<PAGE>

                             Pure Resources, Inc.

                                 Exhibit 10.9
                                 ------------

Office Lease Agreement, dated July 5, 2000, between Midland Prop., LTD and Pure
Resources I, Inc
<PAGE>
                                                                    EXHIBIT 10.9

                                 OFFICE LEASE


         Pure Resources Building, Floors 1, 5, 7, 8, 9, 10, 11 and 12
                                         ----------------------------
                500 West Illinois Avenue, Midland, Texas 79701


          This Lease ("Lease") is made as of the 5th day of July, 2000 and
between the Lessor and the Lessee named below.

                         ARTICLE 1 - BASIC LEASE TERMS

For the purposes of this Lease, the following terms shall have the meanings set
forth below:

1.1  Lessor.
     ------

          MIDLAND PROP, LTD., a Texas limited partnership whose address is P.O.
Box 11227, Midland, Texas 79702.

1.2  Lessee.
     ------

          Pure Resources I, Inc., (the "Lessee")  whose address is 500 West
          ----------------------
Illinois Avenue, Suite 100,  Midland, Texas 79701 .

1.3  Manager.
     -------

          Haley Properties, Inc., a Texas corporation whose address is P.O. Box
11227, Midland, Texas 79702.

1.4  Building.
     --------

          The Building (including the Leased Premises) known as the Pure
Resources Building, 500 West Illinois Avenue, Midland, Texas 79701, located on
the tract of land (the "Land") described on Exhibit "A" hereto, together with
                        ----                -----------
all other buildings, structures, fixtures and other improvements located thereon
from time to time. The Building and the Land are collectively referred to herein
as the "Property".
        ---------

1.5  Leased Premises.
     ---------------

          Approximately 116,791 square feet of Net Rentable Area in the Building
as fully diagrammed on the floor plans of such premises attached hereto and
made a part hereof as Exhibit "B", on the floor(s) indicated thereon, together
                      -----------
with a common area percentage factor determined by Lessor, (the "Leased
Premises").  Said demised space represents approximately 64.149379% of the Total
                                                         ----------
Net Rentable Area, such Total Net Rentable Area of the Building being
approximately 182,061 square feet.

1.6  Lease Term.
     ----------

          Ten (10) years and Zero (0) months, beginning on the Commencement
                             --------
Date.

1.7  Commencement Date.
     -----------------

          If improvements are to be erected upon the Leased Premises pursuant to
a separate Leasehold Improvements Agreement between Lessor and Lessee, as
described in Section 6.1, and the "Commencement Date" shall be the earlier of
the date Lessee begins operating its business in the Leased Premises or the
scheduled "Commencement Date" as stated herein; and if no improvements are to be
erected upon the Leased Premises pursuant to a Leasehold Improvements Agreement,
the Commencement Date shall be the earlier of the date Lessee begins operating
its business in the Leased Premises or July 5 , 2000 (the "Commencement Date").
The Commencement Date shall constitute the commencement of the term of this
Lease for all purposes, whether or not Lessee has actually taken possession. If
this Lease is executed before the Leased Premises become vacant or otherwise
available and ready for occupancy by Lessee, or if any present occupant of the
Leased Premises holds over and Lessor cannot acquire possession of the Leased
Premises before the Commencement Date, then (a) Lessee's obligation to pay rent
hereunder shall be waived until Lessor tenders possession of the Leased Premises
to Lessee, (b) the term shall be extended by the time between the scheduled
Commencement Date and the date on which Lessor tenders possession of the Leased
Premises to Lessee (which date will then be defined as the Commencement Date),
(c) Lessor shall not be in default hereunder or be liable for damages therefore,
and (d) Lessee shall accept possession of the Leased Premises when Lessor
tenders possession thereof to Lessee.

1.8  Base Rent.
     ---------

          During the term of this Lease, Lessee hereby agrees to pay a Base
Rental (herein called "Base Rental") in the amount set out in Exhibit "C", which
                -----------                                     ---
Exhibit is executed by Lessor and Lessee contemporaneously herewith and
incorporated herein by reference for all purposes.

1.9  Security Deposit.
     ----------------

                                       1
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          Security Deposit is $ -0-.
                                ---

1.10  Permitted Use.
      -------------

          The Leased Premises are to be used and occupied by Lessee solely for
the purposes of office space and a health and shower facility and for no other
purpose without Lessor's expressed written consent.


1.11  Common Areas.
      ------------

          Such parking areas, streets, driveways, aisles, sidewalks, curbs,
delivery passages, loading areas, lighting facilities, designated elevators,
public corridors, stairwells, lobbies, restrooms, and all other areas situated
on or in the Property which are designated by Lessor from time to time, for use
by all tenants of the Property in common.

1.12  Guarantor.
      ---------

          The guarantor of Lessee's obligations under this Lease pursuant to a
Guaranty of Lease, if any, executed for the benefit of Lessor.  Said Guarantor
is, as of the date of execution hereof: N/A.
                                        ---

1.13  Operating Expense Base.
      ----------------------

          $4.10 per Square Foot of Net Rentable Area.
          -------------------------------------------

1.14  Parking.
      -------

          Lessor agrees to provide parking in the attached parking garage for up
to 224 parking spaces, including Thirty (30) reserved spaces, Eleven (11) of
                                 -----------                  -----------
which shall be designated "Pool Spaces", at the rate of $-0- per space per
                                                         ---
month.


               ARTICLE 2. - GRANTING CLAUSE AND RENT PROVISIONS

2.1  Grant of Premises.
     -----------------

          In consideration of the obligation of Lessee to pay the rent and other
charges as provided in this Lease, and in consideration of the other terms and
provisions of this Lease, Lessor hereby leases the Leased Premises to Lessee
during the Lease Term, subject to the terms and provisions of this Lease.


2.2  Base Rent.
     ---------

          Lessee agrees to pay monthly as base rent during the term of this
Lease the sum of money set forth in Section 1.8 of this Lease, which amount
shall be payable to Lessor at the address shown in Section 1.1 above or at such
address that Lessor in writing shall notify Lessee. One (1) monthly installment
of rent shall be due and payable on the date of execution of this Lease by
Lessee for the first month's rent and a like monthly installment shall be due
and payable on or before the first day of each calendar month succeeding the
Commencement Date during the term of this Lease, without demand offset or
reduction; provided, if the Commencement Date should be a date other than the
first day of a calendar month, the monthly rental set forth above shall be
prorated to the end of that calendar month, and all succeeding installments of
rent shall be payable on or before the first day of each succeeding calendar
month during the term of this Lease. Unless otherwise specified, Lessee shall
pay as additional rent all other sums due under this Lease at the same time and
in the same manner as the base rent due hereunder. No payment by Lessee or
receipt by Lessor of a lesser amount than the monthly installment of rents
herein stipulated shall be deemed to be other than a payment on account of the
earliest stipulated rent and/or additional rent; nor shall any endorsement of
payment on any check or any letter accompanying any check or payment as rent be
deemed an accord or satisfaction and Lessor may accept such check for payment
without prejudice to Lessor's right to recover the balance of such rent and/or
additional rent or to pursue any other remedy provided in this Lease and/or
under applicable law.


2.3  Operating Expenses.
     ------------------

          If Lessor's Operating Expenses per net rentable square foot for the
Property, in any calendar year during the term of this Lease exceeds the
Operating Expense Base, Lessee agrees to pay as additional rent Lessee's share
of such excess operating expenses.  As used herein, the term "Lessee's share of
                                                              -----------------
such excess Operating Expenses" means the amount by which Lessor's Operating
------------------------------
Expenses per net rentable square foot exceed the Operating Expense Base,
multiplied by the net rentable square feet comprising the Leased Premises.
Lessor may invoice Lessee monthly for Lessee's share of the estimated operating
expenses for each calendar year, which amount shall be adjusted each year based
upon anticipated operating expenses.  Within one-hundred twenty (120) days
following the close of each calendar year, Lessor shall provide Lessee an
accounting showing in reasonable detail all computations of additional rent due
under this section.  Failure of Lessor to give Lessee said notice within said
time period shall not be a waiver of Lessor's right to collect said additional
rent.  If the accounting shows that the total of the monthly payments made by
Lessee exceeds the amount of the additional rent due by Lessee under this
section, the accounting shall be accompanied by a refund.  If the accounting
shows that the total of the monthly payments made by Lessee is less than the
amount of additional rent due by Lessee under this section, the accounting shall
be accompanied by an invoice for the additional rent.  Notwithstanding any other
provisions in this Lease, during the year in which the Lease terminates, Lessor
within  six (6) months following the termination date, shall have the option to
invoice Lessee for Lessee's share of the excess operating expenses based upon
the previous year's operating expenses.  If this Lease shall terminate on a day
other than the last day of a calendar year, the amount of any additional rent
payable by Lessee applicable to

                                       2
<PAGE>

the year in which such termination shall occur shall be prorated on the ratio
that the number of days from the commencement of the calendar year to and
including the termination date bears to 365. Lessee shall have the right at its
own expense and within a reasonable time, to audit during Lessor's regular
business hours Lessor's books relevant to the additional rent payable under this
Section. Notwithstanding anything to the contrary contained in this Lease, if
the Building is not occupied to the extent of ninety-five percent (95%) of the
rentable area thereof, during any calendar year, Lessee's additional rent under
this Section and the operating expenses shall be determined as if the Building
had been occupied to the extent of ninety-five (95%) of the rentable area during
such year. Lessee agrees to pay any additional rent due under this Section
within thirty (30) days following receipt of the invoice or accounting showing
additional rent due.

