Document:

EXECUTION COPY

                                            PRINCIPAL REAL ESTATE INVESTORS, LLC

                      COMMERCIAL INDUSTRIAL LEASE AGREEMENT

                      CSHV TEXAS INDUSTRIAL, L.P., LANDLORD

                                       AND

                           GVI SECURITY, INC. , TENANT

<PAGE>

                                TABLE OF CONTENTS

                                                                        Page No.

1.       PREMISES, TERM, TENANT IMPROVEMENTS, ACCEPTANCE OF PREMISES........3

2.       RENT AND SECURITY DEPOSIT..........................................3

3.       TAXES..............................................................5

4.       LANDLORD'S MAINTENANCE AND REPAIR OBLIGATIONS......................6

5.       TENANT'S MAINTENANCE AND REPAIR OBLIGATIONS........................6

6.       ALTERATIONS BY TENANT..............................................7

7.       SIGNS..............................................................8

8.       UTILITIES..........................................................8

9.       INSURANCE BY TENANT................................................9

10.      SUBROGATION OF RIGHTS OF RECOVERY..................................9

11.      CASUALTY DAMAGE...................................................10

12.      LIABILITY, INDEMNIFICATION, AND NEGLIGENCE........................10

13.      USE; COMPLIANCE WITH LAWS; PARKING................................11

14.      INSPECTION, ACCESS AND RIGHT OF ENTRY; NEW CONSTRUCTION...........12

15.      ASSIGNMENT AND SUBLETTING.........................................12

16.      CONDEMNATION......................................................13

17.      SURRENDER AND REDELIVERY OF PREMISES; HOLDING OVER................13

18.      QUIET ENJOYMENT...................................................14

19.      EVENTS OF DEFAULT.................................................14

20.      REMEDIES..........................................................15

21.      LANDLORD'S DEFAULT AND LIMITATIONS OF LIABILITY...................16

22.      MORTGAGES.........................................................16

23.      ENCUMBRANCES......................................................17

24.      MISCELLANEOUS.....................................................17

25.      NOTICES...........................................................19

26.      HAZARDOUS WASTE...................................................20

27.      LANDLORD'S LIEN...................................................21

28.      TENANT'S ACKNOWLEDGEMENTS.........................................21

29.      THIS RIDER CONTROLS...............................................12

EXHIBIT A...................................................................1

EXHIBIT A-1.................................................................2

EXHIBIT B...................................................................3

EXHIBIT C...................................................................1

EXHIBIT D...................................................................1

EXHIBIT E...................................................................1

EXHIBIT F...................................................................1

<PAGE>

                              LIST OF DEFINED TERMS

                                                                      Page No.

Additional Rent..............................................................4
Affiliate...................................................................16
Agreement...................................................................16
Base Rent....................................................................3
Building.....................................................................3
Building's Structure.........................................................6
Claimant....................................................................15
Collateral..................................................................20
Commencement Date............................................................3
Common Areas.................................................................3
Construction Management Fee..................................................7
Environmental Laws..........................................................19
Event of Default............................................................13
Expiration Date..............................................................3
Final Calendar Year..........................................................4
Hazardous or Toxic Materials................................................19
HVAC System..................................................................6
Indemnified Parties.........................................................16
Tenant Improvements..........................................................3
Land.........................................................................3
Landlord.....................................................................3
Landlord's Mortgagee........................................................16
Law.........................................................................16
Laws........................................................................16
Lease........................................................................3
Loss........................................................................10
Mortgage....................................................................16
New Premises................................................................17
Operating Expenses...........................................................4
Original Term................................................................3
Outside Broker..............................................................16
Parking Areas...............................................................11
Premises.....................................................................3
Primary Lease...............................................................16
Project.....................................................................16
Property Manager.............................................................1
Proportionate Share..........................................................3
Rent.........................................................................3
Rentals.....................................................................16
Repair Period...............................................................10
Reserved Right..............................................................11
Rules and Regulations.......................................................11
Security Deposit.............................................................5
Sign Requirements............................................................8
Taking......................................................................12
Taxes........................................................................5
Tenant.......................................................................3
Tenant Parties..............................................................16
Tenant Party................................................................16
Tenant Prospect.............................................................16
Term.........................................................................3
Transfer....................................................................11
UCC.........................................................................20
Vacation Date...............................................................11

<PAGE>

                             BASIC LEASE INFORMATION

Effective Date:                April 1, 2004

Tenant:                        GVI Security, Inc.
                               a Delaware corporation

Tenant's Address:              2801 Trade Center Drive
                               Carrollton, Texas 75006

                               Prior to Lease Commencement, Tenant's address
                               is 1621 West Crosby, Carrollton, TX 75006

Tenant's Contact:              Thomas M. Wade, President and CEO
                                                     Telephone:     972.245.7353

Tenant's Emergency Contact:                          Telephone:  (___) _________

                               CSHV Texas Industrial, L.P., a
                               Delaware limited partnership

Landlord's Address:            c/o The Holt Companies, Inc.
                               16250 Dallas Parkway, Suite 205
                               Dallas, Texas 75248

Landlord's Contact:            Liz Sheff             Telephone:     972-241-8300

Payments:                      All Rent  payments  shall be sent to  Landlord in
                               care  of  The  Holt  Companies,  Inc.  ("PROPERTY
                               MANAGER")  at the  address  below,  or such place
                               within the continental  United States as Landlord
                               may designate from time to time.

                               Payment Address: The Holt Companies, Inc.
                                                16250 Dallas Parkway, Suite 205
                                                Dallas, Texas 75248

Building:                      Frankford  Trade Center - Building #10 located in
                               Carrollton,   Dallas  County,  Texas,  comprising
                               132,396  deemed  net  rentable  square  feet,  as
                               described in Exhibit "A" attached to this lease.

Premises:                      58,864 deemed net rentable square feet as
                               outlined on the plan attached to this Lease
                               as Exhibit "A-1" and whose street address is
                               2801 Trade Center Drive, Carrollton, Texas.

Original Term:                 Sixty-six (66 months), commencing upon the
                               Commencement Date and ending at 5:00 p.m.
                               Central Standard or Daylight time on the
                               Expiration Date, subject to adjustment and
                               earlier termination as provided in the Lease.

Commencement Date:             Substantial Completion of the Tenant Improvements
                              (targeted as May 3, 2004) subject
                               to adjustment and earlier termination as provided
                               in the Lease

Expiration Date:               End of the 66th month subject to adjustment and
                               earlier termination as provided in the Lease

Security Deposit:              $31,786.56 (one month's rent)

Rent:                          The following chart is provided as an estimate of
                               Tenant's initial monthly payment broken down into
                               its  components.  This chart,  however,  does not
                               supersede  the  specific   provisions   contained
                               elsewhere in this Lease.

<TABLE>
<CAPTION>
<S>                                                                                    <C>
                               Initial Monthly Base Rent                                   $25,703.95
                               Initial Monthly Estimated Operating Expense Escrow           $2,109.29
                               Initial Monthly Estimated Real Estate Tax Escrow             $3,973.32
                                                                                       -------------------
                                                                                       -------------------
                               Total Initial Monthly Payment                               $31,786.56
                                                                                       ===================
</TABLE>

Permitted Use:                 As set forth in Section 13.

Tenant's Proportionate Share:  44.5%, which is the percentage obtained by
                               dividing: (a) the 58,864 deemed net rentable
                               square feet in the Premises by (b)
                               the 132,396 deemed net rentable square feet in
                               the Building.

Guarantor:                     N/A

                                       1
<PAGE>

The foregoing Basic Lease  Information is  incorporated  into and made a part of
this Lease  identified  above.  If any conflict  exists  between any Basic Lease
Information and the Lease, then the Lease shall control.

TENANT:

GVI Security, Inc.

Name:
                                       -----------------------------------------
Printed Name:
                                       -----------------------------------------
Title:
                                       -----------------------------------------

LANDLORD:

CSHV Texas Industrial, L.P., a Delaware
limited partnership

By:      CSHV, LLC, a Delaware limited liability
         company, its general partner

         By:      CALIFORNIA STATE TEACHERS'
                  RETIREMENT SYSTEM, its sole member

                  By:      PRINCIPAL REAL ESTATE
                           INVESTORS, LLC, a Delaware
                           limited liability company, its
                           investment advisor

                           By ______________________

                                       2
<PAGE>

                        Square Feet         58,864
                        Address:            2801 Trade Center Drive
                                            Carrollton, Texas 75006
                        Project No.:

                                 LEASE AGREEMENT

THIS LEASE  AGREEMENT  (THIS "LEASE") IS ENTERED INTO BY CSHV TEXAS  INDUSTRIAL,
L.P., A DELAWARE LIMITED  PARTNERSHIP  ("LANDLORD"),  AND GVI SECURITY,  INC., A
DELAWARE CORPORATION ("TENANT").

1.    PREMISES, TERM, TENANT IMPROVEMENTS, ACCEPTANCE OF PREMISES.

      1.1 Premises.  Landlord leases to Tenant, and Tenant leases from Landlord,
the space  depicted on the floor plan attached as Exhibit A-1 (the  "PREMISES"),
subject to the terms and conditions in this Lease.  The Premises are part of the
132,396  square foot  building  (the  "BUILDING")  located on the real  property
described  on  Exhibit  A (the  "LAND").  All  references  to  "Building"  shall
individually and  collectively  refer to all buildings and Parking Areas (herein
defined) on the Land, now and during the lease Term (defined below),  unless the
context otherwise requires.  Landlord and Tenant hereby agree that, the rentable
square  footage  contained  in the  Premises is deemed to be 58,864 net rentable
square  feet and the  rentable  square  footage of the  Building is deemed to be
132,396 net  rentable  square  feet and  Tenant's  "PROPORTIONATE  SHARE" of the
Building is 44.5%.  "COMMON AREAS" will mean all areas, space,  facilities,  and
equipment  (whether  or not  located  within the  Building)  made  available  by
Landlord for the common and joint use of Landlord, Tenant, and others designated
by  Landlord  using or  occupying  space in the  Building  or on the Land to the
extent that the Common Areas are not expressly made a part of the Premises,  and
are made available for the use of all tenants in the Building.  Landlord  hereby
grants  Tenant a  non-exclusive  right to use the Common  Areas during the lease
Term in common  with  others  designed  by  Landlord,  subject  to the terms and
conditions of this Lease,  including,  without  limitation,  the restrictions on
intended use and the Rules and Regulations (defined below).

      1.2 Term.  The lease term shall be sixty-six  (66) months,  beginning upon
the Substantial  Completion of the Tenant Improvements (targeted as May 3, 2004)
(the  "COMMENCEMENT  DATE"),  and ending  September  30,  2009 (the  "EXPIRATION
DATE"),  the original term of the Lease  ("ORIGINAL  TERM".) The Original  Term,
together with any renewals and extensions,  shall be referred to collectively as
the lease  "TERM." If the  Commencement  Date is not the first day of a calendar
month,  then the Term shall end sixty-six (66) months after the first day of the
first full calendar month of the Term. Following Substantial Completion (defined
in Exhibit B),  Landlord and Tenant shall execute an instrument  specifying  the
Commencement  Date and the  Expiration  Date of the  Original  Term.  If  Tenant
occupies  the  Premises   without   executing  an  instrument   specifying   the
Commencement  Date and Expiration Date,  Tenant shall be deemed to have accepted
the Premises for all purposes and the Commencement  Date shall be deemed to have
occurred on the earlier to occur of; (i) actual occupancy; (ii) the Commencement
Date set forth in Section 1.2, or (iii) the date Tenant commences doing business
at the Premises if Landlord  consents to an early occupancy as set forth in this
Lease.

      1.3  Tenant  Improvements.  If an  Exhibit B is  attached  to this  Lease,
Landlord  shall  construct  in  the  Premises  the  improvements   (the  "TENANT
IMPROVEMENTS" as defined in Exhibit B) described on the plans and specifications
referenced on Exhibit B.

      1.4 Tenant's  Acceptance of Premises.  By occupying  the Premises,  Tenant
accepts the Premises in its "AS-IS WHERE IS" with all faults condition as of the
date of  Tenant's  occupancy,  subject to  completion  of  punch-lists,  if any,
relating to the Tenant Improvements,  if an Exhibit B is attached. If an Exhibit
B is not attached, then Tenant accepts the Premises in its "AS-IS WHERE IS" with
all faults  condition as of the date of Tenant's  occupancy,  and Landlord shall
have no obligation to perform or pay for any repair or other work, other than as
set  forth  in  this  Lease.  Notwithstanding  the  "As Is  Where  Is"  property
acceptance,  Landlord represents that it has no actual knowledge of any material
defect in the roof,  slab,  or  structural  members of the Building  which would
materially  adversely  impact the use of the  Premises by Tenant as permitted by
this Lease.

2.    RENT AND SECURITY DEPOSIT.

      2.1 Rent; No Right of Offset.  The Base Rent, the Additional  Rent and all
other  payments  and  reimbursements  required  to be made by Tenant  under this
Lease,  including  any sums due under the attached  Exhibit B, shall  constitute
"RENT." Tenant shall make each payment of the following  items of Rent when due,
without prior notice, demand, deduction or offset.

                                       1
<PAGE>

      2.2 Base Rent.

Tenant shall pay to Landlord "BASE RENT" equal to the following  amounts for the
following periods of time:

<TABLE>
<CAPTION>

                            Time Period                               Approx. Base Rent / RSF  Monthly Base Rent
<S>                         <C>                                       <C>
The first day of Month 1    Through         The end of Month 6        $0.00*                   $0.00*
The first day of Month 7    Through         the end of Month 66       $5.24                    $25,703.95

</TABLE>

                                       3
<PAGE>

* Landlord hereby abates the first six (6) months of Base Rent. Tenant shall pay
the Operating  Expense payments and all other  obligations  accruing during such
months in  accordance  with  Section  2.3. If Tenant  defaults  under this Lease
beyond any  applicable  period of notice and cure  during the first 48 months of
the  Term,  any  remaining  rent  abatement  shall  cease  from the date of such
default,  and Tenant shall immediately pay to Landlord the unamortized  portions
of all sums previously abated hereunder.

The first monthly  installment of Base Rent,  plus the other monthly charges set
forth in Section 2.3,  shall be due on the date Tenant signs the Lease.  Monthly
installments  of Base Rent shall  then be due on the first day of each  calendar
month  following the  Commencement  Date. If the Term begins on a day other than
the first  day of a month or ends on a day  other  than the last day of a month,
the Base Rent and Additional Rent for each partial month shall be prorated.

      2.3 Additional  Rent. On the same day that Base Rent is due,  Tenant shall
pay as  "ADDITIONAL  RENT"  its  Proportionate  Share of all costs  incurred  in
owning,   operating  and  maintaining  the  Land,   Building  and  Common  Areas
(collectively "OPERATING EXPENSES").  Tenant also shall pay as "ADDITIONAL RENT"
its  Proportionate  Share of Taxes  (defined  in  Section  3) and all late  fees
incurred by Tenant.

            2.3.1 Operating Expenses.

                  2.3.1.1  Operating  Expenses  Inclusions.  Operating  Expenses
shall  include  all  expenses  and  disbursements  of every kind which  Landlord
incurs,  pays or becomes  obligated  to pay in  connection  with the  ownership,
operation and maintenance of the Building (including the associated Parking Area
as herein  defined) and Land including,  but not limited to, the following:  (1)
Taxes  (defined  below) and the cost of any tax  consultant  employed  to assist
Landlord in determining the fair tax valuation of the Building and Land; (2) the
cost of all  utilities  which  are not  billed  separately  to a  tenant  of the
Building  for  above-building  standard  utility  consumption;  (3) the  cost of
insurance;  (4) the cost of repairs,  non-capital  replacement,  market property
management  fees (which  shall not exceed  three  percent  (3%) of Base Rent and
Additional  Rent) and expenses,  asset management fees and expenses (which shall
not exceed  three  percent  (3%) of Base Rent and  Additional  Rent),  landscape
maintenance and replacement,  security service (if provided),  sewer service (if
provided),  trash service (if provided),  and a replacement  reserve for capital
items which reserve shall not exceed five cents  (.05(cent)) per rentable square
foot of the Premises per calendar year; (5) the cost of dues,  assessments,  and
other charges  applicable to the Land payable to any property or community owner
association  under  restrictive  covenants  or deed  restrictions  to which  the
Premises are subject;  (6) the cost of any labor-saving or energy-saving  device
or other  equipment  installed in the Building or on the Land,  amortized over a
period together with an amount equal to interest at an amortization  rate on the
unamortized  balance,  which  calculation  shall  be  reasonably  determined  by
Landlord;  (7)  alterations,  additions,  and  improvements  made by Landlord to
comply with Law (defined  below);  and (8) wages and salaries of personnel up to
and including the level of Property Manager.

                  2.3.1.2 Operating Expense Exclusions. Operating Expenses shall
not include the  following  (1) any loan costs for  interest,  amortization,  or
other  payments  on loans to  Landlord;  (2)  expenses  incurred  in  leasing or
procuring tenants;  (3) legal expenses other than those incurred for the general
benefit of the Building's tenants; (4) allowances,  concessions, and other costs
of  renovating  or otherwise  improving  space for  occupants of the Building or
vacant space in the  Building;  (5) income  taxes  imposed on or measured by the
income of  Landlord  from the  operation  of the  Building;  (6) rents due under
ground  leases;   (7)  costs  incurred  in  selling,   syndicating,   financing,
mortgaging,  or hypothecating any of Landlord's  interests in the Building;  (8)
expenses which are specifically  chargeable to or the specific responsibility of
any other  tenant or party,  whether or not actually  collected  from such other
tenant or party;  (9)  expenses  for which  Landlord  or  Property  Manager  has
received  payment or compensation  from any party in the form of fees or similar
charges,  including without limitation,  any Construction Management Fee or fees
or charges  imposed  for  overhead  or  administrative  costs and (10) wages and
salaries of personnel above the level of Property Manager.

                                       4
<PAGE>

                  2.3.1.3 Operating Expense Calculation and Notices. The initial
monthly  payments for Operating  Expenses  shall be calculated by taking 1/12 of
Landlord's estimate of Tenant's  Proportionate Share of Operating Expenses for a
particular  calendar  year (or any portion of a year as determined by Landlord).
The initial  monthly  payments  are  estimates  only,  and shall be increased or
decreased  annually to reflect the  projected  actual  Operating  Expenses for a
particular  year.  If Landlord  fails to give Tenant  notice of its  estimate of
Tenant's  Proportionate  Share of  Operating  Expenses in  accordance  with this
subsection for any calendar year, then Tenant shall continue  making  Additional
Rent  payments in  accordance  with the estimate for the previous  calendar year
until a new  estimate  is  provided  by  Landlord.  If during any year  Landlord
determines  that,  because of an  unexpected  increase in Operating  Expenses or
other  reasons,  Landlord's  estimate of Operating  Expenses  was too low,  then
Landlord  shall  have  the  right  to  give a new  statement  of  the  estimated
Proportionate  Share of Operating  expenses  due from Tenant for the  applicable
calendar year or the balance of the estimated  amount and to bill Tenant for any
deficiencies  which have accrued  during the calendar year or any portion of the
year,  and Tenant shall then make monthly  payments  based on the new statement.
Within a reasonable  time after the end of each calendar year and the Expiration
Date,  Landlord shall prepare and deliver to Tenant a statement showing Tenant's
actual  Proportionate  Share of Operating  Expenses for the applicable  calendar
year  together  with  additional  supporting  documents  as  may  be  reasonably
requested by Tenant,  provided  that with respect to the calendar  year in which
the Expiration  Date occurs,  (1) that the calendar year shall be deemed to have
commenced on January 1 of that year and ended on the Expiration Date (the "FINAL
CALENDAR  YEAR") and (2)  Landlord  shall have the right to estimate  the actual
Operating  Expenses  allocable to the Final Calendar  Year.  Unless Tenant makes
written  exception to any item within thirty (30) days after Landlord  furnishes
its annual  statement of Tenant's  Additional Rent (the "Review Period") and any
requested additional  documents,  the statement shall be considered as final and
accepted by Tenant. If, within the Review Period thirty (30) day period,  Tenant
requests a right to audit the books and records of Landlord  with respect to the
Operating Expenses, such audit shall be completed within thirty (30) days of the
Review  Period,  and Tenant  shall have until the 30th day after  receipt of the
audit  report to make  objection.  The audit  will only be  considered  valid if
conducted  by a  fee-basis  firm and  under no  circumstances  will the audit be
recognized as being valid if the auditor is compensated  under a contingency fee
arrangement.  Landlord  agrees to reasonably  cooperate with Tenant (or Tenant's
auditors) in  connection  with any such audit.  If an audit shall  demonstrate a
discrepancy  in favor of Tenant of more than 10%,  Landlord  shall pay all costs
and  expenses  incurred by Tenant in  connection  with such audit within 30 days
after Tenant  furnishes an invoice.  If Tenant's  total monthly  payments of its
Proportionate  Share for the  applicable  calendar  year are more than  Tenant's
actual  Proportionate Share of Operating Expenses,  then, except with respect to
the Final Calendar Year,  Landlord shall retain the excess and credit the amount
against  Tenant's  future  Additional  Rent payments.  With respect to the Final
Calendar Year,  Landlord  shall pay to Tenant the amount of all excess  payments
(including  any excess  payments from prior years which have not been applied to
Additional Rent payments), less any additional amounts then owed to Landlord. If
Tenant's total monthly payments of its Proportionate Share of Operating Expenses
for any year are less than  Tenant's  actual  Proportionate  Share of  Operating
Expenses for that year,  tenant shall pay the difference to Landlord  within ten
(10) days after Landlord's request for payment. There shall be no duplication of
costs for  reimbursements  in calculating  Operating  Expenses.  For purposes of
calculating  additional Rent under Section 2.3.1.3,  the Controllable  Operating
Expenses (defined below) for each calendar year after 2004 shall not increase by
more than seven percent (7%) over the  Controllable  Operating  Expenses for the
previous calendar year on a cumulative basis.  "Controllable Operating Expenses"
shall mean all items of  Operating  Expenses  which are  within  the  reasonable
control of Landlord; thus, excluding Taxes, insurance, utilities and other costs
beyond the reasonable control of Landlord.

