Document:

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                                                                   Exhibit 10.10

                                                                     [Net Lease]

                                LEASE AGREEMENT

         THIS LEASE AGREEMENT is made this 13 day of July, 2000, between
ProLogis Trust, a Maryland real estate investment trust ("Landlord"), and the
Tenant named below.

TENANT:                            Kinetics Fluid Systems, a California
                                   corporation

TENANT'S REPRESENTATIVE,           Terry Bielss
ADDRESS, AND PHONE NO.:            200 C Parker Way
                                   Austin, TX 78728
                                   Phone:     512/246-5528
                                   FAX:       512/246-5592

PREMISES:                          That portion of the Building commonly known
                                   as Suite____, containing approximately 72,000
                                   rentable square feet, as determined by
                                   Landlord, as shown on Exhibit A.

PROJECT:                           Corridor Park Corporate Center

BUILDING:                          Corridor Park Corporate Center, Building if
                                   #11 _________Parker Drive, Austin, Texas
                                   78754

TENANT'S PROPORTIONATE SHARE
OF PROJECT:                        _______%

TENANT'S PROPORTIONATE SHARE
OF BUILDING:                       _______%

LEASE TERM:                        Beginning on the Commencement Date and ending
                                   on the last day of the 84th full calendar
                                   month thereafter.

COMMENCEMENT DATE:                 February 1, 2001

<TABLE>
<S>                                <C>    <C>                   <C>            <C>
INITIAL MONTHLY BASE RENT:                                                     $28,800.00

INITIAL ESTIMATED MONTHLY          1.     Common Area Charges:  $1,996.80
OPERATING EXPENSE PAYMENTS:
(estimates only and subject        2.     Taxes                 $6,712.20
to adjustment to actual costs
and expenses according to the      3.     Insurance      .      $  210.00
provisions of this Lease)
                                   4.     Management Fee        $1,131.58
                                                                ---------

INITIAL ESTIMATED MONTHLY OPERATING
EXPENSE PAYMENTS:                                                              $10,050.58
                                                                               ----------

INITIAL MONTHLY BASE RENT AND
  OPERATING EXPENSE PAYMENTS:                                                  $38,850.58
</TABLE>

SECURITY DEPOSIT:                  None.

BROKER:                            Jon Aune

ADDENDA:                           Addendum One-Base Rent Adjustments; Addendum
                                   Two-Construction (Allowance Amortized);
                                   Addendum Three-One Renewal Option at Market;
                                   Addendum Four-Move-Out Conditions; Addendum
                                   5-Sign Specifications; Addendum 6-HVAC
                                   Maintenance Agreement; Addendum 7-Special
                                   Provisions; Exhibit A-Site Plan.

         1.       GRANTING CLAUSE. In consideration of the obligation of Tenant
to pay rent as herein provided and in consideration of the other terms,
covenants, and conditions hereof, Landlord leases to Tenant, and Tenant takes
from Landlord, the Premises, to have and to hold for the Lease Term, subject to
the terms, covenants and conditions of this Lease.

         2.       ACCEPTANCE OF PREMISES. Tenant shall accept the Premises in
its condition as of the Commencement Date, subject to all applicable laws,
ordinances, regulations, covenants and restrictions. Landlord has made no
representation or warranty as to the suitability of the Premises for the conduct
of Tenant's business, and Tenant waives any implied warranty that the Premises
are suitable for Tenant's intended purposes. Except as provided in Paragraph 10,
in no event shall Landlord have any obligation for any defects in the Premises
or any limitation on its use. The taking of possession of the Premises shall be
conclusive evidence that Tenant accepts the Premises and that the Premises were
in good condition at the time possession was taken except for items that are
Landlord's responsibility under Paragraph 10 and any punchlist items agreed to
in writing by Landlord and Tenant. Landlord represents that as of the
Commencement Date, all building and mechanical systems servicing the Premises
shall be in good working order, including, without limitation, the heating,
ventilation and air conditioning system.

         3.       USE. The Premises shall be used only for the purpose of
receiving, storing, shipping and selling (but limited to wholesale sales)
products, materials and merchandise made and/or distributed by Tenant and for
such other lawful purposes as may be incidental thereto; provided, however, with
Landlord's prior written consent, Tenant may also use the Premises for light
manufacturing. Tenant shall not conduct or give notice of any auction,
liquidation, or going out of business sale on the Premises. Tenant will use the
Premises in a careful, safe and proper manner and will not commit waste,
overload the floor or structure of the Premises or subject the Premises to use
that would

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damage the Premises. Tenant shall not permit any objectionable or unpleasant
odors, smoke, dust, gas, noise, or vibrations to emanate from the Premises, or
take any other action that would constitute a nuisance or would disturb,
unreasonably interfere with, or endanger Landlord or any tenants of the Project.
Outside storage, including without limitation, storage of trucks and other
vehicles, is prohibited without Landlord's prior written consent. Tenant, at its
sole expense, shall use and occupy the Premises in compliance with all laws,
including, without limitation, the Americans With Disabilities Act, orders,
judgments, ordinances, regulations, codes, directives, permits, licenses,
covenants and restrictions now or hereafter applicable to the Premises
(collectively, "Legal Requirements"). The Premises shall not be used as a place
of public accommodation under die Americans With Disabilities Act or similar
state statutes or local ordinances or any regulations promulgated thereunder,
all as may be amended from time to time. Tenant shall, at its expense, make any
alterations or modifications, within or without the Premises, that are required
by Legal Requirements related to Tenant's use of the Premises. Tenant will not
use or permit the Premises to be used for any purpose or in any manner that
would void Tenant's or Landlord's insurance, increase the insurance risk, or
cause the disallowance of any sprinkler credits. If any increase in the cost of
any insurance on the Premises or the Project is caused by Tenant's use or
occupation of the Premises, or because Tenant vacates the Premises, then Tenant
shall pay the amount of such increase to Landlord. Any occupation of the
Premises by Tenant prior to the Commencement Date shall be subject to all
obligations of Tenant under this Lease.

                  Tenant's obligations hereunder shall relate only to the
interior of the Premises and any changes to the Project that relate solely to
the specific mariner of use of the Premises by Tenant; and Landlord shall make
all other additions to or modifications of the Project required from time to
time by Legal Requirements. The cost of such additions or modifications made by
Landlord shall be included in Operating Expenses pursuant to Paragraph 6 of this
Lease, except for those additions or modifications which are Landlord's sole
responsibility pursuant to Paragraph 10 of this Lease.

         4.       BASE RENT. Tenant shall pay Base Rent in the amount set forth
above. The first month's Base Rent and the first monthly installment of
estimated Operating Expenses (as hereafter defined) shall be due and payable on
the date hereof, and Tenant promises to pay to Landlord in advance, without
demand, deduction or set-off, monthly installments of Base Rent on or before the
first day of each calendar month succeeding the Commencement Date. Payments of
Base Rent for any fractional calendar month shall be prorated. All payments
required to be made by Tenant to Landlord hereunder shall be payable at such
address as Landlord may specify from time to time by written notice delivered in
accordance herewith. The obligation of Tenant to pay Base Rent and other sums to
Landlord and the obligations of Landlord under this Lease are independent
obligations. Tenant shall have no right at any time to abate, reduce, or set-off
any rent due hereunder except as may be expressly provided in this Lease. If
Tenant is delinquent in any monthly installment of Base Rent or of estimated
Operating Expenses for more than 5 days, Tenant shall pay to Landlord on demand
a late charge equal to 5 percent of such delinquent sum. The provision for such
late charge shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as a penalty.

         5.       SECURITY DEPOSIT. Intentionally deleted.

         6.       OPERATING EXPENSE PAYMENTS. each month of the Lease
Term, on the same date that Base Rent is due, Tenant shall pay Landlord an
amount equal to 1/12 of the annual cost, as estimated by Landlord from time to
time, of Tenant's Proportionate Share (hereinafter defined) of Operating
Expenses for the Project. Payments thereof for any fractional calendar month
shall be prorated. The term "Operating Expenses" means all costs and expenses
incurred by Landlord with respect to the ownership, maintenance, and operation
of the Project including, but not limited to costs of: Taxes (hereinafter
defined) and fees payable to tax consultants and attorneys for consultation and
contesting taxes; insurance; utilities; maintenance, repair and replacement of
all portions of the Project, including without limitation, paving and parking
areas, roads, roofs, alleys, and driveways, mowing, landscaping, exterior
painting, utility lines, heating, ventilation and air conditioning systems,
lighting, electrical systems and other mechanical and building systems; amounts
paid to contractors and subcontractors for work or services performed in
connection with any of the foregoing; charges or assessments of any association
to which the Project is subject; property management fees payable to a property
manager, including any affiliate of Landlord, or if there is no property
manager, an administration fee of 15 percent of Operating Expenses payable to
Landlord; security services, if any; trash collection, sweeping and removal; and
additions or alterations made by Landlord to the Project or the Building in
order to comply with Legal Requirements (other than those expressly required
herein to be made by Tenant) or that are appropriate to the continued operation
of the Project or the Building as a bulk warehouse facility in the market area,
provided that the cost of additions or alterations that are required to be
capitalized for federal income tax purposes shall be amortized on a straight
line basis over a period equal to the lesser of the useful life thereof for
federal income tax purposes or 10 years. Operating Expenses do not include
costs, expenses, depreciation or amortization for capital repairs and capital
replacements required to be made by Landlord under Paragraph 10 of this Lease;
debt service under mortgages or ground rent under ground leases; costs of
restoration to the extent of net insurance proceeds received by Landlord with
respect thereto; leasing commissions; the costs of renovating space for tenants;
costs incurred in connection with the construction or remodeling of the Project
or any other improvements now or hereafter located thereon, correction of
defects in design or construction; interest, principal, or other payments on
account of any indebtedness that is secured by any incumbrance on any part of
the Project, or rental or other payments under any ground lease, or any payments
in the nature of returns on or of equity of any kind; costs of selling,
syndicating, financing, mortgaging or hypothecating any part of or interest in
the Project; taxes on the income of Landlord or Landlord's franchise taxes
(unless any of said taxes are hereafter instituted by applicable taxing
authorities in substitution for ad valorem real property taxes); depreciation,
reserves of any kind, including replacement reserves and reserves for bad debt
or lost rent, or any other charge not involving the payment of money to third
parties; Landlord's overhead costs, including equipment, supplies, accounting
and legal fees, rent and other occupancy costs or any other costs associated
with the operation or internal organization and

                                     - 2 -

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function of Landlord as a business entity (but this provision does not prevent
the payment of a management fee to Landlord as provided in this Paragraph 6);
fees or other costs for professional services provided by space planners,
architects, engineers, and other similar professional consultants, real estate
commissions, and marketing and advertising expenses; costs of defending or
prosecuting litigation with any party, unless a favorable judgment would reduce
or avoid an increase in Operating Expenses, or unless the litigation is to
enforce compliance with Rules and Regulations of the Project, or other standards
or requirements for the general benefit of the tenants in the Project; costs
incurred as a result of Landlord's violation of any lease, contract, law or
ordinance, including fines and penalties; late charges, interest or penalties of
any kind for late or other improper payment of any public or private obligation,
including ad valorem taxes; costs of removing Hazardous Materials or of
correcting any other conditions in order to comply with any environmental law or
ordinance (but this exclusion shall not constitute a release by Landlord of
Tenant for any such costs for which Tenant is liable pursuant to Paragraph 30 of
this Lease); costs for which Landlord is reimbursed from any other source; costs
related to any building or land not included in the Project, including any
allocation of costs incurred on a shared basis, such as centralized accounting
costs, unless the allocation is made on a reasonable and consistent basis that
fairly reflects the share of costs actually attributable to the Project; and the
part of any costs or other sum paid to any affiliate of Landlord that may exceed
the fair market price or cost generally payable for substantially similar goods
or services in the area of the Project.

                  Landlord shall provide Tenant within 90 days following the
final day of the Calendar year Landlord's itemized year-end common area
maintenance reconciliation reports. Upon Tenant's written request (which request
shall be limited to once in a calendar year), Landlord shall provide photocopies
of invoices, bills and other verification to substantiate such costs. If
Tenant's total payments of Operating Expenses for any year are less than
Tenant's Proportionate Share of actual Operating Expenses for such year, then
Tenant shall pay the difference to Landlord within 30 days after demand, and if
more, then Landlord shall retain such excess and credit it against Tenant's next
payments. For purposes of calculating Tenant's Proportionate Share of Operating
Expenses, a year shall mean a calendar year except the first year, which shall
begin on the Commencement Date, and the last year, which shall end on the
expiration of this Lease. With respect to Operating Expenses which Landlord
allocates to the entire Project, Tenant's "Proportionate Share" shall be the
percentage set forth on the first page of this Lease as Tenant's Proportionate
Share of the Project as reasonably adjusted by Landlord in the future for
changes in the physical size of the Premises or the Project; and, with respect
to Operating Expenses which Landlord allocates only to the Building, Tenant's
"Proportionate Share" shall be the percentage set forth on the first page of
this Lease as Tenant's Proportionate Share of the Building as reasonably
adjusted by Landlord in the future for changes in the physical size of the
Premises or the Building. Landlord may equitably increase Tenant's Proportionate
Share for any item of expense or cost reimbursable by Tenant that relates to a
repair, replacement, or service that benefits only the Premises or only a
portion of the Project or Building that includes the Premises or that varies
with occupancy or use. The estimated Operating Expenses for the Premises set
forth on the first page of this Lease are only estimates, and Landlord makes no
guaranty or warranty that such estimates will be accurate.

         7.       UTILITIES. Tenant shall pay for all water, gas, electricity,
heat, light, power, telephone, sewer, sprinkler services, refuse and trash
collection, and other utilities and services used on the Premises, all
maintenance charges for utilities, and any storm sewer charges or other similar
charges for utilities imposed by any governmental entity or utility provider,
together with any taxes, penalties, surcharges or the like pertaining to
Tenant's use of the Premises. Landlord may cause at Tenant's expense any
utilities to be separately metered or charged directly to Tenant by the
provider. Tenant shall pay its share of all charges for jointly metered
utilities based upon consumption, as reasonably determined by Landlord. No
interruption or failure of utilities shall result in the termination of this
Lease or the abatement of rent. Tenant agrees to limit use of water and sewer
for normal restroom use.

         8.       TAXES. Landlord shall pay all taxes, assessments and
governmental charges (collectively referred to as "Taxes") that accrue against
the Project during the Lease Term, which shall be included as part of the
Operating Expenses charged to Tenant. Landlord may contest by appropriate legal
proceedings the amount, validity, or application of any Taxes or liens thereof.
All capital levies or other taxes assessed or imposed on Landlord upon the rents
payable to Landlord under this Lease and any franchise tax, any excise,
transaction, sales or privilege tax, assessment, levy or charge measured by or
based, in whole or in part, upon such rents from the Premises and/or the Project
or any portion thereof shall be paid by Tenant to Landlord monthly in estimated
installments or upon demand, at the option of Landlord, as additional rent;
provided, however, in no event shall Tenant be liable for any net income taxes
imposed on Landlord unless such net income taxes are in substitution for any
Taxes payable hereunder. If any such tax or excise is levied or assessed
directly against Tenant, then Tenant shall be responsible for and shall pay the
same at such times and in such manner as the taxing authority shall require.
Tenant shall be liable for all taxes levied or assessed against any personal
property or fixtures placed in the Premises, whether levied or assessed against
Landlord or Tenant.

         9.       INSURANCE. Landlord shall maintain all risk property insurance
covering the full replacement cost of the Building, Landlord may, but is not
obligated to, maintain such other insurance and additional coverages as it may
deem necessary, including, but not limited to, commercial liability insurance
and rent loss insurance. All such insurance shall be included as part of the
Operating Expenses charged to Tenant. The Project or Building may be included in
a blanket policy (in which case the cost of such insurance allocable to the
Project or Building will be determined by Landlord based upon the insurer's cost
calculations). Tenant shall also reimburse Landlord for any increased premiums
or additional insurance which Landlord reasonably deems necessary as a result of
Tenant's use of the Premises.

