premises.  If a mechanic's lien is
filed on the leased premises or on improvements on the leased  premises,  Lessee
will  promptly  pay the lien.  If default in payment of the lien  continues  for
thirty (30) days after  written  notice  from  Lessor to Lessee,  Lessor may, at
Lessor's  option,  pay the lien or any  portion of it without  inquiry as to its
validity.  Any amounts paid by the Lessor to remove a mechanic's  lien caused to
be filed  against  the  premises  or  improvements  on the  premises  by Lessee,
including expenses and interest, shall be due from Lessee to Lessor and shall be
repaid to Lessor  immediately on rendition of notice,  together with interest at
ten (10%) percent per annum until repaid.

                                   SECTION XV

                               Liability Insurance

          Lessee agrees to procure and maintain in force during the term of this
lease and any  extension of the lease,  at Lessee's  expense,  public  liability
insurance  in  companies  and through  brokers  approved by Lessor,  adequate to
protect against liability for damage claims through public use of or arising out
of accidents occurring in or around the leased premises,  in a minimum amount of
$1,000,000  for  each  person  injured,  $2,000,000  for any one  accident,  and
$400,000 for property damage. Such insurance policies shall provide coverage for
Lessor's  contingent  liability  on such  claims  or  losses.  The  policies  or
certificates verifying coverage and copies of the policies shall be delivered to
Lessor  for  keeping.  Lessee  agrees to obtain a  written  obligation  from the
insurers  to notify  Lessor  in  writing  at least  thirty  (30)  days  prior to
cancellation or refusal to renew any such policies.  Lessee agrees that, if such
insurance  policies  are not kept in force  during the entire term of this lease
and any extension of this lease, Lessor may procure the necessary insurance, pay
the premium  and that such  premium  shall be repaid to Lessor as an  additional
rent  installment  for the month  following  the date on which such premiums are
paid and that such premium, plus interest at the rate of 10% per annum, shall be
repaid to Lessor as an additional rent installment for the month following.

                                   Section XVI

                                 Indemnification

          Lessee  agrees to indemnify and hold Lessor  harmless  against any and
all  claims,  demands,  damages,  costs,  and  expenses,   including  reasonable
attorney's  fees for the defense of such claims and  demands,  arising  from the
conduct or management of Lessee's business on the leased premises,  or  Lessee's
use of the  leased  premises  or from any  breach  on the part of  Lessee of any
conditions  of this lease,  or from any act or  negligence  of Lessee,  Lessee's
agents, contractors, employees, subtenants,  concessionaires, or licensees in or
about the leased premises.  In case of any action or proceeding  brought against
Lessor by reason of any such claim,  Lessee, upon notice from Lessor,  agrees to
defend the action or proceeding by counsel  acceptable to Lessor.  Specifically,
without limiting the foregoing,  Lessee shall indemnify and hold Lessor harmless
from any and all  liability  for  damages  that may  result  from the  bursting,
stoppage,  or leakage of any water pipe, steam pipe or gas pipe,  sewer,  basin,
toilet or drain and from any and all  liability  for any damage  caused by water
pipes, gas pipes or steam heat pipes, sewers, basins, toilets and/or drains.

                                  Section XVII

                             Assignment or Sublease

          Lessee agrees not to assign or sublease the premises leased,  any part
of the premises,  or any right or privilege  connected  with it, or to allow any
other person,  except Lessee's  agents and employees,  to occupy the premises or
any part of the premises,  without first obtaining Lessor's written consent. Ore
consent by Lessor shall not be a consent to a subsequent  assignment,  sublease,
or occupation by other persons.  Lessee's unauthorized assignment,  sublease, or
license  to occupy  shall be void,  and shall  terminate  the lease at  Lessor's
option.  Lessee's  interest in this lease is not assignable by operation of law,
nor is any assignment of Lessee's  interest  therein,  without  Lessor's written
consent which will not be unreasonably withheld.

          Lessee may assign this lease to any subsidiary or corporate  entity or
limited liability company in which Lessee has at least a 25% ownership interest,
but such assignment shall not release Lessee from any obligations  hereunder and
any Assignee must agree to also assume any obligations hereunder.