                  2.3.1.4 Grossed-Up Operating Expenses.  If during any year the
Building is less than one hundred percent (100%) occupied, then, for purposes of
calculating  Tenant's  Proportionate  Share of Operating Expenses for that year,
the amount of Operating  expenses that fluctuates with Building  occupancy shall
be  "grossed-up" to the amount which, in Landlord's  reasonable  estimation,  it
would have been had the Building been one hundred  percent  (100%)  occupied for
that entire year.  In the event that  Landlord,  in  calculating  the  Operating
Expenses of the Building,  "grosses-up"  the Operating  Expenses that  fluctuate
with  Building  occupancy  incurred  during the year in question,  then Landlord
agrees that the  "gross-up" of Expenses  shall be limited to Operating  Expenses
that  fluctuate  with Building  occupancy  and the following  items of Operating
Expenses shall not be adjusted in the  "gross-up"  calculation:  (1) Taxes,  (2)
amortized  capital  improvement  costs, (3) insurance  premiums,  (4) management
fees, (5) landscaping  expenses,  (6) building security costs, and (7) any other
fixed-cost  items  that are not  subject  to  fluctuation  based  on  occupancy.
Notwithstanding the aforementioned  exclusions from the "gross-up"  calculation,
Tenant agrees to pay the management fees directly  attributable to its space and
this lease.

            2.3.2  Late Fee.  If any Rent or other  payment  required  of Tenant
under this  Lease is not paid when due more than twice in any twelve  (12) month
period  and no more  than  three  times  over the  Original  Term of the  Lease,
Landlord may charge Tenant, and Tenant shall pay upon demand a fee equal to five
percent (5%) of the  delinquent  payment to reimburse  Landlord for its cost and
inconvenience  incurred as a consequence of Tenant's delinquency . All such fees
shall be Additional Rent.

      2.4 Initial Monthly Rent. The amounts of the initial monthly Base Rent and
Additional Rent for Tenant's Proportionate Share of Operating Expenses and Taxes
are as follows:

          Base Rent (Section 2.2)   .............................   $25,703.95
          Operating Expenses, excluding Taxes (Section 2.3.1)....    $2,109.29
          Taxes (Sections 2.3.1 and 3.1).........................    $3,973.32
          Total initial monthly payment..........................   $31,786.56

      2.5 Security Deposit. Tenant shall deposit with Landlord, on the date this
Lease is  executed  by Tenant,  a  security  deposit  in the  initial  amount of
$31,786.56 (the "SECURITY  DEPOSIT"),  which shall be held by Landlord to secure
Tenant's  obligations  under this Lease.  The Security Deposit is not an advance
rental  deposit  or a measure  of  Landlord's  damages  for an Event of  Default
(defined below). Landlord may use any portion of the Security Deposit to satisfy
Tenant's  unperformed  obligations (after any required notice and opportunity to
cure to be given Tenant) under this Lease, to reimburse  Landlord for performing
any such  obligations  or to  compensate  Landlord for its damages  arising from
Tenant's  failure  to  perform  its  obligations,  without  prejudice  to any of
Landlord's other remedies.  If so used, Tenant shall, upon request, pay Landlord
an amount  that will  restore  the  Security  Deposit  to its  original  amount.
Landlord also may require Tenant to provide  Landlord with an additional  amount
to be held as part of the Security Deposit if Tenant commits a material monetary
default before  reinstating the Lease.  The Security Deposit shall be Landlord's
property.  Tenant  shall not be entitled to  interest  on any  security  deposit
amount and Landlord may commingle  such  Security  Deposit with any other of its
funds. Tenant agrees that it will not assign or encumber or attempt to assign or
encumber the monies  deposited  with  Landlord as the Security  Deposit and that
Landlord and its successors and assigns shall not be bound by any such actual or
attempted assignment or encumbrance.  The unused portion of the Security Deposit
will be returned to Tenant within a reasonable  time after the  Expiration  Date
(but not more than 30 days), provided that Tenant has fully and timely performed
its obligations under this Lease.

                                        5
<PAGE>

3.    TAXES

      3.1 Real  Property  Taxes.  The term  "TAXES"  shall  include  all  taxes,
assessments and governmental charges that accrue against the Premises, the Land,
and the Building,  whether federal,  state,  county,  or municipal,  and whether
imposed by taxing or management  districts or authorities  presently existing or
hereafter  created.  Landlord shall pay the Taxes, and Tenant shall pay Landlord
for Tenant's  Proportionate  Share of the Taxes.  If, during the Term,  there is
levied,  assessed or imposed on Landlord a capital levy or other tax directly on
the Rent; or a franchise tax,  assessment,  levy or charge measured by or based,
in whole or in part, upon the Rent; then all such taxes, assessments,  levies or
charges,  or any part so  measured or based,  shall be included  within the term
"Taxes." If the Building is occupied by more than one tenant and the cost of any
improvements constructed in the Premises for Tenant is disproportionately higher
than the cost of  improvements  constructed  in the premises of other tenants of
the  Building,  then  Landlord  may require  that Tenant pay the amount of Taxes
attributable  to such  improvements  in addition to its  Proportionate  Share of
other Taxes. In determining whether the cost of any improvements  constructed in
the  Premises  for  Tenant  is  disproportionately   higher  than  the  cost  of
improvements  constructed  in the  premises  of other  tenants of the  Building,
Landlord will consider factors including, but not limited to, the following: (1)
percentage of office finish of the Premises,  (2) levels of office  finish,  (3)
air  conditioning,  (4)  parking,  (5) and other  differing  and  distinguishing
factors between the  improvements  constructed in the Tenant's  Premises and the
improvements  constructed  in the  premises  of  other  tenants  which  Landlord
reasonably determines impact the assessed value of the Taxes.

      3.2 Personal Property Taxes. Tenant shall before delinquency pay all taxes
and assessments levied or assessed against any personal property, trade fixtures
or alterations  placed in or about the Premises;  and upon  Landlord's  request,
deliver to it receipts from the  applicable  taxing  authority or other evidence
acceptable  to  Landlord  to verify  that the taxes have been paid.  If any such
taxes are levied or assessed against Landlord or its property,  and (1) Landlord
pays them or (2) the assessed  value of  Landlord's  property is  increased  and
Landlord pays the increased taxes,  then Tenant shall pay to Landlord the amount
of all such taxes  within ten (10) days after  Landlord's  request  for  payment
together with appropriate and reasonable  supporting  documentation to establish
Tenant's  responsibility  for such  amounts.  If Tenant fails to pay to Landlord
such amount  within ten (10) days after  Landlord's  request,  all such  amounts
shall bear  interest  from the date paid by  Landlord to the  applicable  taxing
authority until reimbursed by Tenant at the rate set forth in Section 24.13.

4. LANDLORD'S MAINTENANCE AND REPAIR OBLIGATIONS. This Lease is intended to be a
net lease;  accordingly,  Landlord's maintenance obligations shall be limited to
only the replacement of the Building's roof, maintenance of the foundation,  and
maintenance of the structural  members of the exterior walls  (collectively  the
"BUILDING'S  STRUCTURE").  Landlord  shall also be responsible to Tenant to make
any  maintenance,  repairs  or  replacements  to  Common  Areas  which  are  the
responsibility of any other tenant of the Building but which are not provided by
such other tenant or party in a timely or appropriate manner. Landlord shall not
be responsible for: (1) other than in emergency  situations of which Landlord or
Property  Manager  have actual  knowledge,  any such  maintenance  until  Tenant
delivers  to  Landlord  written  notice  of the need for  maintenance,  (2) such
alterations to the Building's  Structure required by Law because of Tenant's use
of the Premises (all alterations shall be performed by Tenant), (3) roof repairs
above the Premise or in the immediate  vicinity  thereof  unless such repairs or
maintenance are the specific  responsibility  of or  specifically  chargeable to
another  party,  such as  another  tenant in the  Building  (all  costs for such
repairs are Operating  Expenses charged to Tenant pursuant to Section  2.3.1.1),
or (4) repairs to interior  columns of the Building located within the Premises.
The Building's  Structure does not include  skylights,  windows,  glass or plate
glass, doors,  special  storefronts or office entries,  all of which, if located
within the Premises,  shall be maintained by Tenant.  Except for maintaining the
Building's  Structure,  Landlord  shall not be required to maintain or repair at
Landlord's expense any other portion of the Premises.  Landlord's  liability for
any  defects,  repairs,   replacement  or  maintenance  for  which  Landlord  is
responsible  under this Lease  shall be limited to the cost of  performing  such
work. All repairs and replacements performed by or on behalf of Landlord (or any
other tenant or party) shall be performed in a good and  workmanlike  manner and
within a reasonable time period.

5.    TENANT'S MAINTENANCE AND REPAIR OBLIGATIONS

      5.1 Tenant's Maintenance of the Premises.  Tenant shall maintain all parts
of the  Premises  except for  maintenance  work for which  Landlord is expressly
responsible  for under Section 4 in good  condition and shall  promptly make all
necessary repairs and replacements to the Premises. All repairs and replacements
performed by or on behalf of Tenant shall be performed in a good and workmanlike
manner acceptable in all respects to Landlord, and in accordance with Landlord's
standards applicable to alterations or improvements performed by Tenant.

      5.2 Tenant's  Maintenance  of the Common Areas.  Tenant shall maintain the
Common Areas,  including,  without limitation,  the Parking Areas, truck courts,
driveways,  alleys and grounds  surrounding the Premises in a clean and sanitary
condition,  consistent  with the  operation  of a  first-class  office/warehouse
building.  Tenant's maintenance  obligations shall include,  without limitation,
the prompt  maintenance,  repair and  replacement of (1) any drill or spur track
servicing the Premises,  (2) the exterior of the Building,  including  painting,
(3) the irrigation  sprinkler  systems and sewage lines, and (4) any other items
normally  associated  with the  foregoing.  Tenant  shall repair and pay for any
damage  caused by a Tenant  Party  (defined  below) or caused by any  failure by
Tenant to perform  obligations  under this  Lease.  Tenant and any Tenant  Party
shall not do  anything  that would  inhibit or prevent  other  tenants'  use and
enjoyment of the Common Areas.

                                       6
<PAGE>

      5.3 HVAC System.  Tenant shall  maintain,  the hot water equipment and the
heating,  air  conditioning,  and  ventilation  equipment  and system (the "HVAC
SYSTEM") in good repair and condition  and in  accordance  with Law and with the
equipment manufacturers' suggested  operation/maintenance  service program. Such
obligation shall include the replacement of all equipment  necessary to maintain
the HVAC System  servicing the Premises in good working  order.  Within ten (10)
days after the  Commencement  Date,  Tenant shall deliver to Landlord  copies of
contracts entered into by Tenant for regularly scheduled preventive  maintenance
and service contracts for the HVAC System, each contract in a form and substance
and with a contractor  reasonably acceptable to Landlord. At least fourteen (14)
days before the Expiration  Date, the earlier  termination of this Lease, or the
termination of Tenant's  right to possess the Premises,  Tenant shall deliver to
Landlord a  certificate  from an  engineer  reasonably  acceptable  to  Landlord
certifying  that the HVAC  System  is then in good  repair  and  working  order,
reasonable  wear and tear excepted.  Landlord  warrants and represents  that the
HVAC System  shall be  installed  new  pursuant to Exhibit B and Tenant shall be
able to take  advantage of any existing  warranty  held by Landlord for the HVAC
System and Landlord shall cooperate in seeking any covered warranty repairs.

      5.4 Landlord's Optional Performance of Tenant's Obligations.  Landlord has
the right,  but not the  obligation,  to perform  or  provide  any  maintenance,
repairs or  replacements  to be  performed by Tenant under this Section 5 and to
provide any utility  service which Tenant is required to provide under Section 8
below,  upon notice to Tenant.  Should  Landlord  elect to do so,  Tenant  shall
reimburse Landlord for all expenses and costs incurred by Landlord in performing
Tenant's  obligations  plus an  additional  five  percent (5%) of such amount to
compensate  Landlord for the overhead and  administrative  costs relating to the
performance  of all such  obligations.  All such amounts owing  pursuant to this
Section 5 shall be deemed Rent under this Lease, which Tenant shall pay Landlord
within ten (10) days after Landlord's request for payment.

6.    ALTERATIONS BY TENANT.

      6.1 No Tenant  Alterations.  Except to the extent required of Tenant under
Section 5 or except in emergency situations,  Tenant shall not make any changes,
modifications,  alterations,  additions  or  improvements  to the  Premises,  or
install any heat or cold  generating  equipment  (excluding  personal  fans), or
other  equipment,  machinery or devices in the Premises or any other part of the
Building without the prior written consent of Landlord,  which consent shall not
be unreasonably  withheld.  Minor reconfiguration of office spaces (which do not
impact  the  roof,   foundation,   HVAC,   or   structural   members),   or  the
reconfiguration  of office desks or cubicles or warehouse  storage layouts shall
not be considered  alterations or changes requiring  Landlord  approval.  Unless
Landlord  specifies  in  writing  otherwise,  all  alterations,  additions,  and
improvements shall be Landlord's property when installed in the Premises.

      6.2  Requirements for Landlord's  Written  Consent.  Landlord shall not be
required to notify  Tenant of whether it consents  to any  material  alterations
until it has received plans and specifications  which are sufficiently  detailed
to allow construction of the work depicted in them to be performed in a good and
workmanlike  manner,  and Landlord has had a  reasonable  opportunity  to review
them.  Without in any way  limiting  Landlord's  rights to refuse its consent to
Tenant's  proposed  alterations,  if  Landlord  consents  in writing to Tenant's
proposed  alterations,  then  Landlord's  consent shall be  conditioned  without
limitation on all of the following: (1) Landlord's approval of the contractor or
person making the alterations and approving each contractor's insurance coverage
provided  in  connection  with  the  alterations  and  their  installation,  (2)
Landlord's  supervision of their installation,  (3) Landlord's approval of final
and  complete  plans  and   specifications   for  the   alterations   and  their
installation,  (4) the appropriate governmental agency, if any, having final and
complete   plans  and   specifications   for  such  work,   and  (5)  Landlord's
determination of whether any changes, modifications,  alterations,  additions or
improvements  to the Premises,  or  installations  of any equipment or machinery
would do any of the following: (i) affect structural or load bearing portions of
the Premises or the Building,  (ii) result in a material  increase of electrical
usage  above the normal type of amount of  electrical  current to be provided by
Landlord,  (iii)  result  in an  increase  of  Tenant's  use of  heating  or air
conditioning,  (iv) impact  mechanical,  electrical  or plumbing  systems in the
Premises or the  Building,  (v) affect areas of the Premises  that can be viewed
from Common Areas, (vi) require greater or more difficult cleaning work, such as
kitchens,  reproduction  rooms,  or interior  glass  partitions,  etc., or (vii)
violate any  provision in Sections 13 or 26 of this Lease or Exhibit B, attached
hereto. If the alterations will affect the Building's Structure, HVAC System, or
mechanical,  electrical,  or plumbing systems, then the plans and specifications
must be prepared  by a licensed  engineer  reasonably  acceptable  to  Landlord.
Landlord's   approval   of  any  plans  and   specifications   shall  not  be  a
representation  that the plans or the work depicted in them will comply with any
applicable Law (defined below) or be adequate for any purpose,  but shall merely
be Landlord's  consent to Tenant's  installation  of the  alterations.  Landlord
shall have the right, but not the obligation,  to periodically  inspect the work
in the Premises and may require  reasonable  changes in the method or quality of
the work. If  Landlord's  consent is granted,  any such changes,  modifications,
alterations,  additions, improvements or installations shall be made at Tenant's
sole cost and expense.

      6.3 Tenant's  Obligations.  Upon completion of any material  alteration to
the Building Structure, Tenant shall deliver to Landlord accurate,  reproducible
"as-built"  plans. If Tenant has not delivered to Landlord the as-built drawings
within thirty (30) days of completion of the alterations,  Landlord may contract
for  production  of  as-built  drawings  at  Tenant's  sole cost and  expense by
providing  Tenant five (5) days written notice of Landlord's  intent to contract
for such  drawings.  Tenant shall  reimburse  Landlord for such costs within ten
(10) days of Landlord's request for payment. All work performed by Tenant in the
Premises,  including work relating to the alterations or their repair,  shall be
performed  in a good and  workmanlike  manner in  accordance  with Law  (defined
below) and with Landlord's and Landlord's insurance carriers' specifications and
requirements.

      6.4  Ownership  of  Alterations.  Upon  the  Expiration  Date  or  earlier
termination  of this Lease,  Tenant shall return the Premises to Landlord  clean
and in the  condition  existing  at  the  time  Tenant  took  possession  of the
Premises,  except for: (1) ordinary wear and tear,  (2) damage that Landlord has
the  obligation  to  repair  under  the terms of this  Lease,  (3) all  changes,
modifications,  alterations, additions or improvements that Tenant does not have
the  obligation to remove under the terms of this Section 6.4, and (4) damage by
casualty.  Except as provided below,  all changes,  modifications,  alterations,
additions or improvements  and property at the Premises  (including wall to wall
carpeting,  paneling  or other  wall  covering  and any other  surface  material
attached  to or  affixed to the floor,  wall or  ceiling of the  Premises)  will
remain in and be  surrendered  with the  Premises  upon the  Expiration  Date or
earlier  termination of this Lease, and Tenant waives all rights to any payment,
reimbursement  or compensation for the property that must remain at the Premises
in  accordance  with this  subsection.  Tenant  must,  however,  remove from the
Premises prior to the Expiration  Date or earlier  termination of this Lease any
changes, modifications, alterations, additions or improvements that Landlord has
designated  for  removal  at the time of  Landlord's  written  approval  of such
changes, modifications, alterations, additions or improvements. Tenant shall not
be required  to remove  from the  Premises  any of the  changes,  modifications,
alterations, additions or improvements that are constructed in the Premises with
the Construction  Plans (as defined in Exhibit "B") or those that do not require
Landlord's  approval.  Tenant  must  promptly  repair  any  damage  which is not
attributable  to ordinary wear and tear to the Premises caused by its removal of
personal   property,   changes,   modifications,   alterations,   additions   or
improvements.

                                       7
<PAGE>

      6.5 Trade Fixtures.  Tenant may erect shelves,  bins,  machinery and trade
fixtures  provided  that such items (1) do not alter the basic  character of the
Premises or the Building; (2) do not overload or damage the same; and (3) may be
removed without damage to the Premises (such shelves,  bins, machinery and trade
fixtures  may be bolted or attached to the floors or  building as  necessary  or
desirable provided that such damages may be patched upon removal,  all damage is
repaired  in a good and  workmanlike  manner and the  Building is resited to its
original  condition).  All such shelves,  bins,  machinery  which is utilized by
Tenant in Tenant's business  operations and trade fixtures shall remain Tenant's
property. Unless Landlord specifies in writing otherwise, all other alterations,
additions,  and improvements  (including,  without  limitation HVAC compressors,
heaters, and fans) shall be Landlord's property when installed in the Premises.

      6.6  Construction  Management  Fee. In  connection  with any such material
alteration,   addition  or  improvement,   when  Landlord   approval  or  actual
construction  management is needed, Tenant shall pay to Landlord a "CONSTRUCTION
MANAGEMENT FEE" of five percent (5%) of all costs incurred for such work.

7.    SIGNS

      7.1 Premises' Exterior.  Tenant shall not without Landlord's prior written
consent (1) make any changes to the  exterior of the  Premises or the  Building,
(2) install any exterior lights, decorations, balloons, flags, pennants, banners
or paintings, (3) erect or install any signs, windows, blinds, draperies, window
treatments,  bars, security installations,  or door lettering, decals, window or
glass-front  stickers,  placards,  decorations or advertising  media of any type
that is visible from the exterior of the Premises.

      7.2  Requirements for Landlord's  Written  Consent.  Landlord shall not be
required  to notify  Tenant in writing of whether it  consents to any sign until
Landlord (1) has received  detailed,  to-scale  drawings  specifying the design,
material composition,  color scheme, and method of installation, and (2) has had
a reasonable opportunity to review them. Notwithstanding the foregoing, Landlord
shall provide its consent in its sole discretion.

      7.3 Sign Requirements.  Signs and lettering will generally be as reflected
in Exhibit E, if applicable. Tenant shall erect any signs in accordance with the
plans and  specifications,  in a good and workmanlike manner, in accordance with
all  Laws and  architectural  guidelines  in  effect  for the area in which  the
Building  is  located  and  will  obtain  all  requisite  approvals  (the  "SIGN
REQUIREMENTS"), and in a manner so as not to unreasonably interfere with the use
of the Building  grounds while such  construction  is taking place;  thereafter,
Tenant  shall  maintain  the  sign in a  good,  clean,  and  safe  condition  in
accordance with the Sign Requirements.

      7.4 Sign Removal. After the Expiration Date or earlier termination of this
Lease or after  Tenant's  right to  possess  the  Premises  has been  terminated
pursuant to Section 20,  Landlord  may  require  that Tenant  remove the sign by
delivering  to  Tenant   written  notice  within  thirty  (30)  days  after  the
termination of the Lease. If Landlord so requests,  Tenant shall within ten (10)
days after  Tenant's  receipt of the notice  remove the sign,  repair all damage
caused by the sign and its installation and removal, and restore the Building to
its condition before the installation of the sign including, but not limited to,
making the following  restoration  and repair work:  hole  punching,  electrical
work, and repair of Building exterior  discolorization or fading made noticeable
by removal of the signage. If Tenant fails timely to remove the sign and perform
the repair work, Landlord may, without compensation to Tenant, (1) use the sign,
or (2) at Tenant's expense, remove the sign, perform the related restoration and
repair work, and dispose of the sign in any manner Landlord deems appropriate.

