LEASE AGREEMENT

     THIS  LEASE,  is made as of this 1ST day JULY , 1999,  by and  between  PRH
PROPERTIES, LP, a Pennsylvania limited partnership (hereinafter "Landlord"), and
P.R.  HOFFMAN  MACHINE  PRODUCTS,  INC.,  an  Arizona  corporation  (hereinafter
"Tenant").

     1. PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord  that  certain  real  property  containing   approximately  2.35  acres
(hereinafter  "Premises"),  together with all  improvements  located thereon and
appurtenances  thereunto  belonging,  located on Commerce Drive, South Middleton
Township, Cumberland County, Pennsylvania.

     2. TERM.  The initial  term of this Lease shall be for a period of five (5)
years and shall commence on the 1st day of July 1999 (hereinafter  "Commencement
Date") and ending June 30, 2004,  unless sooner  terminated  in accordance  with
this  Lease.  Tenant  shall have the right and option to renew the term for five
(5) successive,  additional periods of one (1) year each; provided however, that
Tenant shall have no right or option to renew the term of this Lease if an event
of  default  exists  upon the date of giving  the notice to renew or at any time
thereafter  through and including the expiration date of the then-existing  term
of this Lease.  In order to exercise its right to renew the, Tenant must provide
Landlord  written notice of its exercise thereof at least ninety (90) days prior
to the  expiration of the  then-existing  term of this Lease.  The maxim term of
this Lease and all renewal terms is ten (10) years from the Commencement Date.

     3. USE.  The Premises  shall be used by Tenant as an office,  manufacturing
and warehouse facility and for no other purpose.

     4. RENTAL. (a) Tenant shall pay to Landlord during the initial term of this
Lease monthly rent in accordance with the table below. All rent shall be payable
in advance,  punctually and without demand, deduction or set off, payable on the
1st day of each month  during  the term of this Lease at such place as  Landlord
may from time to time designate in writing. The amount of

                ANNUAL AND MONTHLY RENTAL TABLE FOR INITIAL TERM:

       COMMENCING ON:              ANNUAL RENT               MONTHLY RENT
       --------------              -----------               ------------
         7/1/1999                   $118,200                   $ 9,860
         7/1/2000                   $123,600                   $10,300
         7/1/2001                   $128,400                   $10,700
         7/1/2002                   $129,720                   $10,810
         7/1/2003                   $130,320                   $10,860

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(b) If notice of renewal  has been given in  accordance  with  Section 2 of this
Lease,  then at the  beginning  of each year  following  the  expiration  of the
initial and each  renewal  term (a "Renewal  Year"),  the monthly  rent shall be
adjusted by the index known as the U.S.  City Average  Consumer  Price Index for
Urban Wage Earners and Clerical  Workers (revised  series;  1982-84=100)  issued
from time to time by the Federal  Bureau of Labor  Statistics,  or any successor
agency that shall issue the index,  or any other measure  hereafter  employed by
the Federal Bureau of Labor  Statistics or any successor  agency in lieu of such
index (the "CPI"). The CPI adjustment to the monthly rent shall be exactly equal
to the change is cost of living as  determined  by the CPI;  PROVIDED,  however,
that in no event  shall the CPI  adjustment  to the  monthly  rent  exceed  five
percent  (5%)  for any  Renewal  Year.  To  compute  such  CPI  adjustment,  the
prevailing CPI will be used.  Each such CPI adjustment to the monthly rent shall
be accomplished  by multiplying the monthly rent for the lease year  terminating
immediately  prior to the  Renewal  Year,  for  which  the  adjustment  is being
calculated,  by a fraction,  the  numerator of which shall be the most  recently
published  CPI prior to the first day of the Renewal  Year in  question  and the
denominator  of which shall be the CPI used as the numerator in  calculation  of
the rent  adjustment  in the  previous  Renewal  Year (but in no event shall the
monthly  rent be reduced as a result of such  adjustment  below the monthly rent
payable  immediately  prior thereto),  and the increased  monthly rent resulting
from the CPI adjustment to the monthly rent thereby  established  shall continue
in effect as the monthly  rent until  again  adjusted  as  provided  herein.  In
computing the monthly rent for the first Renewal Year,  the  denominator  of the
fraction  described above shall be the most recently published CPI prior to July
1, 2003.

     5. LATE CHARGE.  If Tenant fails to make any rental or other payment within
ten  (10)  days of the date it is due  hereunder,  a late  charge  equal to five
percent  (5%) of the amount of the payment  due shall be  assessed  and shall be
immediately due and collectible as additional rent hereunder.