                  Tenant. at its expense, shall maintain during the Lease Term:
all risk property insurance covering the full replacement cost of all property
and improvements installed or placed in the Premises by Tenant at Tenant's
expense; worker's compensation insurance with no less than the minimum limits
required by law; employer's liability

                                     - 3 -

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insurance with such limits as required by law; and commercial liability
insurance, with a minimum limit of $1,000,000 per occurrence and a minimum
umbrella limit of $1,000,000, for a total minimum combined general liability and
umbrella limit of $2,000,000 (together with such additional umbrella coverage as
Landlord may reasonably require) for property damage, personal injuries, or
deaths of persons occurring in or about the Premises. Landlord may from time to
time require reasonable increases in any such limits. The commercial liability
policies shall name Landlord as an additional insured, insure on an occurrence
and not a claims-made basis, be issued by insurance companies which are
reasonably acceptable to Landlord, not be cancelable unless 30 days' prior
written notice shall have been given to Landlord, contain a hostile fire
endorsement and a contractual liability endorsement and provide primary coverage
to Landlord (any policy issued to Landlord providing duplicate or similar
coverage shall be deemed excess over Tenant's policies). Such policies or
certificates thereof shall be delivered to Landlord by Tenant upon commencement
of the Lease Term and upon each renewal of said insurance.

                  The all risk property insurance obtained by Landlord and
Tenant shall include a waiver of subrogation by the insurers and all rights
based upon an assignment from its insured, against Landlord or Tenant, their
officers, directors, employees, managers, agents, invitees and contractors, in
connection with any loss or damage thereby insured against. Neither party nor
its officers, directors, employees, managers, agents, invitees or contractors
shall be liable to the other for loss or damage caused by any risk coverable by
all risk property insurance, and each party waives any claims against the other
party, and its officers, directors, employees, managers, agents, invitees and
contractors for such loss or damage. The failure of a party to insure its
property shall not void this waiver. Landlord and its agents, employees and
contractors shall not be liable for, and Tenant hereby waives all claims against
such parties for, business interruption and losses occasioned thereby sustained
by Tenant or any person claiming through Tenant resulting from any accident or
occurrence in or upon the Premises or the Project from any cause whatsoever,
including without limitation, damage caused in whole or in part, directly or
indirectly, by the negligence of Landlord or its agents, employees or
contractors.

                  Tenant and its subtenants, assignees, invitees, employees,
contractors and agents shall not be liable for, and Landlord hereby waives all
claims against Tenant and its subtenants, assignees, invitees, employees,
contractors and agents for damage to property sustained by Landlord or any
person claiming through Landlord resulting from any accident or occurrence in or
upon the Premises or in or about the Project from any cause whatsoever,
including, without limitation, damage caused in whole or in part, directly or
indirectly, by the negligence of Tenant or its subtenants, assignees, invitees,
employees, contractors or agents; provided, however, such waiver shall only
apply to claims in excess of the commercially reasonable deductible under
Landlord's insurance policy.

         10.      LANDLORD'S REPAIRS. Landlord shall maintain, at its expense,
the structural soundness of the roof, foundation, and exterior walls of the
Building in good repair, reasonable wear and tear and uninsured losses and
damages caused by Tenant, its agents and contractors excluded. The term "walls"
as used in this Paragraph 10 shall not include windows, glass or plate glass,
doors or overhead doors, special store fronts, dock bumpers, dock plates or
levelers, or office entries. Tenant shall promptly give Landlord written notice
of any repair required by Landlord pursuant to this Paragraph 10, after which
Landlord shall have a reasonable opportunity to repair.

         11.      TENANT'S REPAIRS. Landlord, at Tenant's expense as provided in
Paragraph 6, shall maintain in good repair and condition the parking areas and
other common areas of the Building, including, but not limited to driveways,
alleys, landscape and grounds surrounding the Premises. Subject to Landlord's
obligation in Paragraph 10 and subject to Paragraphs 9 and 15, Tenant, at its
expense, shall repair, replace and maintain in good condition all portions of
the Premises and all areas, improvements and systems exclusively serving the
Premises including, without limitation, dock and loading areas, truck doors,
plumbing, water and sewer lines up to points of common connection, fire
sprinklers and fire protection systems, entries, doors, ceilings and roof
membrane, windows, interior walls, and the interior side of demising walls, and
heating, ventilation and air conditioning systems. Such repair and replacements
include capital expenditures and repairs whose benefit may extend beyond the
Term, and such capital expenditures and repairs shall be fully amortized in
accordance with the Formula (defined hereafter) over the remainder of the Lease
Term, without regard to any extension or renewal option not then exercised. The
"Formula" shall mean that number, the numerator of which shall be the number of
months of the Lease Term remaining after the replacement of any such capital
expenditures, and the denominator of which shall be the maximum amortization
period (in months) allowable for determining depreciation of such capital
expenditures for federal income tax purposes, but not to exceed 10 years. Tenant
shall reimburse Landlord for the cost of such repairs and replacements in equal
monthly installments in the same manner as the payment by Tenant to Landlord of
the Operating Expenses. Heating, ventilation and air conditioning systems and
other mechanical and building systems serving the Premises shall be maintained
at Tenant's expense pursuant to maintenance service contracts entered into by
Tenant or, at Landlord's election, by Landlord. The scope of services and
contractors under such maintenance contracts shall be reasonably approved by
Landlord. At Landlord's request, Tenant shall enter into a joint maintenance
agreement with any railroad that services the Premises. If Tenant fails to
perform any repair or replacement for which it is responsible, Landlord may
perform such work and be reimbursed by Tenant within 10 days after demand
therefor. Subject to Paragraphs 9 and 15, Tenant shall bear the full cost of any
repair or replacement to any part of the Building or Project that results from
damage caused by Tenant, its agents, contractors, or invitees and any repair
that benefits only the Premises.

         12.      TENANT-MADE ALTERATIONS AND TRADE FIXTURES. Any alterations,
additions, or improvements made by or on behalf of Tenant to the Premises
("Tenant-Made Alterations") shall be subject to Landlord's prior written consent
which shall not be unreasonably withheld provided that such alteration does not
materially affect the structure or the roof of the Building, or modify the
utility systems of the Project. Tenant shall cause, at its expense, all Tenant-
Made Alterations to comply with insurance requirements and with Legal
Requirements and shall construct at its expense any alteration or modification
required by Legal Requirements as a result of any Tenant-Made Alterations.

                                     - 4 -

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All Tenant-Made Alterations shall be constructed in a good and workmanlike
manner by contractors reasonably acceptable to Landlord and only good grades of
materials shall be used. All plans and specifications for any Tenant-Made
Alterations shall be submitted to Landlord for its approval. Landlord shall not
unreasonably withhold its approval of such plans and specifications, and shall
notify Tenant within 10 days of its receipt of such plans and specifications of
any changes needed to obtain Landlord's approval thereof. Landlord may monitor
construction of the Tenant-Made Alterations. Tenant shall reimburse Landlord for
its costs in reviewing plans and specifications and in monitoring construction.
Landlord's right to review plans and specifications and to monitor construction
shall be solely for its own benefit, and Landlord shall have no duty to see that
such plans and specifications or construction comply with applicable laws,
codes, rules and regulations. Tenant shall provide Landlord with the identities
and mailing addresses of all persons performing work or supplying materials,
prior to beginning such construction, and Landlord may post on and about the
Premises notices of non-responsibility pursuant to applicable law. Tenant shall
furnish security or make other arrangements satisfactory to Landlord to assure
payment for the completion of all work free and clear of liens and shall provide
certificates of insurance for worker's compensation and other coverage in
amounts and from an insurance company satisfactory to Landlord protecting
Landlord against liability for personal injury or property damage during
construction. Upon completion of any Tenant-Made Alterations, Tenant shall
deliver to Landlord sworn statements setting forth the names of all contractors
and subcontractors who did work on the Tenant-Made Alterations and final lien
waivers from all such contractors and subcontractors. Upon surrender of the
Premises, all Tenant-Made Alterations and any leasehold improvements constructed
by Landlord or Tenant shall remain on the Premises as Landlord's property,
except to the extent Landlord requires removal at Tenant's expense of any such
items or Landlord and Tenant have otherwise agreed in writing in connection with
Landlord's consent to any Tenant-Made Alterations. Tenant shall repair any
damage caused by such removal.

                  Tenant, at its own cost and expense and without Landlord's
prior approval, may erect such shelves, bins, machinery and trade fixtures
(collectively "Trade Fixtures") in the ordinary course of its business provided
that such items do not alter the basic character of the Premises, do not
overload or damage the Premises, and may be removed without injury to the
Premises, and the construction, erection, and installation thereof complies with
all Legal Requirements and with Landlord's requirements set forth above. Tenant
shall remove its Trade Fixtures and shall repair any damage caused by such
removal.

         13.      SIGNS. Tenant shall not make any changes to the exterior of
the Premises, install any exterior lights, decorations, balloons, flags,
pennants, banners, or painting, or erect or install any signs, windows or door
lettering, placards, decorations, or advertising media of any type which can be
viewed from the exterior of the Premises, without Landlord's prior written
consent. Upon surrender or vacation of the Premises, Tenant shall have removed
all signs and repair, paint, and/or replace the building facia surface to which
its signs are attached. Tenant shall obtain all applicable governmental permits
and approvals for sign and exterior treatments. All signs, decorations,
advertising media, blinds, draperies and other window treatment or bars or other
security installations visible from outside the Premises shall be subject to
Landlord's approval and conform in all respects to Landlord's requirements.

         14.      PARKING. Tenant shall be entitled to park in common with other
tenants of the Project in those areas designated for nonreserved parking.
Landlord may allocate parking spaces among Tenant and other tenants in the
Project if Landlord determines that such parking facilities are becoming
crowded. Landlord shall not be responsible for enforcing Tenant's parking rights
against any third parties.

         15.      RESTORATION. If at any tune during the Lease Term the Premises
are damaged by a fire or other casualty, Landlord shall notify Tenant within 60
days after such damage as to the amount of time Landlord reasonably estimates it
will take to restore the Premises. If the restoration time is estimated to
exceed 6 months, either Landlord or Tenant may elect to terminate this Lease
upon notice to the other party given no later than 30 days after Landlord's
notice. If neither party elects to terminate this Lease or if Landlord estimates
that restoration will take 6 months or less, then, subject to receipt of
sufficient insurance proceeds, Landlord shall promptly restore the Premises
excluding the improvements installed by Tenant or by Landlord and paid by
Tenant, subject to delays arising from the collection of insurance proceeds or
from Force Majeure events. Tenant at Tenant's expense shall promptly perform,
subject to delays arising from the collection of insurance proceeds, or from
Force Majeure events, all repairs or restoration not required to be done by
Landlord and shall promptly re-enter the Premises and commence doing business in
accordance with this Lease. Notwithstanding the foregoing, either party may
terminate this Lease if the Premises are damaged during the last year of the
Lease Term and Landlord reasonably estimates that it will take more than one
month to repair such damage. Tenant shall pay to Landlord with respect to any
damage to the Premises the amount of the commercially reasonable deductible
under Landlord's insurance policy (currently $10,000) within 10 days after
presentment of Landlord's invoice. If the damage involves the premises of other
tenants, Tenant shall pay the portion of the deductible that the cost of the
restoration of the Premises bears to the total cost of restoration, as
determined by Landlord. Base Rent and Operating Expenses shall be abated for the
period of repair and restoration in the proportion which the area of the
Premises, if any, which is not usable by Tenant bears to the total area of the
Premises. Such abatement shall be the sole remedy of Tenant, and except as
provided herein, Tenant waives any right to terminate the Lease by reason of
damage or casualty loss.

         16.      CONDEMNATION. If any part of the Premises or the Project
should be taken for any public or quasi-public use under governmental law,
ordinance, or regulation, or by right of eminent domain, or by private purchase
in lieu thereof (a "Taking" or "Taken"), and the Taking would prevent or
materially interfere with Tenant's use of the Premises or in Landlord's judgment
would materially interfere with or impair its ownership or operation of the
Project, then upon written notice by Landlord this Lease shall terminate and
Base Rent shall be apportioned as of said date. If part of the Premises shall be
Taken, and this Lease is not terminated as provided above, the Base Rent payable
hereunder during the unexpired Lease Term shall be reduced to such extent as may
be fair and reasonable under the circumstances. In the event of any such Taking,
Landlord shall be entitled to receive the entire price or

                                     - 5 -

<PAGE>

award from any such Taking without any payment to Tenant, and Tenant hereby
assigns to Landlord Tenant's interest, if any, in such award. Tenant shall have
the right, to the extent that same shall not diminish Landlord's award, to make
a separate claim against the condemning authority (but not Landlord) for such
compensation as may be separately awarded or recoverable by Tenant for moving
expenses and damage to Tenant's Trade Fixtures, if a separate award for such
items is made to Tenant.

         17.      ASSIGNMENT AND SUBLETTING. Without Landlord's prior written
consent, which Landlord shall not unreasonably withhold, Tenant shall not assign
this Lease or sublease the Premises or any part thereof or mortgage, pledge, or
hypothecate its leasehold interest or grant any concession or license within the
Premises and any attempt to do any of the foregoing shall be void and of no
effect. For purposes of this paragraph, a transfer of the ownership interests
controlling Tenant shall be deemed an assignment of this Lease unless such
ownership interests are publicly traded. Notwithstanding the above, Tenant may
assign or sublet the Premises, or any part thereof, to any entity controlling
Tenant, controlled by Tenant or under common control with Tenant (a "Tenant
Affiliate"), without the prior written consent of Landlord. Tenant shall
reimburse Landlord for all of Landlord's reasonable out-of-pocket expenses in
connection with any assignment or sublease. Upon Landlord's receipt of Tenant's
written notice of a desire to assign or sublet the Premises, or any part thereof
(other than to a Tenant Affiliate), Landlord may, by giving written notice to
Tenant within 30 days after receipt of Tenant's notice, terminate this Lease
with respect to the space described in Tenant's notice, as of the date specified
in Tenant's notice for the commencement of the proposed assignment or sublease.
If Landlord so terminates the Lease, Landlord may enter into a lease directly
with the proposed sublessee or assignee. Tenant may withdraw its notice to
sublease or assign by notifying Landlord within 10 days after Landlord has given
Tenant notice of such termination, in which case the Lease shall not terminate
but shall continue.

                  Provided no default has occurred and is continuing under this
Lease, upon 10 days prior written notice to Landlord, Tenant may, without
Landlord's prior written consent, assign this Lease to an entity into which
Tenant is merged or consolidated or to an entity to which substantially all of
Tenant's assets are transferred, provided (x) such merger, consolidation, or
transfer of assets is for a good business purpose and not principally for the
purpose of transferring Tenant's leasehold estate, and (y) the assignee or
successor entity has a net worth at least equal to the net worth of Tenant
immediately prior to such merger, consolidation, or transfer.

                  It shall be reasonable for the Landlord to withhold its
consent to any assignment or sublease in any of the following instances: (i) an
Event of Default has occurred and is continuing that would not be cured upon the
proposed sublease or assignment; (ii) the assignee or sublessee does not have a
net worth calculated according to generally accepted accounting principles at
least equal to $10 million immediately prior to such assignment or sublease or
the net worth of the Tenant at the time it executed the Lease; (iii) the
intended use of the Premises by the assignee or sublessee is materially
different in comparison to Tenant's use of the Premises; (iv) the intended use
of the Premises by the assignee or sublessee would materially increase the
pedestrian or vehicular traffic to the Premises or the Project; (v) occupancy of
the Premises by the assignee or sublessee would, in Landlord's opinion, violate
an agreement binding upon Landlord or the Project with regard to the identity of
tenants, usage in the Project, or similar matters; (vi) the identity or business
reputation of the assignee or sublessee will, in the good faith judgment of
Landlord, tend to damage the goodwill or reputation of the Project; (vii) the
assignment or sublet is to another tenant in the Project, other than another
tenant occupying the adjacent space to the Premises, and is at rates which are
below those charged by Landlord for comparable space in the Project; (viii) in
the case of a sublease, the subtenant has not acknowledged that the Lease
controls over any inconsistent provision in the sublease or (ix) the proposed
assignee or sublessee is a governmental agency. Tenant and Landlord acknowledge
that each of the foregoing criteria are reasonable as of the date of execution
of this Lease. The foregoing criteria shall not exclude any other reasonable
basis for Landlord to refuse its consent to such assignment or sublease. Any
approved assignment or sublease shall be expressly subject to the terms and
conditions of this Lease. Tenant shall provide to Landlord all information
concerning the assignee or sublessee as Landlord may reasonably request.