8.  UTILITIES.  Tenant  shall  obtain and pay for all water,  gas,  electricity,
telephone,  fiber optic lines and sewer  (collectively,  the "Utility Services")
and other utilities and services used at the Premises,  together with any taxes,
penalties,  surcharges,  maintenance  charges, and similar charges pertaining to
Tenant's  use of the  Premises.  Tenant  shall heat the Premises as necessary to
prevent  any freeze  damage to the  Premises  or any  portion.  Tenant's  use of
electric current shall at no time exceed the capacity of the feeders or lines to
the  Building  or the  risers  or wiring  installation  of the  Building  or the
Premises.  Landlord may, at Tenant's  expense,  separately meter and bill Tenant
directly  for its use of any such  utility  service,  in which  case the  amount
separately  billed to Tenant for Building  standard utility service shall not be
duplicated  in Tenant's  obligation  to pay  Additional  Rent under Section 2.3.
Landlord shall not be liable for any  interruption or failure of utility service
to the  Premises  except to the  extent of rent  abatement  hereafter  provided.
Unless such interruption or failure is the direct result of the gross negligence
or willful misconduct of Landlord and continues for five (5) consecutive days or
more,  any  interruption  or  failure in any  utility  or  service  shall not be
construed as an eviction, constructive or actual of Tenant or as a breach of the
implied  warranty  of  suitability,  and  shall  not  relieve  Tenant  from  the
obligation  to perform any covenant or agreement  under this Lease.  In no event
shall Landlord be liable for damage to persons or property,  including,  without
limitation,  business  interruption,  damages,  or shall  Landlord be in default
under this Lease, as a result of any such  interruption or failure.  All amounts
due from Tenant under this Section 8 shall be payable within ten (10) days after
Landlord's  request for payment.  Notwithstanding  the  foregoing,  if Tenant is
prevented  from  making  reasonable  use  of  the  Premises  for  its  warehouse
operations more than five (5) consecutive days because of the  unavailability of
any such  utility  service,  and such  unavailability  was  primarily  caused by
Landlord's  gross  negligence or willful  misconduct,  then Tenant shall, as its
exclusive  remedy,  be  entitled  to a  reasonable  abatement  of Rent  for each
consecutive  day after the expiration of such five (5)-day period that Tenant is
so prevented from making  reasonable use of the Premises.  Landlord warrants and
represents that, as of the Commencement Date (subject to Tenant's  obligation to
establish Tenant's account for each), the Utility Services will be available for
Tenant's   utilization  in  accordance  with  Tenant's   contract  with  utility
providers.

                                       8
<PAGE>

9.  INSURANCE BY TENANT.  Tenant  shall,  during the Lease Term,  procure at its
expense and keep in force the following insurance:

      9.1 Commercial General Liability  Insurance.  Commercial general liability
insurance  naming  the  Landlord,  Landlord's  Mortgagee  (defined  below),  and
Property  Manager as  additional  insureds  and loss payees  against any and all
claims for bodily and property damage occurring in or about the Premises arising
from or in  connection  with  Tenant's  use or occupancy  of the  Premises.  The
insurance policy or policies shall have a combined single limit of not less than
One Million  Dollars  ($1,000,000)  per  occurrence  with a Two  Million  Dollar
($2,000,000)  aggregate  limit and excess  umbrella  liability  insurance in the
amount of Two Million Dollars  ($2,000,000).  If Tenant has other locations that
it owns or leases,  the policy  shall  include an  aggregate  limit per location
endorsement.  The liability insurance shall be primary and not "contributing to"
any insurance available to Landlord, and Landlord's insurance shall be in excess
of all of Tenant's insurance. In no event shall the limits of Tenant's insurance
limit its liability under this Lease.

      9.2 Property  Insurance.  Property insurance  insuring:  (1) all fixtures,
alterations,  additions, partitions, improvements and equipment installed in the
Premises, (2) trade fixtures,  (3) inventory,  and (4) personal property located
on or in the  Premises  for perils  covered by the causes of loss - special form
(all risk), including coverage for flood, earthquake and damages from any boiler
and machinery,  if applicable.  The insurance  shall be written on a replacement
cost  basis  in an  amount  equal  to one  hundred  percent  (100%)  of the full
replacement value of the aggregate of the foregoing.

      9.3 Workers' Compensation  Insurance.  Workers' compensation  insurance in
accordance  with  the  Laws of the  State  of  Texas  and  employer's  liability
insurance   in  an  amount  not  less  than  Five   Hundred   Thousand   Dollars
($500,000.00).  The worker's  compensation  insurance must include an all-states
endorsement.

      9.4  Other  Insurance.  Time  element  and/or  business  income  insurance
covering  the loss of rental  income for a period of up to eighteen  (18) months
that may  occur as a result  of loss or  damage  to the  Building  caused  by an
insured peril. This policy or policies must name Tenant and Guarantor as insured
and must also name Landlord, Property Manager and Landlord's Mortgagees (defined
below) as additional  insureds  (endorsement form CG 2026 1185) and loss payees,
and  must  contain  a  mortgagee  clause  in  favor  of  Landlord's   designated
mortgagees.  Tenant shall also keep in force all other  insurance  that Landlord
deems necessary and prudent or that is required by Landlord's  beneficiaries  or
mortgagees  of any deed of trust  or  mortgage  encumbering  the  Premises,  the
Building,  or the Land.  Landlord's right to casualty  proceeds against Tenant's
Property (as hereinafter defined) is subject to Section 27.

      9.5 Standard of Tenant's Insurance.  Each policy required to be maintained
by Tenant shall be with companies  rated A-X or better in the most current issue
of  Best's  Insurance  Reports  and  will  contain  endorsements  that  (1) such
insurance  may not lapse with respect to Landlord or its Property  Manager or be
canceled or amended with respect to Landlord or its Property Manager without the
insurance  company's  giving  Landlord and its Property  Manager at least thirty
(30) days prior written notice of every  cancellation  or amendment,  (2) Tenant
shall be solely responsible for payment of premiums, (3) in the event of payment
of any loss covered by any policy,  Landlord or  Landlord's  designees  shall be
paid first by the insurance  company for Landlord's loss and Tenant's  insurance
shall be primary in the event of overlapping  coverage with insurance  which may
be carried by Landlord.  Insurers  shall be licensed to do business in the state
in which the  Premises  are  located and  domiciled  in the United  States.  Any
deductible  amounts  under any  required  insurance  policies  shall not  exceed
$1,000.  Tenant shall deliver to Landlord duplicate originals of certificates of
insurance,  and  certified  copies of the policies  when  requested by Landlord.
Tenant shall have the right to provide  insurance in a "blanket"  policy, if the
required  blanket  policy  expressly  provides  coverage to the  Premises and to
Landlord as required by this Lease.

      9.6 Landlord's Rights. In the event Tenant does not purchase the insurance
required by this Lease or keep any required  insurance in full force and effect,
Landlord  may, but shall not be obligated to,  purchase the necessary  insurance
and pay the premium.  Tenant shall repay to Landlord,  as Additional  Rent,  the
amount so paid  promptly  upon demand.  In  addition,  Landlord may recover from
Tenant and Tenant  agrees to pay,  as  Additional  Rent,  any and all  expenses,
including attorneys' fees,  litigation expenses,  and damages which Landlord may
sustain by reason of the failure of Tenant to obtain and maintain any insurance.

      9.7 Nature of Tenant's  Obligation.  Tenant's insurance  obligations under
this Section 9 are freestanding obligations which are not dependent on any other
conditions or obligations under this Lease.

                                       9
<PAGE>

10. SUBROGATION OF RIGHTS OF RECOVERY.  LANDLORD AND TENANT MUTUALLY WAIVE THEIR
RESPECTIVE  RIGHTS OF RECOVERY AGAINST EACH OTHER FOR ANY LOSS OF, OR DAMAGE TO,
EITHER PARTYS' PROPERTY,  TO THE EXTENT THAT THE LOSS OR DAMAGE IS INSURED UNDER
AN INSURANCE POLICY REQUIRED UNDER THIS LEASE TO BE IN EFFECT AT THE TIME OF THE
LOSS OR DAMAGE. Each party shall obtain any special endorsements, if required by
its  insurer,  under  which the insurer  shall  waive its rights of  subrogation
against the other party.  The  provisions  of this Section 10 shall not apply in
those  instances  in which  waiver of  subrogation  would cause  either  party's
insurance coverage to be voided or otherwise made uncollectible. Notwithstanding
the foregoing,  Landlord's  waiver of liability  under this Section 10 shall not
apply to Landlord's right to seek  compensation  from Tenant or any Tenant Party
for any deductible amounts under Landlord's insurance.

11.   CASUALTY DAMAGE.

      11.1 Total  Destruction.  Tenant  promptly  shall give  written  notice to
Landlord  of any  damage to the  Premises,  the  Building,  or the Land.  If the
Premises,  the Building,  or the Land are totally destroyed by an insured peril,
or so damaged by an insured peril that, in Landlord's estimation,  rebuilding or
repairs cannot be substantially  completed (exclusive of leasehold  improvements
Tenant  makes)  within two hundred  ten (210) days after the date of  Landlord's
actual  knowledge  of the damage,  then  Landlord  may  terminate  this Lease by
delivering to Tenant written notice of termination within thirty (30) days after
the damage. If the Premises,  the Building, or the Land are totally destroyed by
an  insured  peril,  or so  damaged  by an insured  peril  that,  in  Landlord's
estimation,  rebuilding or repairs cannot be substantially  completed (exclusive
of leasehold  improvements Tenant makes) within two hundred ten (210) days after
the date of Landlord's actual knowledge of the damage, then Landlord may, at its
expense  (including,  to  the  extent  insured  by  Landlord,   Tenant's  direct
administrative  and  overhead  costs),   relocate  Tenant  to  space  reasonably
comparable  to the  Premises,  provided  that  Landlord  notifies  Tenant of its
intention to do so in a written  notice  delivered to Tenant  within thirty (30)
days after the damage. and further provided that such space shall be immediately
available for construction of Tenant's leasehold improvements).  Such relocation
may be for a portion of the remaining  Term or the entire Term.  Landlord  shall
complete  any such  relocation  within  ninety  (90)  days  after  Landlord  has
delivered such written notice to Tenant.  If Landlord does not elect to relocate
Tenant  following such damage to the Premises or the Building and Tenant did not
cause such  damage,  then  Tenant may  terminate  this  Lease by  delivering  to
Landlord  written notice of  termination  within (15) days following the date on
which  Landlord  notifies  Tenant  in  writing  of the  estimated  time  for the
restoration.  In either  event,  the Rent shall be abated  during the  unexpired
portion of this Lease,  effective upon the date the damage occurred.  Time is of
the  essence  with  respect  to  the  delivery  of all  notices  of  damage  and
termination.  Notwithstanding the foregoing,  Tenant may not terminate the Lease
if Tenant caused the damage.  Notwithstanding the foregoing,  the Rent shall not
be abated if a Tenant  Party  caused  the  damage or if Tenant  fails to keep in
force the loss of rents insurance described in Section 9.4 above.

      11.2  Restoration  of Premises.  Subject to Section 11.3, if this Lease is
not  terminated  under  Section  11.1 (or if the  Building or the  Premises  are
damaged  but not  totally  destroyed  by any insured  peril,  and in  Landlord's
estimation,  rebuilding  or repairs can be  substantially  completed  within two
hundred ten (210) days after the date of  Landlord's  actual  knowledge  of such
damage,  this Lease  shall not  terminate),  then  Landlord  shall  restore  the
Premises to substantially its previous condition, except that Landlord shall not
be  required to rebuild,  repair or replace any part of the  alterations,  other
improvements,  or personal property required to be covered by Tenant's insurance
under Section 9. If the Premises are  untenantable,  in whole or in part, during
the period  beginning on the date the damage  occurred and ending on the date of
substantial  completion of Landlord's  repair or  restoration  work (the "REPAIR
PERIOD"),  then the Rent for that period  shall be reduced to such extent as may
be fair and reasonable under the circumstances and the Term shall be extended by
the number of days in the Repair Period,  provided that the Rent shall be abated
only to the extent Landlord is compensated for all Rent amounts by loss of rents
insurance  described in Section 9.4 above.  Notwithstanding  the foregoing,  the
Rent shall not be abated if Tenant intentionally  (including any act or omission
of Tenant or parties under Tenant's  supervision or control caused the damage or
if  Tenant  fails to keep in force  the loss of  rents  insurance  described  in
Section 9.4 above.

      11.3 Insurance.  If the Premises are destroyed or substantially damaged by
any peril not covered by the insurance maintained by Landlord, or any Landlord's
Mortgagee  (defined  below)  requires that insurance  proceeds be applied to the
indebtedness  secured by its Mortgage  (defined  below) or to the Primary  Lease
(defined below) obligations,  or the insurance proceeds available to Landlord to
restore the building are insufficient in Landlord's  opinion,  then Landlord may
terminate  this Lease by  delivering  written  notice of  termination  to Tenant
within thirty (30) days of the later of the date upon which any  destruction  or
damage  incurred,  or the date upon which  Landlord  learns there are not enough
insurance proceeds, or Landlord learns of any such requirement by any Landlord's
Mortgagee, as applicable. In the event Landlord terminates the Lease, all rights
and obligations hereunder shall cease and terminate,  except for any liabilities
of Tenant, which accrued before the Lease terminates.

12.   LIABILITY, INDEMNIFICATION, AND NEGLIGENCE.

      12.1 TENANT'S INDEMNITY OF LANDLORD. SUBJECT TO SECTION 12.2, TENANT SHALL
INDEMNIFY,  DEFEND,  AND HOLD  HARMLESS THE  INDEMNIFIED  PARTIES (AS DEFINED IN
SECTION 24.1) FROM AND AGAINST ALL FINES,  SUITS,  LOSSES,  COSTS,  LIABILITIES,
CLAIMS,  DEMANDS,  ACTIONS AND  JUDGMENTS OF EVERY KIND OR CHARACTER (1) ARISING
FROM TENANT'S  FAILURE TO PERFORM ITS COVENANTS UNDER THIS LEASE,  (2) RECOVERED
FROM OR ASSERTED  AGAINST ANY OF THE INDEMNIFIED  PARTIES ON ACCOUNT OF ANY LOSS
(DEFINED BELOW IN SECTION 12.2) TO THE EXTENT THAT ANY SUCH LOSS MAY BE INCIDENT
TO, ARISE OUT OF, OR BE CAUSED,  EITHER  PROXIMATELY  OR REMOTELY,  WHOLLY OR IN
PART,  BY A TENANT  PARTY  (DEFINED  BELOW IN SECTION  24.1) OR ANY OTHER PERSON
ENTERING  UPON THE PREMISES  UNDER OR WITH A TENANT  PARTY'S  EXPRESS OR IMPLIED
INVITATION OR PERMISSION, (3) ARISING FROM OR OUT OF THE OCCUPANCY OR USE OF THE
PREMISES BY A TENANT PARTY OR (4) ARISING FROM OR OUT OF ANY  OCCURRENCE  IN THE
PREMISES, HOWEVER CAUSED, OR SUFFERED BY, RECOVERED FROM OR ASSERTED AGAINST ANY
INDEMNIFIED PARTIES BY A TENANT PARTY.

                                       10
<PAGE>

      12.2 LIABILITY. THE INDEMNIFIED PARTIES (AS DEFINED IN SECTION 24.1) SHALL
NOT BE LIABLE TO THE TENANT  PARTIES 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 OR  INCONVENIENCE  (COLLECTIVELY  AND  INDIVIDUALLY A "LOSS") CAUSED BY
CASUALTY, THEFT, FIRE, THIRD PARTIES, REPAIR, OR FAILURE TO REPAIR.

      12.3  Survival.  The  provisions  of this  Section  12 shall  survive  the
expiration or earlier termination of this Lease.

13.   USE; COMPLIANCE WITH LAWS; PARKING.

      13.1  Permitted  Use.  The  Premises  shall,   subject  to  the  remaining
provisions of this Section,  be used only for receiving,  storing,  shipping and
selling  products,  materials  and  merchandise  made or  distributed  by Tenant
including  related  office  use and  customer  services,  repairs  and  services
directly or indirectly applicable to Tenant's business, and for no other purpose
without  Landlord's prior written consent.  No retail sales may be made from the
Premises  other than sales by catalogue,  the internet or similar sales which do
not require a retail  customer to physically  visit the  Premises.  The Premises
shall not be used for any use which is disreputable, and no part of the Premises
shall be used as an  escort  service,  a  massage  parlor  or spa,  blood  bank,
abortion clinic,  or for the sale,  distribution or display  (electronically  or
otherwise) of materials or merchandise  of a pornographic  nature or merchandise
generally sold in an adult book or adult  videotape  store (which are defined as
stores in which any portion of the inventory is not available for sale or rental
to children under 18 years old because such inventory explicitly details with or
depicts  human  sexuality  but  shall  not  include  mass-merchandise  or  other
specialty  stores  which  do  not  offer  for  sale,   distribution  or  display
(electronically  or  otherwise)  materials  or  merchandise  of  a  pornographic
nature). Tenant shall not sell, display, transmit or distribute  (electronically
or otherwise)  materials or merchandise of a pornographic  nature or merchandise
generally  sold in an adult book or adult video tape store (as  defined  above).
Tenant shall not use the Premises as living or sleeping quarters or a residence.
Tenant  shall not use the  Premises  to  receive,  store or handle any  product,
material or merchandise that is explosive or highly  inflammable or hazardous or
would violate any provision in Section 26. Outside  storage,  including  without
limitation,  storage in non-operative or stationary  trucks,  trailers and other
vehicles,  and vehicle  maintenance or repair is prohibited  without  Landlord's
prior  written  consent.  Tenant shall keep the  Premises  neat and clean at all
times.  Tenant shall not permit any  objectionable or unpleasant  odors,  smoke,
dust, gas, light, noise or vibrations to emanate from the Premises;  nor commit,
suffer  or  permit  any  waste in or upon the  Premises;  nor at any time  sell,
purchase  or give away or permit the sale,  purchase or gift of food in any form
by or to any of Tenant's  agents or employees  or other  parties in the Premises
except  through  vending  machines in employees'  lunch or rest areas within the
Premises  for use by Tenant's  employees  only;  nor take any other  action that
would  constitute  a public  or  private  nuisance  or would  disturb  the quiet
enjoyment of any other tenant of the Building,  or unreasonably  interfere with,
or endanger Landlord or any other person; nor permit the Premises to be used for
any  purpose or in any manner  that would (1) void the  insurance  thereon,  (2)
increase  the  insurance  risk,  (3) cause  the  disallowance  of any  sprinkler
credits, (4) violate any Law (defined below) including,  but not limited to, any
zoning  ordinance,  or (5) be dangerous to life, limb or property.  Tenant shall
pay to  Landlord  on demand any  increase  in the cost of any  insurance  on the
Premises or the Building  incurred by Landlord,  which is caused by Tenant's use
of the Premises or because Tenant  vacates the Premises,  and acceptance of such
payment  shall not  constitute  a waiver of any of  Landlord's  other  rights or
remedies nor a waiver of Tenant's duty to comply herewith.

      13.2  Compliance  with  Laws.  Tenant  shall  be  solely  responsible  for
satisfying  itself and  Landlord  that the  Permitted  Use will  comply with all
applicable Laws. Tenant shall, at its sole cost and expense,  be responsible for
complying  with all Laws  (defined  below)  and Rules and  Regulations  (defined
below) applicable to the use, occupancy,  and condition of the Premises.  Tenant
shall  promptly  correct any  violation of a Law, or Rules or  Regulations  with
respect  to  the  Premises.  Tenant  shall  comply  with  any  direction  of any
governmental authority having jurisdiction which imposes any duty upon Tenant or
Landlord with respect to the Premises, Building, and/or Land, or with respect to
the occupancy or use thereof.

      13.3 Compliance with Rules and  Regulations.  Tenant will comply with such
rules and  regulations  (the  "RULES AND  REGULATIONS")  generally  applying  to
tenants in the  Building as may be adopted from time to time by Landlord for the
management, cleanliness of, and the preservation of good order and protection of
the  Premises,  the  Building  and the  Land.  A  current  copy of the Rules and
Regulations applicable to the Building is attached hereto as Exhibit D. All such
Rules and Regulations are hereby made a part hereof.  All changes and amendments
to the  Rules  and  Regulations  sent by  Landlord  to  Tenant  in  writing  and
conforming  to the  foregoing  standards  shall be carried  out and  observed by
Tenant.  Landlord hereby reserves all rights  necessary to implement and enforce
the  Rules  and  Regulations  and  each  and  every  provision  of  this  Lease.
Notwithstanding  anything to the contrary in this Section 13.3,  Landlord agrees
that  the  changes  negotiated  in  the  Rules  and  Regulations  pertaining  to
equipment, parking, keys and access to the Premises shall survive any changes of
such Rules and Regulations for the Term of this Lease.

      13.4 Parking. Tenant and its employees, agents and invitees shall have the
non-exclusive right to use, at no charge, in common with others, sixty-five (65)
parking areas  associated  with the Building  which  Landlord has designated for
such use (the "PARKING  AREAS"),  subject to (1) such Rules and  Regulations (as
defined  herein) as Landlord may promulgate  from time to time and (2) rights of
ingress and egress of other  tenants and their  employees,  agents and invitees.
Landlord does not reserve or allocate  parking spaces at the Premises.  However,
in no instances shall Tenant allow its employees,  agents and invitees to occupy
more than  sixty-five  (65)  spaces in the  Parking  Areas.  Tenant  shall  take
reasonable  measures to ensure that its  employees,  agents and  invitees do not
occupy more than the above  referenced  quantity of parking.  Tenant  shall only
permit parking by its employees,  agents or invitees of appropriate  vehicles in
appropriate designated Parking Areas.

                                       11
<PAGE>

14.  INSPECTION;  ACCESS AND RIGHT OF ENTRY;  NEW  CONSTRUCTION.  Without  being
deemed or construed as committing an actual or  constructive  eviction of Tenant
and without abatement of Rent, with a representative of Tenant present, Landlord
and Landlord's agents and representatives may enter the Premises during business
hours, with four (4) hours prior notice in a non-emergency situation, to inspect
the  Premises;  to make such repairs as may be required or permitted  under this
Lease; to perform any unperformed  obligations of Tenant hereunder;  and to show
the Premises to prospective purchasers,  mortgagees, ground lessors, and [during
the last (12)  months of the Term]  tenants.  If, due to  bonding  requirements,
Tenant is required to restrict Landlord's access to portions of the Premises for
security reasons,  such restrictions  shall not in any event prevent  Landlord's
access  in  emergencies  or  for  annual  inspections  of the  condition  of the
Premises.  Tenant  hereby  waives  any  claim  for  damages  for any  injury  or
inconvenience or interference with Tenant's  business,  any loss of occupancy or
quiet enjoyment of the Premises, and any other loss occasioned thereby. Landlord
shall have the right to use any and all means which  Landlord may deem proper to
enter the Premises in an emergency  without liability  therefore,  provided that
reasonable  efforts are thereafter  undertaken to protect the Premises including
Tenant's  products  and  information.  During the last twelve (12) months of the
Term, Landlord may erect a sign on the Premises indicating that the Premises are
available.  Tenant shall notify  Landlord in writing of its  intention to vacate
the  Premises at least sixty (60) days before  Tenant will vacate the  Premises;
such  notice  shall  specify  the date on which  Tenant  intends  to vacate  the
Premises (the "VACATION DATE"). Furthermore,  Landlord hereby reserves the right
and at all times  shall have the right to  repair,  change,  redecorate,  alter,
improve,  modify,  renovate,  enclose  or  make  additions  to any  part  of the
Building,  Building's  Structure,  Common Areas or the Land,  to enclose  and/or
change  the  arrangement  and/or  location  of  driveways  or  Parking  Areas or
landscaping or other Common Areas; and to construct new improvements on adjacent
parcels of land,  all,  Tenant  agrees,  without  having  committed an actual or
constructive eviction of Tenant or breach of the implied warranty of suitability
and without an abatement of Rent (the  "Reserved  Right").  When  exercising the
Reserved Right, Landlord will use reasonable efforts not to materially interfere
with Tenant's use and occupancy of the Premises.

