<PAGE>
 
                                                                 EXHIBIT 10(vii)

                                LEASE AGREEMENT



     THIS LEASE is made as of December 9, 1997, between Landlord and Tenant,
both named and defined below, who now agree as follows:

     1. TERMS, DEFINITIONS:  Whenever capitalized in this Lease, the following
terms shall have the meanings set forth below, unless the context clearly
indicates a contrary intent:
 
     Landlord:    Ozark Terminal, Inc.,
                  a Missouri corporation
                  11923 Lime Kiln Drive
                  Post Office Box 471
                  Neosho, Missouri 64850
 
     Tenant:      Brass Eagle Inc.,
                  a Delaware corporation
                  1203A N. Sixth Street
                  Rogers, Arkansas 72756

     Premises:    Approximately 40,000 square feet of warehouse space (the
"Warehouse Space") located in Area 4 of the Ozark Terminal Facility at Lime Kiln
Road, Neosho, Newton County, Missouri, which Facility is located on land legally
described on attached Exhibit A (the "Facility"), together with the associated
parking area (the "Parking Area"), subject to Landlord's right of ingress and
egress over and across the Parking Area to other parts of the Facility and
public roads, the right of ingress and egress through a portion of Area 3 (the
"Access Area"), and the right to use, in common with Landlord, the truck dock
area (the "Truck Dock"). The Warehouse Space, the Parking Area, the Truck Dock,
and the Access Area are depicted on attached Exhibit B and are collectively
referred to as the "Premises."

     Term: The Term shall commence on December 1, 1997 (the "Commencement
Date"), as to the approximately 10,000 square feet of the Warehouse Space that
is not currently being used by Landlord and as to the remainder of the Warehouse
Space on December 15, 1997, and, unless sooner terminated as provided in this
Lease, shall end on December 31, 1999 (the "Expiration Date").

     Rent: Rent for the month of December, 1997 shall be in the amount of
$3,750, payable upon the execution of this Lease. Rent for the remainder of the
Term shall be paid in monthly installments each in the amount of $5,000 per
month, commencing on January 1, 1998, and on the first day of each subsequent
month during the Term.
 
     Late Payment Charge: $100

     Security Deposit:  $0
<PAGE>
 
     Permitted Use: The Premises shall be used only for the warehousing and
distribution of products manufactured or purchased for sale by Tenant,
excluding, however, products of a hazardous or dangerous variety (e.g., live
ammunition) which materially increase the health and safety concerns for the
Premises and the Facility and for persons in or near the Premises and the
Facility, and for supporting office functions and for no other purpose.

     Exhibit A - Legal Description of Facility
     Exhibit B - Drawing of Premises
     Exhibit C - Hazardous Material

     Each Exhibit is attached to and made a part of this Lease.

     2. GRANT: Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the Premises subject to the terms and conditions contained in this
Lease. Landlord agrees, so long as Tenant fully complies with all the terms,
covenants and conditions of this Lease, that Tenant may peaceably have, hold and
enjoy the Premises during the Term.

     3. TERM:

     (a)  The Term shall commence on the Commencement Date and shall end, unless
sooner terminated as provided in this Lease, on the Expiration Date.
 
     (b)  Should Landlord permit Tenant to occupy the Premises prior to the
Commencement Date, such occupancy shall be subject to all provisions of this
Lease and the Expiration Date shall not be advanced.

     (4)  RENT: Tenant agrees to pay Landlord Rent in the amounts and at the
times set forth in Section 1, without setoff or deduction whatsoever, but
prorated for the first and last months of the Term if the Commencement Date is
other than the first day of a month or the Expiration Date is other than the
last day of a month, unless the Expiration Date falls in the last month of a
lease year, in which case no proration shall occur. All Rent and other payments
required under this Lease shall be payable at the office of the Landlord as set
forth in Section 1, or at such other place as Landlord may designate from time
to time in writing to Tenant. Notwithstanding anything in this Lease to the
contrary, all amounts payable by Tenant to or on behalf of Landlord under this
Lease, whether or not expressly denominated as Rent, shall constitute Rent for
all purposes including, without limitation, for the purpose of Section 502(b)(6)
of the Bankruptcy Code or its successor provision. Any sums payable under this
Lease shall bear interest at the rate of twelve percent (12%) per annum from
their due date until the date paid, unless paid within five (5) days of their
due date.

     (5)  LATE PAYMENT CHARGE: If Landlord does not receive the full amount of
any Rent or other payment due under this Lease within five (5) days after the
date payment is due, a late payment charge at the rate set forth in Section I
will be added to the unpaid amount to cover the extra expense involved in
handling the delinquency.
<PAGE>
 
     (6) USE: Tenant shall use and occupy the Premises only for the Permitted
Use set forth in Section 1 and for no other purpose without Landlord's prior
written consent. During the month of December, 1997, Tenant's right of access to
the Warehouse Space shall be limited to the normal business hours of Landlord
(7:30 a.m. to 4:15 p.m. Monday-Friday), unless prior approval has been received
from Landlord.

