6710 LLC COMMERCIAL LEASE

Date:           June 30, 1999

Between:        6710 LLC,                                       ("Landlord")
                an Oregon Limited Liability Company
                P O Box 82448
                Portland, Oregon 97282

And:            Phoenix Gold International, Inc.,               ("Tenant")
                an Oregon Corporation
                9300 N. Decatur
                Portland, Oregon __________

      Landlord  leases to Tenant and Tenant  leases from  Landlord the following
described property (the "Premises") on the terms and conditions stated below:


           SEE EXHIBIT "A " ATTACHED HERETO AND MADE A PART HEREOF


SECTION 1. OCCUPANCY

      1.1 ORIGINAL TERM. The term of this lease shall commence July 1, 1999, and
continue through June 30, 2009 (the "Original  Term"),  unless sooner terminated
as hereinafter provided.

      1.2  POSSESSION.     Tenant is currently in possession of the property.

      1.3 RENEWAL OPTION.  If the lease is not in default at the time the option
is exercised  or at the time the renewal term is to commence,  Tenant shall have
the option to renew this lease for one (1) term of ten (10) years, as follows:

           (1) The renewal term shall commence immediately  following expiration
of the Original Term.

           (2) The option may be exercised by written  notice to Landlord  given
not less than 120 days prior to the last day of the Original Term. The giving of
such notice shall be  sufficient  to make the lease binding for the renewal term
without  further act of the parties.  Landlord and Tenant shall then be bound to
take  the  steps  required  in  connection  with  the  determination  of rent as
specified below.

           (3) The terms and  conditions of the lease for the renewal term shall
be identical  with the Original Term except for rent and except that Tenant will
no longer have any option to renew this lease.  Rent for the renewal  term shall
be the  greater of (a) the rental  during the  Original  Term or (b) fair market
rental for the ensuing term.

           (4) If the  parties do not agree on the rent within 30 days after the
notice of  election  to renew,  the rent  shall be  determined  by a  qualified,
independent real property  appraiser  familiar with commercial  rental values in
the area. The appraiser  shall be chosen by Tenant from a list of not fewer than
five such individuals  submitted by landlord. If Tenant does not make the choice
within  five (5) days  after  submission  of the  list,  Landlord  may do so. If
Landlord does not submit such a list within ten (10) days after written  request
from Tenant to do so, Tenant may name as an appraiser any  individual  with such

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qualifications.  Within thirty (30) days after the appraiser's  decision,  which
shall be final and binding upon both parties. The cost of the appraisal shall be
borne equally by both parties.  In determining fair market rental, the appraiser
shall not assign any value to the then existing improvements in the Premises.

SECTION 2. RENT

      2.1 BASE RENT.  Tenant  hereby agrees to pay base monthly  rental  (herein
called the "Base Rental") in the sums and at the times as follows:

      Month                Base Rent       Annual Rent

      1-12                 $43,400         $520,800
      13-24                $44,485         $533,820
      25-36                $45,597         $547,165
      37-48                $46,737         $560,845
      49-60                $47,905         $574,866
      61-72                $49,103         $589,236
      73-84                $50,331         $603,972
      85-96                $51,589         $619,068
      97-108               $52,879         $634,548
      109-120              $54,201         $650,412

Rent  shall be  payable on the first day of each month in advance at such place
as may be designated by Landlord  except that rent for the first and last months
has been  paid upon the  execution  of this  lease,  and  Landlord  acknowledges
receipt of this sum.

      2.2 SECURITY DEPOSIT. To secure Tenant's compliance with all terms of this
lease, Tenant has paid Landlord the sum of $43,400.00 as a deposit.  The deposit
shall be a debt from  Landlord  to Tenant,  refundable  within  thirty (30) days
after  expiration of the lease term or other  termination not caused by Tenant's
default.  Landlord may commingle the deposit with its funds and Tenant shall not
be entitled to interest on the deposit.  Landlord shall have the right to offset
against the  deposit  any sums owing from  Tenant to Landlord  and not paid when
due, any damages caused by Tenant's  default,  the cost of curing any default by
Tenant should  Landlord elect to do so, and the cost of performing any repair or
cleanup that is Tenant's  responsibility  under this lease.  Offset  against the
deposit shall not be an exclusive  remedy in any of the above cases,  but may be
invoked by Landlord,  at its option, in addition to any other remedy provided by
law or this lease for  Tenant's  nonperformance.  Landlord  shall give notice to
Tenant each time an offset is claimed against the deposit, and, unless the lease
is terminated,  Tenant shall within ten (10) days after such notice deposit with
Landlord  a sum  equal to the  amount of the  offset  so that the total  deposit
amount, not of offset, shall remain constant throughout the lease term.

      2.3 ADDITIONAL  RENT. All taxes,  insurance  costs,  utility  charges that
Tenant is  required  to pay by this  lease,  and any  other  sum that  Tenant is
required to pay to Landlord or third parties shall be additional rent.

SECTION 3. USE OF THE PREMISES.

      3.1 PERMITTED  USE. The Premises  shall be used for office,  warehouse and
manufacturing.  Tenant  shall also have the right to  sublease  up to 30% of the
facility  to any  other  tenant  as long as that  tenant's  occupancy  does  not
increase  the wear  and tear on the  facility,  does  not  increase  the cost of
property  insurance,  and complies with all other terms and requirements of this

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lease.  Tenant  shall  provide  Landlord  with an executed  copy of any sublease
entered into between Tenant and any other tenant, and shall notify Landlord when
any other tenant comes into possession or vacates any portion of the Premises.

      3.2  RESTRICTIONS  ON USE.  In  connection  with the use of the  Premises,
Tenant shall:

           (1)  Conform to all  applicable  laws and  regulations  of any public
authority  affecting  the  premises  and the use,  and correct at  Tenant's  own
expense any failure of compliance created through Tenant's fault or by reason of
Tenant's use, but Tenant shall not be required to make any structural changes to
effect such  compliance  unless such  changes are  required  because of Tenant's
specific use.