                  Notwithstanding any assignment or subletting, Tenant and any
guarantor or surety of Tenant's obligations under this Lease shall at all times
remain fully responsible and liable for the payment of the rent and for
compliance with all of Tenant's other obligations under this Lease (regardless
of whether Landlord's approval has been obtained for any such assignments or
sublettings). In the event mat the rent due and payable by a sublessee or
assignee (or a combination of the rental payable under such sublease or
assignment plus any bonus or other consideration therefor or incident thereto)
exceeds the rental payable under this Lease, then Tenant shall be bound and
obligated to pay Landlord as additional rent hereunder all such excess rental
and other excess consideration within 10 days following receipt thereof by
Tenant.

                  If this Lease be assigned or if the Premises be subleased
(whether in whole or in part) or in the event of the mortgage, pledge, or
hypothecation of Tenant's leasehold interest or grant of any concession or
license within the Premises or if the Premises be occupied in whole or in part
by anyone other than Tenant, then upon a default by Tenant hereunder Landlord
may collect rent from the assignee, sublessee, mortgagee, pledgee, party to whom
the leasehold interest was hypothecated, concessionee or licensee or other
occupant and, except to the extent set forth in the preceding paragraph, apply
the amount collected to the next rent payable hereunder; and all such rentals
collected by Tenant shall be held in trust for Landlord and immediately
forwarded to Landlord, No such transaction or collection of rent or application
thereof by Landlord, however, shall be deemed a waiver of these provisions or a
release of Tenant from the further performance by Tenant of its covenants,
duties, or obligations hereunder.

         18.      INDEMNIFICATION. Except for the negligence or breach of
Landlord, its agents, employees or contractors, and to the extent permitted by
law, Tenant agrees to indemnify, defend and hold harmless Landlord, and

                                     - 6 -

<PAGE>

Landlord's agents, employees and contractors, from and against any and all
losses, liabilities, damages, costs and expenses (including attorneys' fees)
resulting from claims by third parties for injuries to any person and damage to
or theft or misappropriation or loss of property occurring in or about the
Project and arising from Tenant's use and Tenant's occupancy of the Premises or
from any activity, work, or thing done, permitted or suffered by Tenant in or
about the Premises or due to any other act or omission of Tenant, its
subtenants, assignees, invitees, employees, contractors and agents. The
furnishing of insurance required hereunder shall not be deemed to limit Tenant's
obligations under this Paragraph 18.

         19.      INSPECTION AND ACCESS. Landlord and its agents,
representatives, and contractors may enter the Premises at any reasonable time
to inspect the Premises and to make such repairs as may be required or permitted
pursuant to this Lease and for any other business purpose. Landlord and
Landlord's representatives may enter the Premises during business hours for the
purpose of showing the Premises to prospective purchasers and, during the last
year of the Lease Term, to prospective tenants. Landlord may erect a suitable
sign on the Premises stating the Premises are available to let or that the
Project is available for sale. Landlord may grant easements, make public
dedications, designate common areas and create restrictions on or about the
Premises, provided that no such easement, dedication, designation or restriction
materially interferes with Tenant's use or occupancy of the Premises. At
Landlord's request, Tenant shall execute such instruments as may be necessary
for such easements, dedications or restrictions.

         20.      QUIET ENJOYMENT. If Tenant shall perform all of the covenants
and agreements herein required to be performed by Tenant, Tenant shall, subject
to the terms of this Lease, at all times during the Lease Term, have peaceful
and quiet enjoyment of the Premises against any person claiming by, through or
under Landlord.

         21.      SURRENDER. Upon termination of the Lease Term or earlier
termination of Tenant's right of possession, Tenant shall surrender the Premises
to Landlord in the same condition as received, broom clean, ordinary wear and
tear and casualty loss and condemnation covered by Paragraphs 15 and 16
excepted. Any Trade Fixtures, Tenant-Made Alterations and property not so
removed by Tenant as permitted or required herein shall be deemed abandoned and
may be stored, removed, and disposed of by Landlord at Tenant's expense, and
Tenant waives all claims against Landlord for any damages resulting from
Landlord's retention and disposition of such property. All obligations of Tenant
hereunder not fully performed as of the termination of the Lease Term shall
survive the termination of the Lease Term, including without limitation,
indemnity obligations, payment obligations with respect to Operating Expenses
and obligations concerning the condition and repair of the Premises.

         22.      HOLDING OVER. If Tenant retains possession of the Premises
after the termination of the Lease Term, unless otherwise agreed in writing,
such possession shall be subject to immediate termination by Landlord at any
time, and all of the other terms and provisions of this Lease (excluding any
expansion or renewal option or other similar right or option) shall be
applicable during such holdover period, except that Tenant shall pay Landlord
from time to time, upon demand, as Base Rent for the holdover period, an amount
equal to 150% of the Base Rent in effect on the termination date, computed on a
monthly basis for each month or part thereof during such holding over. All other
payments shall continue under the terms of this Lease. In addition, Tenant shall
be liable for all damages incurred by Landlord as a result of such holding over.
No holding over by Tenant, whether with or without consent of Landlord, shall
operate to extend this Lease except as otherwise expressly provided, and this
Paragraph 22 shall not be construed as consent for Tenant to retain possession
of the Premises.

         23.      EVENTS OF DEFAULT. Each of the following events shall be an
event of default ("Event of Default") by Tenant under this Lease;

                  (i)      Tenant shall fail to pay any installment of Base Rent
         or any other payment required herein when due, and such failure shall
         continue for a period of 5 days after notice from Landlord to Tenant
         that such payment was due; provided, however, that Landlord shall not
         be obligated to provide written notice of such failure more than 2
         times in any consecutive 12-month period, and the failure of Tenant to
         pay any third or subsequent installment of Base Rent or any other
         payment required herein when due in any consecutive 12-month period
         shall constitute an Event of Default by Tenant under this Lease without
         the requirement of notice or opportunity to cure.

                  (ii)     Tenant or any guarantor or surety of Tenant's
         obligations hereunder shall (A) make a general assignment for the
         benefit of creditors; (B) commence any case, proceeding or other action
         seeking to have an order for relief entered on its behalf as a debtor
         or to adjudicate it a bankrupt or insolvent, or seeking reorganization,
         arrangement, adjustment, liquidation, dissolution or composition of it
         or its debts or seeking appointment of a receiver, trustee, custodian
         or other similar official for it or for all or of any substantial part
         of its property (collectively a "proceeding for relief"); (C) become
         the subject of any proceeding for relief which is not dismissed within
         60 days of its filing or entry; or (D) die or suffer a legal disability
         (if Tenant, guarantor, or surety is an individual) or be dissolved or
         otherwise fail to maintain its legal existence (if Tenant, guarantor or
         surety is a corporation, partnership or other entity).

                  (iii)    Any insurance required to be maintained by Tenant
         pursuant to this Lease shall be cancelled or terminated or shall expire
         or shall be reduced or materially changed, except, in each case, as
         permitted in this Lease.

                  (iv)     Tenant shall not occupy or shall vacate the Premises
         or shall fail to continuously operate its business at the Premises for
         the permitted use set forth herein, whether or not Tenant is in
         monetary or other default under this Lease. Tenant's vacating of the
         Premises shall not constitute an Event of Default if,

                                     - 7 -

<PAGE>

         prior to vacating the Premises, Tenant has made arrangements reasonably
         acceptable to Landlord to (a) insure that Tenant's insurance for the
         Premises will not be voided or cancelled with respect to the Premises
         as a result of such vacancy, (b) insure that the Premises are secured;
         and (c) insure that the Premises will be properly maintained after such
         vacation. If Tenant vacates, Tenant shall inspect the Premises at least
         once each month and provide Landlord with an informal report on a
         quarterly basis as to the condition of the Premises.

                  (v)      Tenant shall attempt or there shall occur any
         assignment, subleasing or other transfer of Tenant's interest in or
         with respect to this Lease except as otherwise permitted in this Lease.

                  (vi)     Tenant shall fail to discharge any lien placed upon
         the Premises in violation of this Lease within 30 days after any such
         lien or encumbrance is filed against the Premises.

                  (vii)    Tenant shall fail to comply with any provision of
         this Lease other than those specifically referred to in this Paragraph
         23, and except as otherwise expressly provided herein, such default
         shall continue for more than 30 days after Landlord shall have given
         Tenant written notice of such default, unless such default cannot be
         cured within 30 days provided Tenant commences and diligently pursues
         said cure and completes the cure within 90 days.

         24.      LANDLORD'S REMEDIES. Upon each occurrence of an Event of
Default and so long as such Event of Default shall be continuing, Landlord may
at any time thereafter at its election: terminate this Lease or Tenant's right
of possession, (but Tenant shall remain liable as hereinafter provided) and/or
pursue any other remedies at law or in equity. Upon the termination of this
Lease or termination of Tenant's right of possession, it shall be lawful for
Landlord, without formal demand or notice of any kind, to re-enter the Premises
by summary dispossession proceedings or any other action or proceeding
authorized by law and to remove Tenant and all persons and property therefrom.
If Landlord re-enters the Premises, Landlord shall have the right to keep in
place and use, or remove and store, all of the furniture, fixtures and equipment
at the Premises.

                  Except as otherwise provided in the next paragraph, if Tenant
breaches this Lease and abandons the Premises prior to the end of the term
hereof, or if Tenant's right to possession is terminated by Landlord because of
an Event of Default by Tenant under this Lease, this Lease shall terminate. Upon
such termination, Landlord may recover from Tenant the following: (i) the worth
at the time of award of the unpaid Base Rent and other charges under this Lease
that had been earned at the time of termination; (ii) the worth at the time of
award of the amount by which the reasonable value of the unpaid Base Rent and
other charges under this Lease which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; (iii) the worth at the time of the
award by which the reasonable value of the unpaid Base Rent and other charges
under this Lease for the balance of the term of this Lease after the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; and (iv) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or that in the ordinary course of things would be
likely to result therefrom. As used herein, the following terms are defined: (a)
the "worth at the time of award" of the amounts referred to in Sections (i) and
(ii) is computed by allowing interest at the lesser of 18 percent per annum or
the maximum lawful rate. The "worth at the time of award" of the amount referred
to in Section (iii) is computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent; (b) the "time of award" as used in clauses (i), (ii), and (iii) above
is the date on which judgment is entered by a court of competent jurisdiction;
(c) The "reasonable value" of the amount referred to in clause (ii) above is
computed by determining the mathematical product of (1) the "reasonable annual
rental value" (as defined herein) and (2) the number of years, including
fractional parts thereof, between the date of termination and the time of award.
The "reasonable value" of the amount referred to in clause (iii) is computed by
determining the mathematical product of (1) the annual Base Rent and other
charges under this Lease and (2) the number of years including fractional parts
thereof remaining in the balance of the term of this Lease after the time of
award.

                  Even though Tenant has breached this Lease and abandoned the
Premises, which such abandonment of the Premises would constitute an Event of
Default under Paragraph 23(iv) of this Lease, this Lease shall continue in
effect for so long as Landlord does not terminate Tenant's right to possession,
and Landlord may enforce all its rights and remedies under this Lease, including
the right to recover rent as it becomes due. Any such payments due Landlord
shall be made upon demand therefor from time to time and Tenant agrees that
Landlord may file suit to recover any sums falling due from time to time.
Notwithstanding any such reletting without termination, Landlord may at any time
thereafter elect in writing to terminate this Lease for such previous breach.

                  Notwithstanding anything contained herein to the contrary, if
Landlord terminates Tenant's right to possession without terminating the Lease
after an Event of Default, Landlord shall use commercially reasonable efforts to
relet the Premises; provided, however, (a) Landlord shall not be obligated to
accept any tenant proposed by Tenant, (b) Landlord shall have the right to lease
any other space controlled by Landlord first, and (c) any proposed tenant shall
meet all of Landlord's leasing criteria.

                  Exercise by Landlord of any one or more remedies hereunder
granted or otherwise available shall not be deemed to be an acceptance of
surrender of the Premises and/or a termination of this Lease by Landlord,
whether by agreement or by operation of law, it being understood that such
surrender and/or termination can be effected only by the written agreement of
Landlord and Tenant. Any law, usage, or custom to the contrary notwithstanding,
Landlord shall have the right at all times to enforce the provisions of this
Lease in strict accordance with the terms hereof; and the failure of Landlord at
any time to enforce its rights under this Lease strictly in accordance with same
shall not be construed as having created a custom in any way or manner contrary
to the specific

                                     - 8 -

<PAGE>

terms, provisions, and covenants of this Lease or as having modified the same.
Tenant and Landlord further agree that forbearance or waiver by Landlord to
enforce its rights pursuant to this Lease or at law or in equity, shall not be a
waiver of Landlord's right to enforce one or more of its rights in connection
with any subsequent default. A receipt by Landlord of rent or other payment with
knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless expressed in writing and signed by Landlord. To
the greatest extent permitted by law, Tenant waives the service of notice of
Landlord's intention to re-enter as provided for in any statute, or to institute
legal proceedings to that end, and also waives all right of redemption in case
Tenant shall be dispossessed by a judgment or by warrant of any court or judge.
The terms "enter," "re-enter," "entry" or "re-entry," as used in this Lease, are
not restricted to their technical legal meanings. Any reletting of the Premises
shall be on such terms and conditions as Landlord in its sole discretion may
determine (including without limitation a term different than the remaining
Lease Term, rental concessions, alterations and repair of the Premises, lease of
less than the entire Premises to any tenant and leasing any or all other
portions of the Project before reletting the Premises). Landlord shall not be
liable, nor shall Tenant's obligations hereunder be diminished because of,
Landlord's failure to relet the Premises or collect rent due in respect of such
reletting.

         25.      TENANT'S REMEDIES/LIMITATION OF LIABILITY. Landlord shall not
be in default hereunder unless Landlord fails to perform any of its obligations
hereunder within 30 days after written notice from Tenant specifying such
failure (unless such performance will, due to the nature of the obligation,
require a period of time in excess of 30 days, then after such period of time as
is reasonably necessary). All obligations of Landlord hereunder shall be
construed as covenants, not conditions; and, except as may be otherwise
expressly provided in this Lease, Tenant may not terminate this Lease for breach
of Landlord's obligations hereunder. All obligations of Landlord under this
Lease will be binding upon Landlord only during the period of its ownership of
the Premises and not thereafter. The term "Landlord" in this Lease shall mean
only the owner, for the time being of the Premises, and in the event of the
transfer by such owner of its interest in the Premises, such owner shall
thereupon be released and discharged from all obligations of Landlord thereafter
accruing, but such obligations shall be binding during the Lease Term upon each
new owner for the duration of such Owner's ownership. Any liability of Landlord
under this Lease shall be limited solely to its interest in the Project, and in
no event shall any personal liability be asserted against Landlord in connection
with this Lease nor shall any recourse be had to any other property or assets of
Landlord.

