<PAGE>   1
                                                                    EXHIBIT 10.4

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE LAW, AND NO
INTEREST IN SAID SECURITIES MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED
OR OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH
TRANSACTION INVOLVING SAID SECURITIES, (ii) THE COMPANY RECEIVES AN OPINION OF
LEGAL COUNSEL FOR THE HOLDER OF SAID SECURITIES SATISFACTORY TO THE COMPANY
STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (iii) THE COMPANY
OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.

                        --------------------------------

                             STOCK PURCHASE WARRANT
                TO PURCHASE UP TO 300,000 SHARES OF COMMON STOCK
                           OF mHL DEVELOPMENT COMPANY

                        --------------------------------

                  For value received, mHL Development Company, an Oregon
corporation (the "Company"), grants to The Polymer Technology Group
Incorporated, a California corporation (the "Initial Holder") the right, subject
to the terms of this Stock Purchase Warrant ("Warrant"), to purchase at the
times and for the prices set forth in Section 2 of this Warrant, up to 300,000
fully paid and nonassessable shares of Common Stock of the Company.

         Section 1.        Definitions.

                  As used in this Warrant, unless the context otherwise
requires:

                  "Company" means mHL Development Company, an Oregon
corporation, as specified in the introductory paragraph.

                  "Common Stock" means shares of the Company's Common Stock.

                  "Development Agreement" means that Product Development and
Supply Agreement, dated as of the date hereof, by and between the Initial
Holder, the Company and National Applied Science, Inc., an Oregon corporation.

                  "Exercise Date" means any date on which this Warrant is
exercised in the manner indicated in Section 2.


<PAGE>   2
                  "Exercise Period" means that period ending ten years after the
date of this Warrant.

                  "Exercise Price" shall mean $1.00 per Warrant Share; provided,
however, that if an adjustment is required under Section 8.1 of this Warrant,
then "Exercise Price" means the price at which each Warrant Share may be
purchased upon exercise of this Warrant immediately after such adjustment.

                  "Holder" means the Initial Holder or, upon assignment of this
Warrant by the Initial Holder (or a subsequent Holder), such assignee.

                  "Initial Holder" means the entity or individual specified in
the introductory paragraph.

                  "Restriction Agreement" has the meaning specified in Section
2.2.

                  "Securities Act" means the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder, or any act, rules or
regulations which replace the Securities Act or any such rules and regulations.

                  "Subsequent Warrant" has the meaning specified in Section 2.4.

                  "Triggering Event" has the meaning specified in Section 2.3.

                  "Warrant" means this Stock Purchase Warrant, as specified in
the introductory paragraph.

                  "Warrant Shares" means any shares of Common Stock, or other
securities, issued or issuable upon exercise of this Warrant.

          Section 2.       Exercise and Duration of Warrant.

                  2.1      Exercisability and Exercise Price.

                           (a)    Subject to the provisions hereof, this Warrant
may be exercised during the Exercise Period at the Exercise Price at the times
and for the numbers of Warrant Shares set forth below:


                                       2
<PAGE>   3
<TABLE>
<CAPTION>
                                                          Number of Warrant
                                                         Shares with Respect
                                                          to Which Warrant
         Exercise Date                                     is Exercisable
         -------------                                   -------------------
<S>                                                      <C>
         July 1, 1999                                         60,000
         July 1, 2000                                         60,000
         July 1, 2001                                         60,000
         July 1, 2002                                         60,000
         July 1, 2003                                         60,000
</TABLE>

                           (b)      Subject to Section 2.3 of this Agreement, if
the Holder does not exercise the Warrant to purchase all of the Warrant Shares
with respect to which this Warrant is exercisable in any one year, the Holder's
rights shall be cumulative and the Holder may purchase those shares in any
subsequent year during the Exercise Period. The Warrant shall not be exercised
for any fractional shares.

                  2.2      Method of Exercise.  During the Exercise Period, this
Warrant may be exercised by the Holder, in whole or in part, by:

                           (a)      surrendering this Warrant to the Company,

                           (b)      tendering to the Company payment in full by
cash or check of the Exercise Price for the Warrant Shares for which exercise is
made,

                           (c)      executing and delivering to the Company the
Exercise Form attached as Exhibit A, and

                           (d)      executing and delivering to the Company
either the Stock Transfer Restriction Agreement substantially in the form
attached to this Agreement as Exhibit B (the "Restriction Agreement") or at the
Company's discretion any applicable shareholders' or stock transfer restriction
agreement as in effect at that time, which agreement may at the Company's
discretion contain provisions similar to the Restriction Agreement.