     6. COMPLIANCE WITH LAWS AND CONDITION OF PREMISE.  Tenant shall comply with
all laws, ordinances, orders, permits, licenses, regulations of all governmental
authorities   (whether  federal,   state,  local  or  otherwise)  and  insurance
requirements  concerning  the Premises and any fixtures,  machinery or equipment
therein, and Tenant's use of the Premises,  including,  without limitation,  all
laws regarding public health and welfare,  environmental  protection,  water and
air  pollution,  composition  of  products,  underground  storage  tanks,  toxic
substances,  hazardous wastes, hazardous substances,  hazardous materials, waste
or used oil,  occupational  health and safety  and/.or  nuisance,  trespass  and
negligence.  Tenant has  examined  and knows the  condition  of the Premises and
equipment,  and  acknowledges  that no  representations  as to the condition and
repair  thereof  have been made by  Landlord  or its  agents  prior to or at the
execution of this Lease Agreement that are not herein expressed, and accepts the
Premises  and  equipment  in  an  "as  is"  condition  without  warranty  as  to
suitability for any particular use;  provided,  however,  that in no event shall
this Section 6 be construed to contradict Landlord's indemnification obligations
with  respect  to  environmental  matters  set  forth in  Section  30  hereof or
Landlord's  representations and warranties and  indemnification  obligations set
forth in that certain Asset Purchase Agreement dated July 1, 1997.

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     7. UTILITIES.  The Premises shall be served by electricity,  water,  sewer,
telephone and other utilities presently available to the Premises.  Tenant shall
pay for all such  services  consumed  on the  Premises.  Landlord  shall  not be
responsible for any suspension in such services resulting from causes beyond its
control or for  temporary  periods  during  which  repairs are being made to the
Premises.

     8. REAL ESTATE TAXES AND  ASSESSMENTS.  Landlord  shall  provide to Tenant,
within ten (10) business days after  receipt,  all notices of real estate taxes,
and general  and  special  assessments  (including  sewer and water  rentals and
charges,  trash,  street lights,  and the like)  assessed  against the Premises.
Tenant  agrees to pay,  within the  applicable  discount  period,  all said real
estate taxes and assessments.

If the  Tenant  fails to pay such real  estate  taxes or  assessments  and other
charges  which it is  obligated  to pay  pursuant to this  paragraph  within the
aforesaid period of ten (10) business days after receipt,  the Landlord may, but
shall not be obligated to, pay such real estate taxes,  assessments and charges,
as the case may be,  together with the interest and penalties  thereon,  and the
amount so paid shall be considered additional rent due and in arrears.

     9. PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency, all taxes,
assessments,  license  fees,  and other  charges  that are levied  and  assessed
against  personal  property  or  fixtures  installed  or  located  in or on  the
Premises, and that are payable during the term of this Lease.

     10.  MAINTENANCE AND REPAIRS.  Tenant,  at its own cost, shall maintain the
Premises  (including  the roof,  structural  and  mechanical  components  of the
improvements  located on the Premises,  and the adjoining walks and grounds) and
any fixtures,  machinery or equipment thereon in good condition. Tenant shall be
responsible  for the cost of any  janitorial  services  needed for the Premises.
Landlord  shall not have any  responsibility  to  maintain  the  Premises.  Upon
expiration or termination  of the term,  Tenant shall return the Premises to the
Landlord in as good condition and repair as existed on the commencement  date of
the term, ordinary wear and tear along excepted.

     11. GROUND MAINTENANCE. Tenant, at its own cost, shall maintain the grounds
of the Premises, including but not limited to snow and ice removal, landscaping,
mowing  and any  other  maintenance  necessary  to  preserve  the  ground of the
Premises in the  condition  as of the  Commencement  Date.  Upon  expiration  or
termination  of the term of this Lease,  Tenant  shall return the grounds of the
Premises to Landlord in as good condition as existed on the Commencement Date.

     12.  STRUCTURAL  ALTERATIONS.  Tenant  shall  not  make any  structural  or
exterior  alterations to the Premises without  Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed.

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<PAGE>
     13.  NONSTRUCTURAL  ALTERATIONS AND FIXTURES.  Tenant,  at its cost,  after
obtaining   Landlord's  prior  written   consent,   which  consent  may  not  be
unreasonably  withheld or delayed,  may make  nonstructural  alterations  to the
interior of  improvements  located on the Premises and may place and attach such
equipment, machinery and fixtures therein as Tenant requires in order to conduct
its business on the  Premises.  In making any  alterations,  etc.,  Tenant shall
comply with the following:

               (a).  Unless  waived in writing by Landlord,  Tenant shall submit
          reasonably   detailed  plans  and   specifications   of  the  proposed
          alterations or placing of fixtures, machinery or equipment to Landlord
          at least  fifteen  (15) days prior to the date it intends to  commence
          the alterations or fixturing.