         26.      WAIVER OF JURY TRIAL. TENANT AND LANDLORD WAIVE ANY RIGHT TO
TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING
OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

         27.      SUBORDINATION. This Lease and Tenant's interest and rights
hereunder are and shall be subject and subordinate at all times to the lien of
any first mortgage, now existing or hereafter created on or against the Project
or the Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant. Tenant agrees,
at the election of the holder of any such mortgage, to attorn to any such
holder. Tenant agrees upon demand to execute, acknowledge and deliver such
instruments, confirming such subordination and such instruments of attornment as
shall be requested by any such holder. Tenant hereby appoints Landlord attorney
in fact for Tenant irrevocably (such power of attorney being coupled with an
interest) to execute, acknowledge and deliver any such instrument and
instruments for and in the name of the Tenant and to cause any such instrument
to be recorded. Notwithstanding the foregoing, any such holder may at any time
subordinate its mortgage to this Lease, without Tenant's consent, by notice in
writing to Tenant, and thereupon this Lease shall be deemed prior to such
mortgage without regard to their respective dates of execution, delivery or
recording and in that event such holder shall have the same rights with respect
to this Lease as though this Lease had been executed prior to the execution,
delivery and recording of such mortgage and had been assigned to such holder.
The term "mortgage" whenever used in this Lease shall be deemed to include deeds
of trust, security assignments and any other encumbrances, and any reference to
the "holder" of a mortgage shall be deemed to include the beneficiary under a
deed of trust.

                  Tenant shall not be obligated to subordinate the Lease or its
interest therein to any future mortgage, deed of trust or ground lease on the
Project unless concurrently with such subordination the holder of such mortgage
or deed of trust or the ground lessor under such ground lease agrees not to
disturb Tenant's possession of the Premises under the terms of the Lease and
agrees to assume Landlord's obligations under this Lease in the event such
holder or ground lessor acquires title to the Premises through foreclosure, deed
in lieu of foreclosure or otherwise.

         28.      MECHANIC'S LIENS. Tenant has no express or implied authority
to create or place any lien or encumbrance of any kind upon, or in any manner to
bind the interest of Landlord or Tenant in, the Premises or to charge the
rentals payable hereunder 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 covenants and agrees that it will pay or cause
to be paid all sums legally due and payable by it on account of any labor
performed or materials furnished in connection with any work performed on the
Premises at Tenant's request and that it will save and hold Landlord harmless
from all loss, cost or expense based on or arising out of asserted claims or
liens against the leasehold estate or against the interest of Landlord in the
Premises or under this Lease. Tenant shall give Landlord immediate written
notice of the placing of any lien or encumbrance against the Premises and cause
such lien or encumbrance to be discharged within 30 days of the filing or
recording thereof; provided, however, Tenant may contest such liens or
encumbrances as long as such contest prevents foreclosure of the lien or
encumbrance and Tenant causes such lien or encumbrance to be bonded or insured
over in a manner satisfactory to Landlord within such 30 day period.

                                      -9-

<PAGE>

         29.      ESTOPPEL CERTIFICATES. Tenant agrees, from time to time,
within 10 days after request of Landlord, to execute and deliver to Landlord, or
Landlord's designee, any estoppel certificate requested by Landlord, stating
that this Lease is in full force and effect, the date to which rent has been
paid, that Landlord is not in default hereunder (or specifying in detail the
nature of Landlord's default), the termination date of this Lease and such other
matters pertaining to this Lease as may be requested by Landlord. Tenant's
obligation to furnish each estoppel certificate in a timely fashion is a
material inducement for Landlord's execution of this Lease. No cure or grace
period provided in this Lease shall apply to Tenant's obligations to timely
deliver an estoppel certificate.

         30.      ENVIRONMENTAL REQUIREMENTS. Except for Hazardous Material
contained in products used by Tenant in de minimis quantities for ordinary
cleaning and office purposes, Tenant shall not permit or cause any party to
bring any Hazardous Material upon the Premises or transport, store, use,
generate, manufacture or release any Hazardous Material in or about the Premises
without Landlord's prior written consent. Tenant, at its sole cost and expense,
shall operate its business in the Premises in strict compliance with all
Environmental Requirements and shall remediate in a manner satisfactory to
Landlord any Hazardous Materials released on or from the Project by Tenant, its
agents, employees, contractors, subtenants or invitees. Tenant shall complete
and certify to disclosure statements as requested by Environmental Requirements
from time to time relating to Tenant's transportation, storage, use, generation,
manufacture or release of Hazardous Materials on the Premises. The term
"Environmental Requirements" means all applicable present and future statutes,
regulations, ordinances, rules, codes, judgments, orders or other similar
enactments of any governmental authority or agency regulating or relating to
health, safety, or environmental conditions on, under, or about the Premises or
the environment, including without limitation, the following: the Comprehensive
Environmental Response, Compensation and Liability Act; the Resource
Conservation and Recovery Act; and all state and local counterparts thereto, and
any regulations or policies promulgated or issued thereunder. The term
"Hazardous Materials" means and includes any substance, material, waste,
pollutant, or contaminant listed or defined as hazardous or toxic, under any
Environmental Requirements, asbestos and petroleum, including crude oil or any
fraction thereof, natural gas or synthetic gas usable for fuel (or mixtures of
natural gas and such synthetic gas). As defined in Environmental Requirements,
Tenant is and shall be deemed to be the "operator" of Tenant's "facility" and
the "owner" of all Hazardous Materials brought on the Premises by Tenant, its
agents, employees, contractors or invitees, and the wastes, by-products, or
residues generated, resulting, or produced therefrom.

                  Tenant shall indemnify, defend, and hold Landlord harmless
from and against any and all losses (including, without limitation, diminution
in value of the Premises or the Project and loss of rental income from the
Project), claims, demands, actions, suits, damages (including, without
limitation, punitive damages), expenses (including, without limitation,
remediation, removal, repair, corrective action, or cleanup expenses), and costs
(including, without limitation, actual attorneys' fees, consultant fees or
expert fees and including, without limitation, removal or management of any
asbestos brought into the property by Tenant, its agents, employees,
contractors, subtenants, assignees or invitees, or disturbed by Tenant, its
agents, employees, contractors, subtenants, assignees or invitees, in breach of
the requirements of this Paragraph 30, regardless of whether such removal or
management is required by law) which are brought or recoverable against, or
suffered or incurred by Landlord as a result of any release of Hazardous
Materials by Tenant, its agents, employees, contractors, subtenants, assignees
or invitees, or any other breach of the requirements under this Paragraph 30 by
Tenant, its agents, employees, contractors, subtenants, assignees or invitees,
regardless of whether Tenant had knowledge of such noncompliance. The
obligations of Tenant under this Paragraph 30 shall survive any termination of
this Lease.

                  Landlord shall have access to, and a right to perform
inspections and tests of, the Premises to determine Tenant's compliance with
Environmental Requirements, its obligations under this Paragraph 30, or the
environmental condition of the Premises. Access shall be granted to Landlord
upon Landlord's prior notice to Tenant and at such times so as to minimize, so
far as may be reasonable under the circumstances, any disturbance to Tenant's
operations. Such inspections and tests shall be conducted at Landlord's expense,
unless such inspections or tests reveal that Tenant has not complied with any
Environmental Requirement, in which case Tenant shall reimburse Landlord for the
reasonable cost of such inspection and tests. Landlord's receipt of or
satisfaction with any environmental assessment in no way waives any rights that
Landlord holds against Tenant.

                  Notwithstanding anything to the contrary in this Paragraph 30,
Tenant shall have no liability of any kind to Landlord as to Hazardous Materials
on the Premises caused or permitted by: (i) Landlord, its agents, employees,
contractors or invitees; or (ii) any other tenants in the Project or their
agents, employees, contractors, subtenants, assignees or invitees; or (iii) any
other person or entity located outside of the Premises or the Project.

         31.      RULES AND REGULATIONS. Tenant shall, at all times during the
Lease Term and any extension thereof, comply with all reasonable rules and
regulations at any time or from tune to time established by Landlord covering
use of the Premises and the Project. The current rules and regulations are
attached hereto. In the event of any conflict between said rules and regulations
and other provisions of this Lease, the other terms and provisions of this Lease
shall control. Landlord shall not have any liability or obligation for the
breach of any rules or regulations by other tenants in the Project, and shall
uniformly enforce such rules and regulations throughout the Project.

         32.      SECURITY SERVICE. Tenant acknowledges and agrees that, while
Landlord may patrol the Project, Landlord is not providing any security services
with respect to the Premises and that Landlord shall not be liable to Tenant
for, and Tenant waives any claim against Landlord with respect to, any loss by
theft or any other damage suffered or incurred by Tenant in connection with any
unauthorized entry into the Premises or any other breach of security with
respect to the Premises.

         33.      FORCE MAJEURE. Except for monetary obligations, neither
Landlord nor Tenant shall be held responsible for delays in the performance of
its obligations hereunder when caused by strikes, lockouts, labor disputes,

                                     - 10 -

<PAGE>

acts of God, inability to obtain labor or materials or reasonable substitutes
therefor, governmental restrictions, governmental regulations, governmental
controls, delay in issuance of permits, enemy or hostile governmental action,
civil commotion, fire or other casualty, and other causes beyond the reasonable
control of Landlord or Tenant ("Force Majeure").

         34.      ENTIRE AGREEMENT. This Lease constitutes the complete
agreement of Landlord and Tenant with respect to the subject matter hereof. 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 are superseded by this Lease. This Lease may
not be amended except by an instrument in writing signed by both parties hereto.

         35.      SEVERABILITY. If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws, then and in that
event, it is the intention of the parties hereto that the remainder of this
Lease shall not be affected thereby. It is also the intention of the parties to
this Lease that in lieu of each clause or provision of this Lease that is
illegal, invalid or unenforceable, there be added, as a part of this Lease, a
clause or provision as similar in terms to such illegal, invalid or
unenforceable clause or provision as may be possible and be legal, valid and
enforceable.

         36.      BROKERS. Tenant represents and warrants that it has dealt with
no broker, agent or other person in connection with this transaction and that no
broker, agent or other person brought about this transaction, other than the
broker, if any, set forth on the first page of this Lease, and Tenant agrees to
indemnify and hold Landlord harmless from and against any claims by any other
broker, agent or other person claiming a commission or other form of
compensation by virtue of having dealt with Tenant with regard to this leasing
transaction.

         37.      MISCELLANEOUS. (a) Any payments or charges due from Tenant to
Landlord hereunder shall be considered rent for all purposes of this Lease.

         (b)      If and when included within the term "Tenant," as used in this
instrument, there is more than one person, firm or corporation, each shall be
jointly and severally liable for the obligations of Tenant.

         (c)      All notices required or permitted to be given under this Lease
shall be in writing and shall be sent by registered or certified mail, return
receipt requested, or by a reputable national overnight courier service, postage
prepaid, or by hand delivery addressed to the parties at their addresses below,
and with a copy sent to Landlord at 14100 East 35th Place, Aurora, Colorado
80011. Either party may by notice given aforesaid change its address for all
subsequent notices. Except where otherwise expressly provided to the contrary,
notice shall be deemed given upon delivery.

         (d)      Except as otherwise expressly provided in this Lease or as
otherwise required by law, Landlord's right to withhold any consent or approval
shall not be unreasonably withheld.

         (e)      At Landlord's request from time to time Tenant shall furnish
Landlord with true and complete copies of its most recent annual and quarterly
financial statements prepared by Tenant or Tenant's accountants and any other
financial information or summaries that Tenant typically provides to its lenders
or shareholders.

         (f)      Neither this Lease nor a memorandum of lease shall be filed by
or on behalf of Tenant in any public record. Landlord may prepare and file, and
upon request by Landlord Tenant will execute, a memorandum of lease.

         (g)      The normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Lease or any exhibits or amendments hereto.

         (h)      The submission by Landlord to Tenant of this Lease shall have
no binding force or effect, shall not constitute an option for the leasing of
the Premises, nor confer any right or impose any obligations upon either party
until execution of this Lease by both parties.

         (i)      Words of any gender used in this Lease shall be held and
construed to include any other gender, and words in the singular number shall be
held to include the plural, unless the context otherwise requires. The captions
inserted in this Lease are for convenience only and in no way define, limit or
otherwise describe the scope or intent of this Lease, or any provision hereof,
or in any way affect the interpretation of this Lease.

         (j)      Any amount not paid by Tenant within 5 days after its due date
in accordance with the terms of this Lease shall bear interest from such due
date until paid in full at the lesser of the highest rate permitted by
applicable law or 15 percent per year. It is expressly the intent of Landlord
and Tenant at all times to comply with applicable law governing the maximum rate
or amount of any interest payable on or in connection with this Lease. If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken ,
reserved, or received with respect to this Lease, then it is Landlord's and
Tenant's express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.

                                     - 11 -

<PAGE>

         (k)      Construction and interpretation of this Lease shall be
governed by the laws of the state in which the Project is located, excluding any
principles of conflicts of laws.

         (1)      Time is of the essence as to the performance of Tenant's and
Landlord's obligations under this Lease.

         (m)      All exhibits and addenda attached hereto are hereby
incorporated into this Lease and made a part hereof. In the event of any
conflict between such exhibits or addenda and the terms of this Lease, such
exhibits or addenda shall control.

         (n)      ATTORNEY'S FEES. If either party commences in action against
the other arising out of or in connection with the Lease, the prevailing party
shall be entitled to recover from the losing party reasonable attorneys' fees
and costs of suit.

         38.      LANDLORD'S LIEN/SECURITY INTEREST. Intentionally deleted.

         39.      LIMITATION OF LIABILITY OF TRUSTEES, SHAREHOLDERS, AND
OFFICERS OF PROLOGIS TRUST. Any obligation or liability whatsoever of ProLogis
Trust, a Maryland real estate investment trust, which may arise at any time
under this Lease or any obligation or liability which may be incurred by it
pursuant to any other instrument, transaction, or undertaking contemplated
hereby shall not be personally binding upon, nor shall resort for the
enforcement thereof be had to the property of, its trustees, directors,
shareholders, officers, employees or agents, regardless of whether such
obligation or liability is in the nature of contract, tort, or otherwise.

         IN WITNESS WHEREOF. Landlord and Tenant have executed this Lease as of
the day and year first above written.

TENANT:                                   LANDLORD:

KINETICS FLUID SYSTEMS, a California      PROLOGIS TRUST, a Maryland real estate
corporation                               investment trust

By: /s/ Dan Jackson
    ---------------
    Dan Jackson, Senior Vice President    By: /s/ Steven K. Meyer
                                              ----------------------------------
                                              Steven K. Meyer, Managing Director

Address:                                      Address:

2805 Mission College Boulevard            3210 LBJ Freeway, Suite 200
Santa Clara, CA 95054                     Dallas, TX 75234
Phone:  408/727-7740                      Phone:         972/884-9292
FAX:    408/727-9774                      FAX:           972/488-9848

                                     - 12 -

<PAGE>

                              Rules and Regulations

1.       The sidewalk, entries, and driveways of the Project shall not be
         obstructed by Tenant, or its agents, or used by them for any purpose
         other than ingress and egress to and from the Premises.

2.       Tenant shall not place any objects, including antennas, outdoor
         furniture, etc., in the parking areas, landscaped areas or other areas
         outside of its Premises, or on the roof of the Project.

3.       Except for seeing-eye dogs, no animals shall be allowed in the offices,
         halls, or corridors in the Project.

4.       Tenant shall not disturb the occupants of the Project or adjoining
         buildings by the use of any radio or musical instrument or by the
         making of loud or improper noises.

5.       If Tenant desires telegraphic, telephonic or other electric connections
         in the Premises, Landlord or its agent will direct the electrician as
         to where and how the wires may be introduced; and, without such
         direction, no boring or cutting of wires will be permitted. Any such
         installation or connection shall be made at Tenant's expense.

6.       Tenant shall not install or operate any steam or gas engine or boiler,
         or other mechanical apparatus in the Premises, except as specifically
         approved in the Lease. The use of oil, gas or inflammable liquids for
         heating, lighting or any other purpose is expressly prohibited.
         Explosives or other articles deemed extra hazardous shall not be
         brought into the Project.

7.       Parking any type of recreational vehicles is specifically prohibited on
         or about the Project. Except for the overnight parking of operative
         vehicles, no vehicle of any type shall be stored in the parking areas
         at any time. In the event that a vehicle is disabled, it shall be
         removed within 48 hours. There shall be no "For Sale" or other
         advertising signs on or about any parked vehicle. All vehicles shall be
         parked in the designated parking areas in conformity with all signs and
         other markings. All parking will be open parking, and no reserved
         parking, numbering or lettering of individual spaces will be permitted
         except as specified by Landlord.