                  2.3      Limitations on Vesting. All unexercised Warrant
Shares, vested and unvested, shall be canceled and the Holder shall have no
right to exercise the Warrant with respect to those shares, if one of the
following events (each a "Triggering Event") occurs:

                           (a)      the Company or National Applied Science,
Inc. terminates the Development Agreement in accordance with Section 5.2 of the
Development Agreement.

                           (b)      a case or proceeding with respect to the
Holder is commenced under any applicable bankruptcy, insolvency, reorganization,
receivership or readjustment of debt law or other similar law; an order for the
appointment of a receiver, liquidator,


                                       3
<PAGE>   4
sequestrator, trustee, custodian, or other officer having similar powers over
Holder or over a substantial part of Holder's property is entered, or an interim
receiver, trustee or other custodian of Holder or of a substantial part of
Holder's property is appointed or a warrant of attachment, execution or similar
process against any substantial part of Holder's property is issued.

                  2.4      Certificates. As soon as practicable after exercise
of this Warrant, certificates for the Warrant Shares shall be delivered to the
Holder (or any transferee specified in the attached Exercise Form). In the event
of a partial exercise of this Warrant, the Company shall promptly issue and
deliver to the Holder (or any transferee specified on the attached Exercise
Form) a new warrant to purchase the number of Warrant Shares as to which this
Warrant has not been exercised, which new warrant (the "Subsequent Warrant")
shall be dated the date hereof and shall be identical (except for the number of
shares issuable upon exercise thereof) to this Warrant.

                  2.5      Securities Act Compliance. Unless the issuance of the
Warrant Shares shall have been registered under the Securities Act, as a
condition of its delivery of certificates for the Warrant Shares, the Company
may require the Holder (including the transferee of the Warrant Shares in whose
name the Warrant Shares are to be registered) to deliver to the Company, in
writing, representations regarding the Holder's sophistication, investment
intent, acquisition for his own account and such other matters as are reasonable
and customary for purchasers of securities in an unregistered private offering.
The Company may place conspicuously upon each Subsequent Warrant and upon each
certificate representing the Warrant Shares a legend substantially in the
following form, the terms of which are agreed to by the Holder (including such
transferee):

                  THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
         ACT OF 1933 OR APPLICABLE STATE LAW, AND NO INTEREST THEREIN MAY BE
         SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED
         UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
         AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION
         INVOLVING SAID SECURITIES, (ii) THE COMPANY RECEIVES AN OPINION OF
         LEGAL COUNSEL FOR THE HOLDER OF SAID SECURITIES SATISFACTORY TO THE
         COMPANY STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR
         (iii) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS
         EXEMPT FROM REGISTRATION.

                  2.6      Taxes. The Company shall not be required to pay any
tax which may be payable in respect of any transfer of this Warrant or in
respect of the issuance or transfer of the Warrant Shares.


                                       4
<PAGE>   5
          Section 3.       Stock Transfer Restriction Agreement.
                  The Holder agrees that any of the shares acquired upon
exercise of this Warrant shall be subject to the Restriction Agreement, or at
the Company's discretion any applicable shareholders or stock restriction
agreement as in effect at that time, which agreement may at the Company's
discretion contain provisions similar to the Restriction Agreement, and the
exercise of the Warrant shall not be effective until the Holder has signed and
delivered to the Company the stock transfer restriction agreement required by
this Section 3.

          Section 4.       Validity and Reservation of Warrant Shares.

                  The Company covenants that all Warrant Shares issued upon
exercise of this Warrant will be validly issued, fully paid, and nonassessable.
The Company agrees that, as long as this Warrant may be exercised, the Company
will have authorized and reserved for issuance upon exercise of this Warrant a
sufficient number of Warrant Shares to provide for exercise in full of this
Warrant.

          Section 5.       No Fractional Shares.

                  No fractional Warrant Shares shall be issued upon the exercise
of this Warrant, and the number of Warrant Shares to be issued shall be rounded
down to the nearest whole number.

          Section 6.       Limited Rights of Warrant Holder.

                  The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a stockholder of the Company, either at
law or equity, until this Warrant shall have been exercised.

          Section 7.       Loss of Warrant.