               (b). The  alterations and fixturing,  etc.,  shall be approved by
          all appropriate  government  agencies,  and all applicable permits and
          authorizations shall be obtained before commencement of the work.

          Any  alterations  made  shall  remain on and be  surrendered  with the
     Premises on expiration or termination of the term, except that Landlord may
     elect to require  Tenant,  at Tenant's  cost,  to remove any  nonstructural
     alterations  and fixtures that Tenant has made to the Premises,  and Tenant
     shall  restore  the  Premises  to as  good  condition  as  existed  at  the
     commencement of the term, normal wear and tear excepted.

          If Tenant is not then in default of any provision of the Lease, Tenant
     shall have the right to remove from the Premises  immediately  prior to the
     expiration of the term any and all equipment,  machinery and fixtures which
     Tenant has placed or  attached  in or to the  Premises  (and at  Landlord's
     option, Landlord may require Tenant to remove same), and such removal shall
     be done in a manner  that  will not  cause  any  structural  damage  to the
     Premises,  and Tenant  shall  promptly  restore  any damage  caused by such
     removal.


     14. MECHANICS'  LIENS.  Tenant will not permit any mechanics' claim or lien
to be placed upon the Premises or any  building or  improvement  constituting  a
part  thereof  during the term of this  Lease,  and in case of the filing of any
such  claim or lien,  Tenant  will  promptly  discharge  same or  procure a lien
release bond by a good and sufficient  surety  corporation in an amount equal to
one and  one-half  times the  amount of the claim or lien.  If a default  in the
discharge  thereof or  procuring  of a bond shall  continue for thirty (30) days
after written  notice from Landlord to the Tenant,  the Landlord  shall have the
right and  privilege  at  Landlord's  option of paying  the same or any  portion
thereof  without  inquiry as to the validity  thereof,  and any amounts so paid,
including  expenses  and  interest  shall be deemed  additional  rental  due and
payable by Tenant to Landlord.

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<PAGE>
     15.  INDEMNITY.  Tenant shall indemnity and hold Landlord harmless from all
claims and liability, including reasonable attorneys' fees and related costs and
expenses,  arising  out of any  damage or  injury  to or death of any  person or
property  occurring in, on or about the Premises,  or resulting  from any act or
omission  of  Tenant,  unless  such  liability  arises  from the  negligence  of
Landlord.

     16.  INSURANCE.  Tenant shall, at its sole cost and expense,  maintain fire
insurance coverage with all-risk endorsements on the improvements located on the
Premises  in  an  amount  equal  to  the  full  replacement  cost  of  the  said
improvements.  In addition,  Tenant  shall  maintain  casualty  insurance on its
personal  property,  but in any  event,  all  personal  property  of any kind or
description  of Tenant on the  Premises  shall be at  tenant's  sole  risk,  and
Landlord  shall not be liable  for any damage  done to or loss of such  personal
property or damage or loss suffered by the business of Tenant arising out of any
act or neglect of other  occupants of the building  located on the Premises,  or
other parties, or from bursting, overflowing or leaking of water, sewer or steam
pipes or from heating or plumbing  fixtures or from electric wires of equipment,
or from gas or odors, or caused in any manner  whatsoever  except in the case of
the intentional neglect of Landlord.

     Tenant  shall  procure  and  maintain,  throughout  the term of this  Lease
Agreement,  general  liability  insurance,  insuring  against injury or death to
persons occurring in or about the Premises and the improvements located thereon.

     Tenant agrees to release,  indemnify  and hold  harmless  Landlord from and
against any and all costs, losses,  damages,  claims and liabilities,  including
reasonable  attorneys'  fees,  arising out of or  attributable to the condition,
use,  operation or maintenance of the Premises and any improvements or buildings
located thereon, or arising out of or based upon any injury (including death) to
any person,  or damage to any property,  occurring in, on or about the Premises,
and  any  improvements  or  buildings  thereon,  or  resulting  from  any act or
admission of the Tenant.  The aforesaid general liability  insurance,  shall, in
addition,  insure performance by the Tenant of the indemnity provisions provided
above.