2.4  Definition of Operating Expenses.
     --------------------------------

          The term "Operating Expenses" includes all expenses incurred by
               ------------------
Lessor with respect to the maintenance, servicing, repairing and operation of
the Property, including, but not limited to the following: maintenance, repair
and replacement costs (other than major or substantive repair, replacement and
general maintenance of the roof, foundation and exterior walls of the Building);
electricity, fuel, water, sewer, gas and other utility charges; security, window
washing and janitorial services; trash and snow and ice removal; landscaping and
pest control; management fees payable to Lessor or third parties; wages and
salaries of all employees employed by Manager or Lessor, engaged in the
operation, repair, replacement, maintenance, and security of the Building,
including taxes, insurance, and benefits relating thereto; all services,
supplies, repairs, replacement or other expenses for maintaining and operating
the Property including parking and common areas; the cost including interest,
amortized over a reasonable period, of any capital improvement made to the
Property by Lessor after the date of this Lease which is required under any
governmental law or regulation that was not applicable to the Property at the
time it was constructed; the cost, including interest, amortized over a
reasonable period, of installation of any device or other equipment which
improves the operating efficiency of any system applicable to the Leased
Premises or the Property and thereby reduces operating expenses; all other
expenses which generally would be regarded as operating and maintenance expenses
which would be reasonably amortized over a period not to exceed five (5) years;
all real property taxes and installments of special assessments, including dues
and assessments by means of deed restrictions and/or owner's associations which
accrue against the Property during the term of this Lease; governmental levies
or charges of any kind or nature assessed or imposed on the Property, whether by
state, county, city or any political subdivision thereof; and all insurance
premiums Lessor is required to pay or deems necessary to pay including public
liability insurance, with respect to the Property. The term operating expenses
does not include the following: expenses for repairs, restoration or other work
occasioned by fire, wind, the elements or other casualty to the extent they are
covered by insurance proceeds; income and franchise taxes of Lessor; expenses
incurred in leasing to or procuring of tenants, leasing commissions, advertising
expenses and expenses for the renovating of space for new tenants; interest or
principal payments on any mortgage or other indebtedness of Lessor; compensation
paid to any employee of Lessor above the grade of property manager; any
depreciation allowance or expense; operating expenses which are the
responsibility of Lessee; or that portion of after hours charges specifically
attributable to increased utility costs as calculated by Lessor.

          For the term of this Lease, Operating Expenses may not be increased by
Lessor by more than the proportion of increase in the Consumer Price Index for
Urban Wage Earners (("CPI-U") maintained by the United States Department of
Labor, with a base month of December, 2000 for Operating Expenses within
Lessor's control. That portion of the Excess Operating Expenses made up of
Operating Expenses that are not within Lessor's control, i.e., Noncontrollable
Expenses [increases in real property and ad valorem taxes, insurance, utilities
(including water, sewer, electricity, natural gas fuel and trash hauling], third
party contractors such as janitorial and mechanical, and government levies or
charges of any kind or nature assessed or imposed on the property and directly
paid by Lessor, whether by state, county, city or any political subdivision
thereof, shall not be limited to the increase in the CPI as set forth above, and
Lessee shall pay its full share of any Excess Operating Expenses for
Noncontrollable Expenses.

2.5  Late Payment Charge.
     -------------------

          Other remedies for nonpayment of rent notwithstanding, if any monthly
rental payment is not received by Lessor on or before the fifth (5th) day of the
month for which the rent is due, or if any other payment hereunder due Lessor by
Lessee is not received by Lessor on or before the fifth (5th) day of the month
next following the month in which Lessee was invoiced, a late payment charge of
ten percent (10%) of such past due amount shall become due and payable in
addition to such amounts owed under this Lease.  Alternatively, at Lessor's
election, all payments required of Lessee hereunder shall bear interest from the
date due until paid at the maximum lawful rate. In no event, however, shall the
charges permitted under this Section 2.5 or elsewhere in this Lease, to the
extent the same are considered to be interest under applicable law, exceed the
maximum lawful rate of interest.

2.6  Increase In Insurance Premiums.
     ------------------------------

          If an increase in any insurance premiums paid by Lessor for the
Property is caused by Lessee's use of the Leased Premises or if Lessee vacates
the Leased Premises and causes an increase in such premiums, then Lessee shall
pay as additional rent the amount of such increase to Lessor and acceptance of
such payment shall not constitute waiver of any of Lessor's other rights. Lessee
agrees to pay any amount due under this Section within ten (10) days following
receipt of the invoice showing the additional rent due.

2.7  Deleted.
     -------

2.8  Holding Over.
     ------------

          If Lessee does not vacate the Leased Premises upon the expiration or
earlier termination of this Lease, Lessee shall be a tenant at will for the
holdover period and all of the terms and provisions of this Lease shall be
applicable during that period, except that Lessee shall pay Lessor (in addition
to additional rent payable under Section 2.3 and any other sums payable under
this Lease) as base rental for the period of such holdover an amount equal to
two times the base rent which would have been payable by Lessee had the holdover
period been a part of the original term of this Lease (without waiver of

                                       3
<PAGE>

Lessor's right to recover damages as permitted by law). Upon the expiration or
earlier termination of this Lease, Lessee agrees to vacate and deliver the
Leased Premises, and all keys thereto, to Lessor upon delivery to Lessee of
notice from Lessor to vacate.  The rental payable during the holdover period
shall be payable to Lessor on demand.  No holding over by Lessee, whether with
or without the consent of Lessor, shall operate to extend the term of this
Lease.  Lessee shall indemnify Lessor against all claims made by any tenant or
prospective tenant against Lessor resulting from delay by Lessor in delivering
possession of the Leased Premises to such other tenant or prospective tenant.

2.9  Parking.
     -------

          The parking spaces set forth in Section 1.14 shall be for Lessee
and/or Lessee's employees and Lessor shall have the right to assign parking
space as conditions permit. However, Lessor shall not be required to police the
use of these spaces. Lessor may make, modify and enforce rules and regulations
relating to the parking of automobiles in the parking area(s), and Lessee shall
abide thereby. Lessor shall not be liable to Lessee or Lessee's agents,
servants, employees, customers, or invitees for damage to person or property
caused by any act omission or neglect of Lessee, and Lessee agrees to hold
Lessor harmless from all claims for any such damage.

                  ARTICLE 3. - OCCUPANCY, USE AND OPERATIONS
3.1  Use.
     ---

          Lessee warrants and represents to Lessor that the Leased Premises
shall be used and occupied only for the purpose as set forth in Section 1.10.
Lessee shall occupy the Leased Premises, conduct its business and control its
agents, employees, invitees, licensees and visitors in such a manner as is
lawful, reputable and will not create a nuisance to other tenants in the
Property. Lessee shall not solicit business, distribute handbills or display
merchandise within the Common Areas, or take any action which would interfere
with the rights of other persons to use the Common Areas. Lessee shall not
permit any operation which emits any odor or matter which intrudes into other
portions of the Property, use any apparatus or machine which makes undue noise
or causes vibration in any portion of the Property or otherwise interfere with,
annoy or disturb any other tenant in its normal business operations or Lessor in
its management of the Property. Lessee shall neither permit any waste on the
Leased Premises nor allow the Leased Premises to be used in any way which would,
in the opinion of Lessor, be extra hazardous on account of fire or which would
in any way increase or render void the fire insurance on the Property, or permit
the storage of any hazardous materials or substances.

3.2  Signs.
     -----

          No signs of any type or description shall be erected, placed or
painted in or about the Leased Premises except those signs submitted to Lessor
in writing and approved by Lessor in writing, and which signs are in conformity
with Lessor's sign criteria established for the Property. Lessor reserves the
right to remove, at Lessee's expense, all signs other than signs approved in
writing by Lessor under this Section 3.2 without notice to Lessee and without
liability to Lessee for any damages sustained by Lessee as a result thereof.