           (2) Refrain from any activity that would make it impossible to insure
the Premises  against  casualty,  would  increase the  insurance  rate, or would
prevent  Landlord  from taking  advantage of any ruling of the Oregon  Insurance
Rating Bureau,  or its successor,  allowing  Landlord to obtain reduced  premium
rates for long-term fire insurance  policies,  unless Tenant pays the additional
cost of the insurance.

           (3) Refrain from any use that would be reasonably  offensive to other
tenants or owners or users of neighboring  premises or that would tend to create
a nuisance or damage the reputation of the premises.

           (4) Refrain from loading the  electrical  system or floors beyond the
point considered safe by a competent engineer or architect selected by Landlord.

           (5) Refrain from making any marks on or attaching any sign, insignia,
antenna,  aerial, or other device to the exterior or interior walls, windows, or
roof of the  premises  without the written  consent of Landlord,  which  consent
shall not be unreasonably withheld or delayed

           (6) Tenant  shall not cause or permit any  Hazardous  Substance to be
spilled,  leaked,  disposed of, or otherwise  released on or under the Premises.
Tenant  may  use or  otherwise  handle  on the  Premises  only  those  Hazardous
Substances  typically  used or sold in the  prudent  and safe  operation  of the
business specified in Section 3.1. Tenant may store such Hazardous Substances on
the  Premises  only in  quantities  necessary  to  satisfy  Tenant's  reasonably
anticipated needs.  Tenant shall comply with all Environmental Laws and exercise
the  highest  degree of care in the use,  handling,  and  storage  of  Hazardous
Substances and shall take all practicable  measures to minimize the quantity and
toxicity of Hazardous Substances used, handled, or stored on the Premises.  Upon
the expiration or  termination of this Lease,  Tenant shall remove all Hazardous
Substances from the Premises. The term Environmental Law shall mean any federal,
state,  or local  statute,  regulation,  or  ordinance  or any judicial or other
governmental  order  pertaining  to the  protection  of  health,  safety  or the
environment.  The term  Hazardous  Substance  shall mean any  hazardous,  toxic,
infectious or radioactive substance, waste, and material as defined or listed by
any Environmental Law and shall include,  without limitation,  petroleum oil and
its fractions.

SECTION 4. REPAIRS AND MAINTENANCE

      4.1 LANDLORD'S  OBLIGATIONS.  The following shall be the responsibility of
Landlord:

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           (1) Other  than  maintenance  and  repair of the roof  membrane  (not
including the concrete roof used to park  vehicles),  Landlord shall be under no
obligation   to  make  or  perform  any   repairs,   maintenance,   replacement,
alterations,  or improvements on or to the Premises or the building of which the
Premises are a part.

           (2)  Notwithstanding  the provisions of subsection (1) above,  within
one (1) year from the commencement date of this lease, Landlord shall repair the
roof of the Premises  substantially  in accordance with the  specifications  set
forth in the proposals dated May 18, 1999, from Interstate  Roofing Inc., copies
of which are  attached  hereto as Exhibit "B". It is  expressly  understood  and
agreed that  Landlord need not contract  with  Interstate  Roofing Inc. for such
repairs but may use a roofing  contractor of Landlord's  choosing to perform the
work.

      4.2 TENANT'S  OBLIGATIONS.  The following shall be the  responsibility  of
Tenant:

           (1) Except for Landlord's  obligation under Section 5.1,  Tenant,  at
its  expense,  shall  keep the  Premises  (including,  without  limitation,  the
exterior paint) in first-class repair,  operating condition,  working order, and
appearance.

      4.3  LANDLORD'S  INTERFERENCE  WITH  TENANT.  In  performing  any repairs,
replacements,  alterations,  or other work  performed on or around the Premises,
Landlord shall not cause  unreasonable  interference with use of the Premises by
Tenant. Tenant shall have no right to an abatement of rent nor any claim against
Landlord  for  any  inconvenience  or  disturbance   resulting  from  Landlord's
activities performed in conformance with the requirement of this provision.

      4.4 REIMBURSEMENT FOR REPAIRS ASSUMED.  If Tenant fails or refuses to make
repairs that are  required by this Section 4,  Landlord may make the repairs and
charge the actual  costs of repairs to Tenant.  Such  expenditures  by  Landlord
shall be  reimbursed  by Tenant on demand  together with interest at the rate of
12% per annum from the date of expenditure  by Landlord.  Except in an emergency
creating an immediate risk of personal injury or property  damage,  Landlord may
not perform repairs which are the obligation of Tenant and charge Tenant for the
resulting  expense  unless at least 20 days before work is commenced,  Tenant is
given notice in writing  outlining  with  reasonable  particularity  the repairs
required,  and Tenant  fails  within that time to initiate  such repairs in good
faith.

      4.5  INSPECTION OF PREMISES.  Landlord shall have the right to inspect the
Premises at any  reasonable  time or times to determine the necessity of repair.
Whether or not such  inspection  is made,  the duty of Landlord to make  repairs
shall not mature until a reasonable time after Landlord has received from Tenant
written  notice of the repairs  that are  required.  Landlord  shall  attempt to
schedule its  inspections  with Tenant so as to minimize  disruption of Tenant's
business operations at the Premises.

SECTION 5. ALTERATIONS.

      5.1  ALTERATIONS   PROHIBITED.   Tenant  shall  make  no  improvements  or
alterations  on the  Premises of any kind costing  over  $50,000  without  first
obtaining  Landlord's  written consent,  which consent shall not be unreasonably
withheld or delayed.  Tenant shall present to Landlord plans and  specifications
for such work at the time  consent is sought.  Landlord  may  require  Tenant to
provide  Landlord  with a performance  and payment bond prior to commencing  any
work. All alterations shall be made in a good


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and  workmanlike  manner,  and in compliance  with  applicable laws and building
codes. As used herein,  "alterations"  includes the installation of computer and
telecommunications wiring, cables, and conduit.