     Tenant  shall  name  Landlord  and  Landlord's  mortgagee,  if any,  on all
policies of insurance  obtained  regarding the Premises,  each as their interest
may appear.  Each of the policies shall contain an endorsement that it shall not
be cancelled without at least ten (10) days prior written notice to Landlord and
any such mortgagee.  Landlord and its mortgagee,  if any, shall be entitled to a
duplicate  original of all such  insurance  policies no later than ten (10) days
prior  to the  expiration  date of the  then  existing  polices,  together  with
evidence that the premiums have been prepaid for the full term of the policy.

     If the Tenant fails to pay the premium for any of the policies of insurance
listed  above  which it is  obligated  to pay  pursuant to this  paragraph,  the
Landlord  may, but will not be  obligated  to, pay such  insurance  premiums for
tenants, and the amount so paid shall be considered rent due and in arrears.

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<PAGE>
     17. MUTUAL RELEASE. Notwithstanding anything in this Lease to the contrary,
Landlord and Tenant  hereby waive and release each other of and from any and all
rights of  recovery,  claims,  actions or causes of action  against  each other,
their agents, officers,  representatives,  employees,  servants, contractors and
invitees for any loss or damage that may occur to the  Premises,  the  building,
improvements or fixtures therein or thereon, or any personal property within the
building  from any cause  whatsoever  which could be insured  against  under the
terms of an all-risk fire, and extended coverage insurance policy, regardless of
cause or origin, including the negligence of Landlord or Tenant or their agents,
officers, representatives, servants, employees, contractors or invitees.

     18.  PARTIAL  DESTRUCTION  OF THE  PREMISES.  If the Premises are partially
damaged by fire or other  cause not in excess of 50% of the area or value of the
Premises,  the damage thereto (exclusive of Tenant's property) shall be repaired
or restored  promptly by Landlord,  at no expense to Tenant.  If the damages are
such as to render  all or a part of the  Premises  untenable,  the rent shall be
abated to an extent corresponding with the period during which and the extent to
which the  Premises  have  become  untenantable.  More  specifically,  until the
Premises are satisfactorily repaired or restored by Landlord as described above,
Tenant's  obligation to pay rent apportionable to such period of nonuse shall be
reduced based on a fraction, the numerator of which is the number of square feet
no longer used or usable by Tenant,  and the  denominator  of which shall be the
total square footage leased by Tenant hereunder.

     19. TOTAL DESTRUCTION OF THE PREMISES. In the event of total destruction of
the  Premises  (i.e.,  greater  than or equal to 50% of the area or value of the
Premises), Landlord shall have the option to rebuild, and rent shall abate until
such time as the Premises are available to Tenant  (except that  Landlord  shall
not be responsible  for restoring any of Tenant's  fixtures or other property of
Tenant),  at which  time rent  shall  again  commence.  In the  event,  however,
Landlord  elects  not to rebuild or does not  within  sixty  (60)days  after the
destruction commence to rebuild or repair, or does not within one hundred eighty
(180) days make  available to Tenant the  Premises,  this Lease shall  thereupon
terminate.

     20. CONDEMNATION.  In the event the Premises or a portion thereof are taken
or sold pursuant to the exercise of the right of eminent  domain,  rent shall be
proportionately  abated and  reduced  (in the case of a partial  taking) or this
Lease shall be  terminated  (in the case of a taking of the whole),  as the case
may be, but in no event  shall  Tenant be  entitled  to receive  any part of the
award paid to Landlord in connection  therewith,  and Tenant  hereby  assigns to
Landlord  all such awards and  compensation,  except that Tenant  shall have the
right  to  claim  any  separate  award  for  the  value  of  Tenant's  fixtures,
improvements  and  relocation  expenses.  If the useable  square  footage of the
building  is  reduced  by  ten  percent  (10%)  or  more  as a  result  of  such
condemnation, Tenant shall have the right to terminate this lease.

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     21.  ASSIGNMENT  AND  SUBLETTING.  Tenant  shall not  assign or sublet  the
Premises or any part  thereof  without the written  consent of  Landlord,  which
consent shall not be unreasonably withheld or delayed.

     22.  LANDLORD'S  MORTGAGES.  This Lease is expressly subject to all present
and future mortgages or other security  instruments of Landlord  encumbering the
Building. Tenant covenants to execute such documents as requested by Landlord to
confirm  such  subordination,  and upon  failure  to do so,  hereby  irrevocably
appoints  Landlord  its agent and  attorney-in-fact  to execute  the same on its
behalf.

     23.  QUIET  ENJOYMENT.  Landlord  covenants  to allow  Tenant  quietly  and
peaceably  to  enjoy  possession  of the  Premises  free  from  interference  or
interruption of Landlord or any other person claiming under or through Landlord,
and Landlord represents to Tenant that it has a sufficient ownership interest in
the Premises to enter into and carry out the provisions of this Lease.