3.3  Compliance with Laws, Rules and Regulations.
     -------------------------------------------

          Lessee, at Lessee's sole cost and expense, shall comply with all laws,
ordinances, orders rules and regulations of state, federal, municipal or other
agencies or bodies having jurisdiction over the use, condition or occupancy of
the Leased Premises.  Lessee shall procure at its own expense all permits and
licenses required for the transaction of its business in the Leased Premises.
Lessee will comply with the rules and regulations of the Property adopted by
Lessor which are set forth on a schedule attached to this Lease.  If Lessee is
not complying with such rules and regulations, or if Lessee is in any way not
complying with this Article 3, then notwithstanding anything to the contrary
contained herein, Lessor, may, at its election, enter the Leased Premises
without liability therefor and fulfill Lessee's obligations.  Lessee shall
reimburse Lessor on demand for any expenses which Lessor may incur in effecting
compliance with Lessee's obligations and agrees that Lessor shall not be liable
for any damages resulting to Lessee from such action. Lessor shall have the
right at all times to change and amend the rules and regulations in any
reasonable manner as it may deem advisable for the safety, care, cleanliness,
preservation of good order and operation or use of the Property or the Leased
Premises. All changes and amendments to the rules and regulations of the
Property will be forwarded by Lessor to Lessee in writing and shall thereafter
be carried out and observed by Lessee.

3.4  Compliance with Americans with Disabilities Act and Texas Architectural
     -----------------------------------------------------------------------
Barrier Act.
-----------

          Lessee represents and covenants that it shall conduct its occupancy
and use of the Leased Premises in accordance with the requirements of the
Americans with Disabilities Act of 1990, 42 U.S.C., Subsection 12101 et seq.
(including, but not limited to, modifying its policies, practices and
procedures, and providing auxiliary aids and services to disabled persons) and
the Texas Architectural Barriers Act (Tex. Rev. Civ. Stat. Art. 9102),
(collectively, the ADA). If the Lease provides that the Lessee is to complete
certain alterations and improvements to the Leased Premises in conjunction with
the Lessee taking occupancy of the Leased Premises, Lessee agrees that such work
shall comply with the ADA and, on request of the Lessor, Lessee shall provide
                      ---
Lessor with evidence reasonably satisfactory to Lessor that such work was
performed in compliance with the ADA. Furthermore, Lessee covenants and agrees
that any and all future alterations or improvements made by Lessee to the Leased
Premises shall comply with the ADA. To the extent any alterations to the Leased
Premises are required by the

                                       4
<PAGE>

ADA or other applicable laws or regulations, Lessee shall bear the expense of
the alterations. To the extent any alterations to areas of the Building or the
Land outside of the Leased Premises are required to be altered under the ADA or
applicable laws and regulations, Lessor shall bear the expense of such
alterations.

3.5 Compliance with all Environmental Laws, Regulations, Policies, Orders, etc.
    ---------------------------------------------------------------------------

          Lessee agrees that it will comply fully and promptly with any and all
environmental laws, regulations, statutes, ordinances, policies and orders
issued by any federal, state, county or local governmental authority; that it
will obtain, maintain in full force and effect, and strictly comply with any and
all governmental permits, approvals and authorizations necessary for the conduct
of its business operations; that it will supply Lessor with copies of any such
permits, approvals and authorizations; that it will promptly notify Lessor of
the expiration or revocation of any such permits, approvals and authorizations;
and that it will promptly notify Lessor and supply Lessor with a copy of any
notice of violation of any environmental law, regulation, statute, ordinance,
policy or order Lessee receives.

3.6  Quiet Enjoyment.
     ---------------

          Provided Lessee has performed all of the terms and conditions of this
Lease to be performed by Lessee, Lessee shall peaceably and quietly hold and
enjoy the Leased Premises for the term, without hindrance from Lessor or any
party claiming by, through, or under Lessor, subject to the terms and conditions
of this Lease and subject to all mortgages, deeds of trust, leases and
agreements to which this Lease is subordinate and to all laws, ordinances,
orders, rules and regulations of any governmental authority. Lessor shall not be
responsible for the acts or omissions of any other lessee or third party that
may interfere with Lessee's use and enjoyment of the Leased Premises.

3.7  Acceptance of Premises.
     ----------------------

          By occupying the Leased Premises, Lessee shall be deemed to have
accepted the Leased Premises in their condition as of the date of such
occupancy. Lessee shall execute and deliver to Lessor, within ten (10) days
after Lessor has requested same, a letter confirming (i) the Commencement Date,
(ii) that Lessee has accepted the Leased Premises, and (iii) that Lessor has
performed all of its obligations with respect to the Leased Premises (except for
items specified in such letter) if applicable.

3.8  Inspection.
     ----------

          Lessor or its authorized agents shall at any and all reasonable times
have the right to enter the Leased Premises to inspect the same, to supply
janitorial service or any other service to be provided by Lessor, to show the
Leased Premises to prospective mortgagees, purchasers or prospective tenants,
and to alter, improve or repair the Leased Premises or any other portion of the
Property. Lessee hereby waives any claim for abatement or reduction of rent or
for any damages for injury or inconvenience to or interference with Lessee's
business, for any loss of occupancy or use of the Leased Premises, and for any
other loss occasioned thereby. Lessor shall at all times have and retain a key
with which to unlock all of the doors in, upon and about the Leased Premises.
Lessee shall not change Lessor's lock system or in any other manner prohibit
Lessor from entering the Leased Premises. Lessor shall have the right at all
times to enter the Leased Premises by any means in the event of an emergency
without liability therefor.

3.9  Security.
     --------

          Lessor may, at its option, provide a security service or electronic
security devices to supervise access to the Building during the weekends and
after normal working hours during the week; provided, however, Lessor shall have
no responsibility to prevent, and shall be indemnified by Lessee against
liability to Lessee, its agents, employees, licensees  and invitees for losses
due to theft or burglary, or damages done by persons gaining access to the
Leased Premises or the Building and the parking areas.

3.10 Personal Property Taxes.
     -----------------------

          Lessee shall be liable for all taxes levied against leasehold
improvements, merchandise, personal property, trade fixtures and all other
taxable personal property belonging to Lessee and located in the Leased
Premises. If any such taxes for which Lessee is liable are levied against Lessor
or Lessor's property and if Lessor elects to pay the same or if the assessed
value of Lessor's property is increased by inclusion of personal property and
trade fixtures placed by Lessee in the Leased Premises and Lessor elects to pay
the taxes based on such increase, Lessee shall pay to Lessor, upon demand, that
part of such taxes for which the Lessee is primarily liable pursuant to the
terms of this Section. Lessee shall pay when due any and all taxes related to
Lessee's use and operation of its business in the Leased Premises.

                      ARTICLE 4. - UTILITIES AND SERVICE

4.1  Building Services.
     -----------------

          Lessor shall provide water and electricity for Lessee during the term
of this Lease. Lessee shall pay all telephone charges. Lessor shall furnish
Lessee water at those points of supply provided for general use by other tenants
in the Building, and central heating and air conditioning in season on business
days during regular hours as are considered normal in Midland,

                                       5
<PAGE>

Texas (7:00 a.m. to 6:00 p.m., Monday through Friday, 8:00 a.m. to 2:00 p.m.
Saturday except for legal holidays) and at temperatures and in amounts as are
considered by Lessor to be standard or in compliance with any governmental
regulations, such service at times other than regular hours to be furnished upon
request with not less than twenty-four (24) hours advance notice from Lessee,
who shall bear the entire cost thereof (which cost shall include but not be
limited to an amount that will fairly compensate Lessor for additional services,
depreciation and replacement of capital items and any other costs attributable
thereto) at the rate not to exceed $25.00 per hour. Lessor shall also provide
routine maintenance, painting and electric lighting service for all public areas
and special service areas of the Property in the manner and to the extent deemed
by Lessor to be standard. Lessor may, in its sole discretion, provide additional
services not enumerated herein. Failure by Lessor to any extent to provide these
defined services or any other services not enumerated, or any cessation thereof,
shall not render Lessor liable in any respect for damages to either person or
property, be construed as an eviction of Lessee, work an abatement of rent or
relieve Lessee from fulfillment of any covenant in this Lease. If any of the
equipment or machinery useful or necessary for provision of utility services,
and for which Lessor is responsible, breaks down, or for any cause ceases to
function properly, Lessor shall use reasonable diligence to repair the same
promptly, but Lessee shall have no claim for rebate of rent or damages on
account of any interruption in service occasioned from the repairs. Lessor
reserves the right from time to time to make changes in the utilities and
services provided by Lessor to the Property.