      5.2 OWNERSHIP AND REMOVAL OF ALTERATIONS. All improvements and alterations
performed on the Premises by either  Landlord or Tenant shall be the property of
Landlord when installed unless the applicable  Landlord's  consent or work sheet
specifically  provides  otherwise.  Improvements  and  alterations  installed by
Tenant  shall,  at  Landlord's  option,  be removed  by Tenant and the  Premises
restored  unless the applicable  Landlord's  consent or work sheet  specifically
provides otherwise.

SECTION 6. INSURANCE

      6.1 INSURANCE  REQUIRED.  Tenant shall keep the Premises  insured  against
fire and other  risks  covered  by a  standard  fire  insurance  policy  with an
endorsement  for extended  coverage  naming  Landlord as an additional  insured.
Tenant  shall carry  similar  insurance  insuring  the property of Tenant on the
Premises against such risks.  Tenant shall also carry  employer's  liability and
workers compensation insurance as required by law, and rent loss insurance in an
amount  sufficient to compensate  Landlord for rent abated pursuant to Section 8
of this lease or  otherwise  for a period of up to twelve  months.  Certificates
evidencing  such  insurance  and bearing  endorsements  requiring ten (10) days'
written  notice  to  Landlord  prior  to any  change  or  cancellation  shall be
furnished to Landlord prior to Tenant's occupancy of the Premises.

      6.2 WAIVER OF SUBROGATION.  Neither party shall be liable to the other (or
to the other's  successors  or assigns) for any loss or damage caused by fire or
any of the risks enumerated in a standard fire insurance policy with an extended
coverage  endorsement,  and  in the  event  of  insured  loss,  neither  party's
insurance  company shall have a subrogated claim against the other.  This waiver
shall be valid only if the insurance policy in question expressly permits waiver
of subrogation or if the insurance  company agrees in writing that such a waiver
will not affect  coverage  under the  policies.  Each  party  agrees to use best
efforts to obtain  such an  agreement  from its  insurer if the policy  does not
expressly permit a waiver of subrogation.

SECTION 7. TAXES; UTILITIES.

      7.1  PROPERTY  TAXES.  Tenant  shall pay as due all taxes on its  personal
property  located on the Premises.  Landlord  shall pay as due all real property
taxes and special assessments levied against the Premises.  As used herein, real
property  taxes includes any fee or charge  relating to the  ownership,  use, or
rental of the  Premises,  other  than  taxes on the net  income of  Landlord  or
Tenant.  Tenant shall reimburse Landlord for all real property taxes and special
assessments within 30 days of billing therefore by Landlord.

      7.2 SPECIAL ASSESSMENTS. If an assessment for a public improvement is made
against the Premises,  Landlord may elect to cause such assessment to be paid in
installments,  in which case all of the installments payable with respect to the
lease term shall be treated the same as general real property taxes for purposes
of Section 7.1.

      7.3 CONTEST OF TAXES.  Tenant  shall be permitted to contest the amount of
any tax or assessment as long as such contest is conducted in a manner that does
not cause any risk that  Landlord's  interest in the Premises will be foreclosed
for nonpayment.

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      7.4  PRORATION  OF  TAXES.  Tenant's  share  of real  property  taxes  and
assessments for the years in which this lease  commences or terminates  shall be
prorated based on the portion of the tax year that this lease is in effect.

      7.5 NEW CHARGES OR FEES.  If a new charge or fee relating to the ownership
or use of the Premises or the receipt of rental therefrom or in lieu of property
taxes is assessed or imposed, then, to the extent permitted by law, Tenant shall
pay such charge or fee.  Tenant,  however,  shall have no  obligation to pay any
income,  profits,  or franchise tax levied on the net income derived by Landlord
from this lease.

      7.6 PAYMENT OF  UTILITIES  CHARGES.  Tenant shall pay when due all charges
for services  and  utilities  incurred in  connection  with the use,  occupancy,
operation,  and  maintenance  of the  Premises,  including  (but not limited to)
charges  for  fuel,   water,   gas,   electricity,   sewage   disposal,   power,
refrigeration,  air conditioning,  telephone,  and janitorial  services.  If any
utility services are provided by or through Landlord, charges to Tenant shall be
comparable with prevailing rates for comparable services. If the charges are not
separately  metered  or  stated,  Landlord  shall  apportion  the  charges on an
equitable basis, and Tenant shall pay its apportioned share on demand.

SECTION 8. DAMAGE AND DESTRUCTION

      8.1 PARTIAL  DAMAGE.  If the Premises  are partly  damaged and Section 8.2
does not apply,  the  Premises  shall be  repaired  by  Landlord  at  Landlord's
expense.  Repairs shall be accomplished with all reasonable  dispatch subject to
interruptions  and delays from labor  disputes and matters beyond the control of
Landlord  and shall be  performed  in  accordance  with the  provisions  of 4.3;
provided,  however,  that the rent shall be abated as set forth in  Section  8.3
below.

      8.2  DESTRUCTION.  If the Premises are  destroyed or damaged such that the
cost of repair  exceeds  50% of the value of the  structure  before the  damage,
either  party may elect to  terminate  the lease as of the date of the damage or
destruction  by notice  given to the other in writing  not more than  forty-five
(45) days following the date of damage. In such event all rights and obligations
of the parties  shall cease as of the date of  termination,  and Tenant shall be
entitled  to the  reimbursement  of any  prepaid  amounts  paid  by  Tenant  and
attributable  to the  anticipated  term.  If neither  party elects to terminate,
Landlord shall proceed to restore the Premises to substantially the same form as
prior  to the  damage  or  destruction.  Work  shall  be  commenced  as  soon as
reasonably possible and thereafter shall proceed without interruption except for
work  stoppages  on account of labor  disputes  and  matters  beyond  Landlord's
reasonable  control;  provided,  however,  that the rent  shall be abated as set
forth in Section 8.3 below.

      8.3 RENT  ABATEMENT.  Rent shall be abated during the repair of any damage
to the extent the premises are untenantable,  except that there shall be no rent
abatement where the damage occurred as the result of the fault of Tenant.

      8.4 DAMAGE LATE IN TERM.  If damage or  destruction  to which  Section 8.2
would apply occurs within one (1) year before the end of the then-current  lease
term,  Tenant may elect to  terminate  the lease by written  notice to  Landlord
given  within  thirty (30) days after the date of the damage.  Such  termination
shall have the same effect as termination by Landlord under Section 8.2.