                  Upon receipt by the Company of satisfactory evidence of the
loss, theft, destruction or mutilation of this Warrant and either (in the case
of loss, theft or destruction) reasonable indemnification and a bond
satisfactory to the Company if requested by the Company or (in the case of
mutilation) the surrender of this Warrant for cancellation, the Company will
execute and deliver to the Holder, without charge, a new warrant of like
denomination.

          Section 8.       Certain Adjustments of Exercise Price.

                  8.1 Adjustment of Exercise Price. The number, class and
Exercise Price of securities for which this Warrant may be exercised are subject
to adjustment from time to time upon the happening of certain events as
hereinafter provided:

                                       5
<PAGE>   6
                           (a)      Stock Split or Recapitalization, Etc.  If
the outstanding shares of the Company's Common Stock are divided into a greater
number of shares, the number of shares of Common Stock purchasable upon the
exercise of this Warrant shall be proportionately increased and the Exercise
Price shall be proportionately reduced; conversely, if the outstanding shares of
Common Stock are combined into a smaller number of shares of Common Stock, the
number of shares of Common Stock purchasable upon the exercise of this Warrant
shall be proportionately reduced and the Exercise Price shall be proportionately
increased. The increases and reductions provided for in this Section 8.1(a)
shall be made with the intent and, as nearly as practicable, the effect that
neither the percentage of the total equity of the Company obtainable on exercise
of this Warrant nor the price payable for such percentage shall be affected by
any event described in this Section 8.1(a).

                           (b)      Merger or Reorganization, Etc.  In the event
of any change in the Common Stock through merger, consolidation,
reclassification, reorganization, partial or complete liquidation or other
change in the capital structure of the Company (not including the issuance of
additional shares of capital stock other than by stock dividend), then, as a
condition of the change in capital structure of the Company, lawful and adequate
provision shall be made so that the Holder will have the right thereafter to
receive upon the exercise of this Warrant the kind and amount of shares of stock
or other securities or property to which he would have been entitled if,
immediately prior to such merger, consolidation, reclassification,
reorganization, or other change in the capital structure, the Holder had held
the number of shares of Common Stock obtainable upon the exercise of this
Warrant. In any such case, appropriate adjustment also shall be made in the
applications of the provisions set forth herein with respect to the rights and
interest thereafter of the Holder, to the end that the provisions set forth
herein shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other securities or property thereafter
deliverable upon the exercise of this Warrant.

                  8.2      Notice of Adjustment. Whenever an event occurs
requiring any adjustment to be made pursuant to Section 8.1, the Company shall
promptly file with its Secretary or an Assistant Secretary at its principal
office and with its stock transfer agent, if any, a certificate of its chief
executive officer or chief financial officer specifying such adjustment, setting
forth in reasonable detail the acts requiring such adjustment, and stating such
other facts as shall be necessary to show the manner and figures used to compute
such adjustment. Such certificate shall be made available at all reasonable
times for inspection by the Holder. Promptly (but in no event more than 30 days)
after each such adjustment, the Company shall give a copy of such certificate by
certified mail to the Holder.

          Section 9.       Miscellaneous.

                  9.1      Successors and Assigns. The provisions of this
Warrant shall be binding upon and inure to the benefit of the Company, the
Holder and their respective successors and assigns.

                                       6
<PAGE>   7
                  9.2      Notice. Each notice, certificate or demand referred

to in this Warrant shall be in writing and shall be deemed "given" or
"delivered" upon (a) personal delivery to the party to be notified, (b) five
days after deposit with the United States Postal Service, as registered or
certified mail, postage prepaid, or (c) the same day of facsimile transmission
with confirmed transmission. Notices shall be addressed to the party to be
notified at the address set forth below or such other address as such party may
designate by written notice to the other party given in the foregoing manner:

If to the Company:

                  To the address of the Company's principal place of business.

If to the Holder:

                  To the Holder's last known address as it appears on the books
of the Company.

                  9.3      Applicable Law. The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of
Oregon.

                  9.4      Headings. The headings herein are for convenience
only and are not part of this Warrant and shall not affect the interpretation
thereof.

                  Dated as of March 27, 2000.

                                    mHL DEVELOPMENT COMPANY


                                    By:/s/ RICHARD G. SASS
                                       -----------------------------------------
                                    Title: CEO


                                       7
<PAGE>   8
                                  EXERCISE FORM

                      (To Be Executed by the Warrant Holder
                  to Exercise the Warrant in Whole or in Part)

To:     mHL DEVELOPMENT COMPANY

1.       The undersigned hereby irrevocably elects to exercise the right of
         purchase represented by the Warrant for, and to purchase thereunder,
         __________ shares of Common Stock provided for therein and tenders
         payment herewith payable to the order of mHL Development Company in
         the amount of $___________.