15.   ASSIGNMENT AND SUBLETTING.

      15.1.  Transfers.  Tenant shall not,  without the prior written consent of
Landlord,  (1) advertise that any portion of the Premises is available for lease
or cause or allow any such advertisement, (2) assign, transfer, or encumber this
Lease or any estate or interest herein, whether directly or by operation of law,
(3) permit any other  entity  (other than a  guarantor  of this Lease) to become
Tenant hereunder by merger,  consolidation,  or other  reorganization  (provided
that such  consent  shall  not be  unreasonably  withheld),  (4) if Tenant is an
entity  other than a  corporation  whose  stock is publicly  traded,  permit the
transfer of an  ownership  interest in Tenant so as to result in a change in the
current  control  of  Tenant  (other  than a  merger,  consolidation,  or  other
reorganization  with a guarantor of this  Lease),  (5) sublet any portion of the
Premises, (6) grant any license,  concession, or other right of occupancy of any
portion of the  Premises,  or (7) permit the use of the  Premises by any parties
other than  Tenant (any of the events  listed in  Sections  15.1 (1) through (7)
being a "TRANSFER").  If Tenant requests Landlord's consent to a Transfer,  then
Tenant  shall  provide  Landlord  with a  written  description  of all terms and
conditions of the proposed Transfer,  copies of the proposed documentation,  and
the  following  information  about the  proposed  transferee:  name and address;
reasonably satisfactory information about its business and business history; its
proposed use of the Premises;  banking, financial, and other credit information;
and general  references  sufficient to enable Landlord to determine the proposed
transferee's creditworthiness and character.

      15.2  Landlord's  Written  Consent  Requirements.  In determining  whether
Landlord shall consent to any proposed assignment or subletting of the Premises,
Landlord  will  consider  the  following  factors:  provided  that the  proposed
transferee (1) has  creditworthiness  (meaning the proposed transferee (a) has a
publicly  traded  debt rated in  quality as Baa2 or BBB- or higher,  as rated by
Moody's and Standard & Poor  respectively,  and/OR (b) has a tangible net worth,
financial  condition,  and operating  performance,  greater than or equal to the
tangible net worth, financial condition, and operating performance of the Tenant
and the Guarantor of Tenant's obligations hereunder,  if any, as of the time the
Tenant, (2) has a good reputation in the business community,  (3) is not another
occupant  of  the  Building  or  other  buildings  in  the   Carrollton,   Texas
metropolitan area owned by Landlord,  its affiliates or customers,  (4) will use
the Premises  consistent  with the  permitted  use allowed under the Lease which
shall not be  environmentally  harmful as agreed to in Section 26 of this Lease.
In  addition,  the  Transfer  shall not  constitute  a violation of the Employee
Retirement  Income  Security Act of 1974, as amended  (ERISA).  In the event the
proposed  transferee  does not meet all the above  factors,  then  Landlord  may
withhold its consent in its sole discretion. Tenant shall reimburse Landlord for
its attorneys' fees and other expenses  incurred in connection with  considering
any request for its consent to a Transfer,  in addition to a fee of Five Hundred
Dollars  ($500.00)  which Tenant will submit to Landlord  along with its written
request for review of the  proposed  assignment  or  subletting,  regardless  of
whether Landlord  subsequently grants its approval of the proposed assignment or
subletting. Landlord will provide consent or deny consent no later than ten (10)
business days after Tenant's  written  submission of the request and appropriate
accompanying information.

      15.3 Obligations of Tenant and Proposed  Transferee.  If Landlord consents
to a proposed Transfer, then the proposed transferee shall deliver to Landlord a
written  agreement,  in a form  satisfactory  to Landlord,  whereby the proposed
transferee expressly assumes the Tenant's obligations hereunder (however, in the
event of transfer  of less than all of the space in the  Premises  the  proposed
transferee  shall be liable  only for  obligations  under  this  Lease  that are
properly allocable to the space subject to the Transfer,  and only to the extent
of the rent it has agreed to pay Tenant). Landlord's consent to a Transfer shall
not release any Guarantor of Tenant's  obligations  hereunder nor release Tenant
from  performing  its  obligations  under this Lease,  but rather Tenant and its
transferee  shall be  jointly  and  severally  liable.  No such  Transfer  shall
constitute  a  novation.  Landlord's  consent  to any  Transfer  shall not waive
Landlord's rights as to any subsequent Transfers.  If a default occurs while the
Premises  or any part  thereof  are subject to a  Transfer,  then  Landlord,  in
addition to its other  remedies,  may collect  directly from such transferee all
rents  becoming  due to Tenant  and  apply  such  rents  against  Tenant's  Rent
obligations. Tenant authorizes its transferees to make payments of Rent directly
to Landlord  upon receipt of notice from  Landlord to do so. If Landlord  should
fail to notify  Tenant in writing  of its  decision  within the thirty  (30) day
period  after  Landlord's  receipt of Tenant's  written  request for  Landlord's
consent to a Transfer,  then Landlord shall be deemed to have refused to consent
to the  proposed  Transfer  and to have elected to keep this Lease in full force
and effect.

                                       12
<PAGE>

      15.4  Landlord's  Recapture  Right.  Within ten (10)  business  days after
Landlord's  receipt of  Tenant's  submission  of  Tenant's  written  request for
Landlord's consent to a Transfer (other than a Transfer pursuant to Section 15.1
(3) or  Section  15.1 (4),  Landlord  shall have the  option  (without  limiting
Landlord's other rights under this Lease) of terminating this Lease (or, as to a
subletting or assignment, terminate this Lease as to the portion of the Premises
proposed to be sublet or assigned) as of the latter of either:  upon thirty (30)
days notice or the date the proposed  Transfer was to be effective.  If Landlord
terminates this Lease as to all or any portion of the Premises,  then this Lease
shall cease for such  portion of the  Premises  and Tenant shall pay to Landlord
all Rent accrued  through the  cancellation  date relating to the portion of the
Premises covered by the proposed Transfer. Thereafter, Landlord may lease all or
such  portion of the  Premises to the  prospective  transferee  (or to any other
person or entity) without liability to Tenant.

      15.5 Excess Rent.  Notwithstanding  anything to the contrary  contained in
Section 15 of this Lease,  Tenant hereby  assigns,  transfers and conveys 50% of
all consideration  received by Tenant under any Transfer,  which is in excess of
the Rent payable by Tenant under this Lease,  and Tenant shall hold such amounts
in trust for  Landlord  and pay them to  Landlord  within  ten (10)  days  after
receipt.

16. CONDEMNATION. If (1) more than thirty percent (30%) of the Premises is taken
for any  public  or  quasi-public  use by right of  eminent  domain  or  private
purchase in lieu thereof (a  "TAKING"),  and the Taking  prevents or  materially
interferes  with the use of the  remainder  of the  Premises for the purpose for
which they were leased to Tenant,  or (2) more than fifty  percent  (50%) of the
space within the Premises  utilized for warehousing  operations is taken for any
public or  quasi-public  use by right of eminent  domain or private  purchase in
lieu thereof (also  referred to as a "Taking")  either party may terminate  this
Lease by delivering to the other written  notice thereof within thirty (30) days
after the  Taking,  in which  case Rent  shall be abated  during  the  unexpired
portion of the Term, effective on the date of such Taking; provided, however, in
lieu of such  termination  rights,  Landlord  shall  have the right to  relocate
Tenant to space  reasonably  comparable to the Premises,  provided that Landlord
notifies  Tenant of its  intention  to do so in a written  notice  delivered  to
Tenant within thirty (30) days after such Taking, and further provided that such
space shall be  immediately  available for  construction  of Tenant's  leasehold
improvements. Landlord shall pay the cost and expense for such relocation to the
extent  such  expenses  are  included  in any  condemnation  award to  Landlord;
provided,  however, that if Tenant receives a separate award for such relocation
expenses,  Tenant shall pay the cost and expense of such relocation. If (3) less
than 30% of the  Premises  are  subject  to a Taking or (4) more than 30% of the
Premises are subject to a Taking,  but the Taking does not prevent or materially
interfere  with the use of the  remainder  of the  Premises  for the purpose for
which they were leased to Tenant,  then neither party may terminate  this Lease,
but the Rent payable  during the unexpired  portion of the Term shall be reduced
to such extent as may be fair and reasonable under the circumstances.  Except as
provided herein,  all compensation  awarded for any Taking shall be the property
of  Landlord,  and Tenant  hereby  assigns any  interest it may have in any such
award to  Landlord;  however,  Landlord  shall have no interest in any  separate
award  made to Tenant  (which  does not  reduce  Landlord's  award)  for loss of
Tenant's business or goodwill,  for the taking of Tenant's trade fixtures, or on
account of Tenant's  moving and  relocation  expenses  and  depreciation  to and
removal of Tenant's  physical  personal  property,  if a separate award for such
items is made to Tenant.

17.   SURRENDER AND REDELIVERY OF PREMISES; HOLDING OVER.

      17.1 Surrender and Redelivery of Premises.  No act by Landlord shall be an
acceptance  of a  surrender  of the  Premises,  and no  agreement  to  accept  a
surrender of the Premises shall be valid,  unless it is in writing and signed by
Landlord.  Tenant's  delivery of the keys or access cards to Property Manager or
any agent or  employee of Landlord  shall not operate as a  termination  of this
Lease or a surrender of the Premises.

            17.1.1  Joint  Inspection.  At least  thirty  (30) days  before  the
Vacation Date, Tenant shall arrange to meet with Landlord for a joint inspection
of the Premises.  After such inspection,  Landlord shall prepare a list of items
that Tenant must  perform on or before the  Vacation  Date.  If Tenant  fails to
arrange for such  inspection,  then  Landlord  may conduct such  inspection  and
Landlord's  reasonable  determination  of the work Tenant is required to perform
before the Vacation  Date shall be  conclusive.  If Tenant fails to perform such
work on or before the  Vacation  Date,  then  Landlord  may perform such work at
Tenant's cost. Tenant shall pay all cost incurred by Landlord in performing such
work within ten (10) days after Landlord's request thereof.

            17.1.2 Tenant's Payment Obligations.  Tenant shall remain liable for
its prorated share of Operating Expenses for the year in which the Term ends for
the period in which Tenant  occupied the Premises  Tenant remains liable for any
additional  costs  therefor  upon demand by Landlord and  Landlord  shall remain
liable  to  Tenant  for the  return  of any  excess  to  Tenant  after  all such
obligations  have been determined and satisfied as the case may be. Any Security
Deposit held by Landlord may be credited  against the amount due by Tenant under
this Section 17.

                                       13
<PAGE>

            17.1.3  Condition of Premises.  After the Expiration Date or earlier
termination of this Lease,  or the  termination of Tenant's right to possess the
Premises,  Tenant shall (1) deliver to Landlord  the Premises in a safe,  "broom
clean," neat,  sanitary,  and operational  condition with all  improvements  and
alterations  as set forth in Section  6.4  located  thereon  in good  repair and
condition,  reasonable  wear and tear excepted  (subject,  however,  to Tenant's
maintenance  obligations),  and with the HVAC  System  and hot water  equipment,
light and light fixtures  (including  ballasts),  and overhead doors and related
equipment in good working order, (2) deliver to Landlord the Premises with steam
cleaned  carpets and with concrete  floors in the  warehouse  and  manufacturing
areas which have been  sealed,  (3) deliver to Landlord all keys and parking and
access cards to the Premises, and (4) remove all signage placed on the Premises,
the Building, or the Land by or at Tenant's request. All fixtures,  alterations,
additions, and improvements (whether temporary or permanent) shall be Landlord's
property  and shall remain on the  Premises,  except as provided in the next two
sentences.  Provided that Tenant has performed all of its obligations hereunder,
Tenant  may  remove all  unattached  trade  fixtures,  furniture,  and  personal
property  placed in the Premises by Tenant (but Tenant shall not remove any such
item which was paid for, in whole or in part, by Landlord). Additionally, Tenant
shall remove such alterations,  additions,  improvements,  fixtures,  equipment,
wiring,  furniture,  trade  fixtures and other property as Landlord may request,
provided such request is made within six (6) months after the Expiration Date or
earlier  termination of this Lease.  All items not so removed shall, at the sole
option of Landlord, be deemed abandoned by Tenant and may be appropriated, sold,
stored, destroyed, or otherwise disposed of by Landlord without notice to Tenant
and without any  obligation to account for such items,  and Tenant shall pay for
the costs  incurred by Landlord in  connection  therewith.  All work required of
Tenant under this Section 17 shall be coordinated with Landlord and be done in a
good and workmanlike manner, in accordance with all Laws (defined below), and so
as not to damage the Building or unreasonably  interfere with other tenants' use
of their premises. Tenant shall, at its expense, repair all damage caused by any
work  performed by Tenant under this  Section 17,  provided  that in the case of
alterations  or  improvements  that Tenant is required to remove,  Tenant  shall
restore the Premises to the condition existing prior to the installation of such
alterations. If Tenant fails to perform work under this Section 17, Tenant shall
pay all costs incurred by Landlord in performing such work within ten (10) after
Landlord's request thereof.

      17.2 Holding  Over.  If a Tenant Party fails to vacate the Premises  after
the Expiration Date or earlier  termination of this Lease, then a Tenant Party's
possession  of the Premises  shall  constitute  and be construed as a tenancy at
will only,  subject,  however,  to all of the terms,  provisions,  covenants and
agreements  on the part of Tenant under this Lease,  and such Tenant Party shall
be subject to immediate  eviction  and removal;  Tenant or any such Tenant Party
covenants  and  agrees  to pay  Landlord,  in  addition  to the  other  Rent due
hereunder, if any, as Rent for the period of such holdover a prorated daily Base
Rent equal to the sum of one-hundred  and fifty percent (150%) of the daily Base
Rent plus one hundred  percent (100%)  Additional  Rent, both payable during the
last month of the Term. Tenant's possession of the Premises after the Expiration
Date or earlier termination of this Lease shall immediately  constitute an Event
of Default under Section 19.5 herein. The Rent during such holdover period shall
be payable to Landlord  from time to time on demand;  provided,  however,  if no
demand is made during a particular  month,  holdover rent  accruing  during such
month shall be paid in accordance with the provisions of this Section 17. Tenant
will vacate the Premises and deliver same to Landlord  immediately upon Tenant's
receipt of notice from Landlord to so vacate.  No holding over by a Tenant Party
(whether with or without the consent of  Landlord),  and no payments of money by
Tenant to  Landlord  after  the end of the Term,  shall  operate  to  reinstate,
continue or extend the Term, and no extension of this Term shall be valid unless
evidenced by a writing signed by both Landlord and Tenant.  No payments of money
by Tenant  (other than the holdover rent  accruing  during such holdover  period
paid in accordance with the provisions of this Section 17) to Landlord after the
Expiration  Date or earlier  termination  of this Lease  shall  constitute  full
payment of Rent under the terms of this  Lease.  Tenant  shall be liable for all
damages resulting from a Tenant Party's holding over.

18. QUIET ENJOYMENT.  Provided Tenant has fully performed its obligations  under
this Lease,  Tenant shall  peaceably and quietly hold and enjoy the Premises for
the Term,  without  hindrance from Landlord or any party claiming by, through or
under Landlord, but not otherwise, subject, however, to all of the provisions of
this Lease and all Laws (defined  below),  liens,  encumbrances  and restrictive
covenants to which the Land is subject.  Landlord shall not be  responsible  for
the acts or omissions of any other tenant or third party that may interfere with
Tenant's use and enjoyment of the Premises.

19. EVENTS OF DEFAULT.  Each of the following  events shall constitute an "EVENT
OF DEFAULT" under this Lease:

      19.1 Monetary Default;  Failure to Pay Rent. Tenant fails to pay Rent when
due or any payment or reimbursement required under this Lease or under any other
lease with Landlord when due after any applicable notice and opportunity to cure
provided in such lease,  and in either case such failure  continues for a period
of five (5) days from the date  such  payment  was due;  provided  however  that
Tenant shall be entitled to written notice and five (5) day  opportunity to cure
upon the first two such failures in any twelve (12) month period, however, in no
event more than a total of three times over the Original Term.

      19.2 Bankruptcy; Insolvency. The filing of a petition by or against Tenant
or any  Guarantor of Tenant's  obligations  hereunder  (1) in any  bankruptcy or
other insolvency proceeding; (2) seeking any relief under any debtor relief Law;
(3) for the  appointment  of a  liquidator,  receiver,  trustee,  custodian,  or
similar  official  for all or  substantially  all of  Tenant's  property  or for
Tenant's  interest in this Lease; or (4) for  reorganization  or modification of
Tenant's  capital  structure  (however,  if any such  petition is filed  against
Tenant,  then the  filing  of such  petition  shall not  constitute  an Event of
Default,  unless it is not  dismissed  within 120 days after the filing  thereof
provided that Tenant shall take prompt action to seek  dismissal  within 45 days
after the filing thereof and diligently pursue dismissal thereafter).

      19.3 Vacation;  Failure to Continuously Operate. Tenant (1) vacates all or
a substantial  portion of the Premises or (2) fails to continuously  operate its
business at the Premises for the permitted use set forth herein, in either event
for a cumulative period in excess of 180 days.

                                       14
<PAGE>

      19.4  Liens;  Encumbrances.  Tenant  fails to bond or  discharge  any lien
placed upon the  Premises in  violation  of Section 23 within ten (10)  business
days after any such lien or encumbrance is filed against the Premises.

      19.5 Non-Monetary Default; Failure to Perform. Tenant fails to comply with
any term,  provision  or covenant of this Lease (other than those listed in this
Section 19), and such failure  continues for thirty (30) days,  unless otherwise
specified  in this  Lease,  after  written  notice  thereof to Tenant;  provided
however  that if such matter  cannot be corrected  within  thirty (30) days that
Tenant has and shall continue to diligently  pursue such  correction and further
provided  than in all events the failure  must be corrected no later than ninety
(90) days after written notice.

20.   REMEDIES.

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

            20.1.1  Terminate the Lease.  Terminate  this Lease by giving Tenant
written notice thereof,  in which event, Tenant shall pay to Landlord the sum of
(1) all Rent accrued hereunder through the date of termination,  (2) all amounts
due  under  Section  20.2,  and (3) an amount  equal to (i) the total  Rent that
Tenant would have been required to pay for the remainder of the Term  discounted
to present  value at a per annum rate equal to the "Prime  Rate" as published on
the date this Lease is terminated by The Wall Street Journal, Southwest Edition,
in its listing of "Money  Rates",  minus (ii) the then present fair rental value
of the Premises for such period, similarly discounted; Landlord and Tenant agree
that in no event shall (ii) herein be greater than seventy-five percent (75%) of
(i) herein; or

            20.1.2 Terminate  Tenant's Right of Possession.  Terminate  Tenant's
right to possess the Premises  without  terminating this Lease by giving written
notice  thereof to Tenant,  in which event  Tenant shall pay to Landlord (1) all
Rent  and  other  amounts  accrued  hereunder  to the  date  of  termination  of
possession,  (2) all amounts due from time to time under Section  20.2,  and (3)
all Rent and other  sums  required  hereunder  to be paid by Tenant  during  the
remainder  of the  Term,  diminished  by any net  sums  thereafter  received  by
Landlord through reletting the Premises during such period.  LANDLORD SHALL SEEK
TO USE REASONABLE  EFFORTS TO MITIGATE  LANDLORD'S  DAMAGES WHICH MAY, DEPENDING
UPON THE CIRCUMSTANCES,  INCLUDE RELETTING THE PREMISES, HOWEVER, Landlord shall
not be obligated  to relet the Premises  before  leasing  other  portions of the
Building,  and Tenant's obligations hereunder shall not be diminished because of
Landlord's failure to relet the Premises or to collect Rent due for a reletting.
Tenant  shall not be  entitled  to the excess of any  consideration  obtained by
reletting over the Rent due hereunder. Reentry by Landlord in the Premises shall
not affect  Tenant's  obligations  hereunder  for the  unexpired  Term;  rather,
Landlord may, from time to time,  bring action against Tenant to collect amounts
due by Tenant,  without the necessity of Landlord's waiting until the expiration
of the Term.  Actions to collect  amounts due by Tenant to  Landlord  under this
subsection  may be brought from time to time on one or more  occasions,  without
the  necessity  of Landlord  waiting  until the  Expiration  Date of this Lease.
Unless Landlord  delivers written notice to Tenant expressly stating that it has
elected to  terminate  this Lease,  all actions  taken by Landlord to exclude or
dispossess  Tenant  of the  Premises  shall be  deemed  to be taken  under  this
subsection.  If Landlord elects to proceed under this Section 20.1.2,  it may at
any time elect to terminate this Lease under Section 20.1.1; or

            20.1.3 Lock Out.  Additionally,  without notice,  Landlord may alter
locks or other  security  devices at the  Premises  to deprive  Tenant of access
thereto,  and  Landlord  shall not be  required to provide a new key or right of
access to Tenant.  This Lease  supercedes  Section  93.002 of the Texas Property
Code to the extent of any conflict.