     24.  SURRENDER.  At the  expiration or earlier  termination  of this Lease,
Tenant shall quit and surrender the Premises in the same  condition as they were
delivered to Tenant at the Commencement Date, normal wear and tear excepted. All
fixtures,  improvements and appurtenances attached to or built into the Premises
by Tenant in such a manner as to become part of the  freehold,  shall become and
remain a part of and be surrendered with the Premises,  except that Landlord may
elect to  require  Tenant,  at  Tenant's  expense,  to remove any or all of such
fixtures,  nonstructural improvements and appurtenances, and Tenant shall repair
any damage caused by such  removal;  provided,  however,  that in no event shall
this Section 24 be construed to contradict any provisions of Section .13 hereof.

     Time is of the  essence of each  provision  of this  Lease.  Tenant  hereby
waives the Notice to Quit  requirements of the Pennsylvania  Landlord and Tenant
Act of 1951, as amended,  68 P.S.  ss.250.101  et seq., or any other  applicable
law,  and agrees to surrender  the  Premises  without the need for notice at the
expiration  of the term,  including  any  renewal or  extension  thereof or upon
sooner termination of this Lease.

     25. SIGNS. Tenant shall provide and maintain,  at its expense, a sign on or
about the  building  located on the  Premises,  which sign shall be  approved by
Landlord prior to it being affixed to the building.

     26. ACCESS.  Landlord and Landlord's authorized agents shall have the right
from time to time after  reasonable prior notice or in the case of an emergency,
no notice,  to Tenant to enter the Premises for the purposes of making  repairs,
of  inspecting  the  Premises,  and  of  showing  the  Premises  to  prospective
purchasers or tenants.

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     27. DEFAULT BY TENANT.

     (a) If Tenant shall default (i) in making any payment of rent or other sums
required to be paid by Tenant in  accordance  with the terms of this  Lease,  or
(ii) shall default in the observance or  performance  of any other  provision of
this Lease,  or (iii) there shall occur an  assignment by Tenant for the benefit
of  creditors;  an  appointment  of a receiver  of the assets of Tenant;  or the
filing for, by or against  Tenant of any action  under  Chapter 7 of the Federal
Bankruptcy  Act  or  comparable   federal,   state  or  local  legislation  that
establishes  a plan for the  liquidation  of the Tenant and such  default  shall
continue  uncured  for a period  of ten (10)  days with  respect  to a  monetary
default  or thirty  (30) days  with  respect  to a  non-monetary  default  after
Landlord  notifies  Tenant,  an Event of Default shall have occurred;  provided,
however, that if the nature of Tenant" default is such that it is not capable of
being cured within such thirty (30) day period,  the Event of Default  shall not
be deemed to have  occurred if Tenant  commences  such cure within a thirty (30)
day period and thereafter  diligently  prosecutes  such cure to  completion,  as
determined by Landlord in Landlord's sole and reasonable discretion.

     (b) If an Event of Default has  occurred,  Landlord  may declare this Lease
Agreement  and Tenant's  right to possession  of the Premises  ended,  whereupon
Landlord shall, without this exposition limiting its rights in law or in equity,
have the following remedies:

          (i)   Landlord  may declare  the entire  rent and other sums  reserved
                hereunder  for the  full  term of this  Lease  remaining  unpaid
                immediately due and payable in full;

          (ii)  Landlord  may  terminate  this  Lease and  annul  the  unexpired
                portion of this Lease;

          (iii) Landlord  may  enter  upon and  repossess  the  Premises  and at
                Landlord's  option,  may relet the  Premises,  in which case all
                expenses  of such  reletting  shall be  deemed  additional  rent
                immediately  due  and  payable  hereunder,  and  all  rent  when
                received from the new tenant shall be credited  against Tenant's
                liability hereunder;

          (iv)  Landlord may institute legal proceedings to collect all rent and
                sums due and payable hereunder and to recover  possession of the
                Premises.

          (V)   REMEDIES  CUMULATIVE:  It is  understood  and  agreed  that  the
                remedies  herein given to Landlord shall be cumulative,  and the
                exercise  of any one  remedy  by  Landlord  shall  not be to the
                exclusion  of any other  remedy.  Each and all of said  remedies
                shall  be  exercisable   repeatedly  and  as  often  as  may  be
                necessary.