     7.  ASSIGNING OR SUBLEASING:

     (a) Tenant shall not permit an Assignment (as hereinafter defined) without
the prior written consent of Landlord in each instance. An "Assignment" shall be
deemed to have occurred in the event: (i) Tenant shall assign, sublet, transfer,
mortgage, pledge, hypothecate or encumber this Lease or any interest therein, in
whole or in part (including any involuntary assignment or subletting arising by
operation of law); (ii) Tenant shall allow any person or entity (the employees,
agents, servants and invitees of Tenant excepted) to occupy or use all or any
part of the Premises; or (iii) Tenant is a corporation or partnership and there
occurs any sale, transfer or other disposition of fifty percent (50%) or more of
the corporate stock or fifty percent (50%) or more of the partnership interests
in Tenant (or in any general partner of Tenant if Tenant is a limited
partnership) by any transaction or series of transactions after the date of this
Lease. Any Assignment in contravention of this Section 7 shall be void.

     (b) Notwithstanding any approved Assignment Tenant shall remain fully
liable on this Lease and shall not be released from performing any of the terms,
covenants and conditions hereof.

     (c) Without limiting Landlord's right to approve any Assignment, Tenant
hereby assigns to Landlord the right but not the obligation, to collect Rent
(including any additional Rent) from any subtenant or assignee of Tenant and to
apply such Rent to Tenant's obligations under this Lease.

     (d) The consent by Landlord to any Assignment will not constitute a waiver
of the necessity for such consent in any subsequent event.

     (e) Notwithstanding anything set forth in this Lease to the contrary, if
this Lease is assigned to any person or entity pursuant to the provisions of any
chapter of the Federal Bankruptcy Code, any and all money or other consideration
payable or otherwise to be delivered in connection with such Assignment will be
paid or delivered to Landlord, will be and remain the exclusive property of
Landlord and will not constitute property of Tenant or of the estate of Tenant
within the meaning of the Bankruptcy Code. Any and all money or other
consideration constituting Landlord's property under the preceding sentence not
paid or delivered to Landlord will be held in trust for the benefit of Landlord
and will be promptly paid or delivered to Landlord. Further, the assignee will
be deemed, without further act or deed, to have assumed all of the obligations
arising under this Lease on and after the date of Assignment. The assignee will,
upon demand, execute and deliver to Landlord an instrument confirming the
assumption.

     8.  LANDLORD'S RIGHT OF ENTRY: Landlord or Landlord's agent may enter the
Premises at reasonable hours or at any time in the case of an emergency, to
examine the Premises 
<PAGE>
 
and to do anything Landlord may be required to do under this Lease or which
Landlord may deem necessary for the good of the Premises. During the Term,
Landlord may exhibit the Premises to prospective mortgagees and purchasers, and
during the last six (6) months of the Term, Landlord may exhibit the Premises to
prospective tenants and place signs on the Premises indicating Landlord's desire
to lease same.

     9.  SIGNS AND ADVERTISEMENTS: Tenant shall not place on the Premises any
signs, billboards or advertisements of any kind without the prior written
consent of Landlord.

     10. REAL ESTATE TAXES AND SPECIAL ASSESSMENTS: Tenant shall pay Landlord
as additional Rent within thirty (30) days after demand from Landlord, the
Tenant's pro rata share of real estate taxes and special assessments assessed
against the Facility. "Tenant's pro rata share" shall be computed by multiplying
the total amount of taxes and special assessments by a fraction, the numerator
of which is the total square footage of the Warehouse Space, and the denominator
of which is the total square feet of space leased and available for lease in the
Facility as of January 1 of the year for which the taxes and special assessments
are assessed. Currently, that fraction produces a percentage of 5.8% as Tenant's
pro rata share. The amount payable by Tenant under this Section will be prorated
on a per diem basis for the partial years, if any, in which this Lease commences
and terminates, and Tenant's obligation under this Section shall survive the
expiration or termination of this Lease.

     11. REPAIRS AND MAINTENANCE:

     (a) By Landlord. Landlord agrees to maintain the structural portions of
the Premises, the septic system (except the grinder and pump located in the
Premises) and dehumidification equipment serving the Premises. If any repairs
for which Landlord is obligated are necessitated by the negligent act or
omission of Tenant, its employees, agents, contractors, customers, guests,
licensees or invitees, Tenant shall immediately reimburse Landlord for the cost
upon demand. Landlord shall perform such repairs and maintenance with reasonable
diligence, but Landlord shall not be liable for any damages, direct, indirect or
consequential, or for damages for personal discomfort, illness or inconvenience
of Tenant by reason of reasonable delays in the performance of the repairs.
Landlord will be under no obligation, and will not be liable for any failure to
make any repairs until Tenant notifies Landlord in writing they are necessary,
in which event Landlord will have a reasonable time after notice to make such
repairs.