2.       The undersigned requests that certificates for such shares of Common
         Stock be issued and delivered as follows:

         Name:
                --------------------------------------------------

         Address:
                   -----------------------------------------------

         Deliver to:
                      --------------------------------------------

         Address:
                   -----------------------------------------------

         and, if the purchased number of shares of Common Stock shall not be all
         the shares of Common Stock purchasable hereunder, that a new Warrant
         for the balance remaining of the shares of Common Stock purchasable
         under the within Warrant be registered in the name of, and delivered
         to, the undersigned at the address stated below:

         Address:
                   -----------------------------------------------

3.       In connection with the exercise of the Warrant, the undersigned hereby
         represents and warrants to you as follows:

         (a)      Purchase Entirely for Own Account. The Common Stock will be
                  acquired for investment for the undersigned's own account and
                  not with a view to the resale or distribution of any part
                  thereof, and the undersigned has no intention of selling,
                  granting any participation in, or otherwise distributing the
                  same.

         (b)      Restricted Securities. The undersigned understands that the
                  Common Stock may not be sold, transferred, or otherwise
                  disposed of without registration under the Securities Act of
                  1933 (the "Act") or an exemption therefrom and, in the absence
                  of an effective registration statement covering the Common
                  Stock or an available exemption from registration under the
                  Act, the Common Stock must be held indefinitely.


<PAGE>   9
         (c)      Investment Experience. The undersigned is experienced in
                  evaluating and investing in companies in the development
                  stage, can bear the economic risk of an investment in the
                  Common Stock, and has enough knowledge and experience in
                  financial and business matters to evaluate the merits and
                  risks of an investment in the Common Stock.

         (d)      Opportunity to Review Documents and Ask Questions. The Company
                  has made available to the undersigned all documents and
                  information requested by the undersigned relating to an
                  investment in the Company. In addition, the undersigned has
                  had adequate opportunity to ask questions and to receive
                  answers from the management of the Company covering the terms
                  and conditions of the offering and the Company's business,
                  management, and financial affairs.

4.       The undersigned understands, agrees, and recognizes that:

         (a)      No federal or state agency has made any finding or
                  determination as to the fairness of the investment or any
                  recommendation or endorsement of the Common Stock.

         (b)      All certificates evidencing the Common Stock shall bear
                  legends substantially similar to the legend set forth in
                  Section 2.4 of the Warrant.

5.       The undersigned is a resident of             .
                                         -------------


                  Dated:            ,       .
                          ----------  -----

                                    Signature:
                                              ----------------------------------

                                    Print Name:
                                               ---------------------------------

                           Note: Signature must correspond with the name as
                           written upon the face of this Warrant in every
                           particular, without alteration or enlargement or any
                           change whatsoever.

<PAGE>   10
                                                                       EXHIBIT B

                      STOCK TRANSFER RESTRICTION AGREEMENT

             This Stock Transfer Restriction Agreement (the "Agreement"),
effective as of ____________, _____, is by and between mHL Development Company,
an Oregon corporation (the "Company"), and The Polymer Technology Group
Incorporated, a California corporation ("Shareholder")

                                    RECITALS

             A.       Shareholder owns, intends to purchase or has the right to
purchase shares of the Company's Common Stock.

             B.       The parties wish to enter into a agreement relating to the
sale or other disposition of the shares of Common Stock owned or held by
Shareholder.

                                    AGREEMENT

    1.       Limitations on Transfer.

             1.1    Shares Subject to Restrictions Under This Agreement. For the
purposes of this Agreement, the term "Shares" shall mean all of the shares of
the Company's Common Stock owned or held by the Shareholder, including any
additional shares that may be acquired subsequent to the date of this Agreement
and all securities received in replacement of the Common Stock or as stock
dividends or splits and all securities received in replacement of the Common
Stock in a recapitalization, merger reorganization and the like.

             1.2    Restrictions. In addition to any other limitation on
transfer created by applicable securities laws, by the Company's Articles of
Incorporation or Bylaws, or by a separate agreement between the Company and
Shareholder, including, if applicable, a Restricted Stock Purchase Agreement,
Shareholder shall not sell, or otherwise transfer, including transfers by gift
and by operation of law, any interest in any of the Shares except as provided in
this Agreement. Any transfer of the Shares in violation of this Agreement shall
be void.