      20.2  Landlord's  Other Rights and Remedies.  Upon any default or Event of
Default,  Tenant shall pay to Landlord all costs incurred by Landlord (including
court costs and attorneys' fees and expenses) in (1) obtaining possession of the
Premises,  (2) removing and storing Tenant's or any other  occupant's  property,
(3)  repairing,  restoring,  altering,  remodeling,  or  otherwise  putting  the
Premises into  condition  acceptable  to a new tenant,  (4) reletting all or any
part of the Premises  (including  brokerage  commissions,  cost of tenant finish
work, and other costs  incidental to such  reletting),  (5) performing  Tenant's
obligations  which  Tenant  failed to perform,  and (6)  enforcing,  or advising
Landlord of, its rights, remedies, and recourses.  Landlord's acceptance of Rent
following an Event of Default shall not waive  Landlord's  rights regarding such
Event of Default.  Landlord's  receipt of Rent with  knowledge of any default by
Tenant  hereunder  shall  not be a waiver  of such  default,  and no  waiver  by
Landlord of any provision of this Lease shall be deemed to have been made unless
set forth in  writing  and  signed by  Landlord.  No waiver by  Landlord  of any
violation or breach of any of the terms contained  herein shall waive Landlord's
rights  regarding  any future  violation  of such term or violation of any other
term. If Landlord  repossesses  the Premises  pursuant to the  authority  herein
granted, then Landlord shall have the right to (i) keep in place and use or (ii)
remove and store,  at Tenant's  expense,  all of the furniture,  trade fixtures,
equipment and other personal  property in the Premises,  including that which is
owned by or leased to Tenant at all times  before  any  foreclosure  thereon  by
Landlord or  repossession  thereof by any lessor thereof or third party having a
lien thereon.  Landlord may relinquish  possession of all or any portion of such
furniture,  trade  fixtures,  equipment  and  other  property  to any  person (a
"CLAIMANT")  who presents to Landlord a copy of any  instrument  represented  by
Claimant to have been executed by Tenant (or any predecessor of Tenant) granting
Claimant  the right  under  various  circumstances  to take  possession  of such
furniture, trade fixtures, equipment or other property, without the necessity on
the part of  Landlord  to  inquire  into the  authenticity  or  legality  of the
instrument.  Landlord  may, at its option and without  prejudice to or waiver of
any rights it may have,  (a)  escort  Tenant to the  Premises  to  retrieve  any
personal belongings of Tenant and/or its employees not covered by the Landlord's
statutory lien or the security interest  described in Section 27 or (b) obtain a
list from Tenant of the personal property of Tenant and/or its employees that is
not covered by the Landlord's  statutory lien or the security interest described
in Section  27,  and make such  property  available  to Tenant  and/or  Tenant's
employees;  however,  Tenant  first  shall pay in cash all  costs and  estimated
expenses to be  incurred in  connection  with the removal of such  property  and
making it available. The rights of Landlord herein stated in this Section 20 are
cumulative  and in addition to any and all other rights that Landlord has or may
hereafter  have at law or in equity,  and Tenant  hereby  agrees that the rights
herein granted Landlord are commercially reasonable.

                                       15
<PAGE>

      20.3 Landlord's Recapture Right. After Landlord's vacation of the Premises
and a resulting  Event of Default under Section  19.3,  Landlord  shall have the
option  (without   limiting   Landlord's  other  rights  under  this  Lease)  of
terminating this Lease upon written notice to the Tenant. If Landlord terminates
this Lease as to all or any portion of the Premises, then this Lease shall cease
for such portion of the  Premises and Tenant shall pay to Landlord  Rent accrued
through the  cancellation  date relating to that portion of the Premises covered
by the  Landlord's  termination.  Thereafter,  Landlord's  termination  will  be
without liability to Tenant.

21.   LANDLORD'S DEFAULT AND LIMITATIONS OF LIABILITY.

      21.1.  DEFAULTS  BY  LANDLORD.  If  Landlord  fails to perform  any of its
obligations  hereunder  within thirty (30) days after written notice from Tenant
specifying such failure,  Tenant's  exclusive and sole remedy shall be an action
for damages. Tenant is granted no contractual right of termination by the Lease,
except to the extent and only to the extent set forth in Section 11.1 and 16.

      21.2 LIMITATIONS ON LANDLORD'S LIABILITY.

THE  LIABILITY OF LANDLORD TO A TENANT PARTY FOR ANY DEFAULT BY LANDLORD,  SHALL
BE LIMITED TO ACTUAL AND DIRECT DAMAGES. IN NO EVENT SHALL LANDLORD BE LIABLE TO
A TENANT PARTY FOR  CONSEQUENTIAL  OR SPECIAL  DAMAGES BY REASON OF A FAILURE TO
PERFORM  (OR A DEFAULT)  BY  LANDLORD  HEREUNDER  OR  OTHERWISE,  EXCEPT IF SUCH
FAILURE OR DEFAULT  WAS THE RESULT OF GROSS  NEGLIGENCE  OR WILLFUL  MISCONDUCT.
EXCEPT FOR CLAIMS  WHICH MAY BE COVERED BY  INSURANCE,  IF A TENANT  PARTY SHALL
RECOVER A MONEY  JUDGMENT  AGAINST  LANDLORD,  THE TENANT PARTY AGREES THAT SUCH
MONEY JUDGMENT SHALL BE SATISFIED SOLELY BY LANDLORD'S  INTEREST IN THE PREMISES
AND BUILDING, AS THE SAME MAY THEN BE ENCUMBERED,  AND LANDLORD, ITS AFFILIATES,
PARTNERS, OFFICERS, DIRECTORS,  SHAREHOLDERS,  AND EMPLOYEES SHALL NOT BE LIABLE
OTHERWISE FOR ANY OTHER CLAIM ARISING OUT OF OR RELATING TO THIS LEASE.

LANDLORD SHALL NOT BE LIABLE TO A TENANT PARTY FOR ANY CLAIMS, ACTIONS, DEMANDS,
COSTS,  EXPENSES,  DAMAGE,  OR  LIABILITY  OF ANY  KIND  ARISING  FROM  THE USE,
OCCUPANCY OR ENJOYMENT OF THE PREMISES BY A TENANT PARTY AS A RESULT OF ANY LOSS
OF OR DAMAGE TO PROPERTY OF TENANT OR OF OTHERS  LOCATED IN THE  PREMISES OR THE
BUILDING BY REASON OF THEFT OR BURGLARY.

      21.3  Examination  of Lease;  No  Contract  Until  Execution  by  Parties.
Submission by Landlord of this instrument to Tenant for examination or signature
does not  constitute a  reservation  of or option for lease.  This Lease will be
effective  as a lease or  otherwise  only upon  execution  by both  Landlord and
Tenant and delivery to the parties.  If Tenant is a corporation  (including  any
form  of  professional  association),  limited  liability  company,  partnership
(general or limited),  or other form of  organization  other than an individual,
then each individual  executing this Lease on behalf of Tenant hereby covenants,
warrants and represents:  (1) that such individual is duly authorized to execute
and deliver this Lease on behalf of Tenant in accordance with the organizational
documents of Tenant; (2) that this Lease is binding upon Tenant; (3) that Tenant
is duly organized and legally existing in the state of its organization,  and is
qualified to do business in the State of Texas;  (4) that upon  request,  Tenant
will  provide  Landlord  with  true and  correct  copies  of all  organizational
documents of Tenant, and any amendments thereto;  and (5) that the execution and
delivery of this Lease by Tenant 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 Tenant is a party
or by which Tenant may be bound. If Tenant is a form of organization  other than
an individual,  Tenant will, prior to the Commencement Date, deliver to Landlord
written  documentation   reasonably  satisfactory  to  Landlord  evidencing  the
authority of an authorized  representative of Tenant to enter into the Lease and
bind Tenant to all of the obligations of Tenant under the Lease.

22.   MORTGAGES.

      22.1 Lease Subordinate to Mortgage. This Lease shall be subordinate to any
deed of trust,  mortgage or other security  instrument (a  "MORTGAGE"),  and any
ground  lease,  master lease,  or primary lease (a "PRIMARY  LEASE") that now or
hereafter  covers any portion of the Premises (the mortgagee  under any Mortgage
or the lessor  under any  Primary  Lease is  referred  to herein as  "LANDLORD'S
MORTGAGEE"),  and  to  increases,   renewals,   modifications,   consolidations,
replacements,  and extensions  thereof.  However,  any Landlord's  Mortgagee may
elect to subordinate  its Mortgage or Primary Lease (as the case may be) to this
Lease by  delivering  written  notice  thereof  to Tenant.  With  respect to any
encumbrance encumbering the Building or the Premises, the Landlord agrees to use
its best  efforts to obtain from the holder of such  encumbrance  its  agreement
(either in the Encumbrance or in a separate  agreement with Tenant) that so long
as Tenant is not in default of its obligations under this Lease, this Lease will
not be terminated and Tenant's  possession of the Premises will not be disturbed
by the  termination or  foreclosure,  or proceedings  for  enforcement,  of such
encumbrance.  The provisions of this Section 22 shall be self-operative,  and no
further  instrument  shall be required to effect  such  subordination;  however,
Tenant  shall from time to time  within ten (10) days  after  request  therefor,
execute any  instruments  that may be required by any  Landlord's  Mortgagee  to
evidence the  subordination  of this Lease to any such Mortgage or Primary Lease
together  with the  nondisturbance  provisions of this Section 22 and such other
customary provisions as the Landlord's Mortgagee may require. If Tenant fails to
execute the same within such ten (10) day period,  Landlord may execute the same
as attorney-in-fact for Tenant, and Tenant's failure to execute such instruments
shall  immediately  constitute an Event of Default  under  Section 19.5,  and in
addition to Landlord's  other  available  remedies,  Tenant shall pay Landlord a
late fee of Five Hundred Dollars ($500.00) per day for each day such instruments
are not  returned  past the ten (10) day period.  Furthermore,  Tenant  shall be
liable to Landlord for any and all damages caused by Tenant's  delinquency which
results in delays to the closing of such mortgage or other financing activity.

                                       16
<PAGE>

      22.2 Attornment. Tenant shall attorn to any party succeeding to Landlord's
interest in the  Premises,  whether by  purchase,  foreclosure,  deed in lieu of
foreclosure,  power of sale,  termination  of  lease,  or  otherwise,  upon such
party's request, and shall execute such agreements confirming such attornment as
such party may reasonably  request.  Tenant shall not seek to enforce any remedy
it may have for any default on the part of Landlord without first giving written
notice by certified mail,  return receipt  requested,  specifying the default in
reasonable  detail to any Landlord's  Mortgagee  whose address has been given to
Tenant  in  writing,  and  affording  such  Landlord's  Mortgagee  a  reasonable
opportunity  (not  to  exceed  that  of  Landlord's  and to  run  simultaneously
therewith) to perform Landlord's obligations hereunder.

      22.3  No  Landlord's  Mortgagee's  Liability.   Notwithstanding  any  such
attornment or  subordination  of a Mortgage or Primary Lease to this Lease,  the
Landlord's  Mortgagee shall not be liable for any acts of any previous landlord,
shall not be  obligated  to install  the Tenant  Improvements,  and shall not be
bound by any amendment to which it did not consent in writing nor any payment of
Rent made more than one month in advance.

23.   ENCUMBRANCES.

      23.1 No Liens.  Tenant has no authority,  express or implied, to create or
place any lien or encumbrance of any kind or nature  whatsoever  upon, or in any
manner to bind Landlord's  property or the interest of Landlord or Tenant in the
Premises or to charge the rent for any claim in favor of any person dealing with
Tenant,  including  those who may  furnish  materials  or perform  labor for any
construction  or repairs.  Tenant  shall timely pay or cause to be paid all sums
due for any labor  performed or materials  furnished in connection with any work
performed  on the Premises by or at the request of Tenant.  Notwithstanding  the
foregoing, Tenant shall give Landlord immediate written notice of the placing of
any lien or encumbrance against the Premises, Building or Land.

      23.2  Landlord's  Rights.  In the event that Tenant shall not,  within ten
(10) days following  notification  to Tenant of the imposition of any such lien,
cause the same to be  released  of record by payment or the posting of a bond in
amount,  form and  substance  acceptable  to Landlord,  Landlord  shall have, in
addition to all other remedies provided herein and by law, the right but not the
obligation,  to cause the same to be  released  by such  means as it shall  deem
proper,  including  payment of or defense  against the claim giving rise to such
lien.  Nothing  in  this  Lease  shall  be  deemed  or  construed  in any way as
constituting  the  consent or  request  of  Landlord,  express  or  implied,  by
inference or otherwise, to any contractor, subcontractor, laborer or materialman
for the  performance  of any labor or the  furnishing  of any  materials for any
specific improvement, alteration or repair of or to the Building or the Premises
or any part  thereof,  nor as giving  Tenant any right,  power or  authority  to
contract for or permit the  rendering of any services or the  furnishing  of any
materials  that would give rise to the filing of any  mechanic's  or other liens
against the interest of Landlord in the Building, Land or the Premises.  Nothing
in this Section 23 modifies an Event of Default under Section 19.4 herein.

24.   MISCELLANEOUS.

      24.1 Laws; Affiliate; Tenant Party. Words of any gender used in this Lease
shall  include any other  gender,  and words in the singular  shall  include the
plural,  unless the context  otherwise  requires.  The captions inserted in this
Lease are for convenience only and in no way affect the  interpretation  of this
Lease. The following terms shall have the following meanings:  "LAWS" shall mean
all federal,  state, and local laws, zoning ordinances,  municipal  regulations,
rules,  and  regulations;   all  court  orders,   governmental  directives,  and
governmental  orders,  all Environmental Laws (as defined below), all applicable
laws, regulations and building codes governing nondiscrimination  accommodations
and commercial facilities, and all restrictive covenants affecting the Property,
and "LAW" shall mean any of the foregoing;  "AFFILIATE" shall mean any person or
entity which,  directly or indirectly,  controls,  is controlled by, or is under
common control with the party in question;  "TENANT PARTY" or  collectively  the
"TENANT PARTIES" shall include Tenant,  any assignees  claiming by, through,  or
under Tenant, any subtenants  claiming by, through,  or under Tenant, and any of
their respective agents, contractors,  employees, and invitees; and "INDEMNIFIED
PARTIES" shall include Landlord,  its successors,  assigns,  agents,  employees,
contractors, Property Manager, partners, directors, officers and affiliates.

      24.2 Joint and Several Liability.  If there is more than one Tenant,  then
the  obligations  hereunder  imposed  upon  Tenant  shall be joint and  several,
whether or not  Tenant's  obligations  arise  during the  Original  Term of this
Lease,  during any renewal or extension,  or a holdover term or  thereafter.  If
there is a Guarantor of Tenant's  obligations  hereunder,  then the  obligations
hereunder  imposed  upon Tenant  shall be the joint and several  obligations  of
Tenant and such  Guarantor,  and Landlord need not first proceed  against Tenant
before  proceeding  against  such  Guarantor  nor  shall any such  Guarantor  be
released from its Guaranty for any reason whatsoever.

      24.3 Landlord's Assignment; Authority of Tenant. Landlord may transfer and
assign,  in whole or in part, its rights and obligations in the Building,  Land,
or Premises  that are the subject to this Lease,  in which case  Landlord  shall
have no further  liability  hereunder except for Tenant  Improvements,  pre-paid
rents which are not transferred and existing claims and defaults.

                                       17
<PAGE>

Tenant shall furnish to Landlord,  promptly upon demand, a corporate resolution,
proof of due  authorization  by  partners,  or other  appropriate  documentation
evidencing the due authorization of such party to enter into this Lease.  Tenant
and each person signing this Lease on behalf of Tenant represents to Landlord as
follows:  Tenant and its general partners and managing  members,  if applicable,
are each duly organized and legally  existing under the laws of the state of its
incorporation  and are duly  qualified  to do  business  in the state  where the
Building is located.  Tenant and its general partners and managing  members,  if
applicable,  each have all requisite power and all governmental  certificates of
authority,  licenses,  permits,  qualifications and other documentation to lease
the Premises and to carry on its business as now conducted  and as  contemplated
to conducted. Each person signing on behalf of Tenant is authorized to do so.

      24.4 Force  Majeure.  Whenever a period of time is herein  prescribed  for
action to be taken by Landlord or Tenant,  the party taking the action shall not
be liable or responsible  for, and there shall be excluded from the  computation
of any such  period of time,  any delays  due to  strikes,  riots,  acts of God,
shortages  of  labor or  materials,  war,  terrorism,  governmental  actions  or
inactions or laws, regulations, or restrictions, or any other causes of any kind
whatsoever which are beyond the control of such acting party; provided, however,
in no event shall the  foregoing  apply to the financial  obligations  of Tenant
under this Lease, including, without limitation, Tenant's obligation to promptly
pay Base Rent,  Additional Rent,  reimbursements  or any other amount payable to
Landlord as well as Tenant's obligation to maintain insurance hereunder.

      24.5   Certificate   of   Occupancy;   Financial   Statements;    Estoppel
Certificates. Prior to Tenant's occupancy of the Premises, Landlord shall obtain
and deliver a copy to Tenant of a Certificate of Occupancy for the Premises from
the appropriate governmental authority.  Tenant shall, from time to time, within
ten (10)  business  days  after  written  request  of  Landlord,  deliver to the
Landlord or Landlord's  designee,  a certificate  of occupancy for the Premises,
audited financial statements or financial statements submitted to the Securities
and Exchange Commission in accordance with applicable laws for the most recently
concluded  accounting  period for itself and any  Guarantor  of its  obligations
hereunder,   evidence  reasonably  satisfactory  to  Landlord  that  Tenant  has
performed its obligations under this Lease (including evidence of the payment of
the Security Deposit), and an estoppel certificate stating that this Lease is in
full effect,  the date to which Rent has been paid,  the unexpired Term and such
other factual matters pertaining to this Lease as may be reasonably requested by
Landlord.  Tenant's obligation to furnish the above-described  items in a timely
fashion is a material  inducement  for  Landlord's  execution of this Lease.  If
Tenant fails to execute any such estoppel  certificate  within such ten (10) day
period,  Landlord may do so as attorney-in-fact for Tenant, and Tenant's failure
to execute any such estoppel  certificate shall immediately  constitute an Event
of Default  under Section 19.5,  and in addition to Landlord's  other  available
remedies, Tenant shall pay Landlord a late fee of Five Hundred Dollars ($500.00)
per day for each day such estoppel certificate is not returned past the ten (10)
day period.  Furthermore,  Tenant  shall be liable to  Landlord  for any and all
damages caused by Tenant's  delinquency  which results from Tenant's  failure to
execute such estoppel certificate.

      24.6 Entire Agreement.  This Lease constitutes the entire agreement of the
Landlord  and Tenant  with  respect to the  subject  matter of this  Lease,  and
contains all of the covenants and agreements of Landlord and Tenant with respect
thereto.   Landlord  and  Tenant  each  acknowledge  that  no   representations,
inducements, promises or agreements, oral or written, have been made by Landlord
or Tenant,  or anyone  acting on behalf of  Landlord  or  Tenant,  which are not
contained  herein,  and  any  prior  agreements,   promises,   negotiations,  or
representations  not  expressly  set forth in this Lease are of no effect.  This
Lease may not be altered,  changed or amended except by an instrument in writing
signed by both parties hereto.

      24.7 Survival of Tenant's  Indemnities  and  Obligations.  Each  indemnity
agreement  and hold  harmless  agreement  contained  herein  shall  survive  the
expiration or termination of the Lease. Additionally,  all obligations of Tenant
hereunder not fully  performed by the end of the Term shall survive,  including,
without limitation,  all payment obligations with respect to Taxes and insurance
and all obligations concerning the condition and repair of the Premises.

      24.8 [Intentionally omitted]

      24.9 Severability.  If any provision of this Lease is illegal,  invalid or
unenforceable, then the remainder of this Lease shall not be affected thereby.

      24.10 Effective Date. All references in this Lease to "EFFECTIVE  DATE" or
similar  references shall be deemed to refer to the last date, in point of time,
on which all parties hereto have executed this Lease.

      24.11 Brokerage Commissions. Landlord and Tenant each warrant to the other
that they have not dealt with any broker or agent  other  than  Argent  Property
Company  and Sharon  Morrison of The  Staubach  Company and that they know of no
broker or agent who are or might be entitled to a commission in connection  with
this Lease.  TENANT AND  LANDLORD  SHALL EACH  INDEMNIFY  THE OTHER  AGAINST ALL
COSTS,   ATTORNEYS'  FEES,  AND  OTHER  LIABILITIES  FOR  COMMISSIONS  OR  OTHER
COMPENSATION  CLAIMED BY ANY BROKER OR AGENT CLAIMING THE SAME BY,  THROUGH,  OR
UNDER  TENANT  OR  LANDLORD,  RESPECTIVELY.  A  true  and  correct  copy  of the
Commission  Agreement  between  Landlord  and Sharon  Morrison  of The  Staubach
Company is attached hereto as Exhibit "G" and  incorporated by reference  herein
for all purposes.

                                       18
<PAGE>

      24.12  Confidentiality.  The  terms  and  conditions  of  this  Lease  are
confidential  and Tenant shall not disclose the terms of this Lease to any third
party except as may be required by Law or to enforce its rights hereunder.

      24.13  Interest.  Tenant shall pay interest on all past-due  Rent from the
date due (after any notice and opportunity to cure, if applicable) until paid at
the maximum lawful rate. In no event, however, shall the charges permitted under
this Section 24.13 or elsewhere in this Lease, to the extent they are considered
to be interest under applicable Law, exceed the maximum lawful rate of interest.

      24.14  Time.  Time is of the  essence in this Lease and in each and all of
the  provisions  hereof.  Whenever a period of days is  specified in this Lease,
such period shall refer to calendar days unless  otherwise  expressly  stated in
this Lease.

      24.15  Attorneys'  Fees. In the event of the filing of any legal action or
proceeding  brought by either party against the other arising out of this Lease,
the prevailing party shall be entitled to recover reasonable attorneys' fees and
costs  incurred  in such action  (including,  without  limitation,  all costs of
appeal) and such  amount  shall be  included  in any  judgment  rendered in such
proceeding.

      24.16 Choice of Law and Exclusive Venue. THIS LEASE SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,  EXCEPT AS SUCH LAWS
ARE PREEMPTED BY APPLICABLE  FEDERAL LAW, WITHOUT REGARD TO ANY CONFLICT OF LAWS
RULE OR PRINCIPLE  WHICH MIGHT REFER THE  CONSTRUCTION  OR  ENFORCEMENT  OF THIS
LEASE TO THE LAWS OF ANOTHER JURISDICTION. JURISDICTION AND VENUE FOR ANY ACTION
HEREUNDER SHALL BE EXCLUSIVELY IN DALLAS,  DALLAS COUNTY,  TEXAS EITHER IN TEXAS
STATE DISTRICT COURT OR IN FEDERAL DISTRICT COURT,  NORTHERN  DISTRICT OF TEXAS,
DALLAS DIVISION.