     (b) By Tenant. Except for the obligations imposed upon Landlord in the
immediately preceding subsection, and except for damage resulting from a loss
covered by Landlord's insurance, during the Term of this Lease and at Tenant's
sole cost and expense, Tenant will maintain and keep in good order, repair and
condition, and, when necessary, will replace all parts of the Premises,
including, but not limited to, dock equipment and apparatus, utility service
lines, interior walls and partitions, fixtures, floor coverings, lighting
fixtures, heating, ventilating, air-conditioning, plumbing, sprinkler, glass,
windows, doors, electrical and other mechanical equipment, appliances and
systems (including the grinder and pump which are a part of the septic system
and located within the Premises), and improvements made by and at the expense of
Tenant. Tenant will police and keep 
<PAGE>
 
the Parking Area clean, orderly, sightly, and unobstructed. Tenant shall not
store any personal property in the Parking Area or any place outside without the
prior written consent of Landlord.

     12. CONDITION OF PREMISES AT BEGINNING AND END OF TERM: Tenant acknowledges
that Tenant has inspected the Premises and except as may be provided elsewhere
in this Lease and without abrogating Landlord's maintenance and other
obligations in this Lease, Tenant will accept the Premises in their present
condition. At the end of the Term of this Lease, except for damage caused by
fire or other perils, Tenant, at Tenant's expense, will (a) cause the all
fixtures and equipment which are a part of Premises, including, but not limited
to, all lighting fixtures, light bulbs, dryer, air compressor, septic system
grinder and pump, and all heating, ventilating, air-conditioning, plumbing,
sprinkler, elevator, electrical and other mechanical equipment to be in good
working order and repair, (b) surrender the Premises in as good a condition as
the Permitted Use will have permitted, subject to Tenant's obligations stated in
the immediately preceding clause, (c) remove all of Tenant's Property from the
Premises, (d) promptly repair any damage to the Premises caused by the removal
of Tenant's Property, and (e) leave the Premises free of trash and debris and
the Building in "broom clean" condition.

     13. TENANT'S PROPERTY: All equipment, materials, supplies, inventory,
furniture, business trade fixtures and property of a similar nature and kind in
or about the Premises owned by Tenant and not the property of Landlord
("Tenant's Property") shall be at Tenant's sole risk, and Tenant does hereby,
now and forever, release Landlord from any claims for damages, howsoever caused,
including the breach by Landlord of any of its obligations under this Lease.
Landlord hereby waives, as to Tenant's Property, any statutory or common law
lien rights that exist in favor of landlords of real property on account of a
tenant's failure to pay rent.

     14. ALTERATIONS AND IMPROVEMENTS: Except as may be provided in this Lease,
Tenant shall not make or allow to be made, any alterations, additions,
improvements, installations and replacements of or to all or any part of the
Premises, including, without limitation, modifications to the current electrical
and air systems and painting of the Premises, without Landlord's prior written
consent which consent will not be unreasonably withheld. Any alterations,
additions, improvements, installations and replacements of or to the Premises
shall be at Tenant's sole cost and expense and shall immediately become part of
the Premises and the property of Landlord, subject to the provisions of this
Lease. Any approved alterations, additions, improvements, installations and
replacements shall be performed in a good and workmanlike manner and in
accordance with all applicable laws, statutes, ordinances, regulations and
codes. Tenant shall not permit any mechanic's liens to be filed against the
Premises on account of any such work.
 
     15. UTILITIES: Landlord shall provide water and electricity to the
Warehouse Space. Tenant shall pay to Landlord Tenant's pro rata share of the
cost of the electrical service. "Tenant's pro rata share" shall be computed by
multiplying the total cost of the electricity billed to Landlord for the
Facility by a fraction, the numerator of which is the total square footage of
the Warehouse Space, and the denominator of which is the total square feet of
space in the Facility, excluding, however, any space in the Facility where the
electrical service is separately metered. On the first day of each month during
the Term, Tenant shall pay Landlord as an estimate of Tenant's pro rata share of
the 
<PAGE>
 
electrical service for that month, the sum of $500. At the end of each lease
year, Landlord shall compute Tenant's pro rata share of the electrical service
for such year and give Tenant written notice of the amount of same. If the
estimated payments paid by Tenant during such year are less than Tenant's pro
rata share, Tenant shall pay Landlord the difference within ten (10) days after
its receipt of the notice. If Tenant's estimated payments are greater than
Tenant's pro rata share, the excess shall be credited against Tenant's estimated
payment for the next month or, in the case of the end of the Term shall be paid
to Tenant by Landlord with such notice.