4.2  Utility Deregulation.
     --------------------

          a.  Selection.  Lessor has advised Lessee that TXU Electric ("Electric
              ---------
Service Provider") is the utility company currently selected by Lessor to
provide electricity service for the Building.  Notwithstanding the foregoing,
Lessor shall have the right at any time and from time to time during the Lease
Term to either contract for service from a different company or companies
providing electricity service (each such company hereinafter referred to as an
"Alternative Service Provider") or continue to contract from the Electric
Service Provider.

          b.  Lessor's Access.  Lessee shall cooperate with Lessor, the Electric
              ---------------
Service Provider and any Alternative Service Provider at all times and, as
reasonably necessary, shall allow Lessor, Electric Service Provider and any
Alternative Service Provider reasonable access to the electric lines, feeders,
risers, wiring and any other machinery or equipment within the Leased Premises.

          c.  Service Interruption.  Lessor shall in no way be liable or
              --------------------
responsible for any loss, damage or expense that Lessee may sustain or incur by
reason of any change, failure, interference, disruption or defect in the supply
or character of the electric energy furnished to the Leased Premises, or if the
quantity or character of the electric energy supplied by the Electric Service
Provider or any Alternative Service Provider is no longer available or suitable
for Lessee's requirements, and no such change, failure, defect, unavailability
or unsuitability shall constitute an actual or constructive eviction, in whole
or in part, or entitle Lessee to any abatement or diminution of rent, or relieve
Lessee from any of its obligations under this Lease.

4.3  Deleted.
     -------

4.4  Janitorial Service.
     ------------------

          Lessor shall furnish janitorial services to the Leased Premises and
public areas of the Building five (5) times per week during the term of this
Lease, excluding holidays. Lessor shall not provide janitorial service to
storage areas included in the Leased Premises.

4.5  Excessive Utility Consumption.
     -----------------------------

          Lessee shall pay all utility costs occasioned by electronic data
processing equipment telephone equipment, special lighting and other equipment
of high electrical consumption as determined by Lessor, whose electrical
consumption exceeds normal office usage including (without limitation) the cost
of installing, servicing and maintaining any special or additional inside or
outside wiring or lines, meters or submeters, transformers, poles, air
conditioning costs, or the cost of any other equipment necessary to increase the
amount or type of electricity or power available to the Leased Premises.

4.6  Window Coverings.
     ----------------

          Lessor may (but shall not be obligated to) furnish and install window
coverings on all exterior windows to maintain a uniform exterior appearance.
Lessee shall not remove or replace these window coverings or install any other
window covering which would affect the exterior appearance of the Building.
Lessee may install lined or unlined draperies on the interior sides of the
Lessor furnished window coverings for interior appearance or to reduce light
transmission, provided such over draperies do not (in Lessor's determination)
affect the exterior appearance of the Building or affect the operation of the
Building's heating, ventilating and air conditioning systems.

4.7  Restoration of Services; Abatement.
     ----------------------------------

          Lessor shall use reasonable efforts to restore any service that
becomes unavailable; however, such unavailability shall not render Lessor liable
for any damages caused thereby, be a constructive eviction of Lessee, constitute
a breach of any implied warranty, or, except as provided in the next sentence,
entitle Lessee to any abatement of Lessee's obligations hereunder. However, if
Lessee is prevented from making reasonable use of the Leased Premises for more
than thirty (30) consecutive days because of the unavailability of any such
service, Lessee shall, as its exclusive remedy therefor, be entitled to a
reasonable abatement of rent for each consecutive day (after such thirty (30)
day period) that Lessee is so prevented from making reasonable use of the Leased
Premises.

4.8  Deleted.
     -------

                                       6
<PAGE>

                     ARTICLE 5. - REPAIRS AND MAINTENANCE

5.1  Lessor Repairs.
     --------------

          Unless otherwise expressly stipulated herein, Lessor shall not be
required to make any improvements to or repairs of any kind or character on the
Leased Premises during the term of this Lease, except such repairs as may be for
normal maintenance of the Common Areas which shall include the painting of and
repairs to walls, floors, corridors, windows, and other structures and equipment
within the Common Areas only, and such additional maintenance of the Common
Areas as may be necessary because of damages by persons other than Lessee, its
agents, employees, invitees, licensees or visitors. Lessor shall have no
obligation to maintain or repair the Leased Premises except as set forth herein.
Lessee will promptly give Lessor notice of any damage in the Leased Premises
requiring repairs by Lessor. If the Building or the equipment used to provide
the services referred to in Section 4.1 are damaged by acts or omissions of
Lessee, its agents, customers, employees, licensees or invitees, then Lessee
will bear the cost of such repairs. Lessor shall not be liable to Lessee, except
as expressly provided in this Lease, for any damage or inconvenience, and Lessee
shall not be entitled to any damages nor to any abatement or reduction of rent
by reason of any repairs, alterations or additions made by Lessor under this
Lease. Lessor's cost of maintaining and repairing the items set forth in this
section are subject to the operating expense provisions in Section 2.3. All
requests for repairs or maintenance that are the responsibility of Lessor
pursuant to any provision of this Lease must be made in writing to Lessor and
Manager at the addresses in Section 1.1 and Section 1.3.

5.2  Lessee Repairs and Damages.
     --------------------------

          Lessee, at its own cost and expense, shall maintain the Leased
Premises in a first-class condition, ordinary wear and tear excepted, (except
for those items that are the responsibility of Lessor under Section 5.1) and
shall repair or replace any damage or injury to all or any part of the Leased
Premises and/or the Property, caused by any act or omission of Lessee or
Lessee's agents, employees, invitees, licensees or visitors. Lessee shall not
allow any damage to be committed on any portion of the Leased Premises or
Property, and at the termination of this Lease, by lapse of time or otherwise,
Lessee shall deliver the Leased Premises to Lessor in as good a condition as
existed at the Commencement Date of this Lease, ordinary wear and tear excepted.
The cost and expense of any repairs necessary to restore the condition of the
Leased Premises shall be borne by Lessee.

                   ARTICLE 6. - ALTERATIONS AND IMPROVEMENTS

6.1  Construction.
     ------------

          If any construction of tenant improvements is necessary for the
initial occupancy of the Leased Premises, such construction shall be
accomplished and the cost of such construction shall be borne by Lessor and/or
Lessee in accordance with a separate "Leasehold Improvements Agreement" (herein
                                      --------------------------------
so called and made a part hereof as Exhibit "D") between Lessor and Lessee.
                                    ----------
Except as expressly provided in this Lease or in the Leasehold Improvements
Agreement (if any), Lessee acknowledges and agrees that Lessor has not
undertaken to perform any modification, alteration or improvements to the Leased
Premises, and Lessee further waives any defects in the Leased Premises (except
in accordance with Section 6.2 below) and acknowledges and accepts (1) the
Leased Premises as suitable for the purpose for which they are leased and (2)
the Property and every part and appurtenance thereof as being in good and
satisfactory condition. Upon the request of Lessor, Lessee shall deliver to
Lessor a completed acceptance of premises memorandum in Lessor's standard form.

6.2  Lessee Improvements.
     -------------------

          Lessee shall not make or allow to be made any alterations, physical
additions or improvements in or to the Leased Premises without first obtaining
the written consent of Lessor, which consent may be denied in the sole and
absolute discretion of Lessor.  Any alterations, physical additions or
improvements to the Leased Premises made by or installed by either party hereto
shall remain upon and be surrendered with the Leased Premises and become the
property of Lessor upon the expiration or earlier termination of this Lease
without credit to Lessee; provided, however, Lessor, at its option, may require
Lessee to remove any physical improvements or additions and/or repair any
alterations in order to restore the Leased Premises to the condition existing at
the time Lessee took possession, all costs of removal and/or alterations to be
borne by Lessee.  This clause shall not apply to moveable equipment, furniture
or moveable trade fixtures owned by Lessee, which may be removed by Lessee at
the end of the term of this Lease if Lessee is not then in default and if such
equipment and furniture are not then subject to any other rights, liens and
interests of Lessor.  Lessee shall have no authority or power, express or
implied, to create or cause any mechanic's or materialmen's lien, charge or
encumbrance of any kind against the Leased Premises, the Property or any portion
thereof.  Lessee shall promptly cause any such liens that have arisen by reason
of any work claimed to have been undertaken by or through Lessee to be released
by payment, bonding or otherwise within thirty (30) days after request by
Lessor, and shall indemnify Lessor against losses arising out of any such claim
(including, without limitation, legal fees and court costs).  If Lessee fails to
timely take either such action, then Lessor may pay the lien claim without
inquiry as to the validity thereof, and any amounts so paid, including expenses
and interest, shall be paid by Lessee to Lessor within ten (10) days after
Lessor has delivered to Lessee an invoice therefor.  Lessor approved alterations
and modifications shall be deemed to be included as original condition unless
otherwise stated in Lessor's written consent.

6.3  Common and Service Area Alterations.
     -----------------------------------

          Lessor shall have the right to decorate and to make repairs,
alterations, additions, changes or improvements, whether structural or
otherwise, in, about or on the Property or any part thereof, and to change,
alter, relocate, remove or replace service areas and/or Common Areas, to place,
inspect, repair and replace in the Leased Premises (below floors, above ceilings
or next to columns) utility lines, pipes and the like to serve other areas of
the Property outside the Leased Premises and to otherwise alter or modify the
Property, and for such purposes to enter upon the Leased Premises and, during
the continuance of any such work, to take such measures for safety or for the
expediting of such work as may be required, in Lessor's judgment, all without
affecting any of Lessee's obligations hereunder.