8.       Tenant shall maintain the Premises free from rodents, insects and other
         pests.

9.       Landlord reserves the right to exclude or expel from the Project any
         person who, in the judgment of Landlord, is intoxicated or under the
         influence of liquor or drugs or who shall in any manner do any act in
         violation of the Rules and Regulations of the Project.

10.      Tenant shall not cause any unnecessary labor by reason of Tenant's
         carelessness or indifference in the preservation of good order and
         cleanliness. Landlord shall not be responsible to Tenant for any loss
         of property on the Premises, however occurring, or for any damage done
         to the effects of Tenant by the janitors or any other employee or
         person.

11.      Tenant shall give Landlord prompt notice of any defects in the water,
         lawn sprinkler, sewage, gas pipes, electrical lights and fixtures,
         heating apparatus, or any other service equipment affecting the
         Premises.

12.      Tenant shall not permit storage outside the Premises, including without
         limitation, outside storage of trucks and other vehicles, or dumping of
         waste or refuse or permit any harmful materials to be placed in any
         drainage system or sanitary system in or about the Premises.

13.      All moveable trash receptacles provided by the trash disposal firm for
         the Premises must be kept in the trash enclosure areas, if any,
         provided for that purpose.

14.      No auction, public or private, will be permitted on the Premises or the
         Project.

15.      No awnings shall be placed over the windows in the Premises except with
         the prior written consent of Landlord.

16.      The Premises shall not be used for lodging, sleeping or cooking or for
         any immoral or illegal purposes or for any purpose other than that
         specified in the Lease. No gaming devices shall be operated in the
         Premises.

17.      Tenant shall ascertain from Landlord the maximum amount of electrical
         current which can safely be used in the Premises, taking into account
         the capacity of the electrical wiring in the Project and the Premises
         and the needs of other tenants, and shall not use more than such safe
         capacity. Landlord's consent to the installation of electric equipment
         shall not relieve Tenant from the obligation not to use more
         electricity than such safe capacity.

18.      Tenant assumes full responsibility for protecting the Premises from
         theft, robbery and pilferage.

19.      Tenant shall not install or operate on the Premises any machinery or
         mechanical devices of a nature not directly related to Tenant's
         ordinary use of the Premises and shall keep all such machinery free of
         vibration, noise and air waves which may be transmitted beyond the
         Premises.

                                      -13-

<PAGE>

                                  ADDENDUM ONE

                             BASE RENT ADJUSTMENTS

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                           DATED 7-13, 2000, BETWEEN
                               PROLOGIS AND TRUST
                             KINETICS FLUID SYSTEMS

       Base Rent shall equal the following amounts for the respective periods
set forth below:

<TABLE>
<CAPTION>
         Period                                                  Monthly Base Rent
         ------                                                  -----------------
<S>                         <C>                                  <C>
3   Months  l to 36         02/01/01 - 02/01/04                      $28,800.00

2   Months 37 to 60         02/01/04 - 02/01/06                      $31,680.00

2   Months 61 to 84         02/01/06 - 02/01/08                      $34,560.00
</TABLE>

<PAGE>

                                  ADDENDUM TWO

                                  CONSTRUCTION
                              (ALLOWANCE AMORTIZED)

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                            DATED 7-13, 2000, BETWEEN
                                 PROLOGIS TRUST
                                       and
                             KINETICS FLUID SYSTEMS

         (a)      Landlord agrees to furnish an allowance of up to $432,000.00
for Tenant's use for the installation of its Tenant Improvements, and in no
event shall Landlord have any obligation to pay for any costs of the Tenant
Improvements in excess of such amount. If the cost of the Tenant Improvements
exceeds such amount, such overage shall be borne by Tenant, and repaid to
Landlord, together with interest at 13% per annum, in equal monthly installments
over the Lease Term; provided, however, in no event shall Landlord be obligated
to amortize any portion of such overage in excess of $144,000.00 and any overage
in excess of such amount shall be paid by Tenant. As security for a portion of
the amortized costs of the Tenant Improvements, Tenant shall provide Landlord
with an unconditional, irrevocable letter of credit in the amount of $72,000.00
from a bank reasonably acceptable to Landlord and in form substantially similar
to the sample attached hereto. The letter of credit shall either provide that it
does not expire until the end of the Lease Term or, if it is for less than the
full term of the Lease, shall be renewed by Tenant at least 30 days prior to its
expiration during the term of the Lease. The letter of credit shall provide for
20% annual reductions ($14,400.00), such that the total amount of the letter of
credit required shall be reduced to: $57,600.00 the first anniversary of its
issuance, $43,200.00 on the second anniversary of its issuance, $28,800.00 on
the third anniversary of its issuance, and $14,400.00 on the fourth anniversary
of its issuance. The letter of credit shall provide that it may be drawn down
upon by Landlord at any time Landlord delivers its site draft to the bank. If
Landlord sells or conveys the Premises, Tenant shall, at Landlord's request,
cooperate in having the letter of credit transferred to the purchaser. If the
letter of credit is ever drawn upon by Landlord pursuant to the terms of the
Lease and this Addendum, Tenant shall within ten (10) days thereafter cause the
letter of credit to be restored to its original amount.

         (b)      Subject to applicable ordinances and building codes governing
Tenant's right occupy or perform in the Premises, Tenant and its contractors
shall have access to the Premises for a period of ninety (90) days from the
Landlord's contractor declares the Building to be shell complete, or such
earlier date as Landlord, its contractor, Tenant and Tenant's contractor shall
unanimously agree is appropriate, free of any obligation to pay Base Rent or
estimated Operating Expenses, in order to install the Tenant Improvements,
provided that Tenant does not thereby interfere with the completion of
construction of the Building or cause any labor dispute as a result of such
installations, and provided further that Tenant does hereby agree to indemnify,
defend, and hold Landlord harmless from any loss or damage to such property, and
all liability, loss, or damage arising from any injury to the Project or the
property of Landlord, its contractors, subcontractors, or materialmen, and any
death or personal injury to any person or persons arising out of such
installations, unless any such loss, damage, liability, death, or personal
injury was caused by Landlord's negligence.

         (c)      Tenant's installation of the Tenant Improvements in the
Premises shall be performed in accordance with the provisions governing
Tenant-Made Alterations and Trade Fixtures in the Lease, and shall be subject to
Tenant providing to Landlord satisfactory evidence of insurance for personal
injury and property damage related to such installations and satisfactory
payment arrangements with respect to installations permitted hereunder. Delay in
putting Tenant in possession of the Premises shall not serve to extend the term
of this Lease or to make Landlord liable for any damages arising therefrom.

<PAGE>

                         ATTACHMENT ONE TO ADDENDUM TWO

        FORM OF LETTER OF CREDIT FOR AMORTIZED TENANT IMPROVEMENT COSTS

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                            DATED 7-13, 2000, BETWEEN
                                 PROLOGIS TRUST
                                       and
                             KINETICS FLUID SYSTEMS

                      [LETTERHEAD OF LETTER OF CREDIT BANK]

                                     [DATE]

ProLogis Trust
____________________

____________________

Attention: _______________

           Re:         Irrevocable Transferrable Letter of Credit
                       No.__________________________________________

Beneficiary:

         By order of our client, Kinetics Fluid Systems (the "Applicant"). we
hereby establish this Irrevocable Transferrable Letter of Credit No._________in
your favor for an amount up to but not exceeding the aggregate sum of Seventy
Two Thousand and No/100 Dollars ($72,000.00) (as reduced from time to time in
accordance with the terms hereof, the "Letter of Credit Amount"), effective
immediately, and expiring on the close of business at our office at the address
set forth above one year from the date hereof unless renewed as hereinafter
provided.

         Funds under this Letter of Credit are available to you on or prior to
the expiry date against presentation by you of your (i) sight drafts drawn on us
in the form of Annex 1 hereto, indicating this Letter of Credit number and (ii)
request in the form of Annex 2 hereto (such sight draft and request, together
referred to as a "Drawing Request"), sight draft(s), completed and signed by one
of your officers. Presentation of your Drawing Requests may be made by you to us
at the address set forth above or may be made by facsimile transmission, to the
following facsimile number_______. You may present to us one or more Drawing
Requests from time to time prior to the expiry date in an aggregate amount not
to exceed the Letter of Credit Amount then in effect (it being understood that
the honoring by us of each Drawing Request shall reduce the Letter of Credit
Amount then in effect).

         This Letter of Credit will be automatically renewed for a one-year
period upon the expiration date set forth above and upon each anniversary of
such date, unless at least sixty (60) days prior to such expiration date, or
prior to any anniversary of such date, we notify both you and the Applicant in
writing by certified mail that we elect not to so renew the Letter of Credit;
provided, however, that the total amount of the Letter of Credit shall be
reduced by 20% ($14,400,00) upon each renewal.

         This Letter of Credit sets forth in full the terms of our undertaking
and such undertaking shall not in any way be modified, amended or amplified by
reference to any document or instrument referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates, and
no such reference shall be deemed to incorporate herein by reference any
document or instrument.

         All bank charges and commissions incurred in this transaction are for
the Applicant's account.

         This Letter of Credit is transferable by you and your successors and
assigns any number of times in its entirely and not in part, but only by
delivery to us of a Notice of Assignment in the form of Annex 3 hereto.

         We hereby agree with the drawers, endorsers, and bona fide holders of
drafts drawn under and in compliance with the terms of this Letter of Credit
that such drafts will be duly honored upon presentation to the drawee from our
own funds and not the funds of the Applicant and shall be available to such
drawers, endorsers, and bona fide holders, as the case may be, on or before
noon, New York time, on the Business Day (defined below) next following the date
on which such drafts are received by us. "Business Day" shall mean any day which
is not a Saturday, Sunday or day on which we are required or authorized by law
to be closed in New York, New York.

         To the extent not inconsistent with the express terms hereof, this
Letter of Credit shall be governed by, and construed in accordance with, the
terms of the Uniform Customs and Practice for Commercial Documentary Credits
(1993 Revision), I.C.C. Publication No. 500 (the "UCP 500") and as to matters
not governed by the UCP 500, this Letter of Credit shall be governed by and
construed in accordance with the laws of the State of New York.

                                   Very truly yours,

                                   [NAME OF LETTER OF CREDIT BANK]

                                   By:__________________________________________
                                   Name: _______________________________________
                                   Title:_______________________________________

<PAGE>

                                                                         ANNEX 1

                                   SIGHT DRAFT

                                                                       ___, 200_

         For value received, at sight pay to the order of ProLogis Trust, the
sum of [Amount in words] [Amount in Figures] United States Dollars drawn under
[Name of Letter of Credit Bank] Irrevocable Transferable Letter of Credit No.
_______________________dated ___________________, 200__.

                                   PROLOGIS TRUST

                                   By:__________________________________________
                                   Name: _______________________________________
                                   Title:_______________________________________

<PAGE>

                                                                         ANNEX 2

                                 DRAWING REQUEST

                                                                 _________, 200_

[NAME AND ADDRESS OF LETTER OF CREDIT
BANK]

                  Re: Irrevocable Transferable Letter of Credit No.____(the
         "Letter of Credit")

         The undersigned (the "Beneficiary"), hereby certifies to [Name of
Letter of Credit Bank] (the "Issuer") that:

         (a)      The Beneficiary is making a request for payment in lawful
currency of the United States of America under Irrevocable Transferable Letter
of Credit No._____(the "Letter of Credit") in the amount of $____.

         (b)      The Letter of Credit Amount (as defined in the Letter of
Credit) as of the date hereof and prior to payment of the amount demanded in
this Drawing Request is $____. The amount requested by this Drawing Request does
not exceed the Letter of Credit Amount.

         [(c)     Demand is made for payment under the Letter of Credit as a
result of the occurrence and continuation of an Event of Default (as defined in
the Lease Agreement).]

         Please wire transfer the proceeds of the drawing to the following
account of the Beneficiary at the financial institution indicated below:

                          ___________________________
                          ___________________________
                          ___________________________

         Unless otherwise defined, all capitalized terms used herein have the
meanings provided in, or by reference in, the Letter of Credit.

         IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Drawing Request as of the____day of ________, 200_.

                                   PROLOGIS TRUST

                                   By:__________________________________________
                                   Name: _______________________________________
                                   Title:_______________________________________

<PAGE>

                                                                         ANNEX 3

                              NOTICE OF ASSIGNMENT

                                                                  ________, 200_

[NAME AND ADDRESS OF LETTER
OF CREDIT BANK]

                   Re: Irrevocable Transferable Letter of Credit No. ____

         The undersigned (the "Beneficiary"), hereby notifies [Name of Letter of
Credit Bank] (the "Issuer") that it has irrevocably assigned the
above-referenced Letter of Credit to ____ (the "Assignee") with an address
at _____________ effective as of the date the Issuer receives this Notice of
Assignment. The Assignee acknowledges and agrees that the Letter of Credit
Amount may have been reduced pursuant to the terms thereof, and that the
Assignee is bound by any such reduction.

         IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Notice of Assignment as of this ____ day of ________, 200_.

                                   PROLOGIS TRUST

                                   By:__________________________________________
                                   Name: _______________________________________
                                   Title:_______________________________________
Agreed:

[Assignee]

____________

<PAGE>

                                 ADDENDUM THREE

                          ONE RENEWAL OPTION AT MARKET

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                           DATED 7-13, 2000, BETWEEN
                                 PROLOGIS TRUST
                                      AND
                             KINETICS FLUID SYSTEMS

         (a)      Provided that as of the time of the giving of the Extension
Notice and the Commencement Date of the Extension Term, (x) Tenant is the Tenant
originally named herein, (y) Tenant actually occupies all of the Premises
initially demised under this Lease and any space added to the Premises, and (z)
no Event of Default exists or would exist but for the passage of time or the
giving of notice, or both; then Tenant shall have the right to extend the Lease
Term for an additional term of 5 years (such additional term is hereinafter
called the "Extension Term") commencing on the day following the expiration of
the Lease Term (hereinafter referred to as the "Commencement Date of the
Extension Term"). Tenant shall give Landlord notice (hereinafter called the
"Extension Notice") of its election to extend the term of the Lease Term at
least 6 months, but not more than 9 months, prior to the scheduled expiration
date of the Lease Term.

         (b)      The Base Rent payable by Tenant to Landlord during the
Extension Term shall be the greater of (i) the Base Rent applicable to the last
year of the initial Lease Term and (ii) the then prevailing market rate for
comparable space in the Project and comparable buildings in the vicinity of the
Project, taking into account the size of the Lease, the length of the renewal
term, market escalations and the credit of Tenant. The Base Rent shall not be
reduced by reason of any costs or expenses saved by Landlord by reason of
Landlord's not having to find a new tenant for such premises (including, without
limitation, brokerage commissions, costs of improvements, rent concessions or
lost rental income during any vacancy period). In the event Landlord and Tenant
fail to reach an agreement on such rental rate and execute the Amendment
(defined below) at least 4 months prior to the expiration of the Lease, then
Tenant's exercise of the renewal option shall be deemed withdrawn and the Lease
shall terminate on its original expiration date.

         (c)      The determination of Base Rent does not reduce the Tenant's
obligation to pay or reimburse Landlord for Operating Expenses and other
reimbursable items as set forth in the Lease, and Tenant shall reimburse and pay
Landlord as set forth in the Lease with respect to such Operating Expenses and
other items with respect to the Premises during the Extension Term without
regard to any cap on such expenses set forth in the Lease.

         (d)      Except for the Base Rent as determined above, Tenant's
occupancy of the Premises during the Extension Term shall be on the same terms
and conditions as are in effect immediately prior to the expiration of the
Tenant Lease Term; provided, however, Tenant shall have no further right to any
allowances, credits or abatements or any options to expand, contract, renew or
extend the Lease.

         (e)      If Tenant does not give the Extension Notice within the period
set forth in paragraph (a) above, Tenant's right to extend the Lease Term shall
automatically terminate. Time is of the essence as to the giving of the
Extension Notice.

         (f)      Landlord shall have no obligation to refurbish or otherwise
improve the Premises for the Extension Term. The Premises shall be tendered on
the Commencement Date of the Extension Term in "as-is" condition.