    2.       Company Repurchase Rights.

             2.1     Triggering Events.  On the occurrence of any of the
following events (each a "Triggering Event"):


<PAGE>   11
                      (a)   The Company or National Applied Science terminates
             the Development Agreement in accordance with Section 5.2 of the
             Development Agreement; or

                      (b)   A case or proceeding with respect to the Shareholder
             is commenced under any applicable bankruptcy, insolvency,
             reorganization, receivership or readjustment of debt law or other
             similar law; an order for the appointment of a receiver,
             liquidator, sequestrator, trustee, custodian, or other officer
             having similar powers over Shareholder or over a substantial part
             of Shareholder's property is entered, or an interim receiver,
             trustee or other custodian of Shareholder or of a substantial part
             of Shareholder's property is appointed or a warrant of attachment,
             execution or similar process against any substantial part of
             Shareholder's property is issued;

the Company shall have the option to repurchase any and all Shares owned or held
or to be acquired by exercise of an option by Shareholder (the "Optional
Redemption") pursuant to the terms of Section 2.2; provided, however, that any
unvested shares subject to an option at the time of Triggering Event shall be
canceled, and Shareholder shall have no right to exercise any option with
respect to those shares.

             2.2      Terms and Conditions of an Optional Redemption. An
Optional Redemption shall be subject to the following terms and conditions:

                      (a)   Upon the exercise by the Company of an Optional
             Redemption, the Shareholder shall be obligated to sell all of the
             Shares. The Company shall exercise an Optional Redemption by
             written notice to the Shareholder at any time after the Optional
             Redemption is exercisable thereby (a "Notice of Exercise").

                      (b)   In the case of any exercise of the Optional
             Redemption, the purchase price of the Shares shall be the amount
             that the Company and the Shareholder agree upon or, if they are
             unable to agree within 15 days following the Notice of Exercise,
             the amount determined in accordance with the appraisal procedures
             set forth in Section 2.2(c).

                      (c)   The following procedure shall apply in connection
             with any appraisal in connection with an exercise of the Optional
             Redemption:

                            (i)   The Shareholder and the Company shall attempt
                      to agree upon a single appraiser prior to the expiration
                      of the 30-day period following the Notice of Exercise. If
                      they so agree, such appraiser shall, as promptly as
                      possible, determine the amount that reflects the current
                      value of the Shares by first determining the value of the
                      Company in terms of assets and liabilities, present
                      earnings, future prospects and all other relevant factors,
                      and then determining the proportion of such value
                      represented by the Shares


                                       2
<PAGE>   12
                      considering the existence of senior securities, if any,
                      and the number of the Shares in relation to all
                      outstanding shares and options, warrants, purchase
                      rights and/or rights convertible to shares of the
                      Company's capital stock, but without applying any
                      minority interest discount or illiquidity or similar
                      discount (the "Fair Market Value of the Shares"). The
                      appraiser's written determination shall be final,
                      conclusive and binding upon all parties to the purchase
                      and sale. The Company and the Shareholder shall share
                      equally the costs and fees of the single appraiser.

                            (ii)  If the Shareholder and the Company are unable
                      to agree upon a single appraiser within the 30-day period
                      after the Notice of Exercise, the Shareholder shall
                      appoint one appraiser and the Company shall appoint one
                      appraiser (each party giving notice of the appointment to
                      the other) within 30 days after the expiration of such
                      period, and the two appraisers so appointed shall choose a
                      third appraiser within 30 days after appointment of the
                      second. If either party fails to appoint an appraiser, or
                      if the two appraisers fail to choose a third, the
                      appraiser or appraisers appointed in accordance with the
                      foregoing procedures shall serve as the sole appraiser or
                      appraisers. Any written determination of the Fair Market
                      Value of the Shares signed by at least two appraisers
                      shall be final, conclusive and binding upon all parties to
                      the purchase and sale. If no two appraisers so agree
                      within 60 days following the appointment of the last
                      appraiser, the median of the Fair Market Value of the
                      Shares as determined by each of the three appraisers, or
                      the average of the Fair Market Value of the Shares if
                      there are only two appraisers, shall be final, conclusive
                      and binding upon all parties to the purchase and sale
                      subject to the following modifications:

                                    (A)    if there are three appraisers and
                              each arrives at a different determination of the
                              Fair Market Value of the Shares and any such
                              amount is more than 5% different than the average
                              of all three appraisals, the appraisal that is the
                              farthest away from the average (either high or
                              low) shall be discarded and the average of the
                              remaining two appraisals shall be the Fair Market
                              Value of the Shares.