                                       7
<PAGE>

           ARTICLE 7. - CASUALTY; WAIVERS; SUBROGATION AND INDEMNITY

7.1  Repair Estimate.
     ---------------

          If the Leased Premises or the Building are damaged by fire or other
casualty (a "Casualty"), Lessor shall, within sixty (60) days after such
             --------
Casualty, deliver to Lessee a good faith estimate (the "Damage Notice") of the
                                                        -------------
time needed to repair the damage caused by such Casualty.


7.2  Lessor's and Lessee's Rights.
     ----------------------------

          If a material portion of the Leased Premises or the Building is
damaged by Casualty such that Lessee is prevented from conducting its business
in the Leased Premises in a manner reasonably comparable to that conducted
immediately before such Casualty and Lessor estimates that the damage caused
thereby cannot be repaired within 180 days after the commencement of repair,
then Lessor may, at its expense, relocate Lessee to office space reasonably
comparable to the Leased Premises, provided that Lessor notifies Lessee of its
intention to do so in the Damage Notice. Such relocation may be for a portion of
the remaining term or the entire term. Lessor shall complete any such relocation
within ninety (90) days after Lessor has delivered the Damage Notice to Lessee.
If such relocation is not for the remaining term, Lessor agrees to pay for
Lessee's relocation back to the Leased Premises. If Lessor does not elect to
relocate Lessee following such Casualty, then Lessee may terminate this Lease by
delivering written notice to Lessor of its election to terminate within thirty
(30) days after the Damage Notice has been delivered to Lessee. If Lessor does
not relocate Lessee and Lessee does not terminate this Lease, then (subject to
Lessor's rights under Section 7.3) Lessor shall repair the Building or the
Leased Premises, as the case may be, as provided below, and Basic Rental for the
portion of the Leased Premises rendered untenantable by the damage shall be
abated on a reasonable basis from the date of damage until the completion of the
repair, unless Lessee caused such damage, in which case, Lessee shall continue
to pay rent without abatement.

7.3  Lessor's Rights.
     ---------------

          If a Casualty damages a material portion of the Building, and Lessor
makes a good faith determination that restoring the Leased Premises would be
uneconomical, or if Lessor is required to pay any insurance proceeds arising out
of the Casualty to Lessor's Mortgagee, then Lessor may terminate this Lease by
giving written notice of its election to terminate within thirty (30) days after
the Damage Notice has been delivered to Lessee, and Base Rental, and any
additional rent which may be due pursuant to this Lease, hereunder shall be
abated as of the date of the Casualty.


7.4  Repair Obligation.
     -----------------

          If neither party elects to terminate this Lease following a Casualty,
then Lessor shall, within a reasonable time after such Casualty, commence to
repair the Building and the Leased Premises and shall proceed with reasonable
diligence to restore the Building and Leased Premises to substantially the same
condition as they existed immediately before such Casualty; however, Lessor
shall not be required to repair or replace any part of the furniture, equipment,
fixtures, and other improvements which may have been placed by, or at the
request of, Lessee or other occupants in the Building or the Leased Premises,
and the Lessor's obligation to repair or restore the Building or Leased Premises
shall be limited to the extent of the insurance proceeds actually received by
Lessor for the Casualty in question. However, in the event the Building or
Leased Premises is not repaired to substantially the same condition as existing
prior to the Casualty, then Lessee shall have the right to terminate this Lease.

7.5  Property Insurance.
     ------------------

          Lessor shall at all times during the term of this Lease insure the
Property against all risk of direct physical loss in an amount and with such
deductibles as Lessor considers appropriate; provided, Lessor shall not be
obligated in any way or manner to insure any personal property (including, but
not limited to, any furniture, machinery, goods or supplies) of Lessee upon or
within the Leased Premises, any fixtures installed or paid for by Lessee upon or
within the Leased Premises, or any improvements which Lessee may construct on
the Leased Premises. Lessee shall have no right in or claim to the proceeds of
any policy of insurance maintained by Lessor even if the cost of such insurance
is borne by Lessee as set forth in Article 2. Lessee at all times during the
term of the Lease shall, at its own expense, keep in full force and effect
insurance including self insurance against fire and such other risks as are from
time to time included in standard all-risk insurance (including coverage against
vandalism and malicious mischief) for the full insurable value of Lessee's trade
fixtures, furniture, supplies and all items of personal property of Lessee
located on or within the Leased Premises.

7.6  Waiver; No Subrogation.
     ----------------------

          Lessor shall not be liable to Lessee or those claiming by, through, or
under Lessee or to Lessee's agents, employees, invitees or licensees for any
injury to or death of any person or persons or the damage to or theft,
destruction, loss, or loss of use of any property (a "Loss") caused by casualty,
                                                      ----
theft, fire, third parties, or any other matter beyond the control of Lessor, or
for any injury or damage or inconvenience which may arise through repair or
alteration of any part of the Building, or failure to make repairs, or from any
other cause, except if such Loss is caused by Lessor's gross negligence or
willful misconduct.  Lessor and Lessee each waives any claim it might have
against the other for any damage to or theft, destruction, loss, or loss of use
of any property, to the extent the same is insured against under any insurance
policy that covers the Building, the

                                       8
<PAGE>

Leased Premises, Lessor's or Lessee's fixtures, personal property, leasehold
improvements, or business, or is required to be insured against under the terms
hereof, regardless of whether the negligence or fault of the other party caused
such loss. Each party shall cause its insurance carrier to endorse all
applicable policies waiving the carrier's rights of recovery under subrogation
or otherwise against the other party.

7.7  Deleted.
     -------

7.8  Insurance.
     ---------

          Lessee shall at its expense procure and maintain throughout the term
comprehensive general liability insurance in amounts of not less than $ 500,000,
insuring Lessee and  Lessor and Lessor's agents against all liability for injury
to or death of a person or persons or damage to property arising from the use
and occupancy of the Leased Premises.  Lessee's insurance shall provide primary
coverage to Lessor when any policy issued to Lessor provides duplicate or
similar coverage, and in such circumstance Lessor's policy will be excess over
Lessee's policy.  Lessee shall furnish certificates of such insurance and such
other evidence satisfactory to Lessor of the maintenance of all insurance
coverage required hereunder, and Lessee shall obtain a written obligation on the
part of each insurance company to notify Lessor at least fifteen (15) days
before cancellation or a material change of any such insurance.

7.9 Ad Valorem Taxes.
    ----------------

          Lessee hereby waives any right it may have to contest the appraised
value of the Property or Building as the appraised value may be determined by
any taxing authority.

                           ARTICLE 8. - CONDEMNATION

8.1  Taking - Lessor's and Lessee's   Rights.
     ---------------------------------------

          If any part of the Building is taken by right of eminent domain or
conveyed in lieu thereof (a "Taking"), and such Taking prevents Lessee from
                             ------
conducting its business in the Leased Premises in a manner reasonably comparable
to that conducted immediately before such Taking, then Lessor may, at its
expense, relocate Lessee to office space reasonably comparable to the Leased
Premises, provided that Lessor notifies Lessee of its intention to do so within
thirty (30) days after the Taking. Such relocation may be for a portion of the
remaining term or the entire term. Lessor shall complete any such relocation
within ninety (90) days after Lessor has notified Lessee of its intention to
relocate Lessee. If Lessor does not elect to relocate Lessee following such
Taking, then Lessee may terminate this Lease as of the date of such Taking by
giving written notice to Lessor within sixty (60) days after the Taking, and
rent shall be apportioned as of the date of such Taking. If Lessor does not
relocate Lessee and Lessee does not terminate this Lease, then Base Rental, and
any additional rent which may be due, shall be abated on a reasonable basis as
to that portion of the Leased Premises rendered untenantable by the Taking as of
the date of such Taking.

8.2  Taking - Lessor's Rights.
     ------------------------

          If any material portion, but less than all, of the Building becomes
subject to a Taking, or if Lessor is required to pay any of the proceeds
received for a Taking to Lessor's Mortgagee, then this Lease, at the option of
Lessor, exercised by written notice to Lessee within thirty (30) days after such
Taking, shall terminate and rent shall be apportioned as of the date of such
Taking. If Lessor does not so terminate this Lease and does not elect to
relocate Lessee, then this Lease will continue, but if any portion of the Leased
Premises has been taken, Base Rental shall abate as provided in the last
sentence of Section 8.1.

8.3  Award.
     -----

          If any Taking occurs, then Lessor shall receive the entire award or
other compensation for the Land, the Building, and other improvements taken, and
Lessee may separately pursue a claim against the condemnor for the value of
Lessee's personal property which Lessee is entitled to remove under this Lease,
moving costs, loss of business, and other claims it may have.