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SECTION 9. EMINENT DOMAIN

      9.1 PARTIAL TAKING.  If a portion of the Premises is condemned and Section
9.2 does not apply, the lease shall continue on the following terms:

           (1)   Landlord   shall  be  entitled  to  all  of  the   proceeds  of
condemnation, and Tenant shall have no claim against Landlord as a result of the
condemnation.

           (2) Landlord  shall  proceed as soon as  reasonably  possible to make
such repairs and  alterations  to the  Premises as are  necessary to restore the
remaining  Premises to a condition as comparable as  reasonably  practicable  to
that existing at the time of the condemnation.

           (3) After the date on which title vests in the  condemning  authority
or an earlier date on which  alterations or repairs are commenced by Landlord to
restore the balance of the Premises in anticipation of taking, the rent shall be
reduced in  proportion  to the reduction in value of the Premises as an economic
unit on account of the partial taking. If the parties are unable to agree on the
amount of the reduction of rent,  the amount shall be determined by  arbitration
in the manner provided in Section 17.

           (4) If a portion of Landlord's  property not included in the Premises
is taken,  and severance  damages are awarded on account of the Premises,  or an
award is made for  detriment to the Premises as a result of activity by a public
body not involving a physical taking of any portion of the Premises,  this shall
be regarded as a partial condemnation to which Sections 9.1(1) and 9.1(3) apply,
and the rent shall be reduced to the extent of  reduction in rental value of the
Premises as though a portion had been physically taken.

           (5)  Notwithstanding  any contrary  provision  in this lease,  Tenant
shall be entitled to negotiate for and retain condemnation  compensation for the
value of Tenant's  improvements  to the Premises  taken in  connection  with the
condemnation.

      9.2 TOTAL TAKING. If a condemning authority takes all of the Premises or a
portion  sufficient to render the remaining premises  reasonably  unsuitable for
the use that Tenant was then making of the premises,  the lease shall  terminate
as of the date the title vests in the condemning  authorities.  Such termination
shall have the same effect as a termination under Section 9.1(1). Landlord shall
be entitled to all of the  proceeds of  condemnation,  and Tenant  shall have no
claim  against  Landlord as a result of the  condemnation.  Notwithstanding  any
contrary provision in this lease,  Tenant shall be entitled to negotiate for and
retain condemnation  compensation for the value of Tenant's  improvements to the
Premises taken in connection with the condemnation.

      9.3 SALE IN LIEU OF CONDEMNATION. Sale of all or part of the premises to a
purchaser  with  the  power  of  eminent  domain  in the  face  of a  threat  or
probability  of the  exercise of the power shall be treated for the  purposes of
this Section 9 as a taking by condemnation.

SECTION 10.     LIABILITY AND INDEMNITY.

      10.1 LIENS

           (1)  Except  with  respect  to  activities   for  which  Landlord  is
responsible,  Tenant  shall  pay as due  all  claims  for  work  done on and for
services  rendered or material  furnished  to the  Premises,  and shall keep the
Premises  free  from any  liens.  If Tenant  fails to pay any such  claims or to

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discharge any lien,  Landlord may do so and collect the cost as additional rent.

Any amount so added  shall bear  interest  at the rate of 12% per annum from the
date expended by Landlord  shall not  constitute a waiver of any right or remedy
which Landlord may have on account of Tenant's default.

           (2) Tenant may  withhold  payment of any claim in  connection  with a
good-faith  dispute over the  obligation  to pay, as long a Landlord's  property
interests  are not  jeopardized.  If a lien is filed as a result of  nonpayment,
Tenant  shall,  within ten (10) days after  knowledge of the filing,  secure the
discharge  of the lien or deposit with  Landlord  cash or  sufficient  corporate
surety bond or other surety  satisfactory to Landlord in an amount sufficient to
discharge the lien plus any costs,  attorney  fees, and other charges that could
accrue as a result of a foreclosure or sale under the lien.

      10.2 INDEMNIFICATION.  Tenant shall indemnify and defend Landlord from any
claim, loss, or liability arising out of or related to any activity of Tenant on
the Premises or any  condition of the  Premises in the  possession  or under the
control of Tenant.  Landlord  shall have no  liability to Tenant for any injury,
loss, or damage caused by third parties, or by any condition of the Premises.

      10.3 LIABILITY  INSURANCE.  Before going into  possession of the Premises,
Tenant shall procure and thereafter  during the term of the lease shall continue
to carry the  following  insurance  at  Tenant's  costs:  comprehensive  general
liability  insurance  in a  responsible  company  with  limits  of not less than
$1,000,000  for  injury  to one  person,  $2,000,000  for  injury to two or more
persons in one occurrence, and $2,000,000 for damage to property. Such insurance
shall cover all risks arising directly or indirectly out of Tenant's  activities
on or any  condition  of the  premises  whether or not related to an  occurrence
caused or contributed to by Landlord's  negligence.  Such insurance  shall cover
all risks arising  directly or indirectly  out of Tenant's  activities on or any
condition  of the  premises  whether or not related to an  occurrence  caused or
contributed to by Landlord's  negligence.  Such  insurance  shall protect Tenant
against the claims of Landlord on account of the  obligations  assumed by Tenant
under  Section  10.2,  and  shall  name  Landlord  as  an  additional   insured.
Certificates  evidencing such insurance and bearing  endorsements  requiring ten
(10) days' written notice to Landlord prior to any change or cancellation  shall
be furnished to Landlord prior to Tenant's occupancy of the Premises.

SECTION 11.     QUIET ENJOYMENT; MORTGAGE PRIORITY

      11.1 LANDLORD'S  WARRANTY.  Landlord  warrants that it is the owner of the
Premises and has the right to lease them free of all  encumbrances  except those
set forth on the attached  schedule  entitled  "Exceptions to Title." Subject to
these exceptions,  Landlord will defend Tenant's right to quiet enjoyment of the
Premises from the lawful claims of all persons during the lease term.