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<PAGE>
          (VI)  NO WAIVER:  No delay or omission in the exercise of any right or
                remedy of Landlord on any default by Tenant  shall impair such a
                right or  remedy or be  construed  as a  waiver.  Any  waiver by
                Landlord  of any  default  must be in writing and shall not be a
                waiver of any  other  default  concerning  the same or any other
                provision  of this  Lease  unless  and only to the  extent  such
                additional  waiver(s)  are  specifically  provided  for in  such
                written waiver.

     28. DEFAULT BY LANDLORD.

     (a) In the event Landlord shall default in keeping, observing or performing
any of the terms, provisions,  covenants and conditions contained in this Lease,
and such  default  is not  cured (or  proper  corrective  measures  to cure such
default commenced) by Landlord within the period specified herein for the curing
of such defaults, Tenant shall have the right, but not the obligation, to remedy
such default after giving written notice thereof to Landlord. Landlord agrees to
promptly  send to  Tenant a copy of any  notice  of  default  received  from the
holders of present or future mortgages or other security instruments encumbering
the building.

     (b) In the event Landlord shall default in keeping, observing or performing
any of the terms, provisions,  covenants and conditions contained in this Lease,
and such  default  is not  cured (or  proper  corrective  measures  to cure such
default commenced) by Landlord within ten (10) days of such default,  Tenant, at
any time thereafter upon ten (10) days' written notice to Landlord,  may declare
this Lease ended, whereupon Tenant shall have the remedies provided at law or in
equity.

     29. HOLDOVER.  If Tenant holds possession of the Premises after the term of
this Lease and any exercised  renewal  options Tenant shall become a tenant from
month-to-month upon the terms herein specified, but at a monthly base rent equal
to the monthly base rent payable during the last month of the term multiplied by
110%, which shall be payable monthly in advance, and such tenancy shall continue
on a  month-to-month  basis until terminated by Landlord or Tenant upon at least
one month's prior written notice to terminate such monthly tenancy.

     30. TOXIC MATERIALS.

     (a) As used in this Lease.

          (i)   The term "Hazardous Material(s)" means any oil, flammable items,
                explosives,    radioactive   materials,   hazardous   or   toxic
                substances,  material or waste or related  materials  including,
                without  limitation,  any  substances  that pose a hazard to the
                Premises  or to  persons  on  or  about  the  Premises  and  any
                substances   defined  as  or  included  in  the   definition  of
                "hazardous  substance," "hazardous waste," "hazardous material,"
                "toxic  substance,"  "extremely  hazardous  waste,"  "restricted
                hazardous waste" or words of similar import, now or subsequently

                                        9
<PAGE>
                regulated in any way under  applicable  federal,  state or local
                laws   or    regulations,    including    without    limitation,
                petroleum-based products,  paints, solvents, lead, cyanide, DDT,
                printing inks,  acids,  pesticides,  ammonia compounds and other
                chemical  products,  asbestos,  PCB's,  urea  formaldehyde  foam
                insulation,   transformers   or   other   equipment   containing
                dielectric fluid, levels of polychlorinated  biphenyls, or radon
                gas, and similar compounds, and including any different products
                and materials which are subsequently  found have adverse effects
                on the environment or the health and safety of persons.

          (ii)  The  term  "Environmental  Law(s)"  means  any one or all of the
                following:    the    Comprehensive    Environmental    Response,
                Compensation  and  Liability  Act,  as amended by the  Superfund
                Amendments and Reauthorization act of 1986 (42  U.S.C.ss.ss.9601
                et seq.); the Resource  Conservation and Recovery Act as amended
                (42 U.S.C.ss.ss.300f et seq); the Clean Water Act as amended (33
                U.S.C.ss.ss.1251  et seq.);  the Clean  Air Act as  amended  (42
                U.S.C.ss.ss.7401  et seq.) the Toxic  Substance  Control  Act as
                amended (15  U.S.C.ss.ss.136  et seq.) the Solid Waste  Disposal
                Act as  Amended  (42  U.S.C.ss.ss.3251  et seq.)  the  Hazardous
                Materials  Transportation Act (49 U.S.C.ss.ss.1801 et seq.); the
                regulations  promulgated  under  any of the  foregoing:  and all
                other laws, regulations,  ordinances,  standards,  policies, and
                guidelines  now  in  effect  or   hereinafter   enacted  by  any
                governmental  entity  (whether  local,  state or federal) having
                jurisdiction  or regulatory  authority over the Premises or over
                activities  conducted therein and which deal with the regulation
                or  protection  of  human  health,  industrial  hygiene  or  the
                environment,  including the soil,  subsurface soil, ambient air,
                groundwater, surface water, and land use.