      24.17  Waiver of Right to Trial By Jury.  TENANT AND  LANDLORD  EACH:  (1)
AGREE NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS
LEASE OR THE RELATIONSHIP BETWEEN THE PARTIES AS TENANT AND LANDLORD THAT CAN BE
TRIED BY A JURY;  AND (2) WAIVE ANY RIGHT TO TRIAL BY JURY WITH  RESPECT TO SUCH
ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER
OF RIGHT  TO TRIAL BY JURY IS  SEPARATELY  GIVEN BY EACH  PARTY,  KNOWINGLY  AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

      24.18 Waiver of Right to File Tax Protest.  LANDLORD SPECIFICALLY RESERVES
THE RIGHT, BUT NOT THE OBLIGATION,  TO CONTEST BY APPROPRIATE  LEGAL PROCEEDINGS
THE AMOUNT OF VALIDITY OF ANY TAXES WITH  RESPECT TO THE BUILDING OR ANY PORTION
THEREOF, TENANT HEREBY WAIVES ALL RIGHTS UNDER SECTIONS 41.413 AND 42.015 OF THE
TEXAS  TAX  CODE  OR  ANY  SIMILAR  OR  CORRESPONDING  LAW:  (1)  TO  PROTEST  A
DETERMINATION  OF APPRAISED  VALUE OR TO APPEAL AN ORDER  DETERMINING A PROTEST;
AND (2) TO RECEIVE NOTICES OF REAPPRAISALS.

25.  NOTICES.  Each provision of this  instrument or of any applicable  Laws and
other  requirements  with  reference to the sending,  mailing or  delivering  of
notice or the making of any  payment  hereunder  shall be deemed to be  complied
with, when and if, the following steps are taken:

      25.1 Rent  Payments to Landlord.  All Rent shall be payable to Landlord at
the address for Landlord set forth below or at such other continental US address
as  Landlord  may  specify  from time to time by  written  notice  delivered  in
accordance  herewith.  Tenant's  obligation  to pay  Rent  shall  not be  deemed
satisfied until such Rent has been actually received by Landlord.

      25.2 Payments to Tenant.  All payments  required to be made by Landlord to
Tenant  hereunder  shall be payable to Tenant at the address set forth below, or
at such other address within the continental United States as Tenant may specify
from time to time by written notice delivered in accordance herewith.

      25.3 Written Notices;  Emergency  Contact.  Any written notice or document
required or permitted to be delivered  hereunder shall be deemed to be delivered
upon  the  earlier  to  occur  of (1)  tender  of  delivery  (in  the  case of a
hand-delivered  notice), (2) deposit in the United States Mail, postage prepaid,
Certified  Mail,  or  (3)  receipt  by  facsimile  transmission  followed  by  a
confirmatory  letter,  in each  case,  addressed  to the  parties  hereto at the
respective  addresses set out in the Basic Lease  Information,  or at such other
address as they have  theretofore  specified  by  written  notice  delivered  in
accordance  herewith.  If Landlord has attempted to deliver  notice to Tenant at
Tenant's  address  reflected on Landlord's books but such notice was returned or
acceptance thereof was refused,  then Landlord may post such notice in or on the
Premises,  which  notice  shall be deemed  delivered  to Tenant upon the posting
thereof.

      In case of any  emergency,  Tenant's  contact  person  shall be the person
designated in the Basic Lease Information.

      25.4 Multiplicity.  If and when included within the term "Tenant," as used
in this  instrument,  there is more than one person,  firm or  corporation,  all
shall jointly  arrange among  themselves  for their joint  execution of a notice
specifying an individual at a specific  address  within the  continental  United
States for the receipt of notices and payments to Tenant.  All parties  included
within  the  terms  "Landlord"  and  "Tenant,"  respectively,  shall be bound by
notices given in accordance with the provisions of Section 25 to the same effect
as if each had received such notice.

                                       19
<PAGE>

26.   HAZARDOUS WASTE

      26.1  Definitions.  For  purposes  of  this  Lease,  "HAZARDOUS  OR  TOXIC
MATERIALS"   shall  mean  all  materials,   substances,   wastes  and  chemicals
classified,  defined,  listed or  regulated  as,  or  containing,  a  "hazardous
substance,"  "hazardous waste," "toxic substance,"  "pollutant,"  "contaminant,"
"oil," "hazardous  material," solid waste," and/or  "regulated  substance" under
any Environmental Law. As used herein, the term "ENVIRONMENTAL  LAWS" shall mean
any and all statutes, rules, regulations, ordinances, orders, permits, licenses,
and other  applicable  legal  requirements,  relating  directly or indirectly to
human health or safety or the environment, or the presence, handling, treatment,
storage,  disposal,  recycling,   reporting,   remediation,   investigation,  or
monitoring of hazardous or toxic materials.

      26.2 Prohibited  Uses.  Tenant shall not incorporate  into, use,  release,
conduct any activity that will produce, or otherwise place or dispose of at, in,
under or near the  Premises,  the  Building or the Land any  Hazardous  or Toxic
Materials.  Tenant  shall not (1)  occupy or use the  Premises,  nor  permit any
portion of the Premises to be occupied or used (i) except in compliance with all
Laws, ordinances,  governmental or municipal regulations,  and orders, including
without  limitation  Environmental  Laws,  or  (ii)  in a  manner  which  may be
dangerous  to life,  limb or property;  (2) cause or permit  anything to be done
which  would  in any way  increase  the rate of fire,  liability,  or any  other
insurance coverage on the Premises,  the Building, or its contents;  (3) use the
Premises or any portion as a landfill or dump; (4) install any underground tanks
of any kind; (5) permit any Hazardous or Toxic  Materials to be brought onto the
Premises  except as permitted by Section 26.3 below; or (6) allow any surface or
subsurface  conditions to exist or come into existence  that  constitute or may,
with the passes of time constitute a public or private nuisance.

      26.3 Permissive  Uses.  Tenant may use and temporarily  store cleaning and
office supplies used in the ordinary  course of Tenant's  business and then only
if (1) such materials are in reasonable quantities  appropriate to warehouse and
office  use,  properly  labeled and  contained,  (2) notice of and a copy of the
current material safety data sheet is first delivered to, and written consent is
obtained  from,  Landlord for each such Hazardous or Toxic Material and (3) such
materials  are used,  transported,  stored,  handled and disposed of off-site at
properly authorized  facilities in accordance with the highest accepted industry
standards  for safety,  storage,  use and  disposal and in  accordance  with all
applicable   governmental   laws,  rules  and  regulations,   including  without
limitations, all Environmental Laws, as defined below.

      26.4  Landlord's  Rights.  Landlord  shall have the right to  periodically
inspect, take samples for testing and otherwise investigate the Premises for the
presence of Hazardous or Toxic Materials.

      26.5 Remediation.

            26.5.1  Tenant's  Obligations.  If Tenant ever has  knowledge of the
presence in the  Premises  or the  Building  or the Land of  Hazardous  or Toxic
Materials  which affect the Premises,  Tenant shall notify  Landlord  thereof in
writing promptly after obtaining such knowledge.  If at any time during or after
the term,  the Premises,  Land or Building are found to have  Hazardous or Toxic
Materials  in, on or under them,  except for such  conditions  that were present
prior  to the  Commencement  Date of the  Lease,  then  Tenant  shall  promptly,
diligently, and expeditiously  investigate,  clean up, remove and dispose of the
material causing the violation,  in compliance with all applicable  governmental
standards, Laws, rules and regulations, including without limitation, applicable
Environmental Laws and the then prevalent  industry practice and standards,  and
Tenant  shall  repair any damage to the  Premises or the Building or the Land as
soon as practicable. Tenant shall notify Landlord in advance of its method, time
and procedure for any  investigation,  remediation or monitoring of Hazardous or
Toxic materials, and Landlord shall have the right to require reasonable changes
in such method,  time or procedure as Landlord considers  appropriate to prevent
interference  with any use,  occupancy,  care,  appearance or maintenance of the
Land or the  Building,  or the  Premises  or the  rights of other  tenants or to
require the same to be done after normal business hours,  Under no circumstances
shall any  remediation by Tenant leave any Hazardous or Toxic  Materials at, in,
or under the  Premises,  the Land, or the Building  without first  obtaining the
prior written consent of Landlord.

            26.5.2 Landlord's Rights.  Notwithstanding  the foregoing,  Landlord
shall have the right,  but not the obligation,  to perform the work described in
Section 26.5.1 and all costs and expenses associated  therewith shall be due and
payable by Tenant upon demand.

      26.6 Tenant's  Representation.  Tenant represents to Landlord that, except
as has been  disclosed  to Landlord  in  writing,  Tenant nor any of its owners,
partners,  managers, members,  shareholders,  or venturers have never been cited
for or convicted of any violations  under applicable Laws, rules or regulations,
including without limitation, Environmental Laws.

                                       20
<PAGE>

      26.7  TENANT'S  INDEMNITY.  TENANT  AGREES TO  INDEMNIFY,  DEFEND AND HOLD
HARMLESS THE  INDEMNIFIED  PARTIES FROM AND AGAINST ALL  OBLIGATIONS  (INCLUDING
REMOVAL AND REMEDIAL ACTIONS),  LOSSES,  CLAIMS, SUITS,  JUDGMENTS,  LIABILITIES
(INCLUDING WITHOUT LIMITATION STRICT LIABILITIES),  PENALTIES, DAMAGES COSTS AND
EXPENSES  (INCLUDING  ATTORNEYS' AND CONSULTANTS' FEES AND EXPENSES) OF ANY KIND
OR NATURE  WHATSOVER THAT MAY AT ANY TIME BE INCURRED BY, IMPOSED ON OR ASSERTED
AGAINST THE INDEMNIFIED  PARTIES DIRECTLY OR INDIRECTLY BASED ON, OR ARISING OUT
OF OR RESULTING FROM (1) THE ACTUAL OR ALLEGED  PRESENCE OR RELEASE OF HAZARDOUS
OR TOXIC MATERIALS ON, AT, IN, UNDER FROM OR NEAR THE PREMISES, THE BUILDING, OR
THE LAND WHICH IS CAUSED OR PERMITTED  BY A TENANT PARTY OR AT THE  DIRECTION OR
PERMISSION OF A TENANT PARTY AND/OR (2) OPERATION OR USE OF THE PREMISES  AND/OR
(3)  NON-COMPLIANCE  WITH  ENVIRONMENTAL  LAWS,  OR THE  CONDUCT OF  OBLIGATIONS
HEREUNDER,  BY A TENANT  PARTY,  OR AT THE  DIRECTION OR  PERMISSION OF A TENANT
PARTY,  (4) THE  DIMUNITION  OF PROPERTY  VALUE AND THE  RESULTING  EFFECTS UPON
LANDLORD'S  TITLE TO THE  PREMISES,  THE  BUILDING  AND THE LAND  CAUSED  BY, OR
ALLEGED TO BE CAUSED BY THE ACTUAL OR ALLEGED  PRESENCE OR RELEASE OF  HAZARDOUS
OR TOXIC MATERIALS ON, AT, IN, UNDER,  FROM OR NEAR THE PREMISES,  THE BUILDING,
OR THE LAND WHICH IS CAUSED OR PERMITTED  BY A TENANT PARTY OR AT THE  DIRECTION
OR PERMISSION OF A TENANT PARTY.

      26.8  Survival.  The  provisions  of this  Section  26 shall  survive  the
Expiration Date or earlier termination of this Lease.

      26.9  Pre-Existing  Contamination.  Tenant  shall  not be  liable  for any
claims,  demands,  actions,   liabilities,   costs,  expenses,   damages  and/or
obligations  of  any  nature  arising  from  contamination  pre-existing  in the
Premises prior to the earlier of either (a) Tenant's  occupancy of the Premises,
or (b) the Commencement Date. Prior to commencing construction of any buildings,
Landlord's  affiliate  completed  voluntary  clean up of portions of the Project
property  pursuant to the Texas  Voluntary  Cleanup  Program.  The Texas Natural
Resources  Conservation  Commission  (predecessor  to the  Texas  Commission  on
Environmental  Quality) issued two final Certificates of Completion in June 1997
reflecting  agency  closure of the Project  property  based on  amendment of the
project declaration of covenants to include certain building design criteria for
foundation  liners and Development  Control  Committee  activity to monitor soil
conditions for defined  periods.  The Certificates of Completion are recorded in
the Real Property Records of Denton County and Dallas County, Texas.

27. LANDLORD'S LIEN. In addition to the statutory landlord's lien, Tenant grants
to Landlord, to secure performance of Tenant's obligations hereunder, a security
interest  in  all  goods,  inventory,   equipment,  trade  fixtures,  furniture,
improvements,  fixtures,  chattel paper, accounts, and general intangibles,  and
other  personal  property of Tenant now or hereafter  situated on or relating to
Tenant's use of the Premises, and all proceeds therefrom (the "COLLATERAL"), and
the  Collateral  shall not be removed from the  Premises  without the consent of
Landlord  until all  obligations of Tenant have been fully  performed.  Upon the
occurrence  of an Event of  Default,  Landlord  may,  in  addition  to all other
remedies, without notice or demand except as provided below, exercise the rights
afforded a secured party under the Uniform Commercial Code of the State in which
the Building is located (the "UCC").  In  connection  with any public or private
sale under the UCC,  Landlord  shall  give  Tenant  five (5) days prior  written
notice of the time and place of any public sale of the Collateral or of the time
after  which any private  sale or other  intended  disposition  thereof is to be
made,  which  is  agreed  to be a  reasonable  notice  of  such  sale  or  other
disposition.  Tenant  grants to Landlord a power of attorney to execute and file
any  financing  statement or other  instrument  necessary to perfect  Landlord's
security interest under this Section 27, which power is coupled with an interest
and is irrevocable during the Term.  Landlord may also file a copy of this Lease
or as a financing statement to perfect its security interest in the Collateral.

      Landlord  does hereby  acknowledge  and agree that  Landlord  does not and
shall not have any right,  claim or interest in the inventory of Tenant which is
secured by UCC-1 filings and/or  purchase money  security  agreements,  or other
encumbrances in favor of creditors of Tenant.  Landlord further acknowledges and
agrees that  Landlord may not make claim for any proceeds  under any casualty or
their  insurance  policy  maintained  by  Tenant  with  regard  to such  secured
inventory. Nothing contained herein shall be construed to preclude Landlord from
asserting a claim for a Landlord's Lien to the personal  property of Tenant,  or
the proceeds of any casualty  insurance on the personal  property of Tenant,  or
the proceeds of any casualty  insurance on the personal property of Tenant which
is not in the nature of  inventory  secured  by UCC-1  filings,  purchase  money
security  agreements  or  otherwise  subject to the claims of a  creditor(s)  of
Tenant.

28. TENANT'S  ACKNOWLEDGEMENTS.  SUBJECT TO SECTION 1.4 AND THE  REPRESENTATIONS
AND  WARRANTIES OF LANDLORD  THEREIN AND THE  REPRESENTATION  AND  WARRANTIES IN
SECTION 5.3, AND THE WORK LETTER  (SECTION 2), TENANT  ACKNOWLEDGES  THAT (1) IT
HAS INSPECTED  AND ACCEPTS THE PREMISES IN AN "AS-IS,  WHERE IS" WITH ALL FAULTS
CONDITION,  (2) THE BUILDINGS AND IMPROVEMENTS  COMPRISING THE SAME ARE SUITABLE
FOR THE  PURPOSE  FOR WHICH THE  PREMISES  ARE LEASED AND  LANDLORD  HAS MADE NO
WARRANTY,   REPRESENTATION,   COVENANT,   OR  AGREEMENT   WITH  RESPECT  TO  THE
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR  PURPOSE OF THE PREMISES,  (3) THE
PREMISES ARE IN GOOD AND SATISFACTORY  CONDITION,  (4) NO  REPRESENTATIONS AS TO
THE REPAIR OF THE PREMISES,  NOR PROMISES (EXPRESS OR IMPLIED) TO ALTER, REMODEL
OR IMPROVE THE BUILDING OR PREMISES OR ANY OTHER PART OF THE LAND HAVE BEEN MADE
BY LANDLORD (UNLESS AND EXCEPT AS MAY BE SET FORTH IN EXHIBIT B ATTACHED TO THIS
LEASE, IF ONE SHALL BE ATTACHED,  OR AS IS OTHERWISE EXPRESSLY SET FORTH IN THIS
LEASE), (5) THERE ARE NO REPRESENTATIONS  OR WARRANTIES,  EXPRESSED,  IMPLIED OR
STATUTORY,  THAT  EXTEND  BEYOND THE  DESCRIPTION  OF THE  PREMISES,  AND (6) NO
RIGHTS,  EASEMENTS  OR  LICENSES  ARE  ACQUIRED  BY  TENANT  BY  IMPLICATION  OR
OTHERWISE, EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE.

                                       21
<PAGE>

Executed by Tenant on __________________________________, 2004.

TENANT:

GVI Security, Inc.

Name:
                                       -----------------------------------------
Printed Name:
                                       -----------------------------------------
Title:
                                       -----------------------------------------
Address:                               2801 Trade Center Drive
                                       Carrollton, Texas 75006

Phone Number:
Fax Number:

Executed by Landlord on                                       , 2004.

LANDLORD:

CSHV Texas Industrial, L.P., a Delaware
limited partnership

By:      CSHV, LLC, a Delaware limited liability
         company, its general partner

         By:      CALIFORNIA STATE TEACHERS'
                  RETIREMENT SYSTEM, its sole member

                  By:      PRINCIPAL REAL ESTATE
                           INVESTORS, LLC, a Delaware
                           limited liability company, its
                           investment advisor

                           By ______________________

                                       -----------------------------------------
Address:                               c/o The Holt Companies, Inc.
                                       16250 Dallas Parkway, Suite 205
                                       Dallas, Texas 75248
Phone Number:                          972-241-8300
Fax Number:                            972-241-7955

                                       22
<PAGE>

                                    RIDER ONE

                              ADDITIONAL PROVISIONS

29. THIS RIDER  CONTROLS.  The provisions set forth in this Rider control to the
extent they conflict  with any provision or provisions  set forth in the body of
this Lease Agreement.

30. RENEWAL OPTION. A. Provided that all the following have not occurred: Tenant
is not in default of any of the terms,  covenants and conditions hereof,  Tenant
has not been in material  default of any term or  condition  of the Lease beyond
any  applicable  notice  or cure  period,  which has not been  cured or  waived,
Tenant's right to possession of the Premises has not been terminated, and Tenant
has not  assigned any of its interest in this Lease or sublet any portion of the
Premises,  except as provided by Paragraph 15 herein, then Tenant shall have the
right and option to extend the  Original  Term of this Lease for one (1) further
sixty (60) month (the "Renewal Option") renewal term (each renewal term, if more
than one,  hereinafter the "Renewal Term").  Such extension of the Original Term
shall be on the same terms,  covenants  and  conditions  as provided  for in the
Original Term except for this Paragraph and except that the Base Rent during the
Renewal  Term  shall be at fair  market  base rent then in effect on  equivalent
properties,  of equivalent  size, in  equivalent  areas,  with the length of the
Renewal Term and the credit  standing of Tenant to be taken into  account,  (the
"Fair Market Base Rent"),.  Tenant shall deliver  written  notice to Landlord of
Tenant's  intent to exercise the renewal  option  granted  herein (the  "Renewal
Request  Notice")  not less than six (6) months prior to the  expiration  of the
Original Term of this Lease or expiration of the first Renewal Term. If Landlord
and Tenant  mutually  agree in writing upon the base rent for the first  Renewal
Term or the Fair Market Base Rent for the second Renewal Term within thirty (30)
days after written  exercise by Tenant of this renewal  option,  Landlord  shall
lease the  Premises  to Tenant  during  each  respective  Renewal  Term in their
then-current, "AS IS, WHERE IS" with all faults condition,. Tenant shall have no
further renewal options unless expressly granted by Landlord in writing.

B. In the event Tenant fails to deliver the Renewal  Request  Notice  within the
time period set forth above,  time being of the essence with respect to Tenant's
exercise thereof,  Tenant's right to extend the term hereof shall  automatically
terminate, be null and void, and be of no further force and effect. In the event
Landlord and Tenant fail to mutually agree in writing upon the base rent for the
first  Renewal  Term or the Fair Market Base Rent within  thirty (30) days after
written  exercise by Tenant of this renewal option,  Tenant's right hereunder to
extend the term shall  automatically  terminate,  be null and void, and be of no
further force and effect.

31. MOVING  ALLOWANCE.  Landlord shall provide Tenant a moving  allowance in the
amount of $22,000.00  to help cover moving  expenses  and/or  telephone/computer
cabling  costs,  evidenced  by  appropriate  documentation,  resulting  from its
relocation  to 2801 Trade  Center  Drive  which  amount  shall be paid to Tenant
within   fifteen  (15)  days  after  Tenant   furnishes   invoicing   and  other
documentation of Tenant's reimburseable expenses to Landlord.

32. TERMINATION OPTION. Landlord hereby grants to Tenant an option ("Termination
Option")  to  terminate  this Lease on end of the 48th month of the term,  to be
adjusted  based  on  the  actual   Commencement   Date  of  the  Original  Term,
("Termination Effective Date") subject to the following provisions.

      (a) Termination  Notice.  The  Termination  Option shall be exercisable by
Tenant by written notice ("Termination Notice") to Landlord of Tenant's election
to exercise the  Termination  Option,  such notice to be received by Landlord no
later than twelve (12) months prior to the Termination Effective Date. If Tenant
fails to deliver to Landlord the Termination  Notice on or before said date, the
Termination  Option  shall  lapse and  Tenant  shall  have no  further  right to
terminate this Lease.

      (b) Termination Fee. In consideration of Landlord's agreement to allow the
termination of this Lease,  Tenant shall pay to Landlord the sum of $246,350.00.
Such Termination Fee shall be paid by Tenant to Landlord  contemporaneously with
the Termination Notice. The Termination Fee shall not be deemed to be a penalty.
If the Termination Fee is not timely paid by Tenant to Landlord, the Termination
Option  shall lapse and Tenant  shall have no right to  terminate  this Lease as
provided herein.

      (c)  Survival  of  Obligations.  In the event  Tenant  has  satisfied  the
provisions  of  Subsection  (a)  and  (b)  above,  then,  as of the  Termination
Effective  Date, all obligations of the parties shall cease and terminate in the
same manner as upon expiration of the Term; provided, however, that Tenant shall
remain liable  hereunder for all obligations and liabilities  which accrue under
the Lease through the Termination Effective Date, including, without limitation,
Tenant's  obligation  to pay Monthly Base Rent and  Tenant's  Share of Operating
Expenses  and  Taxes.  Any  such  amounts  not  due  and  payable  prior  to the
Termination  Effective  Date,  but  which  relate  to the  period  prior  to the
Termination  Effective Date, shall be paid by Tenant to Landlord within ten (10)
days of Tenant's receipt of an invoice therefor from Landlord.