      11.2 MORTGAGE  PRIORITY.  The Premises are subject to real estate mortgage
given to Ronald and Heather  Killough as  mortgagee.  This lease is  conditioned
upon its approval by the mortgagee and upon  agreement by the mortgagee that the
rights of Tenant  under the  lease  will be  recognized  so that in the event of
foreclosure  of the mortgage  this lease will remain in effect  according to its
terms and  Tenant's  possession  will not be  disturbed  as long as Tenant is in
compliance with this lease.

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      This  lease  is and  shall  be  prior  to any  mortgage  or deed of  trust
("Encumbrance")  recorded  after  the  date  of this  lease  and  affecting  the
Premises.  However, if any lender holding such an Encumbrance requires that this
lease be subordinate to the Encumbrance, then Tenant agrees that the lease shall
be subordinate  to the  Encumbrance if the holder thereof agrees in writing with
Tenant  that as long as tenant  performs  its  obligations  under  this lease no
foreclosure, deed given in lieu of foreclosure, or sale pursuant to the terms of
the Encumbrance,  or other steps or procedures taken under the Encumbrance shall
affect  Tenant's  rights under this lease.  If the  foregoing  condition is met,
Tenant shall execute the written  agreement and any other documents  required by
the holder of the Encumbrance to accomplish the purposes of this  paragraph.  If
the Premises are sold as a result of foreclosure of any Encumbrance  thereon, or
otherwise  transferred by Landlord or any successor,  Tenant shall attorn to the
purchaser or transferee.

      11.3 ESTOPPEL CERTIFICATE.  Either party will, within twenty (20) days
after Notice from the other,  execute  and  deliver  to the  other  party a
certificate stating whether or not this lease has been  modified  and is in full
force and effect and specifying any  modifications or alleged breaches by the
other party.  The  certificate shall also state the amount of monthly base rent,
the dates to which rent has been paid in advance, and the amount of any security
deposit or prepaid rent. Failure to deliver the certificate within the specified
time shall be conclusive upon the party from whom the certificate  was requested
that the lease  is in full  force  and  effect  and  has  not  been  modified
except as represented in the notice requesting the certificate.

SECTION 12.     ASSIGNMENT AND SUBLETTING.

      Except  as  provided  in  Section  3.1,  no  part of the  Premises  may be
assigned,  mortgaged, or subleased, nor may a right of use of any portion of the
property be conferred on any third person by any other means,  without the prior
written consent of Landlord, which consent shall not be unreasonably withheld or
delayed. This provision shall apply to mergers and all transfers by operation of
law. If Tenant is a corporation or  partnership,  this provision  shall apply to
any transfer of a majority voting  interest in stock or partnership  interest of
Tenant.  No consent in one instance shall prevent the provision from applying to
a subsequent instance.  In determining whether to consent to assignment Landlord
may consider the  following  factors;  financial  ability of assignee;  business
experience of assignee;  and credit  worthiness of assignee.  Landlord  shall be
required  to consent  when the  assignee's  use is allowed by this lease and the
assignee's net worth exceeds that of Tenant.

SECTION 13.     DEFAULT

      The following shall be events of default:

      13.1  DEFAULT IN RENT.  Failure of Tenant to pay any rent or other  charge
within  twenty (20) days  following  written  notice to Tenant that rent has not
been received.  Notwithstanding the foregoing,  if Landlord has given the notice
provided in this Section 13.1 twice within any 12 consecutive month period, then
Landlord  need not give such notice in the event of any further  default  within
that 12 month  period and Tenant  shall be in default if Tenant fails to pay any
rent or other charge within ten (10) days after it is due.

      13.2 DEFAULT IN OTHER COVENANTS. Failure of Tenant to comply with any term
or condition or fulfill any  obligation  of the lease (other than the payment of
rent or other charges)  within twenty (20) days after written notice by Landlord
specifying  the nature of the  default  with  reasonable  particularity.  If the
default is of such a nature  that it cannot be  completely  remedied  within the

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20-day period, this provision shall be complied with if Tenant begins correction
of the default within the 20-day period and thereafter  proceeds with reasonable
diligence and in good faith to effect the remedy as soon as practicable.

      13.3  INSOLVENCY.  Insolvency  of Tenant;  an assignment by Tenant for the
benefit  of  creditors;  the  filing  by  Tenant  of  a  voluntary  petition  in
bankruptcy;  an  adjudication  that Tenant is bankrupt or the  appointment  of a
receiver of the properties of Tenant; the filing of any involuntary  petition of
bankruptcy  and the  failure  of Tenant to secure a  dismissal  of the  petition
within ninety (90) days after filing;  attachment of or the levying of execution
on the  leasehold  interest  and  failure of Tenant to secure  discharge  of the
attachment  or release of the levy of  execution  within  thirty (30) days shall
constitute a default.  If Tenant consists of two or more individuals or business
entities,  the events of default  specified  in this Section 13.3 shall apply to
each  individual  unless within ten (10) days after an event of default  occurs,
the remaining  individuals  produce evidence  satisfactory to Landlord that they
have  unconditionally  acquired the interest of the one causing the default.  If
the lease has been assigned, the events of default so specified shall apply only
with respect to the one then exercising the rights of Tenant under the lease.

      13.4  ABANDONMENT.  Failure  of Tenant for ten (10) days or more to occupy
the Premises for one or more of the purposes permitted under this lease,  unless
such failure is excused  under other  provisions  of this lease.  The  foregoing
failure to occupy shall not constitute an event of default if, prior to vacating
the  Premises,  Tenant  delivers to Landlord a surety bond in an amount equal to
the rent payable under this lease for the 12 months next succeeding the month in
which the  abandonment  will  occur,  guaranteeing  payment of rent  during that
period, issued by a reputable company licensed to issue surety bonds in Oregon.