         (g)      If the Lease is extended for the Extension Term, then Landlord
shall prepare and Tenant shall execute an amendment to the Lease confirming the
extension of the Lease Term and the other provisions applicable thereto (the
"Amendment").

         (h)      If Tenant exercises its right to extend the term of the Lease
for the Extension Term pursuant to this Addendum, the term "Lease Term" as used
in the Lease, shall be construed to include, when practicable, the Extension
Term except as provided in (d) above.

<PAGE>

                                  ADDENDUM FOUR

                              MOVE-OUT CONDITIONS

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                           DATED 7-13, 2000, BETWEEN
                                 PROLOGIS TRUST
                                       AND
                             KINETICS FLUID SYSTEMS

         Per Paragraph 21, Tenant is obligated to check and address prior to
move-out of the Premises the following items. Landlord expects to receive the
Premises in a well maintained condition, with normal wear and tear of certain
areas acceptable. The following list is designed to assist Tenant in the
move-out procedures but is not intended to be all inclusive.

1.       All lighting is to be placed into good working order. This includes
         replacement of bulbs, ballasts, and lenses as needed.

2.       All truck doors and dock levelers should be serviced and placed in good
         operating order. This would include the necessary replacement of any
         dented truck door panels and adjustment of door tension to insure
         proper operation. All door panels which are replaced need to be painted
         to match the Building standard.

3.       All structural steel columns in the warehouse and office should be
         inspected for damage. Repairs of this nature should be pre-approved by
         the Landlord prior to implementation.

4.       Heating/air-conditioning systems should be placed in good working
         order, including the necessary replacement of any parts to return the
         unit to a well maintained condition. This includes warehouse heaters
         and exhaust fans. Upon move-out, Landlord will have an exit inspection
         performed by a certified mechanical contractor to determine the
         condition.

5.       All holes in the sheet rock walls should be repaired prior to move-out.

6.       The carpets and vinyl tiles should be in a reasonably clean condition
         and should not have any holes or chips in them. Landlord will accept
         normal wear on these items provided they appear to be in a maintained
         condition.

7.       Facilities should be returned in a clean condition, which would include
         cleaning of the coffee bar, restroom areas, windows, and other portions
         of the space.

8.       The warehouse should be in broom clean condition with all inventory and
         racking removed. There should be no protrusion of anchors from the
         warehouse floor and all holes should be appropriately patched. If
         machinery /equipment is removed, the electrical lines should be
         properly terminated at the nearest junction box.

9.       All exterior windows with cracks or breakage should be replaced.

10.      The Tenant shall provide keys for all locks on the Premises, including
         front doors, rear doors, and interior doors.

11.      Items that have been added by the Tenant and affixed to the Building
         will remain the property of Landlord, unless agreed otherwise. This
         would include but is not limited to mini-blinds, air conditioners,
         electrical, water heaters, cabinets, flooring, etc. Please note that if
         modifications have been made to the space, such as the addition of
         office areas, Landlord retains the right to have the Tenant remove
         these at Tenant's expense.

12.      All electrical systems should be left in a safe condition that conforms
         to code. Bare wires and dangerous installations should be corrected
         prior to move-out.

13.      All plumbing fixtures should be in good working order, including the
         water heater. Faucets and toilets should not leak.

14.      All dock bumpers must be left in place and well secured.

<PAGE>

                                 ADDENDUM FIVE

                              SIGN SPECIFICATIONS

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                          DATED 7 - 13, 2000, BETWEEN
                                 PROLOGIS TRUST
                                       AND
                             KINETICS FLUID SYSTEMS

Per Paragraph 13, signage at the Project is subject to restrictions as noted
below. This is controlled to maintain a consistent overall visual appeal of the
building. Tenant may install white vinyl lettering on your front door, or the
glass next to the front door, with Tenant's company name only. The lettering may
not exceed 4" in height. No other storefront graphics are allowed.
Alternatively, Tenant may install one exterior sign which meets the standard
sign specifications for the Project.

         I.       INTRODUCTION

                  The intent of these sign criteria is to establish and maintain
                  guidelines consistent with the signage policies of the
                  Landlord and the City or County, as appropriate. Further, the
                  purpose is to assure a standard conformance for the design,
                  size, fabrication techniques, and materials for signage for
                  the project and for tenant identification.

         II.      GENERAL REQUIREMENTS

                  A.       Each Tenant will be supplied a copy of the sign
                           criteria prior to lease agreement.

                  B.       Each Tenant sign shall be designed, fabricated and
                           installed in accordance with this sign criteria and
                           consistent with the Sign Code of the City or County
                           as amended from time to time by the governing
                           authority.

                  C.       Landlord's written approval of Design Drawings, and
                           Working Shop Drawings is required prior to the
                           commencement of Tenant construction.

                  D.       Sign permits must be obtained from the City or County
                           prior to installation of signage.

                  E.       Signs installed without written approval of the
                           Landlord or the appropriate city permit may be
                           subject to removal and proper reinstallation at
                           Tenant's expense. Damage may be assessed to cover
                           costs of repairs to sign band or removal of signage
                           resulting from unapproved installations.

                  F.       Tenant and his sign contractor shall repair any
                           damage caused during installation of signage.

                  G.       No labels shall be permitted on the exposed surface
                           of signs, except those required by local ordinance.
                           Those required must be installed in an inconspicuous
                           location.

                  H.       Flashing, strobing, moving or audible signs are not
                           permitted.

                  I.       No window signs with the exception of suite numbers
                           are permitted without the express approval of
                           Landlord.

                  J.       No portable signs are to be displayed on site.

                  K.       No secondary exterior signs are to be placed on
                           building wall elevations.

                  L.       No freestanding and/or pylon type exterior signs will
                           be permitted without Landlord's prior approval.

         III.     TENANT RESPONSIBILITIES

                  Each Tenant shall, at its own expense, provide and maintain
                  its own identification sign in accordance with specifications
                  noted herein.

         IV.      FASCIA-MOUNTED EXTERIOR SIGN

                  A.       A sign fascia area will be provided for each Tenant
                           at the panels above the storefront lease line. Each
                           Tenant sign and/or logo sign shall be mounted in this
                           space in conformance with the attached sign exhibits.

                  B.       Each Tenant will be allowed to have only one
                           wall-mounted sign. Any variance to the quantity,
                           size, mounting method will be allowed only upon
                           Landlord's written approval.

                  C.       The sign panel shall be a .080 aluminum pan type sign
                           with an acrylic urethane finish. The specified size
                           of the sign shall be:

                           (1) 4' x 10' (on 12' face panel)

                           (2) 4' x 12' (on 18' & 20' face panels)

                           The Tenant I.D. sign cannot exceed 80% of the
                           building wall panel space available.

<PAGE>

                  D.       The sign panel shall have 90 degree corners and 1"
                           flanges. The sign background color will be painted to
                           match the accent band on the building. The background
                           color of the sign will be visible on at least
                           one-half of the sign or as approved by ProLogis.

                  E.       The program allows for the use of a corporate logo
                           and letter styles at the discretion of the Tenant.
                           Final approval of logo and letter style will be by
                           the Landlord. The logo colors are optional, however
                           care must be taken to select colors and images that
                           will be comparable and legible on the specified
                           background. The color of the lettering identifying
                           the Tenant will be PMS 343 (green) or as approved by
                           the Landlord.

                  F.       Sign layouts and colors must have written approval by
                           the Landlord prior to fabrication. The logo, when
                           applicable, will not exceed more than 50% of the sign
                           face.

                  G.       There are two approved methods for applying the copy
                           to the sign background:

                           (1)      Acrylic urethane

                           (2)      Vinyl (high performance -  seven year grade)

                  H.       A margin equal to at least one-half of the height of
                           the type should appear to the left, right, top and
                           bottom of the Tenant name. Margin parameters will not
                           apply to the logo area of the sign. Neutral space
                           between a two line sign shall be a minimum of
                           one-third the height of the letter type, The sign
                           panel will be mounted on the building face in
                           conformance with Landlord standards; mounting clips
                           (minimum 1/8" x 1" x 1" x 2" long aluminum angle w/
                           red head anchors - no Kwick bolts allowed), no
                           exposed fasteners through the face of the sign panel.
                           The correct design, construction and mounting of the
                           sign panel. The correct design, construction and
                           mounting of the sign is the responsibility of the
                           Tenant and the sign contractor. Any signage that is
                           constructed/installed improperly shall be removed and
                           corrected and reinstalled by the Tenant/Contractor at
                           their expense.

                  I.       All signs erected within the City of Austin and the
                           extra territorial jurisdiction that describe the
                           location of a business will require a sign permit.
                           Sign permits will require payment for:

                           (1)      Site Inspection

                           (2)      Construction Permit

                           (3)      Application Fee

                           These costs are the responsibility of the Tenant.
                           Licensed sign contractors/companies are required to
                           acquire these permits prior to installation of the
                           sign. Failure to acquire permits will not release the
                           Tenant from responsibility to acquire a permit for
                           the sign.

                  J.       All Copy shall be installed vertically and
                           horizontally, centered on sign band fascia, and shall
                           not exceed a horizontal length of 80 percent of
                           allowable fascia panel.

         V.       MONUMENT SIGN

                  Monument sign will be provided by the Landlord. Tenant shall
                  pay to provide Tenant sign letters to match Landlord
                  standards.

         VI.      MISCELLANEOUS SIGNAGE

                  A.       Front Door Signage: Business name, address and
                           operating hours shall be white vinyl in Landlord
                           approved letter style. Landlord to approve all front
                           door signage prior to installation.

                  B.       Dock Door Numbers: Provided by Landlord.

                  C.       Suite Signs: Provided by Landlord.

                  D.       Building Address: Provided by Landlord.

         VII.     TENANT SIGN SUBMISSIONS

                  A.       Tenant sign contractors shall submit all Working Shop
                           Drawings to the Landlord or his appointed
                           representative for approval. Allow a minimum of ten
                           working days, or two weeks, for Landlord review and
                           approval.

                  B.       All submissions to include two (2) blueline prints.
                           An approved copy will be returned.

                  C.       Shop Drawings must include:

                           (1)      Full and complete dimensions

                           (2)      Letter style, face (color, material and
                                    thickness), returns (color, material and
                                    thickness).

         VII.     APPROVALS

                  No sign shall be installed without first securing the
                  necessary permits from the appropriate governing jurisdiction.
                  Artwork and sign location are to be approved in writing by the
                  Landlord or its appointed representative prior to
                  installation. Landlord reserves the right to reject any sign
                  that does not comply with the intent and spirit of these sign
                  criteria.

<PAGE>

                                  ADDENDUM SIX

                            HVAC MAINTENANCE CONTRACT

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                           DATED 7 - 13, 2000, BETWEEN
                                 PROLOGIS TRUST
                                       AND
                             KINETICS FLUID SYSTEMS

Paragraph 11, captioned "TENANT REPAIRS," is revised to include the following:

         Tenant agrees to enter into and maintain through the term of the Lease,
a regularly scheduled preventative maintenance/service contract for servicing
all hot water, heating and air conditioning systems and equipment within the
Premises. Landlord requires a qualified HVAC contractor perform this work. A
certificate must be provided to the Landlord upon occupancy of the leased
Premises.

         The service contract must become effective within thirty (30) days of
occupancy, and service visits should be performed on a quarterly basis. Landlord
suggests that Tenant send the following list to a qualified HVAC contractor to
be assured that these items are included in the maintenance contract:

         1.       Adjust belt tension;

         2.       Lubricate all moving parts, as necessary;

         3.       Inspect and adjust all temperature and safety controls;

         4.       Check refrigeration system for leaks and operation;

         5.       Check refrigeration system for moisture;

         6.       Inspect compressor oil level and crank case heaters;

         7.       Check head pressure, suction pressure and oil pressure;

         8.       Inspect air filters and replace when necessary;

         9.       Check space conditions;

         10.      Check condensate drains and drain pans and clean, if
                  necessary;

         11.      Inspect and adjust all valves;

         12.      Check and adjust dampers;

         13.      Run machine through complete cycle.

<PAGE>

                                 ADDENDUM SEVEN

                               SPECIAL PROVISIONS

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                          DATED 7 - 13, 2000, BETWEEN
                                 PROLOGIS TRUST
                                       AND
                             KINETICS FLUID SYSTEMS

1.       Termination of Existing Leases. Provided that no Event of Default shall
         then exist and no condition shall then exist which with me passage of
         time or giving of notice, or both, would constitute an Event of
         Default, upon Tenant's written request, Landlord agrees to terminate
         the remaining Term of either or both of the Lease Agreements by and
         between Landlord and Tenant for 22,400 square feet of space occupied by
         Tenant in Walnut Creek Corporate Center #9 ("WCCC #9) and 16,000 square
         feet of space occupied by Tenant in Corridor Park Corporate Center #5
         ("CPCC #5), effective upon the occurrence of the last of the following
         events: (i) Tenant's payment to Landlord of the then remaining balance
         of the costs of the unamortized tenant improvements installed for
         Tenant's benefit at WCCC #9 and/or CPCC #5, if any; (ii) the
         Commencement Date of this Lease; and (iii) Tenant's surrender to
         Landlord of the premises at WCCC #9 and/or CPCC #5 in accordance with
         the terms of the Move-Out Conditions Addendum attached to this Lease.

2.       Free Moving Period. Upon the earlier to occur of the expiration of the
         90-day period provided for Tenant's installation of its Tenant
         Improvements (as provided in the Construction Addendum) or the
         Commencement Date, Tenant shall commence payment of Base Rent and
         Operating Expenses at the Premises, and shall have fourteen (14) days
         to move its property to the Premises from WPCC #9 and/or CPCC #5.
         Tenant shall have no obligation to pay Base Rent and estimated
         Operating Expenses for the space(s) from which it is moving during such
         14-day period.

3.       DELAYS IN COMMENCEMENT DATE: IN THE EVENT THE TENANT IMPROVEMENT DATE
         IS DELAYED BEYONDS NOVEMBER 2, 2000. THE LEASE COMMENCEMENT DATE SHALL
         BE EXTENDED ONE DAY FOR EACH DAY THE TENANT IMPROVEMENT COMMENCEMENT
         DATE IS DELAYS.

<PAGE>

                                    EXHIBIT A

                                   SITE PLAN

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                            DATED 7/13, 2000, BETWEEN
                                 PROLOGIS TRUST
                                       AND
                             KINETICS FLUID SYSTEMS
<PAGE>

                       THIRD AMENDMENT TO LEASE AGREEMENT

         THE THIRD AMENDMENT TO LEASE AGREEMENT ("Third Amendment") made this
18th day of June, 2003 by and between ProLogis formerly known as Security
Capital Industrial Trusts "Landlord" and Celerity Group, Inc., a California
Corporation formerly known as Kinetics Fluid Systems Inc., hereinafter referred
to as "Tenant", in Premises known as Corridor Park Corporate Center, Building
11, located at 400 Parker Drive, Suite 1100, situated in the city of Austin,
State of Texas.

                                   WITNESSETH:

         WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
dated My 13, 2000, as modified by that certain First Amendment dated May 16,
2001, and that certain Second Amendment dated April 29, 2003, (collectively the
"Lease"), under the terms of which Landlord leased approximately 72,000 square
feet in Corridor Park Corporate Center, Building 11, (hereinafter referred to as
the "Premises"); and

         WHEREAS, the parties hereto now desire to amend and modify said Lease
as more fully hereinafter set forth.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of mutual Covenants and Agreements
contained herein, the Lease is modified and amended as set forth below:

                  1.       Effective June 1, 2003, Tenant will no longer be
         required to post security for additional amortized costs in the form of
         a Letter of Credit, as detailed in Addendum Two to the Lease Agreement.