          (iii) The term  "Environmental  Activity(ies)"  means any  generation,
                manufacture,  production,  pumping, bringing upon, use, storage,
                treatment,  release, discharge,  escaping,  emitting,  leaching,
                disposal or transportation of Hazardous Materials.

     (b) Tenant shall protect,  indemnify,  defend (with counsel satisfactory to
Landlord) and hold harmless  Landlord,  his heirs,  representatives,  employees,
agents, lenders, and ground lessees, if any, and their respective successors and
assigns  for,  from and  against  any and all losses,  damages,  claims,  costs,
expenses,   penalties,  response  costs,  fines  and  liabilities  of  any  kind
(including,  without limitation, the cost of any investigation,  remediation and
cleanup, and reasonable attorneys' fees) which are determined to be attributable
to (i) any  Environmental  Activity on the Premises  undertaken  or committed by
Tenant or Tenant's agents or caused by the negligence of such persons during the
Term of this Lease.  This indemnity shall survive the termination of this Lease.
Tenant shall have no liability or obligation arising out of any violation of any

                                       10
<PAGE>
Environmental Law or contamination or pollution of, or from, the Premises caused
by (i) conduct or conditions occurring prior to July 1, 1997, or after, Tenant's
occupancy of the Premises or (ii)  Landlord's  or  Landlord's  agents use of, or
acts or omissions on, the Premises.

     (c) Landlord shall protect, indemnify, defend (with counsel satisfactory to
Tenant)  and  hold  harmless  Tenant  and  its  directors,  officers,  partners,
employees,  agents,  lenders,  and ground lessees,  if any, and their respective
successor and assigns for, from and against any and all losses, damages, claims,
costs,  expenses,  penalties,  response costs, fines and liabilities of any kind
(including without  limitation,  the cost of any investigation,  remediation and
cleanup, and reasonable attorneys' fees) which are determined to be attributable
to (i) any  Environmental  Activity on the Premises  undertaken  or committed by
Landlord or Landlord's agents or caused by the negligence of such persons at any
time  prior to,  during or after the Term of this  Lease.  The  indemnity  shall
survive the  termination  of this Lease.  Landlord  shall have no  liability  or
obligation   arising  out  of  any  violation  of  any   Environmental   Law  or
contamination  or  pollution  of, or from,  the  Premises  caused by Tenant's or
Tenant's agents use of, or acts or omissions on, the Premises.

     31. LANDLORD'S  LIABILITY.  The maximum combined  liability of the Landlord
and the  principals of Landlord  shall limited to the greater of their  combined
equity in the leased  premises  on (i) July 1, 1999 or (ii) the day  immediately
preceding  that  on  which  the  Landlord  or one of  its  principal's  receives
notification from the lessee of a claim under this lease against the Landlord or
one of its principals.  The interest of the Landlord herein may be assigned,  in
which case the  Landlord  shall  advise  Tenant of the name of the  assignee and
Landlord shall have no liability  hereunder from and after the effective date of
any such assignment, except for obligations which may have theretofore accrued.

     32.  NOTICES.  All notices and other  communications  hereunder shall be in
writing and shall be deemed  given when  delivered  by hand or by  certified  or
registered mail, return receipt requested, first-class postage prepaid, properly
addressed  to the  party  to  whom  such  notice  is  directed,  at the  address
hereinafter  specified,  or at such other address as the party receiving  notice
designates to the other party in writing and by complying with the terms of this
paragraph.

     If to Landlord:   PRH Properties, LP
                       17700 N. Crossroads Ranch Road
                       Prescott, Arizona 86305

     With a copy to:   McNees, Wallace & Nurick
                       100 Pine Street
                       Post Office Box 1166
                       Harrisburg, Pennsylvania 17108
                       Attn: W. Jeffry Jamouneau, Esquire

                                       11
<PAGE>
     If to Tenant:
                       Amtech Systems, Inc.
                       131 South Clark Drive
                       Tempe, Arizona 85281
                       Attn: Robert T. Hass, Vice President-Finance, CFO

     With a copy to:
                       Squire, Sanders & Dempsey
                       40 N. Central Avenue, Suite #2700
                       Phoenix, Arizona 85004
                       Attn: Greg Hall, Esquire

     33. ENTIRE  AGREEMENT.  This Lease constitutes the entire agreement between
the parties  hereto as to the Lease of the  Premises  and  supersedes  all prior
discussions,  understandings  or  agreements  between  the  parties  hereto.  No
modification,  amendment,  change or addition to this Lease  Agreement  shall be
binding on the parties unless reduced to writing and signed by their  authorized
representatives.