SECTION 14.     REMEDIES ON DEFAULT

      14.1 TERMINATION. In the event of a default the lease may be terminated at
the option of Landlord by written notice to Tenant.  Whether or not the lease is
terminated by the election of landlord or otherwise,  Landlord shall be entitled
to recover damages from Tenant for the default,  and Landlord may reenter,  take
possession of the  premises,  and remove any persons or property by legal action
or by  self-help  with the use of  reasonable  force and without  liability  for
damages and without having accepted a surrender.

      14.2 RELETTING.  Following reentry or abandonment,  Landlord may relet the
Premises and in that  connection may make any suitable  alterations or refurbish
the  Premises,  or both,  or change the  character or use of the  Premises,  but
Landlord  shall not be required to relet for any use or purpose  other than that
specified in the lease or which  Landlord may reasonably  consider  injurious to
the  Premises,   or  to  any  tenant  that  Landlord  may  reasonably   consider
objectionable.  Landlord  may  relet  all or part of the  Premises,  alone or in
conjunction with other properties, for a term longer or shorter than the term of
this lease, upon any reasonable terms and conditions,  including the granting of
some rent-free occupancy or other rent concession.

      14.3  DAMAGES.  In the event of  termination  or  retaking  of  possession
following default,  Landlord shall be entitled to recover  immediately,  without
waiting  until  the due date of any  future  rent or until  the date  fixed  for
expiration of the lease term, the following amounts as damages:

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           (1) The loss of rental  from the date of  default  until a new tenant
is, or with the  exercise of  reasonable  efforts  could have been,  secured and
paying out.

           (2) The reasonable costs of reentry and reletting including,  without
limitation, the cost of any cleanup, refurbishing,  removal of Tenant's property
and fixtures, costs incurred under Section 14.5, or any other expense occasioned
by Tenant's  default  including,  but not limited to, any  remodeling  or repair
costs, attorney fees, court costs, broker commissions, and advertising costs.

           (3) Any  excess  of the value of the rent and all of  Tenant's  other
obligations  under this  lease  over the  reasonable  expected  return  from the
premises  for the period  commencing  on the earlier of the date of trial or the
date the premises are relet,  and  continuing  through the end of the term.  The
present value of future  amounts will be computed using a discount rate equal to
the prime loan rate of major Oregon banks in effect on the date of trial.

      14.4 RIGHT TO SUE MORE THAN ONCE. Landlord may sue periodically to recover
damages during the period  corresponding to the remainder of the lease term, and
no  action  for  damages  shall  bar a later  action  for  damages  subsequently
accruing.

      14.5  LANDLORD'S  RIGHT TO CURE  DEFAULTS.  If Tenant fails to perform any
obligation  under  this  lease,  Landlord  shall  have the option to do so after
thirty (30) days' written notice to Tenant.  All of Landlord's  expenditures  to
correct the default shall be reimbursed by Tenant on demand with interest at the
rate of 12% annum  from the date of  expenditure  by  Landlord.  Such  action by
Landlord  shall not waive any other  remedies  available to Landlord  because of
default.

      14.6 REMEDIES  CUMULATIVE.  The foregoing remedies shall be in addition to
and shall not exclude any other remedy  available to Landlord  under  applicable
law.

SECTION 15.     SURRENDER AT EXPIRATION

      15.1 CONDITION OF PREMISES.  Upon  expiration of the lease term or earlier
termination on account of default, Tenant shall deliver all keys to Landlord and
surrender  the  Premises  in  as  good  a  condition  as  exists  on  the  lease
commencement date, reasonable wear and tear excepted. Alterations constructed by
Tenant with  permission  from  Landlord  shall not be removed or restored to the
original condition unless the terms of permission for the alteration so require.
Depreciation  and wear from  ordinary use for the purpose for which the Premises
are leased shall be excepted but repairs for which Tenant is  responsible  shall
be  completed to the latest  practical  date prior to such  surrender.  Tenant's
obligations under this section shall be subordinate to the provisions of Section
8 relating to destruction.

      15.2 FIXTURES

           (1) All fixtures placed upon the Premises during the term, other than
Tenant's trade  fixtures,  shall, at Landlord's  option,  become the property of
Landlord.  If Landlord so elects,  Tenant shall remove any or all fixtures  that
would otherwise  remain the property of Landlord,  and shall repair any physical
damage  resulting  from the removal.  If Tenant  fails to remove such  fixtures,
Landlord may do so and charge the cost to Tenant with interest at the legal rate
from the date of expenditure.

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           (2) Prior to expiration or other termination of the lease term Tenant
shall remove all  furnishings,  furniture,  and trade  fixtures  that remain its
property.  If  tenant  fails  to do so,  this  shall  be an  abandonment  of the
property,  and  Landlord  may retain the  property and all rights of Tenant with
respect to it shall cease or, by notice in writing given to Tenant within twenty
(20) days after removal was  required,  Landlord may elect to hold Tenant to its
obligation of removal. If Landlord elects to require Tenant to remove,  Landlord
may effect a removal  and place the  property  in public  storage  for  Tenant's
account.   Tenant  shall  be  liable  to  Landlord  for  the  cost  of  removal,
transportation to storage,  and storage,  with interest at the legal rate on all
such expenses from the date of expenditure by Landlord.

      15.3 HOLDOVER

          (1) If Tenant  does not  vacate  the  Premises  at the time  required,
Landlord  shall have the option to treat Tenant as a tenant from month to month,
subject to all of the  provisions of this lease except the  provisions  for term
and  renewal  and at a rental rate equal to 200 percent of the rent last paid by
Tenant  during the  original  term,  or to eject  tenant from the  Premises  and
recover  damages  caused  by  wrongful  holdover.  Failure  of  tenant to remove
fixtures,  furniture,  furnishings, or trade fixtures that Tenant is required to
remove under this lease shall constitute failure to vacate to which this section
shall  apply if the  property  not removed  will  substantially  interfere  with
occupancy  of the Premises by another  tenant or with  occupancy by Landlord for
any purpose including preparation for a new tenant.

           (2) If a  month-to-month  tenancy  results  from a holdover by Tenant
under this  Section  15.3,  the tenancy  shall be  terminable  at the end of any
monthly rental period on written notice from Landlord given not less than thirty
(30) days prior to the termination  date which shall be specified in the notice.
Tenant waives any notice that would otherwise be provided by law with respect to
a month-to-month tenancy.