                                  Section XVIII

     Effect of Lessee's Receivership or Assignment for Benefit of Creditors

          Appointment  of a  receiver  to take  possession  of  Lessee's  assets
(except a  receiver  appointed  at  Lessor's  request as herein in the lease) or
Lessee's general assignment for benefit of creditors is a breach of this lease.

                                   Section XIX

                        Damage or Destruction of Premises

          (a)  Total.  If the  premises  should be  totally  destroyed  by fire,
tornado or other  casualty,  or if they should be so damaged that  rebuilding or
repairs cannot  reasonably be completed  within one hundred twenty (120) working
days from the date of the occurrence of the damage, Lessor may, but shall not be
required to repair the  premises.  If Lessor elects not to rebuild or repair the
premises,  Lessor shall so notify Lessee in writing and, subject to subparagraph
(c) below, this Lease shall terminate effective as of the date of said damage.

          (b)  Partial.  If the premises  should be damaged by fire,  tornado or
other  casualty  but not to such an extent  that  rebuilding  or repairs  cannot
reasonably  be completed  within one hundred  twenty (120) working days from the
date of the occurrence of the damage, this Lease shall not terminate, but Lessor
shall,  if the casualty has occurred prior to the final one hundred twenty (120)
days of the Lease term  proceed  forthwith  to rebuild or repair the premises to
substantially  the  condition  existing  prior to such  damage.  If the casualty
occurs during the final one hundred twenty (120) days of the Lease term,  Lessor
shall not be required to rebuild or repair such  damage,  but if Lessor does not
so  elect,  Lessor  shall so notify  Lessee in  writing,  and this  Lease  shall
terminate,  effective as of the date of said  damage.  If the premises are to be
rebuilt or repaired  and are  untenantable  in whole or in part  following  such
damage,   the  rents  payable  hereunder  during  the  period  in  which  it  is
untenantable shall be adjusted equitably.

          (c) Lessee's Right to Rebuild or Purchase.  In the event Lessor elects
not to rebuild or repair the premises pursuant to subparagraph (a) or (b) above,
Lessee shall have the right to elect to rebuild or repair the  premises  itself,
or to exercise Lessee's option to purchase the premises pursuant to Section XXVI
of this Lease,  by giving Lessor written notice of such election  within 30 days
after Lessee's  receipt of Lessor's  written notice  advising Lessee that Lessor
has elected not to rebuild the  premises.  If Lessee elects to rebuild or repair
the premises, or to exercise its option to purchase the premises,  the insurance
proceeds,  if any,  resulting from such damage or  destruction  shall be paid to
Lessee.

          (d) Limitation to Insurance  Proceeds.  Under no  circumstances  shall
Lessor be obligated to incur for rebuilding or repairs any sum which exceeds the
proceeds  from  insurance  actually  received or available to Lessor.  If Lessee
requests  replacement,  repairs  or  rebuilding  of the  premises  and such cost
exceeds the available insurance  proceeds,  then Lessee shall be responsible for
such amount or expense exceeding insurance proceeds that are available.


                                   Section XX

                       Effect of Eminent Domain Proceedings

          (a) Condemnation. If during the term of this lease or any extension or
renewal of it, all of the leased premises, or such portion thereof as would make
the leased premises  unsuitable for the purpose for which they have been leased,
should be taken for any public or quasi-public use under any  governmental  law,
ordinance,  or regulation,  or by right of eminent domain,  or should be sold to
the  condemning  authority  under  threat  of  condemnation,  this  lease  shall
terminate,  and the rent shall be abated  during the  unexpired  portion of this
lease,  effective as of the date of the taking of the premises by the condemning
authority.

          (b)  Condemnation  Award.  Lessor and Lessee shall each be entitled to
receive and retain such separate awards, and portions of lump sum awards, as may
be allocated to their respective interests in any condemnation proceedings.  The
termination of this lease shall not affect the rights of the respective  parties
to such awards.



                                   Section XXI

                       Lessor's Remedies on Lessee's Breach

          If  Lessee  breaches  this  lease,  Lessor  shall  have the  following
remedies in addition to its other rights and remedies in such event:

          (a) Reentry.  Lessor may reenter the premises immediately,  and remove
all of Lessee's  personnel and property from the premises.  Lessor may store the
property  in a public  warehouse  or at another  place of  Lessor's  choosing at
Lessee's expense or to Lessee's account.