                  2.       Effective June 1, 2003, Tenant will post a cash
         security deposit of $14,400.00. The Security Deposit shall be held by
         Landlord as security for the performance of Tenant's obligations under
         this Lease. The Security Deposit is not an advance rental deposit or a
         measure of Landlord's damages in case of Tenant's default. Upon each
         occurrence of an Event of Default (hereinafter defined), Landlord may
         use all or part of the Security Deposit to pay delinquent payments due
         under this Lease, and the cost of any damage, injury, expense or
         liability caused by such Event of Default, without prejudice to any
         other remedy provided herein or provided by law. Tenant shall pay
         Landlord on demand the amount that will restore the Security Deposit to
         its original amount. Landlord's obligation respecting the Security
         Deposit is that of a debtor, not a trustee; no interest shall accrue
         thereon. The Security Deposit shall be the property of Landlord, but
         shall be paid to Tenant when Tenant's obligations under this Lease have
         been completely fulfilled. Landlord shall be released from any
         obligation with respect to the Security Deposit upon transfer of this
         Lease and the Premises to a person or entity assuming Landlord's
         obligations under this Third Amendment.

                  3.       This Third Amendment To Lease Agreement shall be
         construed under and enforceable in accordance with the laws of the
         State of Texas.

                  IT IS HEREBY AGREED BY THE PARTIES HERETO that with the
exception of those terms and conditions specifically modified and amended
herein, the herein referenced Lease shall remain in full force and effect in
accordance with all its terms and conditions. In the event of any conflict
between the provisions of the Lease and the provisions of this Third Amendment,
the provisions of this Third Amendment shall supersede and control.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have signed this Third Amendment
to Lease Agreement to be effective as of the 18th day of June, 2003.

TENANT:                                     LANDLORD:

Celerity Group, Inc.                        ProLogis

By:    /s/ Randy Green                      By:    /s/ Mark Cashman
       --------------------------------            -----------------------------
Name:  Randy Green                          Name:  Mark Cashman
Title: Vice President Global Facilities     Title: Senior Vice President

<PAGE>

                       SECOND AMENDMENT TO LEASE AGREEMENT

         THE SECOND AMENDMENT TO LEASE AGREEMENT ("Second Amendment") made this
29th day of April, 2003 by and between ProLogis formerly known as ProLogis
Trust, a Maryland real estate investment trust as "Landlord" and Kinetics Fluid
Systems, a California corporation hereinafter referred to as "Tenant", in
Premises known as Corridor Park Corporate Center, Building 11, located at 400
Parker Drive, Suite 1100, situated in the city of Austin, State of Texas.

                                   WITNESSETH:

         WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
dated July 13th, 2000 (which together with any prior amendments, modifications
and extensions thereof is hereinafter called the Lease), under the terms of
which Landlord leased approximately 72,000 square feet in Corridor Park
Corporate Center, Building 11, (hereinafter referred to as the Premises"); and

         WHEREAS, the parties hereto now desire to amend and modify said Lease
as more fully hereinafter set forth.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

         1.       Landlord and Tenant hereby agree that the Tenant's name shall
hereby be changed to Celerity Group, Inc., a California corporation.

         2.       Except as otherwise specifically modified herein, all defined
terms used in this Second Amendment shall have the same respective meanings as
provided for such defined terms in the Lease.

         3.       Except as herein amended, the terms and conditions of the
Lease and any amendments thereto, shall continue in full force and effect and
the Lease (and any amendments thereto) as amended herein is hereby ratified and
affirmed by Landlord and Tenant.

         4.       This Second Amendment To Lease Agreement shall be construed
under and enforceable in accordance with the laws of the State of Texas.

         IN WITNESS WHEREOF, the parties hereto have signed this Second
Amendment to Lease Agreement to be effective as of the 29th day of April, 2003.

<TABLE>
<CAPTION>
TENANT:                                           LANDLORD:
<S>                                               <C>
Celerity Group, Inc., a California                ProLogis formerly known as ProLogis Trust,
Corporation formerly known as Kinetics Fluid      a Maryland real estate investment trust
Systems, a California corporation

By:    /s/ Randy Green                            By:    /s/ Mark Cashman
       --------------------------------                  --------------------------------
Name:  Randy Green                                Name:  Mark Cashman
Title: Vice President Global Facilities           Title: Senior Vice President
</TABLE>

<PAGE>

                       FIRST AMENDMENT TO LEASE AGREEMENT

                                 BY AND BETWEEN

                   PROLOGIS INDUSTRIAL PROPERTIES INCORPORATED
                    (successor in interest to ProLogis Trust)

                                       and
                             KINETICS FLUID SYSTEMS

This First Amendment To Lease Agreement is made and effective this 16 of May,
2001, by and between ProLogis Industrial Properties Incorporated, successor in
interests to ProLogis Trust, (hereinafter, "Landlord") and Kinetics Fluid
Systems (hereinafter, "Tenant").

                                   WITNESSETH:

WHEREAS, Landlord and Tenant previously entered into that certain Lease
Agreement dated the 13th of July, 2000, (the "Lease"), providing for the leasing
by Landlord to Tenant of that certain office/warehouse space containing 72,000
square feet known as Corridor Park Corporate Center, Building 11, 400 Parker
Drive, Austin, Texas 78754 (the "Premises"); and

WHEREAS, Landlord and Tenant desire to modify certain terms and conditions set
out in the Lease;

NOW, THEREFORE, pursuant to the foregoing, and in consideration of mutual
covenants and agreements contained herein, the Lease is modified and amended as
set out below:

         1.       The Lease Term shall commence on May 15, 2001 ("Commencement
                  Date") and end on May 31, 2008.

         2.       With respect to "Initial Monthly Base Rent" the Lease shall be
                  amended to reflect the following: Pursuant to Addendum Two,
                  "Construction (Allowance Amortized)" of the Lease, the
                  amortization of the Tenant Construction Overages
                  ($144,000.00), Tenants Monthly Base Rent shall be amended as
                  follows:

                        May 15, 2001 to May 31, 2001        $15,793.55

                        June 1, 2001 to May 31, 2004        $31,419.64

                        June 1, 2004 to May 31, 2006        $34,299.64

                        June 1, 2006 to May 31, 2008        $37,179.64

IT IS HEREBY AGREED BY THE PARTIES HERETO, that with the exception of those
terms and conditions specifically modified and amended herein, the herein
referenced Lease shall remain in full force and effect in accordance with all
its terms and conditions.

In witness whereof, the parties hereto have executed this First Amendment To
Lease Agreement as of the day and year as first above written.

LANDLORD:                                          TENANT:

ProLogis Industrial Properties Incorporated        Kinetics Fluid Systems

By: ProLogis Management Incorporated, as Agent

By:  ________________________________              By: /s/ Randy Green
                                                       -------------------------
     Name:  Steven K. Meyer                            Name:  Randy Green
     Title: Managing Director                          Title: Corporate Director
                                                              Facilities<PAGE>
                                                                   Exhibit 10.11

               [LOGO] AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
            STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
                (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1. BASIC PROVISIONS ("BASIC PROVISIONS").

         1.1      PARTIES: THIS LEASE ("LEASE"), dated for reference purposes
only, July 17, 2001, is made by and between Robert A. Gray ("LESSOR") and Poly
Concepts, Inc., an Oregon corporation ("LESSEE"), (collectively the "PARTIES,"
or Individually a "PARTY").

         1.2      PREMISES: That certain real property, Including all
Improvements therein or to be provided by Lessor under the terms of this Lease,
and commonly known as 9660 SW Herman Road, located in the County of Washington,
State of Oregon, 97062, and generally described as (describe briefly the nature
of the property and, if applicable, the "PROJECT", if the property is located
within a Project) an approximate 76,580 sq. ft. industrial building to be
constructed, situated on approximately 4.99 acres ("PREMISES"). (See also
paragraph 2)

         1.3      TERM: Ten (10) years and 0 months ("Original Term") commencing
April 15, 2001 ("COMMENCEMENT DATE") and ending 120 months from commencement
date ("EXPIRATION DATE"). (See also Paragraph 3)

         1.4      EARLY POSSESSION: upon substantial completion of improvements
("EARLY POSSESSION DATE"). (See also Paragraphs 3.2 and 3.3)

         1.5      BASE RENT: $ See Addendum A, Paragraph 50 per month ("BASE
RENT"), payable on the first (1st) day of each month commencing April 15, 2002.
(See also Paragraph 4)

[ ] If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.

         1.6      BASE RENT PAID UPON EXECUTION: $35,000.00* as Base Rent for
the period first month's rent.

         1.7      SECURITY DEPOSIT: $35,000.00* ("SECURITY DEPOSIT"). (See also
Paragraph 5)

         1.8      AGREED USE: assembly and distribution of industrial products,
general office use (See also Paragraph 6)

         1.9      INSURING PARTY: Lessor is the "insuring Party" unless
otherwise stated herein. (See also Paragraph 8)

         1.10     REAL ESTATE BROKERS: (See also Paragraph 15)

                  (a) REPRESENTATION: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist in this
transaction (check applicable boxes):

[ ]      _____________________________________________________________represents
         Lessor exclusively ("Lessor's Broker");
[ ]      _____________________________________________________________represents
         Lessee exclusively ("Lessee's Broker"); or

[X]      Trammell Crow Company represents both Lessor and Lessee ("Dual
         Agency").

                  (b) PAYMENT TO BROKERS: Upon execution and delivery of this
Lease by both Parties, Lessor Shall pay to the Broker the fee agreed to in their
separate written agreement (or if there is no such agreement, the sum of n/a %
of the total Base Rent for the brokerage services rendered by said Broker).

         1.11     GUARANTOR. The obligations of the Lessee under this Lease are
to be guaranteed by See Paragraph 55 ("Guarantor"). (See also Paragraph 37)

         1.12     ADDENDA AND EXHIBITS. Attached hereto is an Addendum or
Addenda consisting of Paragraphs 50 through 55 and Exhibits A & B, all of which
constitute a part of this Lease.

* To be deposited into an interest bearing account at Bank of the West, Main
Branch, owned by Lessee with the Lessor as a signatory. Seventy Thousand
($70,000) dollars will be disbursed from this account to Lessor upon the lease
commencement date.

2.       PREMISES.

         2.1      LETTING. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.

         2.2      Condition. Lessor shall deliver the Premises to Lessee in new
condition and broom clean and free of debris on the Commencement Date or the
Early Possession Date, whichever first occurs ("Start Date"), and, so long as
the required service contracts described in Paragraph 7.1(b) below are obtained
by Lessee within thirty (30) days following the Start Date, warrants that the
existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating
and air conditioning systems ("HVAC"), loading doors, if any, and all other such
elements in the Premises, other than those constructed by Lessee, shall be in
new and good operating condition and free of any material defects on said date
and that the structural elements of the roof, bearing walls and foundation of
any buildings on the Premises (the "Building") shall be new and free of material
defects. If a non-compliance with said warranty exists as of the Start Date,
Lessor shall, as Lessor's sole obligation with respect to such matter, except as
otherwise provided in this Lease, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify same at Lessor's expense. If, after the Start Date,
Lessee does not give Lessor written notice of any non-compliance with this
warranty within: (i) one year as to the surface of the roof and the structural
portions of the roof, foundations and bearing walls, (ii) six (6) months as to
the HVAC systems, (iii) thirty (30) days as to the remaining systems and other
elements of the Building, correction of such non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.

         2.3      Compliance. Lessor warrants that the improvements on the
Premises comply with all applicable laws, covenants or restrictions of record,
building codes, regulations and ordinances ("Applicable Requirements") in effect
on the Start Date. Said warranty does not apply to the use to which Lessee will
put the Premises or to any Alterations or Utility Installations (as defined in
Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the zoning is appropriate for Lessee's intended use,
and acknowledges that past uses of the Premises may no longer be allowed. If the
Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify the same
at Lessor's expense. If Lessee does not give Lessor Written notice of a
non-compliance with this warranty within six (6) months following the Start
Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense. If the Applicable Requirements are hereafter
changed (as opposed to being in existence at the start Date, which

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is addressed in Paragraph 6.2(e) below) so as [ILLEGIBLE] during the term of
this Lease the construction [ILLEGIBLE] addition to or an alteration of the
Building, the remediation of any Hazardous Substance, or the [ILLEGIBLE] or
other physical modification of the [ILLEGIBLE] ("Capital Expenditure"), Lessor
and Lessee shall allocate the cost of such work as follows:

                  (a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent. Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination, Lessee shall immediately cease
the use of the Premises which requires such Capital Expenditure and deliver to
Lessor written notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure.

                  (b) If such Capital Expenditure is not the result of the
specific and unique use of the Premises by Lessee (such as, governmentally
mandated seismic modifications), then Lessor and Lessee shall allocate the
obligation to pay for such costs pursuant to the provisions of Paragraph 7.1(c);
provided, however, that if such Capital Expenditure is required during the last
two years of this Lease or if Lessor reasonably determines that it is not
economically feasible to pay its share thereof, Lessor shall have the option to
terminate this Lease upon ninety (90) days prior written notice to Lessee unless
Lessee notifies Lessor, in writing, within ten (10) days after receipt of
Lessor's termination notice that Lessee will pay for such Capital Expenditure.
If Lessor does not elect to terminate, and falls to tender its share of any such
Capital Expenditure, Lessee may advance such funds and deduct same, with
Interest, from Rent until Lessor's share of such costs have been fully paid. If
Lessee is unable to finance Lessor's share, or if the balance of the Rent due
and payable for the remainder of this Lease Is not sufficient to fully reimburse
Lessee on an offset basis, Lessee shall have the right to terminate this Lease
upon thirty (30) days written notice to Lessor.

                  (c) Notwithstanding the above, the provisions concerning
Capital Expenditures are intended to apply only to non-voluntary, unexpected,
and new Applicable Requirements. If the Capital Expenditures are instead
triggered by Lessee as a result of an actual or proposed change in use, change
in intensity of use, or modification to the Premises then, and in that event,
Lessee shall be fully responsible for the cost thereof, and Lessee shall not
have any right to terminate this Lease.

         2.4      Acknowledgements. Lessee acknowledges that: (a) It has been
advised by Lessor and/or Brokers to satisfy itself with respect to the condition
of the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements), and their suitability for Lessee's intended use; (b)
Lessee has made such investigation as it deems necessary with reference to such
matters and assumes all responsibility therefor as the same relate to its
occupancy of the Premises; and (c) neither Lessor, Lessor's agents, nor any
Broker has made any oral or written representations or warranties with respect
to said matters other than as set forth in this Lease. In addition, Lessor
acknowledges that: (a) Broker has made no representations, promises or
warranties concerning Lessee's ability to honor the Lease or suitability to
occupy the Premises; and (b) it is Lessor's sole responsibility to investigate
the financial capability and/or suitability of all proposed tenants.

         2.5      Lessee as Prior Owner/Occupant. The warranties made by Lessor
in Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.

3.       Term.

         3.1      Term. The Commencement Dale, Expiration Date and Original Term
of this Lease are as specified In Paragraph 1.3.

         3.2      Early Possession. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated tor the period of such early possession. All other terms of this Lease
(Including, but not limited to, the obligations to pay Real Property Taxes and
Insurance premiums and to maintain the Premises) shall, however, be In effect
during such period. Any such early possession shall not affect the Expiration
Date.

         3.3      Delay in Possession. Lessor agrees to use its best
commercially reasonable efforts to deliver possession of the Premises to Lessee
by the Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within sixty (60)
days after the Commencement Date, Lessee may, at its option, by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten (10)
day period, Lessee's right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease, as aforesaid, any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee. If possession of the Premises is not delivered within
four (4) months after the Commencement Date, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.

         3.4      Lessee Compliance. Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of Insurance (Paragraph 8.5). Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under this
Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such
evidence of Insurance. Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start Date shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied.

4.       Rent.

         4.1.     Rent Defined. All monetary obligations of Lessee to Lessor
under the terms of this Lease (except for the Security Deposit) are deemed to be
rent ("Rent").

         4.2      Payment. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction (except
as specifically permitted in this Lease), on or before the day on which it is
due. Rent for any period during the term hereof Which is for less than one (1)
full calendar month shall be prorated based upon the actual number of days of
said month. Payment of Rent shall be made to Lessor at its address stated herein
or to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.