SECTION 16.       RIGHT OF FIRST REFUSAL

         16.1 OFFER TO TENANT. Landlord agrees not to sell, transfer,  exchange,
grant an option to purchase,  or  otherwise  dispose of the Premises or any part
of, or interest in, the Premises  without first offering the Premises to Grantee
on the terms and conditions set forth in this Section 16.

          (1) When  Landlord  receives  from a third  party  (the  "Third  Party
Offeror") a bona fide offer to  purchase  the  Premises,  or a part of it, or an
interest in it,  Landlord shall give Tenant written notice (the "Notice") of the
price,  terms,  and  conditions  of the offer and deliver a copy of the executed
contract evidencing the offer (the "Offer") to Tenant.

          (2) When Tenant receives the Notice and a copy of the Offer,
Tenant shall have the prior and preferential  right to purchase the Premises (or
the part of or interest in the  Premises  covered by the Offer,  as the case may
be) at the same price and on the same terms and  conditions  as are contained in
the  Offer,  except  that if  Tenant  exercises  the right of first  refusal  by
electing  to  purchase  the  Premises  then (1) the  closing of the  transaction
contemplated  by the Offer  shall take  place no earlier  than 30 days after the
date that Tenant elects to exercise the right of first  refusal,  and (2) Tenant
shall receive a credit against the sale price of the Premises in an amount equal
to any  brokerage  commission  that Landlord may save by selling the Property to
Tenant rather than the Third-Party Offeror.

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          (3) Tenant shall have 20 days from the date Tenant receives the Notice
and a copy of the Offer to notify Landlord whether Tenant elects to purchase the
Premises  pursuant to the terms of the Offer.  If Tenant  elects to exercise its
right to purchase the  Premises,  then, in addition to giving  Landlord  written
notice of its  election  within the 20-day  period,  Tenant also shall tender an
amount equal to the earnest money deposit, if any, specified in the Offer, which
will be held and used in accordance with the terms of the Offer.

          (4) If Tenant  fails to timely  exercise  its  right to  purchase  the
Premises pursuant to the terms of this Section,  then Landlord shall be entitled
to sell the  Premises  according  to the terms of the  Offer to the  Third-Party
Offeror, subject to the terms of paragraph (5) below.

          (5) If Tenant  fails to timely  exercise  its  right to  purchase  the
Premises  pursuant  to the terms of this  Section,  and for any reason  Landlord
shall not sell or convey the  Premises to the  Third-Party  Offeror on the terms
contained  in the Offer,  then  Landlord  must  submit any other offer to Tenant
before selling the Premises,  and such offers shall be subject to Tenant's right
of first refusal under this Section.

         16.2 TERM. The term of this Right of First Refusal  commences as of the
date of this lease and  terminates on the earlier to occur of (1) the expiration
of the lease term or earlier  termination  in the event of  default,  or (2) the
consummation  of the sale of the  Premises  to a third  party  after  Tenant has
elected not to exercise its right of first  refusal.  Tenant shall  cooperate in
providing Landlord with any instruments that Landlord reasonably may require for
the  purpose  of  removing  from the  public  record  any  cloud on title to the
Premises  attributable  in any manner to the grant or existence of this right of
first refusal.

         16.3     EXCLUDED TRANSFERS. The right of first refusal created by this
Section shall not apply to:

          (1)  Any  sale  or  conveyance  of the  Premises  by  Landlord  to any
partnership,  limited partnership, joint venture, corporation, limited liability
company,  or other  entity in which  Landlord  owns and  controls at least a 33%
ownership interest; or

          (2) Any  sale,  conveyance,  or  other  transfer  to any  partnership,
limited partnership,  joint venture, corporation,  limited liability company, or
other entity in which one or more  members of 6710 LLC and/or their  descendants
owns and controls at least a 33% ownership interest.

         16.4 REAL ESTATE COMMISSION.  Landlord and Tenant each agree to pay any
commission or finder's  fees that may be due on account of Tenant's  purchase of
the Premises to any broker or finder  employed by it and to indemnify  the other
against any claims for  commissions or fees asserted by any broker  claiming by,
through, or under the indemnifying party.

         16.5 STATUTORY  DISCLAIMER.  THIS  INSTRUMENT WILL NOT ALLOW USE OF THE
PROPERTY  DESCRIBED IN THIS  INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS
AND  REGULATIONS.  BEFORE  SIGNING  OR  ACCEPTING  THIS  INSTRUMENT,  THE PERSON
ACQUIRING FEE TITLE TO THE PROPERTY  SHOULD CHECK WITH THE  APPROPRIATE  CITY OR
COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES.

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SECTION 17.     MISCELLANEOUS

      17.1  NONWAIVER.  Waiver by  either  party of  strict  performance  of any
provision of this lease shall not be a waiver of or prejudice  the party's right
to require  strict  performance  of the same  provision  in the future or of any
other provision.

      17.2 ATTORNEY FEES. If suit or action is instituted in connection with any
controversy arising out of this lease, the prevailing party shall be entitled to
recover in  addition to costs such sum as the court may  adjudge  reasonable  as
attorney fees at trial, on petition for review, and on appeal.

      17.3 NOTICES.  Any notice  required or permitted under this lease shall be
given when actually  delivered or 48 hours after deposited in United States mail
as certified  mail addressed to the address first given in this lease or to such
other address as may be specified  from time to time by either of the parties in
writing.

      17.4 SUCCESSION.  Subject to the  above-stated  limitations on transfer of
Tenant's  interest,  this lease  shall be binding on and inure to the benefit of
the parties and their respective successors and assigns.

      17.5 RECORDATION.

          (1) Landlord shall execute and  acknowledge a memorandum of this lease
in a form suitable for recording, and Tenant may record the memorandum.

          (2)  Tenant  agrees  that upon  expiration  of the lease  term or upon
sooner  termination  of this  lease,  Tenant  will  execute  and  acknowledge  a
memorandum of termination  of this lease in a form suitable for  recording,  and
Landlord may record the memorandum.