          (b)  Termination.  After  reentry,  Lessor may  terminate the lease on
giving fifteen (15) days' written notice of such termination to Lessee.  Reentry
only, without notice of termination, will not terminate the lease.

          (c) Reletting  Premises.  After  reentering,  Lessor  may  relet   the
premises or any part of the  premises,  for any term,  without  terminating  the
lease at such  rent and on such  terms as Lessor  may  choose.  Lessor  may make
alterations and repairs to the premises.

          1.       Liability of Lessee on Reletting.  Lessee is liable to Lessor
                   in  addition to its other  liability  for breach of the lease
                   for all expenses of the reletting, and of the alterations and
                   repairs made, which Lessor may incur. In addition,  Lessee is
                   liable to Lessor for the difference between the rent received
                   by Lessor under the reletting and the rent  installments that
                   are due for the same period under this lease.

          2.       Application  of Rent on Reletting.  Lessor at its option  may
                   apply   the   rent received from  reletting the   premises as
                   follows:

                   i.       To reduce Lessee's  indebtedness to Lessor under the
                   lease, not including indebtedness for rent;

                   ii.      To expenses of  the reletting and   alterations  and
                   repairs made;

                   iii.     To rent due under this lease;

                   iv.      To payment of  future  rent  under  this lease as it
                   becomes due.

          If the new Lessee does not pay a rent installment  promptly to Lessor,
and the rent  installment  has been  credited  in advance of payment to Lessee's
indebtedness  other than  rent,  or if  rentals  from the new  Lessee  have been
otherwise  applied by Lessor as provided for in this lease,  and during any rent
installment  period  are  less  than  the  rent  payable  for the  corresponding
installment period under this lease,  Lessee agrees to pay Lessor the deficiency
separately for each rent installment  deficiency  period,  and before the end of
that period.

          Lessor may at any time after such  reletting  terminate  the lease for
the breach because of which it reentered and relet.

          Lessor may recover from Lessee on  terminating  the lease for Lessee's
breach all damages proximately resulting from the breach,  including the cost of
recovering  the  premises,  and the worth of the  balance of this lease over the
reasonable  rental value of the  premises  for the  remainder of the lease term,
which sum shall be immediately due Lessor from Lessee.

          (d)  Appointment of Receiver.  After  reentry,  Lessor may procure the
appointment  of a receiver to take  possession  of and collect rents and profits
from  Lessee's  business.  If  necessary,  to collect such rents and profits the
receiver may carry on Lessee's business and take possession of Lessee's personal
property  used  in  the  business,  including  inventory,  trade  fixtures,  and
furnishings,  and use them in the business without compensating Lessee for them.
Proceedings  for  appointment of a receiver by Lessor,  or the  appointment of a
receiver and the  conducting  by such receiver of Lessee's  business,  shall not
terminate  this lease  unless  Lessor has given  Lessee  written  notice of such
termination as provided in this lease.