      (d) No  Default.  Tenant may  exercise  the  Termination  Option,  and any
attempted  exercise thereof shall be effective,  only if at the time of Tenant's
exercise of the  Termination  Option and on the  Termination  Effective Date (i)
this Lease is in full  force and  effect,  (ii)  Tenant is not in default of any
term or condition of this Lease and (iii) no event has occurred which,  with the
giving of any  applicable  notice or passage of time,  would  constitute  such a
default.

      (e) Not  Transferable.  Tenant  hereby  acknowledges  and agrees  that the
Termination  Option  contained in this Section shall be deemed to be personal to
Tenant and if Tenant  subleases,  assigns or  otherwise  transfers  any interest
hereunder prior to the exercise of said Termination Option, such option shall be
deemed to be null, void and of no further force or effect.

                                       1
<PAGE>

                                    EXHIBIT A

                               [Legal Description]

                                       1
<PAGE>

                                   EXHIBIT A-1

                                   [Site Plan]

                                       2
<PAGE>

                                    EXHIBIT B

                                   WORK LETTER

Pursuant  to Section 1.3 of the Lease,  Landlord  and Tenant  mutually  agree as
follows:

The terms used  herein  shall have the  meanings  ascribed to them in the Lease,
unless otherwise specifically stated herein.

1.    PLANS.

      (a)  Preliminary  Plans.  Attached  as EXHIBIT B-1 and EXHIBIT B-2 are the
preliminary plan dated February 11, 2004, and certain scope  definitions for the
construction  of  the  interior   improvements  in  the  Premises  (the  "Tenant
Improvements")   which  are  hereby   approved  by  Landlord   and  Tenant  (the
"Preliminary Plan").

      (b)  Drawings.   Landlord  shall  cause  to  be  prepared  all  plans  and
specifications  for the Tenant  Improvements  depicted on the Preliminary  Plan,
including,   without  limitation,   working  drawings,   construction  drawings,
electrical,  plumbing and mechanical  drawings necessary to construct the Tenant
Improvements (the "Drawings"). The initial Drawings shall be delivered to Tenant
for review for conformance  with the  Preliminary  Plan as soon as is reasonably
practicable  after  the  execution  of  this  Lease.  Tenant  shall  return  its
corrections,  if any,  to the  submitted  Drawings  within  five (5) days  after
Landlord's submission thereof.

      (c) Changes.  Tenant may from time to time make changes to the Drawings by
delivering  written  notice to  Landlord,  specifying  in detail  the  requested
change. If Tenant requests any changes to any submitted  Drawings that relate to
matters other than changes  necessary to conform the Drawings to the Preliminary
Plan, then all delays in designing,  reviewing of Drawings, and constructing the
Tenant  Improvements  caused by such  changes  shall not delay the  Commencement
Date.

2.  CONSTRUCTION OF  IMPROVEMENTS.  Landlord shall cause the construction of the
Tenant  Improvements  in substantial  accordance with the Drawings in a good and
workmanlike  manner using materials  specified in the Drawings and in compliance
with all applicable codes,  ordinances,  rules and regulations applicable to the
Tenant  Improvements  (collectively,  the "Laws") and shall pay for all permits,
licenses,  and all other governmental  approvals  requisite for the construction
thereof. Landlord assumes no liability for special, consequential, or incidental
damages of any kind  whatsoever in connection with the design or construction of
the Tenant Improvements, and makes no representations, warranties, or guaranties
regarding  the  same,  expressed  or  implied,  including,  without  limitation,
warranties  of  merchantability,   fitness  for  a  particular  purpose,  or  of
habitability, except for the express warranties set forth in this Section 2. The
warranties of Landlord with respect to  construction of the  Improvements  shall
survive for a period of one (1) year after Substantial Completion (the "Warranty
Period") and if Tenant shall fail to notify  Landlord in writing of any claim to
be asserted on such warranties  prior to the expiration of the Warranty  Period,
such claim shall not survive the  expiration  of the Warranty  Period.  Landlord
shall  assign to Tenant,  without  recourse  or warranty  and on a  nonexclusive
basis,  all  warranties  obtained  by  Landlord  in  connection  with the Tenant
Improvements.  Each such warranty  shall survive  Substantial  Completion of the
warranted  improvement  for a minimum  period of one (1) year after  Substantial
Completion.

3. SUBSTANTIAL  COMPLETION.  The architect (the "Project  Architect") engaged by
Landlord to design and inspect the construction of the Tenant Improvements shall
confer  with a  representative  of the  Tenant  concerning  (i) the  substantial
completion  of  the  Tenant   Improvements   prior  to  submitting  the  Project
Architect's  Certificate of Substantial  Completion and (ii)  preparation of the
punch list (as herein  described) in  conjunction  with the Project  Architect's
submission of the punch list to the  Landlord.  Substantial  Completion  (herein
so-called) shall occur when each of the following  conditions is satisfied:  the
Tenant Improvements are substantially  completed in accordance with the approved
Drawings as  certified by the Project  Architect  utilizing  AIA document  G704,
Certificate  of Substantial  Completion;  Landlord has requested of the building
inspection  division  for the city in which  the  Premises  are  located a final
certificate  of occupancy for the Premises;  and Landlord has tendered to Tenant
physical  possession  thereof.  Substantial  Completion shall have occurred even
though minor details of construction,  decoration,  landscaping,  and mechanical
adjustments  remain  to  be  completed  by  Landlord.  Landlord  shall  use  all
reasonable efforts to complete the punch list of incomplete, minor, detail items
prepared  by the  Project  Architect  in  conjunction  with the  Certificate  of
Substantial  Completion  within  thirty (30) days after the date of  Substantial
Completion,  except as to such items that, by their  nature,  will take a longer
period to complete as set forth in the punch list.

4.  COMMENCEMENT  DATE. The  Commencement  Date (herein  so-called) of the Lease
shall be the date of  Substantial  Completion  of the Tenant  Improvements.  The
Target  Completion  Date (herein  so-called) for  Substantial  Completion of the
Tenant Improvements is May 3, 2004. If Substantial Completion is delayed because
of (a) any acts or omissions of a Tenant and parties under Tenant's  supervision
or control,  (b) changes  requested  by Tenant to any  submitted  Drawings  that
relate to matters  other than changes  necessary to conform such drawings to the
Outline  Specification or to comply with Law, or (c) changes requested by Tenant
in the approved  Drawings other than changes  necessary to conform such drawings
with Law,  then the  Commencement  Date shall not be extended,  but rather shall
occur on the date on which it would have occurred but for such act, omission, or
event.  Each  day of  delay  in  Substantial  Completion  caused  by  the  acts,
omissions,  or events  described  in clauses  (a),  (b) or (c) of the  preceding
sentence or by a Tenant  Party is herein  called a "Tenant  Delay  Day".  If the
actual date of Substantial  Completion is delayed  beyond the Target  Completion
Date, then Landlord shall have no liability  therefor and the Commencement  Date
shall be extended by the period of any such  delay.  This Lease shall  remain in
full effect notwithstanding any delay in Substantial Completion.

                                       1
<PAGE>

5. TENANT  IMPROVEMENTS  CONSTRUCTION.  Landlord  agrees to construct the Tenant
Improvements as described in the Preliminary Plan, including Landlord's building
standard interior finishes for the Project, at Landlord's cost and expense.  Any
other work required to design and construct the Tenant  Improvements with Tenant
requested changes to the Preliminary Plan shall be deemed the "Additional Work".
In the event of  Additional  Work,  then Tenant may elect:  (i) to have Landlord
fund up to an additional  $2.00 per square foot, or  $117,728.00,  and have such
portion of the  Additional  Work,  plus any  associated  brokerage  commissions,
amortized  over the final  sixty (60) months of the  Original  Term and added to
Tenant's rental  obligation as set forth below,  with Tenant paying Landlord for
any  Additional  Work  exceeding  $2.00 per square  foot within ten (10) days of
notice of the amount of such Additional  Work; or (ii) to pay all or any portion
of such Additional Work to Landlord within ten (10) days of notice of the amount
of such Additional Work.

If  Tenant  elects to have any  portion  of the  Additional  Work  amortized  by
Landlord, this Additional Work, plus any associated brokerage commissions, shall
be amortized  over the final sixty (60) months of the Original  Term as follows:
The outstanding  balance of the Additional  Work, plus any associated  brokerage
commissions, shall bear interest at the rate of 11.00% simple interest per annum
from the  Commencement  Date,  and a sum equal to the  amount of  principal  and
interest  necessary to fully amortize the Additional  Work,  plus any associated
brokerage commissions, in level payments over the final sixty (60) months of the
Original Term  (treated for all purposes  under the Lease as an increase in Base
Rent due during  such sixty (60) month  period),  and the  amortized  Additional
Work, plus any associated  brokerage  commissions,  shall constitute  additional
Base Rent due under the Lease.  Tenant  agrees,  if requested  by  Landlord,  to
execute an amendment  to the Lease  setting  forth the amount of such  amortized
Additional  Work  and  associated  brokerage  commissions.  Failure  to pay  the
amortized  Additional Work and associated  brokerage  commissions when due shall
constitute  a Default  under the Lease to the same extent as failure to pay Base
Rent.

6.  CONDITION  OF PREMISES  AT  DELIVERY.  Prior to delivery of the  Premises to
Tenant and occupancy  thereof by Tenant,  Landlord will cause to be removed from
the Premises all rubbish,  tools,  scaffolding,  and surplus  materials and will
cause the  Premises,  interior and exterior,  to be cleaned in  accordance  with
commercially  reasonable standards to be set forth in the construction  contract
for  the  Tenant  Improvements  and  ready  for  occupancy.  All  floors,  floor
coverings,  roof areas,  and glass will be cleaned,  both interior and exterior.
The HVAC System and all utility  services will be installed and connected and in
good working order,  subject to Tenant's  obligations and  responsibilities  set
forth in Section 6.04 of the Lease.

7. TENANT'S  ENTRY PRIOR TO COMPLETION  DATE.  Landlord may permit Tenant or its
agents or  laborers to enter the  Premises  at  Tenant's  sole risk prior to the
Commencement Date in order to perform through Tenant's own contractors such work
as Tenant may desire,  at the same time that Landlord's  contractors are working
in the Premises.  The foregoing license to enter prior to the Commencement Date,
however,  is conditioned  upon Tenant's labor not  interfering  with  Landlord's
contractors  or with any other  tenant or its  labor.  If at any time such entry
shall cause disharmony, interference or union disputes of any nature whatsoever,
or if Landlord shall,  in Landlord's  sole judgment,  determine that such entry,
such work or the continuance  thereof shall  interfere  with,  hamper or prevent
Landlord  from  proceeding  with the  completion  of the  Building or the Tenant
Improvements  at the earliest  possible  date,  this license may be withdrawn by
Landlord  immediately upon written notice to Tenant.  Such entry shall be deemed
to be under and subject to all of the terms,  covenants  and  conditions  of the
Lease, and Tenant shall comply with all of the provisions of the Lease which are
the  obligations or covenants of Tenant,  except that the obligation to pay Rent
shall not  commence  until the  Commencement  Date.  In the event that  Tenant's
agents or laborers incur any charges from Landlord,  including,  but not limited
to, charges for use of construction or hoisting  equipment on the Building site,
such charges shall be deemed an obligation of Tenant and shall be collectible as
Rent pursuant to the Lease, and upon default in payment thereof,  Landlord shall
have the same  remedies  as for a default  in payment  of Rent  pursuant  to the
Lease.

8.  LANDLORD'S  ENTRY  AFTER  SUBSTANTIAL  COMPLETION.  At any  time  after  the
Commencement Date, Landlord may enter the Premises to complete punch list items,
and such entry by Landlord, its agents,  servants,  employees or contractors for
such purpose shall not constitute an actual or constructive  eviction,  in whole
or in part, or entitle Tenant to any abatement or diminution of Rent, or relieve
Tenant  from any  obligation  under this  Lease,  or impose any  liability  upon
Landlord  or  its  agents.   Tenant  hereby   accepts  any  and  all  reasonable
disturbances  associated  with such  entry and  agrees to fully  cooperate  with
Landlord  (and  such  cooperation  shall  include,  without  limitation,  moving
furniture as necessary).

9. DELAYS. Landlord and Tenant mutually acknowledge that Landlord's construction
process in order to complete the Premises  requires a coordination of activities
and a compliance by Tenant without delay of all obligations  imposed upon Tenant
pursuant to this EXHIBIT B and that time is of the essence in the performance of
Tenant's  obligations  hereunder  and  Tenant's  compliance  with the  terms and
provisions or this EXHIBIT B.

10.  PROVISIONS  SUBJECT  TO  LEASE.  The  provisions  of  this  EXHIBIT  B  are
specifically subject to the provisions of the Lease.

11.  TERMS.  To the  extent  not  inconsistent  with this  Exhibit B, the terms,
covenants,  provisions and items of the Lease shall govern the  construction  of
the Tenant  Improvements and the Landlord's and Tenant's  respective  rights and
obligations regarding the improvements installed pursuant thereto.

                                       2
<PAGE>

                                   EXHIBIT B-1

                                PRELIMINARY PLAN

                                       1
<PAGE>

                                   EXHIBIT B-2

                  ADDITIONS, CHANGES, & OTHER SCOPE DEFINITIONS

1.    Two  southern-most  dock high  openings  to receive  dock doors in lieu of
      existing  glass  storefront.  No dock  equipment  included  on any loading
      doors.

2.    Carpet  allowance of $24.00 per yard material cost included.  Carpet to be
      unpatterned.

3.    Based on electrical requirements outlined,  Landlord has assumed a 600 amp
      service.

4.    The  warehouse  and office  areas open to the deck have  standard 400 watt
      metal halide industrial fixtures.

5.    Landlord's pricing includes the following allowances:

      a.    Breakroom bar counter $3,500.00

      b.    Reception desk $5,500.00

      c.    MR-16 lighting $3,500.00

      d.    Ceiling clouds $11,000.00

      e.    Display counters $550.00 each

6.    Flooring in warehouse, storage rooms, janitor room and warehouse restrooms
      to be Lipidolith floor sealer.

7.    No tenant-furnished equipment hook-up is included.

8.    In a follow-up  memo  prepared by  architect,  Landlord  will  provide the
      architectural  scope  definition  to be  included  as part  of  Landlord's
      turnkey process.

                                       2
<PAGE>

                                    EXHIBIT C

                           WAIVER OF RIGHTS UNDER THE

               DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT

      TENANT  WAIVES ITS RIGHTS UNDER THE DECEPTIVE  TRADE  PRACTICES - CONSUMER
PROTECTION  ACT,  SECTION  17.41,  ET.  SEQ.,  BUSINESS  CODE,  A LAW THAT GIVES
CONSUMERS SPECIAL RIGHTS AND PROTECTIONS, AFTER CONSULTATION WITH AN ATTORNEY OF
TENANT'S OWN SELECTION, TENANT VOLUNTARILY CONSENTS TO THIS WAIVER.

LANDLORD:

CSHV Texas Industrial, L.P.

Name:
                                       -----------------------------------------
Printed Name:
                                       -----------------------------------------
Title:
                                       -----------------------------------------
Address:                               c/o The Holt Companies, Inc.
                                       16250 Dallas Parkway, Suite 205
                                       Dallas, Texas 75248

TENANT:

GVI Security, Inc.

Name:
                                       -----------------------------------------
Printed Name:
                                       -----------------------------------------
Title:
                                       -----------------------------------------
Address:                               GVI Security, Inc.
                                       2801 Trade Center
                                       Carrollton, Texas 75006

TENANT'S LEGAL COUNSEL:

Name:
                                       -----------------------------------------
Printed Name:
                                       -----------------------------------------
Title:
                                       -----------------------------------------
Address:

                                       1
<PAGE>

                                    EXHIBIT D

                         Building Rules and Regulations

      The  following  rules and  regulations  shall apply to the  Premises,  the
Building, the Land and the appurtenances thereto:

1.    Sidewalks, doorways, vestibules, halls, stairways, and other similar areas
      shall not be  obstructed  by tenants  or used by any  tenant for  purposes
      other than ingress and egress to and from their respective leased premises
      and for going from one to another part of the Building.

2.    Plumbing,  fixtures and appliances shall be used only for the purposes for
      which  designed,  and no  sweeping,  rubbish,  rags  or  other  unsuitable
      material  shall be thrown or deposited  therein.  Damage  resulting to any
      such  fixtures  or  appliances  from  misuse  by a tenant  or its  agents,
      employees or invitees, shall be paid by such tenant, and Landlord will not
      in any case be responsible therefor.

3.    No signs,  advertisements  or notices shall be painted or affixed on or to
      any  windows  or doors or other  part of the  Building  without  the prior
      written consent of Landlord.  No curtains or other window treatments shall
      be placed between the glass and the Building standard window treatments.

4.    Landlord shall provide all door locks in each tenant's leased premises, at
      the cost of such  tenant,  and no tenant shall place any  additional  door
      locks in the Premises without  Landlord's prior written consent.  Landlord
      shall furnish to each tenant a reasonable  number of keys to such tenant's
      Premises,  at such  tenant's  cost,  and no tenant  shall make a duplicate
      thereof. [This provision is subject to Section of the Lease.]

5.    Movement in or out of the Building of furniture  or office  equipment,  or
      dispatch  or  receipt by tenants  of any bulky  material,  merchandise  or
      materials which require use of stairways, or movement through the Building
      entrances or lobby (but excluding  material and merchandised moved through
      dock doors) shall be conducted under Landlord's  supervision at such times
      and in such a manner as  Landlord  may  reasonably  require.  Each  tenant
      assumes all risks of and shall be liable for all damage to articles  moved
      and injury to persons or public  engaged or not engaged in such  movement,
      including  equipment,  property  and  personnel  of Landlord if damaged or
      injured as a result of acts in  connection  with carrying out this service
      for such tenant from the time of entering  the property to  completion  of
      work and Landlord will not be liable for acts of any person engaged in, or
      any damage or loss to any of said property or persons  resulting from, any
      act in connection with such service performed for a tenant.

6.    Landlord may prescribe weight  limitations and determine the locations for
      safes and other  heavy  equipment  or items,  which  shall in all cases be
      placed in the Building so as to distribute  weight in a manner  acceptable
      to  Landlord  which may  include  the use of such  supporting  devices  as
      Landlord  may  require.   All  damages  to  the  Building  caused  by  the
      installation or removal of any property of a tenant, or done by a tenant's
      property  while in the Building,  shall be repaired at the expense of such
      tenant.

7.    Nothing shall be swept or thrown into the corridors,  halls, or stairways.
      No birds,  pets or animals  shall be brought  into or kept in, on or about
      any tenant's Premises. No portion of any tenant's Premises or the Building
      shall at any time be used or occupied as sleeping or lodging quarters.

8.    Tenant shall  cooperate  with  Landlord's  employees in keeping its leased
      Premises neat and clean.

9.    Tenant shall not make or permit any improper,  objectionable or unpleasant
      noises or orders in the  Building or  otherwise  interfere in any way with
      other tenants or persons having business with them. Smoking of cigarettes,
      cigars,  and all  tobacco  products is  prohibited  on the Land and in the
      Building or Premises.

10.   No  machinery  of  any  kind  (other  than  normal  office  and  warehouse
      equipment,  including security  equipment) shall be operated by any tenant
      in the Premises without  Landlord's  prior written consent,  nor shall any
      tenant use or keep in the  Building any  flammable  or explosive  fluid or
      substance.

11.   Landlord will not be  responsible  for lost or stolen  personal  property,
      money or  jewelry  from  tenant's  Premises  or public or common  areas or
      Parking Areas.

12.   All tenants will refer all contractors,  contractors'  representatives and
      installation  technicians  (when such technicians are on site for purposes
      of  building  matters  other  than as  relates to  Tenant's  products  and
      business) to Landlord  for  Landlord's  supervision,  approval and control
      before the  performance of any contractual  services.  This provision will
      apply to all work  performed in the Building  including but not limited to
      installations of telephones,  telegraph equipment,  electrical devices and
      attachments,  doors, entrance ways, and any and all installations of every
      nature  affecting  floors,  walls,  woodwork,   trim,  window,   ceilings,
      equipment  and any other  physical  portion of the Building but  excluding
      Tenant's  products  and  business.  [This  provision  is  subject  to  the
      provisions of Section 13.2 of the Lease.]

13.   Should a  tenant  require  telegraphic,  telephonic,  enunciator  or other
      communication service,  Landlord will direct the electrician where and how
      wires are to be  introduced  and  placed  and none will be  introduced  or
      placed except as Landlord will direct.  Electric  current will not be used
      for building heating  (excluding  personal fans) without  Landlord's prior
      written permission.

                                       1
<PAGE>

14.   No vehicles(s)  will be left in the Parking Areas for more than a ten (10)
      day period  without  the  Landlord's  prior  written  consent.  No outside
      storage  is  permitted.   Because  nature  of  Tenant's  operations,  some
      employees may leave vehicles parked overnight while traveling on business.
      Such actions shall be at the employees' sole risk.

15.   Tenant shall give prompt notice to Landlord in case of any known emergency
      at the Premises, Building, or Land.

16.   Tenant  shall keep door to  unattended  areas  locked and shall  otherwise
      exercise  reasonable  precautions to protect its property from theft, loss
      or damage. Landlord shall not be responsible for the theft, loss or damage
      of any  property  or for any error with  regard to the  exclusion  from or
      admission  to the  Premises  or the  Building  of any  person.  In case of
      invasion,  mob, riot or public excitement,  Landlord reserves the right to
      prevent access to the Premises or the Building  during the  continuance of
      same by closing the doors or taking  other  measures for the safety of the
      tenants and  protection  of the  Premises or the  Building and property or
      persons therewith.

17.   All keys shall be returned to Landlord upon the  termination of this Lease
      and Tenant shall give to Landlord the  explanations of the combinations of
      all safes,  vaults and  combination  locks  remaining  with the  Premises.
      Landlord may at all times keep a pass key to the Premises,  subject to the
      reservations  and  restrictions set forth in the Lease. All entrance doors
      to the Premises shall be left closed at all times and left locked when the
      Premises are not in use.