      17.6 ENTRY FOR INSPECTION. Landlord shall have the right to enter upon the
Premises at any time to determine  Tenant's  compliance with this lease, to make
necessary repairs to the building or to the Premises, or to show the Premises to
any  prospective  tenant or purchaser,  and in addition shall have the right, at
any time during the last two (2) months of the term of this lease,  to place and
maintain  upon the  Premises  notices  for  leasing or selling of the  Premises.
Landlord shall attempt to schedule its inspections with Tenant so as to minimize
disruption of Tenant's business operations at the Premises.

      17.7  INTEREST  ON RENT AND  OTHER  CHARGES.  Any  rent or  other  payment
required of Tenant by this lease  shall,  if not paid within ten (10) days after
it is due, bear interest at the rate of 12% per annum (but not in any event at a
rate greater  than the maximum  rate of interest  permitted by law) from the due
date until paid. In addition,  if tenant fails to make any rent or other payment
required by this lease to be paid to landlord  within five days after it is due,
landlord  may elect to impose a late  charge of five (5) cents per dollar of the
overdue  payment to reimburse  Landlord for the costs of collecting  the overdue
payment. Tenant shall pay the late charge upon demand by Landlord.  Landlord may
levy and collect a late charge in addition to all other  remedies  available for
Tenant's  default,  and  collection  of a late charge shall not waive the breach
caused by the late payment.

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      17.8  PRORATION OF RENT. In the event of  commencement  or  termination of
this  lease at a time other than the  beginning  or end of one of the  specified
rental  periods,  then the rent shall be prorated as of the date of commencement
or termination  and in the event of termination  for reasons other than default,
all prepaid rent shall be refunded to Tenant or paid on its account.

      17.9 TIME OF ESSENCE.  Time is of the essence of the performance of each
of Tenant's obligations under this lease.

     17.10 NO PARTNERSHIP.  Landlord is not by virtue of this lease a partner or
joint venturer with Tenant in connection with the business carried on under this
lease,  and shall have no  obligation  with  respect to Tenant's  debts or other
liabilities, and no interest in Tenant's profits.

SECTION 18.     ARBITRATION

      18.1 DISPUTES TO BE ARBITRATED. If any dispute arises between the parties,
either party may request arbitration and appoint as an arbitrator an independent
real  estate  appraiser  having  knowledge  of  valuation  of rental  properties
comparable to the Premises. The other party shall also choose an arbitrator with
such qualifications, and the two arbitrators shall choose a third. If the choice
of the  second  or third  arbitrator  is not made  within  ten (10)  days of the
choosing of the prior  arbitrator,  then either party may apply to the presiding
judge of the  judicial  district  where the  premises are located to appoint the
required arbitrator.

      18.2 PROCEDURE FOR ARBITRATION.  The arbitrator shall proceed according to
the Oregon  statutes  governing  arbitration,  and the award of the  arbitrators
shall have the effect therein provided except that the arbitrators'  award shall
be  binding.  The  arbitration  shall take place in the county  where the leases
premises are located.  Costs of the  arbitration  shall be shared equally by the
parties,  but each party shall pay its own attorney  fees incurred in connection
with the arbitration.

SECTION 19.    EXHIBITS.  The  following  Exhibits  are attached hereto and
incorporated herein as a part of this lease:

           Exhibit "A".  The Premises

                           LANDLORD:

                           6710 LLC,
                           an Oregon Limited Liability Company


                           By: /s/ Howard N. Dietrich
                           Title: Manager


                           TENANT:

                           PHOENIX GOLD INTERNATIONAL, INC.,
                           an Oregon Corporation


                           By: /s/ Timothy C. Johnson
                           Title: Executive Vice President


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Order No:  196950

                                    EXHIBIT A
                                LEGAL DESCRIPTION

PARCEL I:

Lots 1, 2, 3, 16, 17, 18 and the  Southeasterly  15 feet of Lots 4 and 15, Block
3; Lots 6, 7, 8, 9, 10 and 11, Block 4; Lots 6, 7, 8, 9, 10 and 11, Block 5; and
Lots 1, 2, 3 and the  Southeasterly  15 feet of Lot 4,  Block 6,  all in  BYAR'S
ADDITION TO ST. JOHNS, in the City of Portland, County of Multnomah and State of
Oregon.

TOGETHER WITH those portions of North Crawford  Street and North Trumbull Avenue
which accrued to said property by reason of vacation proceedings.

PARCEL II:  AMENDED

A tract of land located in the  Northwest  1/4 of Section 12,  Township 1 North,
Range 1 West of the  Willamette  Meridian,  in the City of  Portland,  County of
Multnomah and State of Oregon, more particularly described as follows:

All of Lots 1 through 5, and Lots 12 through 16, Block 4, BYAR'S ADDITION TO ST.
JOHNS.

EXCEPTING  THEREFROM the  Southwesterly  31 feet of Lots 12 through 16, Block 4,
BYAR'S ADDITION, more particularly described as follows:

Beginning  at the  Northwesterly  corner of Lot 12,  Block 4;  thence  along the
Northwesterly line of said Lot 12, North  57(degree)23'19" East, 31.00 feet to a
5/8"  iron  rod  with  yellow  plastic  cap  marked  "ACS&P  668-3151";   thence
Southeasterly and parallel to Northeasterly  line of vacated N. Crawford Street,
South  32(degree)36'41"  East 250.00 feet to a 5/8" iron rod with yellow plastic
cap marked "ACS&P 668-3151" on the Northwesterly  right-of-way line of North St.
Louis  Avenue and being on the  Southeasterly  line of Lot 16,  Block 4,  BYAR'S
ADDITION; thence Southwesterly along said Northwesterly  right-of-way line South
57(degree)23'19"  West 31.00 feet to the Southwesterly corner of said Lot 16 and
being on the Northerly  right-of-way line of vacated N. Crawford Street;  thence
Northwesterly along said Northerly right-of-way line North 32(degree)36'41" West
250.00 feet to the point of beginning.





                                                                      EXHIBIT A