         ARTICLE 9. - ASSIGNMENT OR SUBLEASE; SUBORDINATION AND NOTICE

9.1  Sublease; Consent.
     -----------------

          Lessee shall not, without the prior written consent of Lessor (which
shall not be unreasonably withheld), (i) advertise that any portion of the
Leased Premises is available for lease, (ii) assign, sublease, or encumber this
Lease or any estate or interest herein, whether directly or by operation of law,
(iii) permit any other entity to become Lessee hereunder by merger,
consolidation, or other reorganization, (iv) sublet any portion of the Leased
Premises, (v) grant any license, concession, or other right of occupancy of any
portion of the Leased Premises, or (vi) permit the use of the Leased Premises by
any parties other than Lessee (any of the events listed in clauses (ii) through
(vi) being a "Sublease"). If Lessee requests Lessor's consent to a Sublease,
              --------
then Lessee shall provide Lessor with a written description of all terms and
conditions of the proposed Sublease, copies of the proposed documentation, and
the following information about the proposed sublease:  name and address;
reasonably satisfactory information about its business and business history; its
proposed use of the Leased Premises; banking, financial, and other credit
information; and general references sufficient to enable Lessor to determine the
proposed sublessee's credit worthiness and character.  Lessee shall reimburse
Lessor for its attorneys' fees and other expenses incurred

                                       9
<PAGE>

in connection with considering any request for its consent to a Sublease. If
Lessor consents to a proposed Sublease, then the proposed sublessee shall
deliver to Lessor a written agreement whereby it expressly assumes the Lessee's
obligations hereunder; however, any sublessee of less than all of the space in
the Leased Premises shall be liable only for obligations under this Lease that
are properly allocable to the space subject to the Sublease, and only to the
extent of the rent it has agreed to pay Lessee therefor. Lessor's consent to a
Sublease shall not release Lessee from performing its obligations under this
Lease, but rather Lessee and its sublessee shall be jointly and severally liable
therefor. Lessor's consent to any Sublease shall not waive Lessor's rights as to
any subsequent Subleases. If an Event of Default occurs while the Leased
Premises or any part thereof are subject to a Sublease, then Lessor, in addition
to its other remedies, may collect directly from such sublessee all rents
becoming due to Lessee and apply such rents against rent. Lessee authorizes its
sublessees to make payments of rent directly to Lessor upon receipt of notice
from Lessor to do so.

9.2  Deleted.
     -------

9.3  Additional Compensation.
     -----------------------

          Lessee shall pay to Lessor, immediately upon receipt thereof, seventy-
five per cent (75%) of all compensation received by Lessee for a Sublease that
exceeds the Base Rental and any additional rent which may be due allocable to
the portion of the Leased Premises covered thereby.

9.4  Lessor Assignment.
     -----------------

          Lessor shall have the right to sell, transfer or assign, in whole or
in part, its rights and obligations under this Lease and in the Property. Any
such sale, sublease or assignment shall operate to release Lessor from any and
all liabilities under this Lease arising after the date of such sale, assignment
or transfer.

9.5  Rights of Mortgagee.
     -------------------

          Lessee accepts this Lease subject and subordinate to any recorded
lease, mortgage or deed of trust lien presently existing, if any, or hereafter
encumbering the Property and to all existing ordinances and recorded
restrictions, covenants, easements, and agreements with respect to the Property,
Lessor hereby is irrevocably vested with full power and authority to subordinate
Lessee's interest under this Lease to any mortgage or deed of trust lien
hereafter placed on the Property. Upon any foreclosure, judicially or non-
judicially, of any such mortgage, or the sale of the Property in lieu of
foreclosure, or any other transfer of Lessor's interest in the Property, whether
or not in connection with a mortgage, Lessee hereby does, and hereafter agrees
to attorn to the purchaser at such foreclosure sale or to the grantee under any
deed in lieu of foreclosure or to any other transferee of Lessor's interest, and
shall recognize such purchaser, grantee, or other transferee as Lessor under
this Lease, and no further attornment or other agreement shall be required to
effect or evidence Lessee's attornment to and recognition of such purchaser or
grantee as Lessor hereunder. Such agreement of Lessee to attorn shall survive
any such foreclosure sale, trustee's sale, conveyance in lieu thereof, or any
other transfer of Lessor's interest in the Property. Lessee, upon demand, at any
time, before or after any such foreclosure sale, trustee's sale, conveyance in
lieu thereof, or other transfer shall execute, acknowledge, and deliver to the
prospective transferee and/or mortgagee the Lease Subordination, Non-disturbance
and Attornment Agreement and any additional written instruments and certificates
evidencing such attornment all on substantially the same terms as those herein
as the mortgagee or other prospective transferee may reasonably require.
Notwithstanding anything to the contrary implied in this Section, any mortgagee
under any mortgage shall have the right at any time to subordinate any such
mortgage to this Lease on such terms and subject to such conditions as the
mortgagee in its discretion may consider appropriate.

9.6  Mortgagee's Right to Cure.
     -------------------------

          No act or omission by Lessor which would entitle Lessee under the
terms of this Lease or any Laws to be relieved of Lessee's obligations
hereunder, or to terminate this Lease, shall result in a release or termination
of such obligations or this Lease unless: (a) Lessee first shall have given
written notice of Lessor's act or omission to Lessor and all Lessor's Mortgagees
whose names and addresses shall have been or will be furnished by Certified mail
to Lessee; and (b) Lessor's Mortgagees, after receipt of such notice, fail to
correct or cure the act or omission within a reasonable time thereafter (but in
no event less than sixty (60) days). However, nothing contained in this Section
shall impose any obligation on Lessor's Mortgagees to correct or cure any act or
omission.

9.7  Estoppel Certificates.
     ---------------------

          Lessee agrees to furnish, from time to time (but no more frequently
than two (2) times annually), within ten (10) days after receipt of a request
from Lessor's or Lessor's Mortgagee, a statement certifying, if applicable, all
of the following: Lessee is in possession of the Leased Premises; the Lease is
in full force and effect; the Lease is unmodified (except as disclosed in such
statement); Lessee claims no present charge, lien, or claim of offset against
rent; the rent is paid for the current month, but is not prepaid for more than
one (1) month and will not be prepaid for more than one (1) month in advance;
there is no existing default by reason of some act or omission by Lessor; that
Lessor has performed all inducements required of Lessor, in connection with this
Lease, including construction obligations, and Lessee accepts the Leased
Premises as constructed; an acknowledgment of the assignment of rentals and
other sums due hereunder to the mortgage and agreement to be bound thereby; an
agreement requiring Lessee to advise the mortgagee of damage to or destruction
of the Leased Premises by fire or other casualty requiring reconstruction; an
agreement by Lessee to give the mortgagee written notice of Lessor's default
hereunder and to permit mortgagee to cure such default within no less than sixty
(60) days after such notice before exercising any remedy Lessee might possess as
a result of such default. Lessee's failure to deliver such statement, in
addition to being a default under this Lease, shall be deemed to establish
conclusively that this Lease is in full force and effect except as declared by
Lessor, that Lessor is not in default of any of its obligations under this
Lease, and that Lessor has not received more than

                                       10
<PAGE>

one (1) month's rent in advance.

                              ARTICLE 10. - LIENS

10.1  Deleted.
      -------

                      ARTICLE 11. - DEFAULT AND REMEDIES

11.1  Events of Default.
      -----------------

          Each of the following occurrences shall constitute an "Event of
Default" :

          a.   Lessee's failure to pay rent, or any other sums due from Lessee
to Lessor under the Lease (or any other lease executed by Lessee for space in
the Building), when due;

          b.   Lessee's failure to perform, comply with, or observe any other
agreement or obligation of Lessee under this Lease (or any other Lease executed
by Lessee for space in the Building};

          c.   Deleted.

          d.   Deleted.

          e.   Deleted.

          f.   Lessee's death, dissolution or termination of existence.