18.   Tenant shall not place,  install or operate on the Premises or in any part
      of the  Building,  (A) other than those  Permissive  Uses set forth in the
      Lease or pertaining to Tenant's  warehouse  operations  and business,  any
      machinery or engine, or the mechanical operation thereof, or (B) stove, or
      cook thereon or therein,  or place. Other than normal office and warehouse
      supplies  incidental  to office and  warehouse  operations  in  reasonable
      quantities,  Tenant shall not use in or about the Premises any explosives,
      gasoline,  kerosene, oil, acids, caustics, or any inflammable,  explosive,
      or hazardous materials without written consent of Landlord.

19.   Subject to the  provisions  of the Lease,  Landlord  reserves the right to
      rescind any of these Rules and  Regulations and to make such other further
      Rules and Regulations as in its judgment will from time to time be needful
      for  the  safety,  protection,  care  and  cleanliness  of  the  Premises,
      Building,  and the Land the operation  thereof,  the  preservation of good
      order  therein  and the  protection  and  comfort of the tenants and their
      agents,  employees,  licensees and invitees,  which Rules and Regulations,
      when made and written notice thereof if given to a tenant, will be binding
      upon it in like manner as if originally set forth herein.

                                       2
<PAGE>

                                    EXHIBIT E

                               Sign and Lettering

LOCATION:                       2801 Trade Center Drive
                                Carrollton, Texas 75006

TENANT LETTERING:               The  lettering is limited to the  business  name
                                only. The name must be in one line.

FABRICATION OF LETTERS:         3"  deep  reversed   aluminum  channel  letters.
                                Aluminum  face and aluminum  edges.  Letters are
                                fabricated out of .063  aluminum.  They are then
                                cleaned,   etched,  and  chromate   conversation
                                coated. They are primed and finished coated with
                                two coats of enamel paint. No lighted letters.

SIZE OF LETTERS:                Maximum letter height is 30" tall.
                                Minimum letter height is 15" tall.

LETTER STYLE/LOGOS:             Logos and  different  letter styles are allowed.
                                The fabrication is the same.

COLORS:                         The color of the letters is optional.

INSTALLATION:                   Above the Tenant's  entrance door on the wall of
                                the Building.

BUILDING SUITE NUMBERS:         6", Helvetica Medium, White vinyl

WINDOW LETTERING/

GLASS ENTRANCE DOOR:            No window  lettering  is allowed.  Lettering  is
                                allowed on the doors.  Company  name  only/logo.
                                White gsp scotchal  premium film only. 1.5" tall
                                letters.

SHIPPING/RECEIVING
BAY DOORS:                      20"x60"  aluminum pan panel. 2" deep,  Quart can
                                size  radius  corners.  Deep  bronze  background
                                with1/4" thick white plex letters,  pad mounted.
                                One panel mounted over each bay door

NOTE: All signage to be approved by Landlord. The Tenant will be held liable and
shall bear all cost of removal and/or  correction of signs,  sign  installation,
and damage to the Building due to  installation  of signs that do not conform to
the above specifications.

                                       1
<PAGE>

                                    EXHIBIT F

                   HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE

Your  cooperation  in this matter is  appreciated.  Initially,  the  information
provided by you in this Hazardous Materials Disclosure  Certificate is necessary
for the Landlord  (identified  below) to evaluate and finalize a lease agreement
with you as Tenant.  After a lease  agreement  is signed by you and the Landlord
(the "Lease Agreement"), within 30 days following written request from Landlord,
however no more than twice per calendar year (unless the most recent information
has materially  changed and Tenant  determines that new information  needs to be
provided to Landlord  more  frequently)  in  accordance  with the  provisions of
Section 26 of the signed  Lease  Agreement,  you are to provide an update to the
information  initially  provided  by you in this  certificate.  The  information
contained in the initial  Hazardous  Materials  Disclosure  Certificate and each
subsequent  certificate  provided  by  you  thereafter  will  be  maintained  in
confidentiality by Landlord subject to release and disclosure as required by (i)
any lenders and owners and their respective environmental consultants,  (ii) any
prospective  purchaser(s)  of all or any  portion of the  property  on which the
Premises are located,  (iii) Landlord to defend itself or its lenders,  partners
or  representatives  against  any claim or  demand,  and (iv) any  laws,  rules,
regulations,  orders,  decrees,  or ordinances,  including,  without limitation,
court orders or subpoenas.  Any and all capitalized terms used herein, which are
not otherwise defined herein,  shall have the same meaning ascribed to such term
in the signed Lease Agreement.  Any questions  regarding this certificate should
be directed to, and when completed, the certificate should be delivered to:

    Landlord Name:                      CSHV Texas Industrial, L.P.
                                        c/o The Holt Companies, Inc.
                                        16250 Dallas Parkway
                                        Dallas, Texas 75248

    Attn:                               Liz Sheff
    Phone:                              972.280.8300

    Name of (Prospective) Tenant:       GVI Security, Inc.
    Mailing Address:                    2801 Trade Center Drive
                                        Carrollton, Texas 75006

Contact Person, Title and
Telephone Number(s):                    Thomas Wade, President and
                                        CEO 888-595-2288

Contact  Person for  Hazardous  Waste  Materials  Management  and  Manifests and
Telephone Number(s)

Same
--------------------------------------------------------------------------------

Address of (Prospective) Premises:    2801 Trade Center, Carrollton, Texas 75006

Length of (Prospective) initial Term: Sixty-six (66) months
                                      ------------------------------------------

1.    GENERAL INFORMATION:

      Describe the initial  proposed  operations  to take place in, on, or about
      the Premises, including, without limitation, principal products processed,
      manufactured  or  assembled,  services  and  activities  to be provided or
      otherwise conducted. Existing Tenants should describe any proposed changes
      to ongoing operations. (Attach additional sheets if necessary).

      Security equipment and products,  including computers,  monitors, CCTY and
      related equipment, components and supplies
      --------------------------------------------------------------------------

2.    USE, STORAGE AND DISPOSAL OF HAZARDOUS OR TOXIC MATERIALS

      2.1   Will any  Hazardous  or Toxic  Materials  be used  _____,  generated
            _____,  stored  _____ or  disposed  of  _____  in,  on or about  the
            Premises?  (Note: Generally all storage will be required to be fully
            contained).  Existing Tenants should describe any Hazardous or Toxic
            Materials which continue to be used,  generated,  stored or disposed
            of in, on or about the Premises.

                  Wastes                    Yes |_|                    No |X|

                  Chemical Products         Yes |_|                    No |X|

                  Other                     Yes |_|                    No |X|

            If yes is marked  attach  all MSDS's  and  please  explain:  (MSDS's
            Attached )

                                       1

<PAGE>

      2.2   If yes is marked in Section 2.1,  attach a list of any  Hazardous or
            Toxic Materials to, be used, generated, stored or disposed of in, on
            or about the Premises,  including the applicable hazard class and an
            estimate of the quantities of each such Hazardous or Toxic Materials
            at  any  given  time;  estimated  annual  throughout;  the  proposed
            location(s)  and method of storage,  including  container  sizes and
            types (excluding  nominal amounts of ordinary household cleaners and
            janitorial  supplies  which are not  regulated by any  Environmental
            Laws);  and the proposed  locations) and method of disposal for each
            Hazardous or Toxic Material, including, the estimated frequency, and
            the proposed contractors or subcontractors.  Existing Tenants should
            attach a list setting  forth the  information  requested  above such
            list should  include  actual data from  ongoing  operations  and the
            identification  of any variations in such information from the prior
            year's certificate.  Attach a Site Plan indicating all storage areas
            - (Attached ).

3.    STORAGE TANKS AND SUMPS

      3.1   Is any above or below ground storage of gasoline, diesel, petroleum,
            or other  Hazardous or Toxic Material in tanks or sumps proposed in,
            on or about the Premises?  Existing Tenants should describe any such
            actual or proposed activities, including any required SPCC Plan.

            Yes |_|                    No |X|

            If Yes, please explain:
                                   ---------------------------------------------

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

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

4. WASTE MANAGEMENT

      4.1   (a)   Has your company been issued an EPA Hazardous  Waste Generator
                  I.D.  Number?  Existing Tenants should describe any additional
                  identification numbers issued since the previous certificate.

                  Yes |_|                    No |X|

                  Describe RCRA status:
                                       -----------------------------------------

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

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

            (b)   Has  your  company  been  issued  a solid  waste  registration
                  number?

                  Yes |_|                    No |X|

                  Describe status:
                                   ---------------------------------------------

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

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

      4.2   Has your company filed a biannual or quarterly report as a hazardous
            waste generator?

            Yes |_|                    No |X|

                  If  yes,  attach  a copy  of the  most  recent  report  filed.
                  (Attached |_|).

5.    WASTEWATER TREATMENT AND DISCHARGE

      5.1   Will your company discharge wastewater or other wastes to: NO

                  _____ storm drain?           _____ sewer?

                  _____ surface water?         _____ facility treatment plant?

                  _____ grounds                _____ no wastewater or other

      (i.e.,  compressor  blow-down) wastes discharge  ([Existing Tenants should
indicate any actual  discharges.  If so,  describe the nature of any proposed or
actual  discharges).  (Note:  Generally,  discharges  to  storm  drains  will be
prohibited without prior review and approval from Landlord).

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

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

6.    AIR DISCHARGES

      6.1   Do you plan for any air  filtration  systems or stacks to be used in
            your  company's  operations  in, on or about the Premises  that will
            discharge  into the air; and will such air  emissions be  monitored?
            Existing  Tenants should indicate  whether or not there are any such
            air filtration systems or stacks in use in, on or about the Premises
            which  discharge  into the air and whether  such air  emissions  are
            being monitored.

            Yes |_|                    No |X|

            If Yes, please explain:
                                   ---------------------------------------------

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

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

                                       2
<PAGE>

      6.2   Do you propose to operate any of the  following  types of equipment,
            or any other equipment  requiring an air emissions permit?  Existing
            Tenants should  specify any such equipment  being operated in, on or
            about the Premises. NO

                  _____ Spray booth(s)             _____ Incinerator(s)

                  _____ Dip tank(s)                _____ Drycleaning

                  _____ Drying oven(s)             _____ Other (please describe)

                                                   _____ No Equipment Requiring
                                                         Air Permits

            If Yes, please explain:
                                   ---------------------------------------------

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

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

      6.3   Do any of your operations generate an obvious odor:

            Yes |_|                    No |X|

7.    HAZARDOUS OR TOXIC MATERIALS DISCLOSURES

      7.1   Has your  company  prepared  or will it be  required  to  prepare  a
            Hazardous or Toxic  Materials  management plan  ("Management  Plan")
            pursuant to Fire  Department  or other  governmental  or  regulatory
            agencies' requirements.  Existing Tenants should indicate whether or
            not a Management Plan is required and has been prepared.

            Yes |_|                    No |X|

            If yes,  attach  a copy of the  Management  Plan.  Existing  Tenants
            should attach a copy of any required updates to the Management Plan.

8.    ENFORCEMENT ACTIONS AND COMPLAINTS

      8.1   With respect to Hazardous or Toxic Materials or Environmental  Laws,
            has  your  company  ever  been  subject  to any  agency  enforcement
            actions,  administrative  orders, or consent decrees designated as a
            PRP or has your company received requests for information, notice or
            demand letters (cited in violation of any environmental regulation),
            or any other inquiries  regarding its operations?  Existing  Tenants
            should indicate  whether or not any such actions,  orders or decrees
            have been, or are in the process of being, undertaken or if any such
            requests have been received.

            Yes |_|                    No |X|

            If yes,  describe the actions,  orders or decrees and any continuing
            compliance obligations imposed as a result of these actions,  orders
            or decrees and also describe any requests,  notices or demands,  and
            attach  a copy  of  all  such  documents.  Existing  Tenants  should
            describe  and  attach a copy of any new  actions,  orders,  decrees,
            requests,  notices or demands  not  already  delivered  to  Landlord
            pursuant  to  the  provisions  of  Section  26 of the  signed  Lease
            Agreement.

      8.2   Have there ever been, or are there now pending, any lawsuits against
            your  company  regarding  any  environmental  or health  and  safety
            concerns?

            Yes |_|                    No |X|

            If  yes,  describe  any  such  lawsuit  and  attach  copies  of  the
            complaint(s), cross-complaint(s),  pleadings and all other documents
            related  thereto as requested by Landlord.  Existing  Tenants should
            describe   and   attach   a   copy   of   any   new    complaint(s),
            cross-complaint(s),   pleadings  and  other  related  documents  not
            already  delivered to Landlord pursuant to the provisions of Section
            26 of the signed Lease Agreement.

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

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

      8.3   Have  there been any  problems  or  complaints  from past or current
            landlords,  adjacent  tenants,  owners  or other  neighbors  at your
            company's  current  facility with regard to  environmental or health
            and  safety  or odor  concerns?  Existing  Tenants  should  indicate
            whether or not there have been any such problems or complaints  from
            adjacent  tenants,  owner;  or other neighbors at, about or near the
            Premises.

            Yes |_|                    No |X|

            If yes, please  describe.  Existing Tenants should describe any such
            problems or complaints  not already  disclosed to Landlord under the
            provisions of the signed lease.

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

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

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

                                       3
<PAGE>

9.    PERMITS AND LICENSES

      9.1   Attach  copies  of all  Hazardous  or Toxic  Materials  permits  and
            licenses  issued  to  your  company  with  respect  to its  proposed
            operations  in,  on  or  about  the  Premises,   including,  without
            limitation, any wastewater discharge permits, air emissions permits,
            and use permits or approvals.  Existing Tenants should attach copies
            of any new permits and  licenses as well as any  renewals of permits
            or licenses previously issued.

The undersigned  hereby  acknowledges  and agrees that this Hazardous  Materials
Disclosure  Certificate is being  delivered in connection  with, and as required
by,  Landlord in connection  with the  evaluation  and  finalization  of a Lease
Agreement and will be attached  thereto as an exhibit.  The undersigned  further
acknowledges and agrees that this Hazardous Materials Disclosure  Certificate is
being  delivered  in  accordance  with,  and as required by, the  provisions  of
Section 26 of the Lease  Agreement.  The undersigned  further  acknowledges  and
agrees that the Landlord and its partners,  lender; and representatives may, and
will, rely upon the statements,  representations,  warranties, and certification
is made herein and the truthfulness thereof in entering into the Lease Agreement
and the continuance  thereof  throughout the term, and any renewals thereof,  of
the Lease Agreement.  I,  ______________________,  acting with full authority to
bind the  (proposed)  Tenant and on behalf of the  (proposed)  Tenant,  certify,
represent and warrant that the information contained in this certificate is true
and correct.

(PROSPECTIVE) Tenant:

GVI Security, Inc.

By:
                  --------------------------------------------------
Title:
                  --------------------------------------------------
Date:
                  --------------------------------------------------

                                       4Exhibit 10.1

                             USA TECHNOLOGIES, INC.
                         2004-A STOCK COMPENSATION PLAN

      1. Purpose. The purpose of the USA Technologies, Inc. 2004-A Stock
Compensation Plan is to provide an incentive to Employees, Consultants and
Directors of the Company who are in a position to contribute materially to the
long-term success of the Company, to increase their interest in the Company's
welfare, and to aid in gaining the services of Employees, Consultants and
Directors of outstanding ability who will contribute to the Company's success.

      2. Definitions.

            2.1 "Award" means an award of Stock under the Plan.

            2.2 "Board" means the Board of Directors of USA Technologies, Inc.

            2.3 "Code" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code shall include any successor to such
section.

            2.4 "Committee" means the committee designated by the Board to
administer the Plan under Section 4.

            2.5 "Common Stock" means USA common stock, no par value per share,
or such other class or kind of shares of capital stock or other securities as
may result from the application of Section 8 hereof.

            2.6 "Company" means USA and any successor thereof.

            2.7 "Consultant" means a consultant retained to provide bona fide
services to, and who is not an employee of USA.

            2.8 "Director" means each director of USA who is not an employee of
USA.

            2.9 "Employee" means an officer or employee of the Company including
a director who is such an employee.

            2.10 "Fair Market Value" means, on any given date, the mean between
the high and low prices of actual sales of Common Stock on the principal
national securities exchange on which the Common Stock is listed on such date,
or, if the Common Stock was not so listed, the average closing bid price of the
stock for each of the five trading days prior to such date.

<PAGE>

            2.11 "Holder" means an Employee, Director or Consultant to whom an
Award is made.

            2.12 "USA" means USA Technologies, Inc., a Pennsylvania corporation
and any successor thereto.

            2.13 "1933 Act" means the Securities Act of 1933, as amended.

            2.14 "Plan" means the USA 2004-A Stock Compensation Plan herein set
forth, as amended from time to time.

            2.15 "Stock" means Common Stock awarded by the Committee under
Section 6 of the Plan.

            2.16 "SEC" means the United States Securities and Exchange
Commission.

      3. Eligibility. Any Employee, Eligible Director and Eligible Consultant is
eligible to receive an Award.

      4. Administration of Plan.

            4.1 The Plan shall be administered and interpreted by the Committee,
which shall have full authority to act in selecting Employees, Directors and
Consultants to whom Awards will be made, in determining the type and amount of
Awards to be granted to each such Holder, the terms and conditions of Awards and
the terms of agreements which will be entered into with Holders in connection
with Awards. The Committee shall be appointed by the Board and shall have at
least one member and shall act unanimously in all matters.

            4.2 The Committee's powers shall include, but not be limited to, the
power to determine whether, to what extent and under what extent and under what
circumstances an Award is made.

            4.3 The Committee shall have the power to adopt regulations for
carrying out the Plan and to make such changes in such regulations as it shall
from time to time deem advisable. The Committee shall have the power
unilaterally and without approval of a Holder to amend any existing Award in
order to carry out the purposes of the Plan so long as such amendment does not
deprive the Holder of any benefit granted by the Award and so long as the
amended Award comports with the terms of the Plan. Amendments adverse to the
interests of the Holder must be approved by the Holder. Any interpretation by
the Committee of the terms and provisions of the Plan and the administration
thereof, and all action taken by the Committee, shall be final and binding on
Plan participants.

<PAGE>

      5. Shares of Stock Subject to the Plan.

            5.1 Subject to adjustment as provided in Section 7, the total number
of shares of Common Stock available for Awards under the Plan shall be 500,000
shares.

            5.2 Any shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares or treasury shares. If any shares subject to any
Award granted hereunder are forfeited or such Award otherwise terminates without
the issuance of such shares, the shares subject to such Award, to the extent of
any such forfeiture or termination, shall again be available for Awards under
the Plan.

      6. Stock.

            An Award of Stock is a grant by the Company of a specified number of
shares of Common Stock to the Holder, which shares are subject to forfeiture
upon the happening of specified events. Such an Award shall be subject to the
following terms and conditions:

            6.1 Stock may be evidenced by Stock agreements. Such agreements
shall conform to the requirements of the Plan and may contain such other
provisions as the Committee shall deem advisable.

            6.2 Upon determination of the number of shares of Stock to be
granted to the Holder, the Committee shall direct that a certificate or
certificates representing the number of shares of Common Stock be issued to the
Holder with the Holder designated as the registered owner.

            6.3 The Committee may condition the grant of an Award of Stock upon
the Holder's achievement of one or more performance goal(s) specified in the
Stock agreement. If the Holder fails to achieve the specified performance
goal(s), the Committee shall not grant the Stock to the Holder, or the Holder
shall forfeit the Award of Stock and the Common Stock shall be forfeited to the
Company.

<PAGE>

            6.4 The Stock agreement if any, shall specify the performance,
employment or other conditions (including termination of employment on account
of death, disability, retirement or other cause) under which the Stock may be
forfeited to the Company.

      7. Adjustments Upon Changes in Capitalization. In the event of a
reorganization, recapitalization, stock split, spin-off, split-off, split-up,
stock dividend, issuance of stock rights, combination of shares, merger,
consolidation or any other change in the corporate structure of USA affecting
Common Stock, or any distribution to stockholders other than a cash dividend,
the Board shall make appropriate adjustment in the number and kind of shares
authorized by the Plan as it determines appropriate. No fractional shares of
stock shall be issued pursuant to such an adjustment, but an amount equivalent
to the portion of Fair Market Value attributable to any such fractional shares
shall, where appropriate, be paid in cash to the Holder.

      8. Termination and Amendment. The Plan shall remain in full force and
effect until terminated by the Board. The Board shall have the power to amend,
suspend or terminate the Plan at any time.

      9. Form S-8. Promptly upon the approval of this Plan by the Board of
Directors of USA, the Company shall, at its cost and expense, register all of
the Stock under the 1933 Act pursuant to Form S-8. Notwithstanding anything else
set forth herein, an Award shall not be made to any Director, Consultant or
Employee unless such person in eligible to receive Stock which has been
registered under a Form S-8. In this regard, any Stock issuable to a Consultant
or Director shall be issued to an individual who provided bona fide services to
USA and such services are not in connection with the offer or sale of securities
in a capital-raising transaction, and do not directly or indirectly promote or
maintain a market for USA's securities. In connection with the issuance of any
Stock pursuant to the Plan, USA shall at its expense, use its best efforts to
have any such Stock exempted from the registration requirements under applicable
state securities laws.

<PAGE>

      10. General Provisions.

            10.1 The Plan shall become effective upon its approval by the Board.

            10.2 Nothing contained in the Plan, or an Award granted pursuant to
the Plan, shall confer upon an Employee any right with respect to continuance of
employment by the Company or upon any Director or Consultant any right with
respect to continuance of Board service or the consulting arrangement (as the
case may be), nor interfere in any way with the right of the Company to
terminate such relationships at any time.

            10.3 For purposes of this Plan, transfer of employment between USA
and any Subsidiary shall not be deemed termination of employment.

            10.4 Holders shall be responsible to make appropriate provision for
all taxes required to be withheld in connection with any Award. Such
responsibility shall extend to all applicable federal, state, local or foreign
withholding taxes. Agreements evidencing Awards shall contain appropriate
provisions to effect withholding. The Plan is not qualified under Section 401(a)
of the Internal Revenue Code.

            10.5 To the extent that federal laws (such as the 1934 Act, the Code
or the Employee Retirement Income Security Act of 1974) do not otherwise
control, the Plan and all determinations made and actions taken pursuant hereto
shall be governed by the law of the Commonwealth of Pennsylvania and construed
accordingly.

            10.6 Additional information may be obtained about the Plan and the
Plan administrators by writing the Company at 100 Deerfield Lane, Suite 140,
Malvern, PA 19355, Attn: Stephen P. Herbert, or by calling 610-989-0340.

Dated: April 9, 2004

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