     16. ENVIRONMENTAL MATTERS:

     (a) Tenant shall not cause or permit any Hazardous Material to be brought
upon, kept, disposed from or used in or about the Premises by Tenant, its
agents, employees, contractors or invitees, without the prior written consent of
Landlord (which Landlord shall not unreasonably withhold as long as Tenant
demonstrates to Landlord's reasonable satisfaction that such Hazardous Material
is necessary or useful to Tenant's business and will be used, kept and stored in
a manner that complies with all laws regulating any such Hazardous Material so
bought upon or used or kept in or about the Premises). Attached as Exhibit C is
a list of Hazardous Material that is used in Tenant's business, the use of which
is approved by Landlord subject to the terms of this Section 16. If Tenant
breaches the obligations stated in the preceding sentence or if the presence of
Hazardous Material on the Premises caused or permitted by Tenant results in
contamination of the Premises, or if contamination of the Premises by Hazardous
Material otherwise occurs for which Tenant is legally liable to Landlord for
damage resulting therefrom, then Tenant shall indemnify, defend and hold
Landlord harmless from any and all claims, judgments, damages, penalties, fines,
costs, liabilities or losses (including, without limitation, diminution in value
of the Premises, damages for the loss or restriction on use of rentable or
usable space or of any amenity of the Premises, damages arising from any adverse
impact on marketing of space, and sums paid in settlement of claims, attorneys'
fees, consultant fees and expert fees) which arise during or after the Term as a
result of such contamination. Such indemnification of Landlord by Tenant shall
include, without limitation, costs incurred in connection with any investigation
of site conditions or any cleanup, remedial, removal, or restoration work
required by any federal, state, or local government agency or political
subdivision because of Hazardous Material present in the soil or ground water on
or under the Premises. Without limiting the foregoing, if the presence of any
Hazardous Material on the Premises caused or permitted by Tenant results in any
contamination of the Premises, Tenant shall promptly take all actions at its
sole expense as are necessary to return the Premises to the condition existing
prior to the introduction of any such Hazardous Material to the Premises,
provided that Landlord's approval of such actions shall first be obtained, which
approval shall not be unreasonably withheld so long as such actions would not
potentially have any material adverse long-term or short-term effect on the
Premises. Provided, however, Tenant shall not be responsible for the
consequences of any Hazardous Material that existed on the Premises prior to the
Commencement Date.

     (b) As used in this Lease, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the state in which the Premises are located or
the United States Government. The term "Hazardous Material" includes, without
limitation, any material or substance that is (i) defined as a "hazardous
<PAGE>
 
substance" under the laws of the state in which the Premises are located, (ii)
petroleum, (iii) asbestos, (iv) designated as a "hazardous substance" pursuant
to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. (S) 1321), 
(v) defined as a "hazardous waste" pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act 42 U.S.C. (S) 6901 (42 U.S.C.(S) 6903),
(vi) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
(S) 9601 et seq (42 U.S.C. (S) 9601), or (vii) defined as a "regulated
substance" pursuant to Subchapter IX, Solid Waste Disposal Act (Regulation of
Underground Storage Tanks), 42 U.S.C. (S) 6991 et seq.

     17. LEGAL REQUIREMENTS: Tenant shall comply with all laws, orders,
ordinances and other public requirements now or hereafter affecting the Premises
or their use, including, without limitation, ADA (except Landlord shall be
responsible for complying with any ADA requirements from the Parking Area,
through the Access Area, to the exterior of the Warehouse Space), OSHA and like
requirements and indemnify, defend and save Landlord harmless from any expense
(including attorneys' fees) or damage resulting from Tenant's failure to do so.

     18. INSURANCE:

     (a) Landlord's Insurance. Tenant will not do or permit to be done, or keep
or permit to be kept, anything in, upon or about the Premises which will
contravene Landlord's insurance policies on the Premises or any part of the
Premises or which will prevent Landlord from procuring such policies in
companies acceptable to Landlord at the minimum rate from time to time
applicable to the Premises. Tenant will pay the amount of any increase in the
insurance rate caused by its use of the Premises promptly upon Landlord's
demand.

     (b) Tenant's Insurance. Tenant shall keep in force with an insurance
company or companies authorized to do business in Missouri and reasonably
acceptable to Landlord: (i) a policy of comprehensive public liability insurance
with respect to the Premises and the business operated by Tenant with single
limit coverage of not less than $2,000,000 for bodily injury, including death,
and property damage, with a contractual liability endorsement insuring Tenant's
indemnity obligations under this Lease; and (ii) an "all risk" policy of
casualty insurance insuring Tenant's Property for one hundred percent (100%) of
its replacement value. In addition to Tenant, the policy for public liability
insurance shall also name Landlord, as well as any person, firm or corporation
designated by Landlord and in privity with it as an additional insured. Tenant
shall upon demand deliver to Landlord from time to time certificates or other
evidence of the maintenance of the insurance coverages, with an undertaking by
the insurer not to cancel the coverages without at least 30 days' prior written
notice to Landlord.