     34. MECHANICS' LIENS. The interest of Landlord in the Premises shall not be
subject  to liens  for  materials,  services  or  improvements  which  have been
furnished by any person at the request of Tenant,  and Tenant shall not have the
authority to in any way encumber the interest of Landlord.

     35.  GOVERNING LAW. This Lease  Agreement  shall be governed by the laws of
the  Commonwealth of Pennsylvania,  without regard to choice-of-law  provisions,
and  jurisdiction  and venue for all  disputes  hereunder  shall lie only in the
Court of Common Pleas for Cumberland County,  Pennsylvania  and/or in the United
States District Court for the Middle District of Pennsylvania.

     36.  LEGALLY  BINDING.  Except as herein  otherwise  specified,  this Lease
Agreement shall legally benefit and bind the parties hereto and their respective
successors and assigns.  Tenant may not record this Lease Agreement  without the
prior written consent of Landlord.

     37.  LANDLORD'S   REPRESENTATIONS  AND  WARRANTIES.   Landlord  represents,
warrants and  covenants to and with Tenant that  Landlord has the full right and
power to execute and perform this Lease and to grant the estate  defined  herein
and  Tenant,  on  payment of the rent and  performance  of a the  covenants  and
agreements hereof, shall peaceably and quietly have, hold and enjoy the Premises
and all rights, easements,  appurtenances and privileges belonging or in any way
appertaining thereto without molestation or hindrance of any person claiming by,
through or under Landlord, subject, however, to the terms of this Lease.

     38. MISCELLANEOUS.

     (a)  If any term or provision or portion  thereof of this Lease  Agreement,
          or application thereof to any person or circumstance, be held invalid,

                                       12
<PAGE>
          the remainder of said term or provision and/or of this Lease Agreement
          shall not be affected  thereby;  and, to this end, the parties  hereto
          agree  that the terms  and  provisions  of this  Lease  Agreement  are
          severable.

     (b)  In no event shall this Lease Agreement or anything contained herein be
          construed to contradict  Krieger's  indemnification  obligations  with
          respect  to  environmental  matters  set  forth in  Section  13 of the
          Sublease between John R. Krieger,  as an individual,  and P.R. Hoffman
          Machine  Products,  Inc.  dated  as of July 1,  1997,  as  amended  by
          Amendment #1, or in anyway limit the duration of said  indemnification
          obligations.

     IN WITNESS  WHEREOF,  the  undersigned  have  caused  this Lease to be duly
authorized and executed as of the day and year first above written.

ATTEST:                                 LANDLORD:
                                        PRH PROPERTIES, LP


                                        By: /s/ John R. Krieger
---------------------------                 ------------------------------------
                                            John R. Krieger, Partner


ATTEST                                  TENTANT:
                                        P.R. HOFFMAN MACHINE PRODUCTS, INC.


                                        By: /s/ Robert T. Hass
---------------------------                 ------------------------------------
                                            Robert T. Hass, its Vice President

                                       13
<PAGE>
                                  AMENDMENT #1
                                       TO
                               SUBLEASE AGREEMENT

     Amendment #1 to that certain  Sublease  dated July 1, 1997,  by and between
John R. Krieger, an adult individual, as sublessor ("Krieger") and P. R. Hoffman
Machine Products, Inc., an Arizona corporation, as sublessee ("Hoffman").

                                   WITNESSETH:

     In  consideration  of the mutual covenants set forth in the Sublease and in
Section 38(b) of the lease dated July 1, 1999 and herein e parties  hereto agree
to amend the Sublease as follows:

     In  Sub-section  13(c) on page 7 of the  Sublease,  the words  "Hoffman  or
Hoffman's"  in line eight (8) thereof are to be and hereby are replaced with the
words  "Krieger or Krieger's" in order to reflect the original  intent that said
line would mirror, rather than copy, line 8 of Sub-section 13(b) thereof.

     Except for the change  noted  above,  all terms of the  Sublease  remain in
effect and unchanged.

     IN WITNESS  WHEREOF,  the parties hereto have executed this Amendment #1 as
of the 1ST day of July 1997.

ATTEST:                                 KRIEGER:
                                        JOHN R. KRIEGER


                                        By: /s/ John R. Krieger
---------------------------                 ------------------------------------
                                            John R. Krieger


ATTEST                                  TENTANT:
                                        P.R. HOFFMAN MACHINE PRODUCTS, INC.


                                        By: /s/ Robert T. Hass
---------------------------                 ------------------------------------
                                            Robert T. Hass, its Vice President

                                       14