                                    (B)    if there are only two appraisers and
                              each arrives at a different determination of the
                              Fair Market Value of the Shares and the difference
                              between such amounts exceeds 10% of the lower
                              amount, a third appraiser shall be appointed by
                              the two appraisers or, if they fail to appoint a
                              third appraiser within 10 days after the later of
                              the two determinations of the Fair Market Value of
                              the Shares, by the presiding judge in the county
                              seat in which the Company has its principal place
                              of business upon petition thereto by either
                              appraiser or by either of the Shareholder or the
                              Company. The third appraiser


                                       3
<PAGE>   13

                              shall conduct an appraisal in accordance with this
                              Section 2.2(c)(ii) as promptly as is practicable
                              and the results of such appraisal and all other
                              appraisals conducted pursuant to this Section
                              2.2(c)(ii) shall be subject to all applicable
                              provisions of this Section 2.2(c)(ii), including
                              the foregoing clause (A).

             Except as hereinafter provided in the case of the use of a single
appraiser, each party to the appraisal shall pay the compensation and expenses
of the appraiser appointed by such party. The compensation and expenses of the
third appraiser shall be shared equally by the Shareholder and the Company. If
only one appraiser is used pursuant to this Section 2.2(c)(ii), the compensation
and expenses of such appraiser shall be paid by the party that appointed such
appraiser.

                             (iii)  Each party appointing an appraiser hereunder
                      shall use reasonable diligence to select as an appraiser
                      an individual or firm that by training and experience is
                      knowledgeable concerning the methods of ascertaining the
                      fair market value of an interest in a privately-held
                      business engaged in the primary business of the Company.
                      Any appraiser appointed pursuant to Section 2.2(c)(ii)
                      shall be a member of either or both of the American
                      Society of Appraisers and the Institute of Business
                      Appraisers.

                      (d)    On a date specified by the Company that is not
             later than 45 days after the Notice of Exercise in the case of a
             purchase price determined under Section 2.2(b) other than in
             accordance with the foregoing appraisal procedures described in
             Section 2.2(c) or, in the case of a determination of the purchase
             price of the Shares in accordance with such appraisal procedures,
             not later than 30 days after the determination of the Fair Market
             Value of the Shares (the relevant date in any such case being the
             "Section 2.2 Closing Date"), the Company shall pay to the
             Shareholder ten percent (10%) of the Fair Market Value of the
             Shares, and the balance payable in 60 equal monthly installments,
             including interest on the unpaid balance at the rate of eight
             percent (8%) per annum from the Section 2.2 Closing Date;
             installments to commence one month after the Section 2.2 Closing
             Date with no restrictions on prepayment.

                      (e)    On the Section 2.2 Closing Date, the Shareholder
             shall deliver to the Company certificates evidencing the Shares and
             a certificate dated as of the Section 2.2 Closing Date, containing
             the representation and warranty of the Shareholder as to its
             unrestricted legal right, power and authority to assign, transfer
             and deliver its Shares and that at the closing on the Section 2.2
             Closing Date the Company will receive good and marketable title to
             such Shares, free and clear of all liens, claims, equities,
             encumbrances and restrictions of every kind other than the
             restrictions set forth in this Agreement.

                                       4
<PAGE>   14
In the event the Company does not elect to exercise the Optional Redemption, the
Shares shall remain subject to the terms of this Agreement. The Company's
repurchase rights are in addition to the Company's right of first refusal set
forth in Section 3 of this Agreement.

             2.3      Other Agreements. The repurchase rights contained in this
Agreement are in addition to repurchase rights that may be included in a
separate agreement between Shareholder and the Company, including, if
applicable, a Restricted Stock Purchase Agreement. The repurchase price to be
paid by the Company for any Shares after Triggering Event shall be governed by
the terms of this Agreement only to the extent that such Shares have been
released from the repurchase terms contained in a separate agreement between the
Company and Shareholder.