     (c) Indemnification. Tenant shall, subject to the provisions of subsection
(d) below, indemnify, defend and save harmless Landlord, its officers, agents
and servants, from and against any and all third-party claims, actions,
liability and expense (including attorneys' fees) in connection with loss of
life, bodily injury and/or damage to property arising from or out of any
occurrence in, on, or about the Premises, or the occupancy or use by Tenant of
the Premises or any part thereof, or occasioned wholly or in part by any act or
omission of Tenant, its agents, contractors, employees, 
<PAGE>
 
servants, subtenants or invitees, including a breach of Tenant's obligations
under this Lease unless the same be caused by the negligent or willful act of
Landlord, its officers, agents, servants, employees or invitees. If any action
or proceeding is brought against Landlord, its officers, agents, servants or
employees by reason of any of the aforementioned causes, Tenant upon receiving
written notice thereof from Landlord agrees to defend such action or proceeding
by competent counsel at its own expense.

     (d) Waiver of Subrogation. Notwithstanding anything to the contrary
contained in this Lease, each party to this Lease (the "Releasing Party") hereby
releases the other party (the "Released Party") from any liability which the
Released Party would, but for this Section, have had to the Releasing Party
during the Term for any loss or damage to the property of the Releasing Party or
to the property of others which is under the Releasing Party's control which
results from an Insurable Loss to the property of, or to the property under the
control of, the Releasing Party, regardless of how such loss or damage occurs.
Each party to this Lease will promptly give notice of the terms of this Section
to its insurance carriers and obtain from them any endorsements required to give
effect to the foregoing releases and deliver reasonable evidence of such
endorsements to the other party. For the purposes of this Lease, an "Insurable
Loss" means any loss which is covered by any insurance policy of Landlord or of
Tenant in force at the time of such loss or would be covered under any insurance
policy required by either party under this Lease. However, the releases
contained in this subsection shall not apply to any loss or damage occasioned by
intentional acts of Landlord or Tenant.

     (e) Notice by Tenant. Tenant shall give prompt notice to Landlord in case
of any casualty damage to or accident on the Premises.

     19. DAMAGE BY CASUALTY:

     (a) Subject to the options to terminate provided below in this Section, if
the Premises suffer a loss covered by Landlord's insurance, Landlord, at its
sole cost and expense, will (i) repair or restore the Premises (but not Tenant's
Property) to a condition substantially equivalent to their condition immediately
prior to the loss, subject to zoning and building laws applicable at the time of
the work, (ii) subject to receipt of the insurance proceeds, commence the repair
or restoration with reasonable promptness and (iii) diligently pursue such work
to completion.

     (b) If the Premises (i) suffer a loss that is not covered by Landlord's
insurance and the cost to repair or restore such loss exceeds $10,000, or (ii)
if the loss is covered by Landlord's insurance but is substantial, or (iii) if
existing zoning and building laws do not permit or substantially impair the
repair or restoration, or (iv) the loss occurs during the last six (6) months of
the Term, including any extension or renewal, Landlord may terminate this Lease
by written notice to Tenant given within thirty (30) days after the date of the
loss. If Landlord does not exercise its option to terminate, Landlord will
repair or restore the Premises in accordance with the terms of the immediately
preceding subsection. For the purposes of this Section, "substantial" will mean
damage to such an extent that the estimated cost of fully repairing the damage
is greater than fifty percent (50%) of the then replacement cost of the Premises
(exclusive of land). If Landlord exercises its right to terminate this Lease
under (i) above, Tenant may avoid such termination if Tenant gives Landlord
written 
<PAGE>
 
notice, within ten (10) days after the date of Landlord's notice of election to
terminate, that Tenant will pay the cost of the repairs or restoration in excess
of $10,000 and provides Landlord with reasonable proof that such sum is readily
available for that purpose. Before such repairs and restoration commence,
Landlord may require Tenant's share to be paid to Landlord to be used toward the
cost of the repairs or restoration.

     (c) If the Premises cannot reasonably be expected to be repaired or
restored within one hundred eighty (180) days after the date of the loss
(without overtime), Tenant may terminate this Lease by written notice to
Landlord given within thirty (30) days after the date of the loss.

     (d) If this Lease is terminated under any option given in this Section,
this Lease will terminate on the earlier of (i) the thirtieth (30th) day
following the giving of the notice of termination or (ii) Tenant's surrender of
the Premises. Rent will be apportioned as of the date of termination.

     (e) Following any loss or damage that Landlord is obligated or has
elected to repair or restore, Tenant will cooperate fully with Landlord to
facilitate Landlord's repair or restoration of the Premises. In either event,
Tenant shall remove all rubbish, debris, furniture, merchandise, equipment and
any other personal property, within five (5) days after request by Landlord.
Landlord will not be responsible to Tenant for any inconvenience arising from
such work. In the case of any loss or damage to the Premises, there shall be an
abatement or reduction of Rent between the date of the loss or damage and the
date of completion of restoration, based on the extent to which the destruction
interferes with Tenant's use of the Premises.