          (e)  LESSOR'S  LIEN.  IN  ADDITION TO ALL OTHER  REMEDIES  PROVIDED TO
LESSOR HEREUNDER, IT IS HEREBY EXPRESSLY AGREED THAT, IN THE EVENT OF DEFAULT BY
LESSEE IN THE PAYMENT OF RENT OR ANY OTHER SUM DUE FROM  LESSEE TO LESSOR  UNDER
THE TERMS OF THIS LEASE,  LESSOR SHALL HAVE A LIEN UPON ALL FIXTURES,  CHATTELS,
OR OTHER PROPERTY OF ANY DESCRIPTION  BELONGING TO LESSEE THAT ARE PLACED IN, OR
BECOME A PART OF, THE LEASED PREMISES AS SECURITY FOR RENT DUE AND TO BECOME DUE
FOR THE REMAINDER OF THE CURRENT LEASE TERM AND ANY OTHER SUM DUE FROM LESSEE TO
LESSOR.  THIS LIEN SHALL NOT BE IN LIEU OF, OR IN ANY WAY AFFECT,  THE STATUTORY
LESSOR'S  LIEN GIVEN BY LAW BUT SHALL BE IN  ADDITION  TO THAT LIEN,  AND LESSEE
GRANTS TO LESSOR A SECURITY INTEREST IN ALL OF LESSEE'S PROPERTY PLACED IN OR ON
THE LEASED  PREMISES  FOR  PURPOSES  OF THIS  CONTRACTUAL  LIEN.  THIS SHALL NOT
PREVENT THE SALE BY LESSEE OF ANY MERCHANDISE IN THE ORDINARY COURSE OF BUSINESS
FREE OF SUCH  LIEN TO  LESSOR.  IN THE  EVENT  LESSOR  EXERCISES  THE  OPTION TO
TERMINATE  THE  LEASEHOLD,  REENTER,  AND RELET THE  PREMISES AS PROVIDED IN THE
PRECEDING  PARAGRAPH,  THEN LESSOR,  AFTER GIVING REASONABLE NOTICE TO LESSEE OF
THE INTENT TO TAKE  POSSESSION  AND GIVING AN  OPPORTUNITY  FOR A HEARING ON THE
MATTER, MAY TAKE POSSESSION OF ALL OF LESSEE'S PROPERTY ON THE PREMISES AND SELL
IT AT PUBLIC OR PRIVATE SALE AFTER GIVING LESSEE  REASONABLE  NOTICE OF THE TIME
AND PLACE OF ANY PUBLIC SALE OR OF THE TIME AFTER THAT ANY PRIVATE SALE IS TO BE
MADE,  FOR CASH OR ON CREDIT,  FOR SUCH  PRICES AND TERMS AS LESSOR  DEEMS BEST,
WITH OR WITHOUT  HAVING THE  PROPERTY  PRESENT AT THE SALE.  THE PROCEEDS OF THE
SALE SHALL BE APPLIED  FIRST TO THE  NECESSARY  AND PROPER  EXPENSE OF REMOVING,
STORING.  AND SELLING SUCH  PROPERTY,  THEN TO THE PAYMENT OF ANY RENT DUE OR TO
BECOME DUE UNDER THIS LEASE, WITH THE BALANCE, IF ANY, TO BE PAID TO LESSEE.

         (f) Cumulative  Remedies.  All rights and remedies of Lessor under this
Article  shall be  cumulative,  and none shall exclude any other right or remedy
provided by law or by any other  provision  of this  lease.  All such rights and
remedies may be exercised and enforced concurrently and whenever,  and as often,
as occasion for their exercise arises.

                                  Section XXII

                          Liability for Attorneys' Fees

          If Lessor files an action to   enforce any covenant of  this lease, or
for breach of any covenant in the lease,  Lessee agrees to pay Lessor reasonable
attorneys' fees for the services of Lessor's  attorney in the action,  such fees
to be fixed by the court.

                                  Section XXIII

                                     Notices

         Notices given pursuant to the provisions of this lease, or necessary to
carry out its provisions,  shall be in writing,  and delivered personally to the
person to whom the notice is to be given, or mailed postage  prepaid,  addressed
to such  person.  Lessor's  address  for this  purpose  shall be P. 0. Box 1465,
Graham,  Young County,  Texas 76450,  or such other address as he may in writing
designate  to  Lessee.  Notices  to  Lessee  may be  addressed  to Lessee at the
premises leased.


                                  Section XXIV

                     Effect of Lessor's Waiver of Covenants

          Lessor's  waiver of breach of one  covenant or condition of this lease
is not a waiver of breach of others,  or of subsequent breach of the one waived.
Lessor's  acceptance  of rent  installments  after breach is not a waiver of the
breach,  except  of  breach  of the  covenant  to pay the  rent  installment  or
installments accepted.


                                   Section XXV

                    Binding Effect on Successors and Assigns

          This lease and the covenants and conditions of this lease apply to and
are binding on the heirs, successors, executors,  administrators, and assigns of
the  parties to this  lease.  In the event of the sale,  merger,  consolidation,
dissolution,  or other  transformation  of the structure of Lessee, it is hereby
agreed,  for the same  consideration  herein  expressed,  that the  purchaser or
surviving  entity  shall be  responsible  for and shall  assume all of  Lessee's
duties and obligations under this lease.