    3.       Company Right of First Refusal. If Shareholder desires (or is
required) to sell or transfer any of the Shares in any manner, Shareholder shall
first obtain a firm, unconditional written offer signed by a bona fide
prospective purchaser (the "Bona Fide Offer"), stating the number of Shares to
be purchased, the total purchase price and the terms of payment of the purchase
price. Shareholder shall mail a copy of the Bona Fide Offer to the Company. The
Company shall have a right of first refusal to purchase any portion of the
Shares covered by the Bona Fide Offer at the same price, and upon the same terms
(or terms as similar as reasonably possible) set forth in the Bona Fide Offer.
The right of first refusal shall be provided to the Company for a period of 60
days following receipt by the Company of the Bona Fide Offer. If the Shares are
not purchased by the Company, the selling Shareholder shall have 60 days
following lapse of the period of the right of first refusal provided to the
Company to dispose of the Shares to the transferee identified in the Bona Fide
Offer on terms no more favorable to the transferee than those offered to the
Company. After such 60 day period lapses, the Shares shall once again be subject
to the rights of first refusal herein provided.

    4.       Assignment by the Company. The right of the Company to purchase any
part of the Shares may be assigned in whole or in part to any person or persons
designated by the Board of Directors of the Company.

    5.       Obligations Binding Upon Transferees. All transferees of Shares or
any interest therein will receive and hold such Shares or interests subject to
the provisions of this Agreement. Any sale or transfer of the Shares shall be
void unless the provisions of this Agreement are met.

    6.       Termination. This Agreement shall terminate on (i) the effective
date of a registration statement filed by the Company under the Securities Act
of 1933, as amended (the "Act"), with respect to an underwritten public offering
of Common Stock of the Company or (ii) the closing date of a sale of assets or
merger of the Company pursuant to which shareholders of the Company receive
securities of a buyer whose shares are publicly traded.

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<PAGE>   15
    7.       Lock-up Agreement. Shareholder agrees, in connection with an
initial public offering of equity securities by the Company, upon request of the
Company or the underwriters managing such offering, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Shares (other than those included in the registration of the offering, if any)
without the prior written consent of the Company or such underwriters, as the
case may be, for the period of time after the offering requested by the
underwriters, which period shall not exceed one year from the effective date of
the registration of the offering.

    8.       Transfers in Violation. The Company shall not be required to (a)
transfer on its books any Shares that have been sold or transferred in violation
of any of the provisions set forth in this Agreement, or (b) treat as owner of
such Shares, or accord the right to vote as such owner, or pay dividends to any
transferee to whom such Shares shall have been so transferred.

    9.       Enforcement. The Company and Shareholder acknowledge that the other
party will suffer irreparable harm if either party fails to comply with this
Agreement, and that monetary damages will be inadequate to compensate the
parties for such failure. Accordingly, the parties agree that this Agreement may
be enforced by specific performance or other injunctive relief, in addition to
any other remedies available at law or in equity.

    10.      Governing Law. This Agreement shall be governed by, and shall be
construed and enforced in accordance with, the laws of the State of Oregon
exclusive of choice of law or conflicts of law rules, provisions, and
principles.

    11.      Miscellaneous.

             11.1     Shareholder Rights. Subject to the provisions and
limitations hereof, Shareholder may, during the term of this Agreement, exercise
all rights and privileges of a shareholder of the Company with respect to the
Shares.

             11.2     Notices. Any notice, demand or request required or
permitted to be given under this Agreement shall be in writing and shall be
deemed given when delivered personally, or three days after being deposited in
the United States mail as certified or registered mail, return receipt
requested, with postage prepaid, or the day following facsimile transmission,
with confirmed transmission, in either case addressed, if to the Company, to mHL
Development Company, 16125 SW 72nd Avenue, Portland, OR 97224; and if to
Shareholder at Shareholder's address shown on the stock records of the Company,
or at such other address as any party may designate by 10 days' advance written
notice to the other party.

             11.3     Amendment. This Agreement may be amended only by the
written consent of the Company and Shareholder.

             11.4     Assignment. The rights and benefits of this Agreement
shall inure to the benefit of and be enforceable by the Company and its
respective successors and assigns. The


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<PAGE>   16
rights and obligations of Shareholder under this Agreement may not be assigned
without the prior written consent of the Company.

             IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.

                              MHL DEVELOPMENT COMPANY

                              By:
                                 -------------------------------
                              Name:
                              Title:



                              THE POLYMER TECHNOLOGY GROUP INCORPORATED

                              By:
                                 -------------------------------
                              Name:
                              Title:



                                       7