     20. FIXTURES: All repairs, alterations, additions, improvements,
installations, equipment and fixtures (including light fixtures and light
bulbs), by whomsoever installed, erected or paid for (except equipment and
business trade fixtures constituting Tenant's Property which can be removed
without damaging or leaving incomplete the Premises), shall belong to Landlord
and remain on and be surrendered with the Premises as a part thereof, at the
expiration of this Lease.

     21. EMINENT DOMAIN: If the Premises are totally taken by the exercise of
the power of eminent domain (including any conveyance in lieu of such exercise),
this Lease shall terminate on the date of taking. If only a portion of the
Premises is taken, this Lease shall remain in effect, except that Tenant may
elect to terminate this Lease if ten percent (10%) or more of the total number
of square feet of the Warehouse Space is taken. If Tenant elects to terminate
under the provisions of this Section, it must terminate by giving notice to
Landlord within thirty (30) days after the nature and extent of the taking have
been finally determined. If this Lease is not terminated within the 30-day
period, it shall continue in full force and effect except that Rent shall be
reduced based on the extent to which the taking interferes with Tenant's use of
the Premises. If there is a partial taking of the Premises and this Lease
remains in full force and effect pursuant to this Section, Landlord, at its
cost, shall accomplish all necessary restoration so that the Premises are
returned as near as practical to their condition immediately prior to the date
of the taking, but in no event shall Landlord be obligated to expend more for
such restoration than the extent of funds actually paid to Landlord by the
condemning authority, less the reasonable costs incurred by Landlord in
obtaining those funds. Any award arising from the condemnation or its settlement
shall belong to and be paid to the 
<PAGE>
 
Landlord. Tenant may seek an award from the condemning authority for Tenant's
trade fixtures, tangible personal property, goodwill, loss of business and
relocation expenses. However, in all events, the Landlord shall be solely
entitled to all awards in respect of the real property, including the bonus
value of the leasehold.

     22. DEFAULT: Tenant shall be in default under this Lease if any one of the
following events occur:

     (a) Tenant fails to pay when due any installment of Rent or any other sums
due under this Lease;

     (b) Tenant fails to keep, observe or perform any other terms, covenant or
condition of this Lease within fifteen (15) days after written notice from
Landlord;

     (c) Tenant abandons the Premises;

     (d) Tenant files a voluntary petition under the bankruptcy laws of the
United States or under any state laws for relief of debtors, or if an
involuntary petition under such law(s) is filed against Tenant and is not
dismissed within sixty (60) days of filing;

     (e) A petition for reorganization or arrangement under the bankruptcy laws
of the United States or any state laws for the relief of debtors is filed by or
against Tenant; or

     (f) Tenant makes a general assignment for the benefit of its creditors or
if a trustee or a receiver is appointed to take charge of and manage a
substantial part of the assets of Tenant, or an execution or attachment is
issued against Tenant under which the Premises or any part of the Premises or
any interest in the Premises of the Tenant under this Lease, shall be taken or
attempted to be taken.

     23. LANDLORD'S REMEDIES: After an event of default occurs, Landlord may,
at Landlord's option, without further notice or demand, except as provided below
in this Section, do any of the following:

     (a) Remain out of possession of the Premises; treat the remaining term of
this Lease as subsisting; and recover Rent as it becomes due.

     (b) Reenter and resume possession of the Premises without termination of
this Lease; evict, remove and put out Tenant or any other persons who might be
in possession of, or present at, the Premises, together with all personal
property found at the Premises; and attempt to relet the Premises in an effort
to mitigate Landlord's damages. Landlord shall receive the rental income from
any reletting of the Premises and shall apply it first, to the payment of any
amounts, other than Rent, including, without limitation, Default Expenses
(defined in (c) below), owed by Tenant to Landlord under this Lease; second, to
the costs and expenses of any repair, renovation, remodeling, redecorating and
advertising of the Premises, brokerage fees and other costs and expenses,
including, 
<PAGE>
 
without limitation, reasonable attorney's fees and other legal and judicial
costs and expenses, associated with Landlord's efforts to relet the Premises;
and third, to the payment of Rent due, and to become due, under this Lease.