                                  Section XXVII

                               Option to Purchase

          Lessor  hereby  grants to Lessee  an  option to  purchase  at any time
Tracts One and Two and Tract Three which are the leased premises,  together with
all fixtures and other personal property located thereon, at any time during the
primary term or any renewal  period of this lease,  provided that lease payments
are then  current.  This option to purchase  may be exercised by Lessee upon the
giving of thirty  (30)  days'  written  notice to Lessor of  Lessee's  intent to
exercise this option,  identifying  the tract or tracts to be purchased.  In the
event Lessee should elect to exercise this option,  the purchase  price upon the
exercise of the option shall be $395,000.00  for Tract Two,  $10,000.00 per acre
for Tract One after survey  establishing the exact acreage,  and $300,000.00 for
Tract Three. The option as to Tracts One and Two can only be exercised together.
Lessee  shall not be permitted to exercise any option to only Tract One or Tract
Two without  purchasing both.  Tract Three may be purchased  without purchase of
Tracts One and Two. Tracts One and Two may be purchased without Tract Three.

          In the event of the  exercise of this option as herein  provided as to
any of the tracts,  this lease  shall be deemed  canceled  in its  entirety  and
Lessor  agrees to convey the  property  as to which the option is  exercised  to
Lessee by special warranty deed free and clear of all encumbrances  except taxes
and assessments which under this lease are to be paid by Lessee.  Nothing herein
shall be construed to prevent,  prior to a  consummation  of the sale,  Lessor's
placing  such deeds of trust on the  property  as Lessor  may see fit,  provided
however,  that such  encumbrances  shall not exceed the option purchase price at
the  time of the  inception  of such  lien.  Any  encumbrance  now or  hereafter
existing  against the  property,  created by, for or on account of Lessor shall,
however,  so far as they constitute  liens,  at the  consummation of the sale be
discharged out of the purchase price so provided hereunder.

          In the event and on Lessee's  exercise  of the option to purchase  the
premises in the manner provided as to any of the tracts, a contract for the sale
and purchase of the property shall exist,  the relationship of Lessor and Lessee
shall automatically  terminate,  and the Lessee shall be deemed in possession of
the premises as a vendee under an executory  contract as to the tracts for which
an option is exercised and Lessee agrees to immediately  surrender possession as
to any tracts  for which the  option is not  exercised.  Whenever  Lessee  shall
desire to exercise this option, Lessee shall give Lessor 30-days written notice!
Lessor will within a reasonable  time after receipt of such notice  deliver,  or
cause to be delivered,  to Lessee an owner's policy of title insurance issued by
a mutually  acceptable title insurance company.  Defects in title, if any, shown
by such report shall be remedied by Lessor  within thirty (30) days of notice to
Lessor of such defects and Lessor shall deliver to Lessee at the time of closing
an owner's policy of title insurance  issued by the company in the amount of the
purchase price subject only to encumbrance,  exceptions, and reservations herein
mentioned.  The purchase  shall in any event be completed by  conveyance  of the
property  for which the option is exercised  and payment of the  purchase  price
within  forty-five  (45) days from delivery of notice of intent to exercise this
option.  Cost of any survey that may be required to  determine  acreage of Tract
One will be shared equally by the parties.


                                  Section XXVII

                          Hazardous or Toxic Materials

          (a) In addition to (but not in lieu of) all other generally applicable
requirements  otherwise herein stated,  Lessee shall also comply with all local,
state and  federal  rules  and  regulations  pertaining  to  hazardous  or toxic
materials.  Further,  Lessee does hereby  agree to and does  indemnify  and hold
Lessor  harmless  from any and all claims  arising  out of or  connected  in any
manner with such hazardous or toxic materials or substances caused by the Lessee
after  the date of this  lease.  For the  purpose  of this  agreement,  the term
"hazardous or toxic materials or substances" shall be interpreted to mean:

          i. Any substance,  product, waste or other material that may give rise
             to liability under any laws statutory or common law court theory.

          ii. Asbestos

          iii.Any substance, product, waste or other material of any nature that
              is or becomes listed, regulated, or addressed under one or more of
              the following:

                   The Comprehensive  Environmental Response  Compensation,  and
                   Liability  Act,  referred to as "CERCLA" in Sections  9601 et
                   seq of  Title 42 of the  United  States  Code  The  Hazardous
                   Materials  Transportation  Act,  in  Sections  1801 et seq of
                   Title 49 of the United States Code. The Resource Conservation
                   and  Recovery  Act,  referred to as "RCRA" in Section 6901 et
                   seq of  Title 42 of the  United  States  Code  The  Hazardous
                   Substances Act, referred to as "H SA" in Sections 1261 et seq
                   of Title 15 of the United States Code The Injection Well Act,
                   in Texas Water Code Sections 27.002 et seq The Comprehensive'
                   Municipal  Solid Waste  Management,  Resource  Recovery,  and
                   Conservation  Act, in Texas Health and Safety Code,  Sections
                   363.001 at seq The Hazardous  Substance  Act, in Texas Health
                   and Safety Code,  Sections  501.001 et seq The Water  Quality
                   Control Act, in Texas Water Code, Sections 26.001 et seq.

                   Any other  federal  or state law or local  ordinance or other
                   rule  concerning  hazardous,  toxic or  dangerous substances,
                   waste or materials.

                                 Section XXVIII

                              Additional Provisions

          (a)  Texas Law  to   Apply. This agreement shall be construed   under,
and in accordance  with, the laws of the State of Texas,  and all obligations of
the parties created by this lease are performable in Young County, Texas.

          (b)  Legal  Construction.  In case  any one or more of the  provisions
contained in this agreement shall for any reason be held by a court of competent
jurisdiction  to be invalid,  illegal,  or  unenforceable  in any respect,  such
invalidity, illegality, or unenforceability shall not affect any other provision
of the  agreement,  and this  agreement  shall be  construed  as if the invalid,
illegal, or unenforceable provision had never been included in the agreement.

          (c) Prior Agreements  Superseded.  This agreement constitutes the sole
and only  agreement of the parties to the  agreement  and  supersedes  any prior
understandings or written or oral agreements  between the parties respecting the
subject matter of this agreement.

          (d) Amendment. No amendment,  modification, or alteration or the terms
of this agreement  shall be binding unless in writing,  dated  subsequent to the
date of this agreement, and duly executed by the parties to this agreement.

          (e) Force  Majeure.  Neither  Lessor nor Lessee  shall be  required to
perform  any  term,  condition,  or  covenant  in  this  lease  so  long as such
performance is delayed or prevented by force  majeure,  which shall mean acts of
God,  strikes,  lockouts,  material or labor  restrictions  by any  governmental
authority,  civil riot,  floods,  and any other cause not reasonably  within the
control of Lessor or Lessee and which by the exercise of due diligence Lessor or
Lessee is unable, wholly or in part, to prevent or overcome.

          (f) Time of the Essence. Time is of the essence of this lease.



EFFECTIVE  June  1,1997,  but  EXECUTED by the Lessor and Lessee on the 4 day of
June, 1997, at Graham, Texas.


                                          Lessor:
                                          GRAHAM INDUSTRIAL ASSOCIATION, INC.

                                          BY: /s/ Chuck Rosebrough
                                              ----------------------------------
                                               Chuck Rosebrough, Vice President

                                          Lessee:

                                          CAVALIER MANUFACTURING, INC.
                                          (Town & Country Homes Division)

                                          BY: /s/ A. Keith Finley
                                              ----------------------------------
                                             A. Keith Finley, Division President


STATE OFTEXAS
COUNTY OF YOUNG

                   This   instrument  was   acknowledged   before  me  by  Chuck
Rosebrough,  Vice President of the GRAHAM INDUSTRIAL ASSOCIATION,  INC., a Texas
corporation, on Behalf of said corporation on the 4th day of June, 1997

                                /s/ Candice Todd
                          --------------------------------
                            Notary Public, State of Texas


My commission expires:      2-23-99
                          ------------
<PAGE>

COUNTY OF YOUNG

                   This  instrument  was  acknowledged  before  me by  A.  Keith
Finley, Division President of CAVALIER MANUFACTURING, INC. (Town & Country Homes
Division),  a Texas  corporation,  on behalf of said corporation,  on the day of
June, 1997.
                                /s/ Candice Todd
                          --------------------------------
                            Notary Public, State of Texas


My commission expires:      2-23-99
                         ------------