11.2  Remedies.
      --------

          Upon any Event of Default, Lessor may, in addition to all other rights
and remedies afforded Lessor hereunder or by law or equity, take any of the
following actions:

          a.   Terminate this Lease by giving Lessee written notice thereof, in
which event, Lessee shall pay to Lessor the sum of (i) all rent accrued
hereunder through the date of termination, (ii) all amounts due under Section
11.3., and (iii) an amount equal to (A) the total rent that Lessee would have
been required to pay for the remainder of the term discounted to present value
at a per annum rate equal to ten per cent (10%), minus (B) the then present fair
rental value of the Leased Premises for such period, similarly discounted; or

          b.   Terminate Lessee's right to possession of the Leased Premises
without terminating this Lease by giving written notice thereof to Lessee, in
which event Lessee shall pay to Lessor (i) all rent and other amounts accrued
hereunder to the date of termination of possession, (ii) all amounts due from
time to time under Section 11.3., and (iii) all rent and other sums required
hereunder to be paid by Lessee during the remainder of the term, reduced by any
net sums thereafter received by Lessor through reletting the Leased Premises
during such period. Lessor shall use reasonable efforts to relet the Leased
Premises on such terms and conditions as Lessor in its sole discretion may
determine (including a term different from the term, rental concessions, and
alterations to, and improvement of, the Leased Premises); however, Lessor shall
not be obligated to relet the Leased Premises before leasing other portions of
the Building. Lessor shall not be liable for, nor shall Lessee's obligations
hereunder be diminished because of, Lessor's failure to relet the Leased
Premises or to collect rent due for such reletting. Lessee shall not be entitled
to the excess of any consideration obtained by reletting over the rent due
hereunder. Re-entry by Lessor in the Leased Premises shall not affect Lessee's
obligations hereunder for the unexpired term; rather, Lessor may, from time to
time, bring action against Lessee to collect amounts due by Lessee, without the
necessity of Lessor's waiting until the expiration of the term. Unless Lessor
delivers written notice to Lessee expressly stating that it has elected to
terminate this Lease, all actions taken by Lessor to exclude or dispossess
Lessee of the Leased Premises shall be deemed to be taken under this Section
11.2b. If Lessor elects to proceed under this Section 11.2b., it may at any time
elect to terminate this Lease under Section 11.2a.

          c.   In addition to its rights under 11.2(a) and (b) above, Lessor
may, without notice, alter locks or other security devices at the Leased
Premises to deprive Lessee of access thereto, and Lessor shall not be required
to provide a new key or right of access to Lessee so long as any Event of
Default exists.

11.3  Payment by Lessee.
      -----------------

          Upon any Event of Default, Lessee shall pay to Lessor all costs
incurred by Lessor (including court costs and

                                       11
<PAGE>

reasonable attorneys' fees and expenses) in (i) obtaining possession of the
Leased Premises, (ii) removing and storing Lessee's or any other occupant's
property, (including the cost of altering any locks or security devices), (iii)
the reasonable cost of repairing, restoring, altering, remodeling, or otherwise
putting the Leased Premises into rentable condition, (iv) if Lessee is
dispossessed of the Leased Premises and this Lease is not terminated, reletting
all or any part of the Leased Premises (including brokerage commissions, cost of
tenant finish work to Building Standards, and other costs incidental to such
reletting), (v) performing Lessee's obligations which Lessee failed to perform,
and (vi) enforcing, or advising Lessor of, its rights, remedies, and recourse
arising out of the Event of Default.

11.4 Performance by Lessor.
     ---------------------

          If Lessee defaults under this Lease, Lessor, without waiving or curing
the default, may, but shall not be obligated to, perform Lessee's obligations
for the account and at the expense of Lessee. Notwithstanding Section 11.1b, in
the case of an emergency, Lessor need not give any notice prior to performing
Lessee's obligations. Lessee irrevocably appoints Lessor and Lessor's successor
and assigns, with full power of substitution, as Lessee's attorney-in-fact,
coupled with an interest, to execute, acknowledge and deliver any instruments in
connection with Lessor's performance of Lessee's obligations if Lessee is in
default, and to take all other acts in connection therewith.

11.5 Post-Judgment Interest.
     ----------------------

          The amount of any judgment obtained by Lessor against Lessee in any
legal proceeding arising out of Lessee's default under this Lease shall bear
interest until paid at the maximum rate allowed by law, or, if no maximum rate
prevails, at the rate of eighteen percent (18%) per annum. Notwithstanding
anything to the contrary contained in any laws, with respect to any damages that
are certain or ascertainable by calculation, interest shall accrue from the day
that the right to the damages vests in Lessor, and in the case of any
unliquidated claim, interest shall accrue from the day the claim arose.

                           ARTICLE 12. - RELOCATION

12.1  Deleted.
      -------

12.2   Deleted.
       -------

                           ARTICLE 13. - DEFINITIONS

13.1  Deleted.
      -------

13.2   Act of God or Force Majeure.
       ---------------------------

          An "act of God" or "force majeure" is defined for purposes of this
              ----------      -------------
Lease as including, by way of example, but not limited to strikes, lockouts,
sitdowns, material or labor restrictions by any governmental authority, unusual
transportation delays, riots, floods, washouts, explosions, earthquakes, fire
storms, weather (including wet grounds or inclement weather which prevents
construction), acts of the public enemy, wars, insurrections, and/or any other
cause not reasonably within the control of Lessor or which by the exercise of
due diligence Lessor is unable wholly or in part, to prevent or overcome.

13.3  Deleted.
      -------

                          ARTICLE 14. - MISCELLANEOUS

14.1   Waiver.
       ------

          Failure of Lessor to declare an event of default immediately upon its
occurrence, or delay in taking any action in connection with an event of
default, shall not constitute a waiver of the default, but Lessor shall have the
right to declare the default at any time and take such action as is lawful or
authorized under this Lease.  Pursuit of any one or more of the remedies set
forth in Article 11 above shall not preclude pursuit of any one or more of the
other remedies provided elsewhere in this Lease or provided by law, nor shall
pursuit of any remedy hereunder or at law constitute forfeiture or waiver of any
rent or damages accruing to Lessor by reason of the violation of any of the
terms, provisions or covenants of this Lease.  Failure by Lessor to enforce one
or more of the remedies provided hereunder or at law upon any event of default
shall not be deemed or construed to constitute a waiver of the default or of any
other violation or breach of any of the terms provisions and covenants contained
in this Lease.  Lessor may collect and receive rent due from Lessee without
waiving or affecting any rights or remedies that Lessor may have at law or in
equity or by virtue of this Lease at the time of such payment. Institution of a
forcible detainer action to re-enter the Leased Premises shall not be construed
to be an election by Lessor to terminate this Lease.

14.2  Act of God.
      ----------

                                       12
<PAGE>

          Lessor shall not be required to perform any covenant or obligation in
this Lease, or be liable in damages to Lessee, so long as the performance or
non-performance of the covenant or obligation is delayed, caused or prevented by
an act of God, force majeure or by Lessee.

14.3  Attorney's Fees.
      ---------------

          If either Lessor or Lessee defaults in the performance of any of the
terms, covenants, agreements or conditions contained in this Lease and either
party places in the hands of any attorney the enforcement of all or any part of
this Lease, the collection of any rent or other sums due or to become due or
recovery of the possession of the Leased Premises, the defaulting party agrees
to pay Lessor's costs of collection, including reasonable attorney's fees.

14.4  Successors.
      ----------

          This Lease shall be binding upon and inure to the benefit of Lessor
and Lessee and their respective heirs, personal representatives, successors and
assigns.


14.5  Rent Tax.
      --------

          If applicable in the jurisdiction where the Leased Premises are
situated, Lessee shall pay and be liable for all rental, sales and use taxes or
other similar taxes, if any, levied or imposed by any city, state, county or
other governmental body having authority, such payments to be in addition to all
other payments required to be paid to Lessor by Lessee under the terms of this
Lease. Any such payment shall be paid concurrently with the payment of the rent,
additional rent, operating expenses or other charge upon which the tax is based
as set forth above.

14.6  Interpretation.
      --------------

          The captions appearing in this Lease are for convenience only and in
no way define, limit, construe or describe the scope or intent of any Section.
Grammatical changes required to make the provisions of this Lease apply (1) in
the plural sense where there is more than one tenant and (2) to limited
liability companies, corporations, associations, partnerships or individuals,
males or females, shall in all instances be assumed as though in each case fully
expressed. The laws of the State of Texas shall govern the validity, performance
and enforcement of this Lease. This Lease shall not be construed more or less
favorably with respect to either party as a consequence of the Lease or various
provisions hereof having been drafted by one of the parties hereto.

14.7  Notices.
      -------

          All rent and other payments required to be made by Lessee shall be
payable to Lessor, in care of Manager, at Manager's address set forth on page 1.
All payments required to be made by Lessor to Lessee shall be payable to Lessee
at Lessee's address set forth on page 1. Any notice or document (other than
rent) required or permitted to be delivered by the terms of this Lease shall be
deemed to be delivered (whether or not actually received) when deposited in the
United States Mail, postage prepaid, certified mail, return receipt requested,
addressed to the parties at the respective addresses set forth on page 1 (or, in
the case of Lessee, at the Leased Premises), or to such other addresses as the
parties may have designated by written notice to each other, with copies of
notices to Lessor being sent to Lessor's address as shown on page 1. Manager
shall be a co-addressee with Lessor on all notices sent to Lessor by Lessee
hereunder, and any notice sent to Lessor and not to Manager, also, in accordance
with this section shall be deemed ineffective.

14.8  Submission of Lease.
      -------------------

          Submission of this Lease to Lessee for signature does not constitute a
reservation of space or an option to Lease.  This Lease is not effective until
execution by and delivery to both Lessor and Lessee.