     (c) Give Tenant notice that this Lease is terminated effective the date
stated in the notice; reenter and resume possession of the Premises for
Landlord's own benefit free of this Lease; and evict, remove and put out Tenant
or any other persons who might be in possession of, or present at, the Premises,
together with all personal property found at the Premises. If Landlord
terminates this Lease, all of Tenant's obligations for unpaid Rent and other
sums due under this Lease through the date of termination, including, without
limitation, Tenant's liability for (1) all losses, costs and expenses reasonably
incurred by Landlord, including, without limitation, reasonable attorneys' fees
and other legal and judicial costs and expenses that are in any way connected
with Tenant's default ("Default Expenses"); (2) interest that accrues on Default
Expenses and on unpaid Rent and other sums due under this Lease; (3) damage to
the Premises caused by Tenant in connection with Tenant's occupying or vacating
the Premises; and (4) the present value, at the time of termination, of the
difference between the amount of Rent reserved for the balance of the term of
this Lease and the reasonable rental value of the Premises for the same period
shall be determined as of the date this Lease is terminated and shall be paid by
Tenant to Landlord upon demand. All other obligations of Tenant that would have
come due if this Lease had not been terminated shall terminate as of the date
this Lease is terminated.

     (d) Pursue any and all other remedies available at law or in equity that
are not inconsistent with the terms of this Lease. Prior to Landlord notifying
Tenant that this Lease is terminated, any judicial process, and the results
thereof, pursued or obtained by Landlord shall not be deemed to be a termination
of this Lease unless a judgment or order specifically states that this Lease is
terminated.

     24. WAIVER: A waiver by Landlord of any default or breach hereunder shall
not be construed to be a continuing waiver of such default or breach, nor as a
waiver or permission, expressed or implied, of any other or subsequent default
or breach. No payment by Tenant or receipt by Landlord of a lesser amount than
the monthly Rent and other charges herein reserved shall be deemed to be other
than on account of the earliest stipulated Rent or other charges, nor shall any
endorsement or statement on any check or on any letter accompanying any check be
deemed an accord and satisfaction.

     25. REMEDIES CUMULATIVE: The rights and remedies of Landlord under this
Lease and any others provided by law shall be construed as cumulative and no one
of them is exclusive of any other right or remedy. Such rights and remedies
shall further be continuing rights, none of which shall be exhausted by being
exercised on one or more occasions. Landlord shall be entitled to an injunction,
without bond, in proper cases to enforce any part or parts of this Lease or to
prevent or stop any violation or default on the part of Tenant. Whenever in this
Lease Landlord reserves or is given the right and power to give or withhold its
consent to any action on the part of Tenant such right and power shall not be
exhausted by its exercise on one or more occasions, but shall be a continuing
right and power for the full term of this Lease.
<PAGE>
 
     26. SUBORDINATION: This Lease shall be subordinate to any mortgages, deeds
of trust or other encumbrances that may now or hereafter be in existence against
all or any part of the Premises.

     27. SALE OF PREMISES BY LANDLORD: In the event of any sale of the
Premises, Landlord shall be and is hereby entirely freed and relieved of all
liability under any and all of its covenants and obligations contained in or
derived from this Lease arising out of any act, occurrence or omission occurring
after the consummation of such sale; and the purchaser, at such sale or any
subsequent sale of the Premises shall be deemed, without any further agreement
between the parties or their successors in interest or between the parties and
any such purchaser, to have assumed and agreed to carry out any and all the
covenants and obligations of the Landlord under this Lease.

     28. PEACEABLE SURRENDER: Upon termination of this Lease, whether by
expiration of its stated term or otherwise, Tenant shall peaceably quit and
surrender to Landlord the Premises together with all improvements constructed
thereon, specifically including, but not by way of limitation, any improvements
constructed and/or paid for by Tenant.

     29. HOLDING OVER: In the event Tenant remains in possession of the Premises
after termination of this Lease, and without the execution of a new lease,
Tenant, at the option of Landlord, shall be deemed to be occupying the Premises
as a Tenant from month-to-month, at twice the monthly Rent subject to all other
terms, conditions and obligations of this Lease to the extent same are
applicable to a month-to-month tenancy.

     30. BROKER'S COMMISSION: Landlord and Tenant each warrants to the other
that there are no claims for broker's commissions or finder's fees in connection
with this Lease. Each party agrees to defend, indemnify and save the other
harmless from and against any liability, costs and expenses (including
attorneys' fees) that may arise from the claim of any person by or through it.

     31. ESTOPPEL CERTIFICATE: Tenant agrees, at any time, and from time to
time, upon not less than 10 days prior notice by Landlord, to execute,
acknowledge and deliver to Landlord, a statement in writing addressed to
Landlord (or to whom Landlord directs) certifying that this Lease is in full
force and effect (or, if there have been modifications, that the same is in full
force and effect as modified and stating the modifications), stating the dates
to which the Rent, additional rental and other charges have been paid, and
stating whether or not there exists any default by either party in the
performance of any covenant, agreement, term, provision or condition contained
in this Lease, and, if so, specifying each such default of which the signer may
have knowledge and the claims, if any, of Tenant, it being intended that any
such statement may be relied upon by Landlord or a purchaser of Landlord's
interest and by any mortgagee or beneficiary or trustee of a deed of trust or
any prospective mortgagee, beneficiary or trustee affecting the Premises and the
Building.

     32. SECURITY DEPOSIT: Tenant has deposited with Landlord the sum set forth
in Section 1 as a security deposit. The security deposit shall be held by
Landlord as security for the faithful performance by Tenant of all the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the term hereof. If Tenant defaults with respect to any provision of this
<PAGE>
 
Lease, including, but not limited to the provisions relating to the payment of
Rent, Landlord may (but shall not be required to) use, apply or retain all or
any part of this security deposit for the payment of any Rent or any other sum
in default, or for the payment of any amount which Landlord may spend or become
obligated to spend by reason of Tenant's default. If any portion of said deposit
is so used or applied, Tenant shall, within five (5) days after written demand
therefor, deposit cash with Landlord in an amount sufficient to restore the
security deposit to its original amount and Tenant's failure to do so shall be a
material breach of this Lease. Landlord shall not be required to keep this
security deposit separated from its general funds, and Tenant shall not be
entitled to interest on the deposit. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the security
deposit or any balance thereof shall be returned to Tenant (or, at Landlord's
option, to the last assignee of Tenant's interest hereunder) at the expiration
of the Lease term. Landlord may transfer the security deposit to a purchaser of
the Building and upon such transfer Landlord shall be discharged from any
further liability for the application or return of the security deposit.

     33. ATTORNEYS' FEES: If either party employs an attorney or attorneys to
enforce any of the provisions of this Lease, the defaulting party agrees to pay,
as additional Rent all attorneys' fees, court costs and litigation expenses
reasonably incurred by the non-defaulting party, regardless of whether any legal
action or proceeding is commenced.

     34. PARAGRAPH HEADINGS: The headings used in describing the various
paragraphs of this Lease are for convenience of the parties only and shall not
be considered in interpreting the meaning of the various paragraphs and
provisions of this Lease.

     35. NOTICES: All notices, consents, approvals, requests, demands,
objections, waivers and other communications (collectively, "notices") which may
or are required to be sent, delivered, given, made, maintained or obtained
pursuant to the terms of this Lease shall be in writing and shall be given
either by hand delivery, by prepaid United States certified mail, or by a
reputable overnight delivery service that guarantees next day delivery and that
provides a receipt. All notices shall be addressed to the parties at their
respective addresses set forth in Section 1, as same may be changed from time to
time except that notices given to Tenant after the Commencement Date shall be
sent to the Premises. Either party may, by notice in the manner provided above,
change its address for all subsequent notices. All notices given by certified
mail as provided above shall be deemed given two (2) days after they are so
mailed. All notices given by overnight delivery or hand delivery shall be deemed
given upon delivery. A party's failure or refusal to accept service of a notice
will constitute delivery of the notice.

     36. ENTIRE AGREEMENT: This Lease contains the entire agreement between the
parties and may be modified only by a writing signed by the parties after the
date of this Lease. This Lease supersedes any and all prior oral or written
agreements or understandings relating to the Premises.

     37. INVALIDITY: If one or more provisions of this Lease shall be held to
be invalid or unenforceable for any reason, the remaining provisions shall not
be affected and shall be construed as if the invalid or unenforceable provision
had never been contained in this Lease.

     38. SUCCESSORS: The provisions, covenants and conditions of this Lease
shall bind and 
<PAGE>
 
inure to the benefit of the legal representatives, successors and permitted
assigns of each of the parties hereto, except that no assignment, encumbrance or
subletting by Tenant without written consent of Landlord, shall vest any right
in the assignee, encumbrancer or subtenant of Tenant.

     39. TIME: Time is of the essence of this Lease and each and every
provision contained in this Lease.

     40. TENANT'S IMPROVEMENTS: Tenant, at Tenant's sole cost, may construct in
the Warehouse Space offices and restrooms and install phone lines. All such
improvements shall be subject to the terms of Section 14 of this Lease and none
of such improvements may be commenced until Landlord reviews and approves the
plans and specifications for such improvements.

     41. OPTION TO RENEW: Landlord grants to Tenant the option, at Tenant's
election, to extend the Term of this Lease for one (1) successive period of two
(2) years, provided that Tenant is not in default of any of the terms and
conditions of this Lease. This renewal option shall be upon each and all of the
following terms and conditions:

     (a) Tenant may exercise the option by giving Landlord written notice at
least four (4) months prior to the expiration of the Term. If such notification
is not given, this option shall automatically expire.

     (b) All of the provisions and conditions of this Lease, except where
specifically modified by this option, shall apply.

     (c) Upon the exercise of this option, the term "Expiration Date" shall
mean the last day of the renewal term.

     IN WITNESS WHEREOF, the parties have executed this Lease as of the day and
year first above written.

                              OZARK TERMINAL, INC.


                              By: /s/ Kevin Bowman
                                  ----------------------------------------------
                                      President

                              BRASS EAGLE INC.


                              By: /s/ Steven R. DeMent
                                  ----------------------------------------------
                                      Vice President - Operations