14.9  Authority.
      ---------

          If Lessee executes this Lease as a limited liability company,
corporation or a partnership (general or limited), each person executing this
Lease on behalf of Lessee hereby personally represents and warrants that: Lessee
is a duly authorized and existing limited liability company, corporation or
partnership (general or limited), Lessee is qualified to do business in the
state in which the Leased Premises are located, the limited liability company,
corporation or partnership (general or limited) has full right and authority to
enter into this Lease, each person signing on behalf of the limited liability
company, corporation or partnership (general or limited) is authorized to do so,
and the execution and delivery of the Lease by Lessee will not result in any
breach of, or constitute a default under any mortgage, deed of trust, lease,
loan, credit agreement, partnership agreement, or other contract or instrument
to which Lessee is a party or by which Lessee may be bound. If any
representation or warranty contained in this Section is false, each person who
executes this Lease shall be liable, individually, as Lessee hereunder.

14.10 Deleted.
      -------

                                       13
<PAGE>

14.11 Deleted.
      -------

14.12 Severability.
      ------------

          If any provision of this Lease or the application thereof to any
person or circumstances shall be invalid or unenforceable to any extent, the
remainder of this Lease and the application of such provisions to other persons
or circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law. Each covenant and agreement contained in this
Lease shall be construed to be a separate and independent covenant and
agreement, and the breach of any such covenant or agreement by Lessor shall not
discharge or relieve Lessee from Lessee's obligation to perform each and every
covenant and agreement of this Lease to be performed by Lessee.

14.13 Lessor's Liability.
      ------------------

          If Lessor shall be in default under this Lease and, if as a
consequence of such default, Lessee shall recover a money judgment against
Lessor, such judgment shall be satisfied only out of the right, title, and
interest of Lessor in the Property as the same may then be encumbered and
neither Lessor nor any person or entity comprising Lessor shall be liable for
any deficiency. In no event shall Lessee have the right to levy execution
against any property of Lessor nor any person or entity comprising Lessor other
than its interest in the Property as herein expressly provided.

14.14 Sale of Property.
      ----------------

          Upon any conveyance, sale or exchange of the Leased Premises or
assignment of this Lease, Lessor shall be and is hereby entirely free 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 relating to the Leased Premises or this Lease occurring after the
consummation of such sale or exchange and assignment.

14.15 Time is of the Essence.
      ----------------------

          The time of the performance of all of the covenants, conditions and
agreements of this Lease is of the essence of this Lease.

14.16 Subtenancies.
      ------------

          At Lessor's option, the voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, shall not work a merger of estates and
shall operate as an assignment of any or all permitted subleases or
subtenancies.

14.17 Name.
      ----

          Lessee shall not use the name of the Building or of the development in
which the Building is situated, if any, for any purpose other than as an address
of the business to be conducted by Lessee in the Premises.

14.18 Choice of Law.
      -------------

          This Lease shall be governed by the laws of the State of Texas
applicable to transactions to be performed wholly therein.

14.19 Presumptions.
      ------------

          This Lease shall be construed without regard to any presumption or
other rule requiring construction against the party drafting the document. It
shall be construed neither for nor against Lessor or Lessee, but shall be given
reasonable interpretation in accordance with the plain meaning of its terms and
the intent of the parties.

14.20 Exhibits.
      --------

          All exhibits and any riders annexed to this Lease are incorporated
herein by this reference.

14.21 Brokers.
      -------

          Lessee represents and warrants to Lessor that Lessee has had no
dealings with any broker, finder, or similar person who is or might be entitled
to a commission or other fee in connection with introducing Lessee to the
Building or in connection with this Lease. Lessor shall pay the commission due
Lessor's Broker pursuant to a separate agreement between Lessor and Lessor's
Broker. Lessee shall indemnify Lessor for, and hold Lessor harmless from and
against, any and all claims of any person other than Lessor's Broker who claims
to have introduced Lessee to the Building or dealt with Lessee in connection
with this Lease and all liabilities arising out of or in connection with such
claims.

                                       14
<PAGE>

                       ARTICLE 15. - SPECIAL PROVISIONS

15.1  Renewal Option.
      --------------

          Provided no Event of Default exists and Lessee is occupying the entire
Premises at the time of such election, Lessee may renew this Lease for One (1)
additional period of Five (5) years on the same terms provided in this Lease
(except as set forth below), by delivering written notice of the exercise
thereof to Lessor not later than 180 days before the expiration of the Term.  On
or before the commencement date of the extended term, Lessor and Lessee shall
execute an amendment to this Lease extending the Term on the same terms provided
in this Lease, except as follows:

      (a) The Basic Rental Rate payable for each month during the extended Term
          shall be at ninety-three and one/half per cent (93 1/2 %) of the then
          prevailing market rate.

      (b) Lessee shall have no further renewal options unless expressly granted
          by Lessor in writing; and

      (c) Lessor shall lease to Lessee the Leased Premises in their then current
          condition, and Lessor shall not provide to Lessee any allowances
          (e.g., moving allowance, construction allowance and the like) or other
          tenant inducements.

      Lessee's rights under this clause shall terminate if (I) this Lease or
Lessee's right to possession of the Premises is terminated, (ii)  Lessee assigns
any of its interest in this Lease or sublets more than 5,000 square feet of Net
Rentable Area of the Premises, or (iii)  Lessee fails to timely exercise its
option under this Exhibit, time being of the essence with respect to Lessee's
exercise thereof.

15.2  First Right of Refusal.
      ----------------------

          Lessee shall have First Right of Refusal on all space in the Building
as that space shall become available at a Basic Rental Rate equal to ninety-
three and one/half per cent (93 1/2 %) of the then prevailing market rate.

15.3  Right to Name Building.
      ----------------------

          Lessee shall have the right to change the name of the Building to the
"Pure Resources Building" and to display the name and logo on the Building in a
conspicuous place(s).

15.4   Building Directory.
       ------------------

          Lessee shall have the right to have the names of corporate officers
and department managers listed on the Building Directory.

             ARTICLE 16. - AMENDMENT AND LIMITATION OF WARRANTIES

16.1  Entire Agreement.
      ----------------

          IT IS EXPRESSLY AGREED BY LESSEE, AS A MATERIAL CONSIDERATION FOR THE
EXECUTION OF THIS LEASE, THAT THIS LEASE, WITH THE SPECIFIC REFERENCES TO
EXTRINSIC DOCUMENTS, IS THE ENTIRE AGREEMENT OF THE PARTIES: THAT THERE ARE, AND
WERE, NO VERBAL REPRESENTATIONS, WARRANTIES, UNDERSTANDINGS, STIPULATIONS,
AGREEMENT OR PROMISES PERTAINING TO THE SUBJECT MATTER OF THIS LEASE OR OF ANY
EXPRESSLY MENTIONED EXTRINSIC DOCUMENTS THAT ARE NOT INCORPORATED IN WRITING IN
THIS LEASE.

16.2  Amendment.
      ---------

          THIS LEASE MAY NOT BE ALTERED, WAIVED, AMENDED OR EXTENDED EXCEPT BY
AN INSTRUMENT IN WRITING SIGNED BY LESSOR AND LESSEE.

16.3  Limitation of Warranties.
      ------------------------

          LESSOR AND LESSEE EXPRESSLY AGREE THAT THERE ARE AND SHALL BE NO
IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY, FITNESS OF A PARTICULAR
PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS LEASE, AND THERE ARE NO
WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS LEASE. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, LESSEE EXPRESSLY ACKNOWLEDGES THAT

                                       15
<PAGE>

LESSOR HAS MADE NO WARRANTIES OR REPRESENTATIONS CONCERNING ANY HAZARDOUS
SUBSTANCES OR OTHER ENVIRONMENTAL MATTERS AFFECTING ANY PART OF THE PROPERTY,
AND LESSOR HEREBY EXPRESSLY DISCLAIMS AND LESSOR WAIVES ANY EXPRESS OR IMPLIED
WARRANTIES WITH RESPECT TO ANY SUCH MATTER.

16.4  Waiver and Releases.
      -------------------

          LESSEE SHALL NOT HAVE THE RIGHT TO WITHHOLD OR TO OFFSET RENT OR TO
TERMINATE THIS LEASE EXCEPT AS EXPRESSLY PROVIDED HEREIN.  LESSEE WAIVES AND
RELEASES ANY AND ALL STATUTORY LIENS AND OFFSET RIGHTS.


EXECUTED to be effective the date first above written.



LESSOR


MIDLAND PROP, LTD.
By:  JDHD, Inc., General Partner


By:/s/ Wendell Brown, Jr.
   -------------------------------------



Name:Wendell Brown, Jr.
     -----------------------------------
Title:Vice President
      ----------------------------------



LESSEE


PURE RESOURCES I, INC.



By:/s/ William K. White
   -------------------------------------



Name:William K. White
     -----------------------------------

Title:Vice President
      ----------------------------------

                                       16