5.       Security Deposit. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee falls to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. If the Base Rent increases
during the term of this Lease. Lessee shall, upon written request from Lessor,
deposit additional monies with Lessor so that the total amount of the Security
Deposit shall at all times bear the same proportion to the increased Base Rent
as the initial Security Deposit bore to the initial Base Rent. Lessor shall not
be required to keep the Security Deposit separate from its general accounts.
Within fourteen (14) days after the expiration or termination of this Lease, if
Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise
within thirty (30) days after the Premises have been vacated pursuant to
Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit
not used or applied by Lessor. No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be prepayment for any
monies to be paid by Lessee under this Lease.

6.       Use.

         6.1      Use. Lessee shall use and occupy the Premises only for the
Agreed Use, or any other legal use which is reasonably comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the Premises in
a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessee shall within five

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(5) business days after such request give written [ILLEGIBLE] of same, which
notice shall Include an explanation of Lessor's objections to the change in use.

         6.2      Hazardous Substances.

                  (a) Reportable Uses Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, or waste
whose presence, use, manufacture, disposal, transportation, or release, either
by Itself or In combination with other materials expected to be on the Premises,
is either. (I) potentially Injurious to the public health, safety or welfare,
the environment or the Premises, (II) regulated or monitored by any governmental
authority, or (III) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall Include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which
constitutes a Reportable Use of Hazardous Substances without the express prior
written consent of Lessor and timely compliance (at Lessee's expense) with all
Applicable Requirements. "Reportable Use" shall mean (I) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority.
Notwithstanding the foregoing, Lessee may use any ordinary and customary
materials reasonably required to be used in the normal course of the Agreed Use,
so long as such use is in compliance with all Applicable Requirements, is not a
Reportable Use, and does not expose the Premises or neighboring property to any
meaningful risk of contamination or damage or expose Lessor to any liability
therefor. In addition, Lessor may condition its consent to any Reportable Use
upon receiving such additional assurances as Lessor reasonably deems necessary
to protect itself, the public, the Premises and/or the environment against
damage, contamination, injury and/or liability, including, but not limited to,
the installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the
Security Deposit. Notwithstanding the foregoing. Lessee shall be entitled to use
reasonable quantities of hazardous substances in the normal operation of its
business without Lessor's prior written consent.

                  (b) Duty to Inform Lessor. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance has come to be located in, on,
under or about the Premises, other than as previously consented to by Lessor,
Lessee shall Immediately give written notice of such fact to Lessor, and provide
Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.

                  (c) Lessee Remediation. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about the
Premises (Including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was caused or
materially contributed to by Lessee, or pertaining to or involving any Hazardous
Substance brought onto the Premises during the term of this Lease, by or for
Lessee, or any employee, agent or invitee of Lessee.

                  (d) Lessee Indemnification. Lessee shall indemnity, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless
from and against any and all loss of rents and/or damages, liabilities,
judgments, claims, expenses, penalties, and reasonable attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee, or any employee, agent or invitee of Lessee
(provided, however, that Lessee shall have no liability under this Lease with
respect to underground migration of any Hazardous Substance under the Premises
from adjacent properties). Lessee's obligations shall include, but not be
limited to, the effects of any contamination or injury to person, property or
the environment created or suffered by Lessee, and the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its
obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.

                  (e) Lessor Indemnification. Lessor and its successors and
assigns shall indemnity, defend, reimburse and hold Lessee, its shareholders,
employees and lenders, harmless from and against any and all environmental
damages, including the cost of remediation, which existed as a result of
Hazardous Substances on the Premises other than hazardous substances released by
Lessee or its agents or employees. Lessor's obligations, as and when required by
the Applicable Requirements, shall Include, but not be limited to, the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease.

                  (f) Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entitles having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Start Date, unless such
remediation measure is required as a result of Lessee's use (Including
"Alterations", as defined in Paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor, including allowing Lessor and
Lessor's agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor's investigative and remedial responsibilities. Any
repair or other work done by Lessor or any third party on the Premises shall be
done in a manner which does not materially interfere with Lessee's use of,
access to any portion of the premises. In the event that Lessee's use of, or
access to, any portion of the premises is prevented for more than forty-eight
hours. Lessee's rent shall abate during such period.

                  (g) Lessor Termination Option. If a Hazardous Substance
Condition occurs during the term of this Lease, unless Lessee is legally
responsible for the release thereof (in which case Lessee shall make the
investigation and remediation thereof required by the Applicable Requirements
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option,
either (i) Investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor's expense, In which event
this Lease shall continue in full force and effect, or (ii) If the estimated
cost to remediate such condition exceeds twelve (12) times the then monthly Base
Rent or $100,000 whichever is greater, give written notice to Lessee, within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition, of Lessor's desire to terminate this Lease as of
the date sixty (60) days following the date of such notice. In the event Lessor
elects to give a termination notice, Lessee may, within ten (10) days
thereafter, give written notice to Lessor of Lessee's commitment to pay the
amount by which the cost of the remediation of such Hazardous Substance
Condition exceeds an amount equal to twelve (12) times the then monthly Base
Rent or $100,000, whichever Is greater, Lessee shall provide Lessor with said
funds or satisfactory assurance thereof within thirty (30) days following such
commitment. In such event, this Lease shall continue in full force and effect,
and Lessor shall proceed to make such remediation as soon as reasonably possible
after the required funds are available. If Lessee does not give such notice and
provide the required funds or assurance thereof within the time provided, this
Lease shall terminate as of the date specified In Lessor's notice of
termination.

         6.3      Lessee's Compliance with Applicable Requirements. Except as
otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau relating to Lessee's specific use of the Premises which relate in
any manner to the Premises, without regard to whether said requirements are now
in effect or become effective after the Start Date. Lessee shall, within ten
(10) days after receipt of Lessor's written request, provide Lessor with copies
of all permits and other documents, and other information evidencing Lessee's
compliance with any Applicable Requirements specified by Lessor, and shall
Immediately upon receipt, notify Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning, complain
or report pertaining to or involving the failure of Lessee or the Premises to
comply with any Applicable Requirements.

         6.4      Inspection; Compliance. Lessor and Lessor's "Lender" (as
defined in Paragraph 30 below) and consultants shall have the right to enter
into Premises at any time. In the case of an emergency, and otherwise at
reasonable times and with prior reasonable notice, for the purpose of inspecting
the condition of the Premises and for verifying compliance by Lessee with this
Lease. The cost of any such inspections shall be paid by Lessor, unless a
violation of Applicable Requirements, or a contamination caused by Lessee is
found to exist or be imminent, or the inspection is requested or ordered by a
governmental authority because of contamination caused by Lessee. In such case,
Lessee shall upon request reimburse Lessor for the cost of such inspections, so
long as such inspection is reasonably related to the violation or contamination.

7.       Maintenance; Repairs, Utility Installations; Trade Fixtures and
Alterations.

         7.1      Lessee's Obligations.

                  (a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations). 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the non-structured
portions of the Premises, Utility installations, and Alterations in good order,
condition and repair (whether or not the portion of the Premises requiring
repairs or the means of repairing the same, are reasonably or readily accessible
to Lessee, and provided that whether-or-not the need for such repairs occurs as
a result of Lessee's use, of the Premises), including, but not limited to all
equipment.

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or facilities, such as plumbing, heating, ventilating air-conditioning,
electrical, lighting facilities, boilers, pressure vessels, fire protection
system, fixtures, walls (interior only), foundations, ceilings       floors,
windows, doors, plate glass, skylights,      ping, driveways, parking lots,
fences, retaining walls, signs, sidewalks and parkways located in, on, or
adjacent to the Premises, Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices
ordinary wear and tear and damages by casualty excepted. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair. Lessee shall, during the term of this Lease, keep the
exterior appearance of the Building in a first-class condition consistent with
the exterior appearance of other similar facilities of comparable age and size
in the vicinity, including, when necessary, the exterior repainting of the
Building.

                  (b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense,
and maintain the following equipment and improvements, If any, If and when
installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure
vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof covering and
drains, (vi) driveways and parking lots, (vii) clarifiers (viii) basic utility
feed to the perimeter of the Building, and (ix) any other equipment, if
reasonably required by Lessor.

                  (c) REPLACEMENT. Subject to Lessee's indemnification of Lessor
as set forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if the Basic Elements described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such Basic Elements, then such Basic Elements shall be replaced by Lessor, and
the cost thereof shall be prorated between the Parties and Lessee shall only be
obligated to pay, each month during the remainder of the term of this Lease, on
the date on which Base Rent is due, an amount equal to the product of
multiplying the cost of such replacement by a fraction, the numerator of which
is one, and the denominator of which is the number of months of the useful life
of such replacement as such useful life is specified pursuant to Federal income
tax regulations or guidelines for depreciation thereof (including interest on
the unamortized balance as is then commercially reasonable in the judgment of
Lessor's accountants), with Lessee reserving the right to prepay its obligation
at any time.

         7.2      LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs
2.2 (Condition). 2.3 (Compliance), 9 (Damage or Destruction) and 14
(Condemnation), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, or
the equipment therein, all of which obligations are intended to be that of the
Lessee. It is the Intention of the Parties that the terms of this Lease govern
the respective obligations of the Parties as to maintenance and repair of the
Premises, and they expressly waive the benefit of any statute now or hereafter
in effect to the extent it is inconsistent with the terms of this Lease;
notwithstanding anything herein to the contrary, Lessor shall be required to
maintain all portions of the premises which are not the obligation of Lessee
under Paragraph 7.1 hereof and Lessor shall be responsible for the repair of any
damage which arises as a result of the negligence or acts or commissions of the
Lessor or its agents.

         7.3      UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.

                  (a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" refers to all floor and window coverings, air lines, power
panels, electrical distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing
in or on the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery
and equipment that can be removed without doing material damage to the Premises.
The term "ALTERATIONS" shall mean any modification of the improvements, other
than Utility installations or Trade Fixtures, whether by addition or deletion.
"LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
Utility Installations to the Premises without Lessor's prior written consent.
Lessee may, however, make non-structural Utility Installations to the interior
of the Premises (excluding the roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during this Lease as extended does not exceed $100.000
in the aggregate.

                  (b) CONSENT. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
For work which costs an amount equal to one month's Base Rent. Lessor may
Condition its consent upon Lessee providing a lien and completion bond in an
amount equal to one and one-half times the estimated cost of such Alteration or
Utility Installation and/or upon Lessee's posting an additional Security Deposit
with Lessor.

                  (c) INDEMNIFICATION. Lessee shall pay, when due, all claims
for labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility. If Lessee shall contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof. If Lessor shall require, Lessee shall furnish a
surety bond in an amount equal to one and one-half times the amount of such
contested lien, claim or demand, indemnifying Lessor against liability for the
same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor's reasonable attorneys' fees and costs.

         7.4      OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.

                  (a) OWNERSHIP. Subject to Lessor's right to require removal or
elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per Paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises.

                  (b) REMOVAL. By delivery to Lessee of written notice from
Lessor at the time Lessor consents to any alteration or utility Installation.
Lessor may require that any or all Lessee Owned Alterations that require the
Lessor's consent or Utility Installations be removed by the expiration or
termination of this Lease. Lessor may require the removal at any time of all or
any part of any Lessee Owned Alterations or Utility Installations made without
the required consent.

                  (c) SURRENDER/RESTORATION. Lessee shall surrender the Premises
by the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear and
damage by casualty not caused by lessee or Lessee's agent excepted provided
however, the foregoing shall not be deemed to be an obligation of the part of
the Lessee to improve or restore the condition of the Premises to a condition
better than the condition that existed on the Commencement Date. "Ordinary wear
and tear" shall not include any damage or deterioration that would have been
prevented by good maintenance practice. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee
Owned Alterations and/or Utility Installations, furnishings, and equipment as
well as the removal of any storage tank installed by or for Lessee, and the
removal, replacement, or remediation of any soil, material or groundwater
contaminated by Lessee. Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee. The failure by Lessee to timely vacate the Premises
pursuant to this Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26 below.

8.       INSURANCE; INDEMNITY.

         8.1      PAYMENT FOR INSURANCE. Lessee shall pay for all insurance
required under Paragraph 8 except to the extent of the cost attributable to
liability insurance carried by Lessor under Paragraph 8.2(b) in excess of
$2,000,000 per occurrence. Premiums for policy periods commencing prior to or
extending beyond the Lease term shall be prorated to correspond to the Lease
term. Payment shall be made by Lessee to Lessor within ten (10) days following
receipt of an invoice.

         8.2      LIABILITY INSURANCE.

                  (a) CARRIED BY LESSEE. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an "ADDITIONAL INSURED-MANAGERS OR LESSORS OF PREMISES
ENDORSEMENT" and contain the "AMENDMENT OF THE POLLUTION EXCLUSION ENDORSEMENT"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an insured contract for the performance of

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Lessee's indemnity obligations under this Lease. The limits of said insurance
shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. All insurance, carried by [ILLEGIBLE] shall be primary to
and not contributory with an [ILLEGIBLE] insurance carried by Lessor, whose
insurance shall be considered excess insurance only.

                  (b) CARRIED BY LESSOR. Lessor shall maintain liability
Insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of,
the insurance required to be maintained by Lessee. Lessee shall not be named as
an additional insured therein.

         8.3      PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.

                  (a) BUILDING AND IMPROVEMENTS. The insuring Party shall obtain
and keep in force a policy or policies in the name of Lessor, with loss payable
to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, but in no event
more than the commercially reasonable and available insurable value thereof. If
Lessor is the insuring Party, however, Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee's personal property shall be insured
by Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is
available and commercially appropriate, such policy or policies shall insure
against all risks of direct physical loss or damage (except the perils of flood
and/or earthquake including coverage for debris removal and the enforcement of
any Applicable Requirements requiring the upgrading, demolition, reconstruction
or replacement of any portion of the Premises as the result of a covered loss.
Said policy or policies shall also contain an agreed valuation provision in lieu
of any coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located. If
such insurance coverage has a deductible clause, the deductible amount shall not
exceed $10,000 per occurrence, and Lessee shall be liable for such deductible
amount in the event of an Insured Loss.

                  (b) RENTAL VALUE. The Insuring Party shall obtain and keep in
force a policy or policies in the name of Lessor with loss payable to Lessor and
any Lender, insuring the loss of the full Rent for one (1) year. Said insurance
shall provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full year's loss of Rent from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period. Lessee
shall be liable for any deductible amount in the event of such loss.

                  (c) ADJACENT PREMISES. If the Premises are part of a larger
building, or of a group of buildings owned by Lessor which are adjacent to the
Premises, the Lessee shall pay for any increase in the premiums for the property
insurance of such building or buildings if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.

         8.4      LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.

                  (a) PROPERTY DAMAGE. Lessee shall obtain and maintain
insurance coverage on all of Lessee's personal property, Trade Fixtures, and
Lessee Owned Alterations and Utility installations. Such Insurance shall be full
replacement cost coverage with a deductible of not to exceed $10,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property, Trade Fixtures and Lessee Owned Alterations
and Utility Installations. Lessee shall provide Lessor with written evidence
that such insurance is in force.

                  (b) BUSINESS INTERRUPTION. Lessee shall obtain and maintain
loss of income and extra expense insurance in amounts as will reimburse Lessee
for direct or indirect loss of earnings attributable to all perils commonly
insured against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

                  (c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.

         8.5      INSURANCE POLICIES. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, as set forth in the most current issue
of "Best's Insurance Guide", or such other rating as may be required by a
Lender. Lessee shall not do or permit to be done anything which invalidates the
required insurance policies, Lessee shall, prior to the Start Date, deliver to
Lessor certified copies of policies of such insurance or certificates evidencing
the existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fall to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same.

         8.6      WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

         8.7      INDEMNITY. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, reasonable attorneys' and consultants' fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the use and/or occupancy of the Premises by Lessee. If any action or proceeding
is brought against Lessor by reason of any of the foregoing matters, Lessee
shall upon notice defend the same at Lessee's expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense.
Lessor need not have first paid any such claim in order to be defended or
indemnified.

         8.8      EXEMPTION OF LESSOR FROM LIABILITY. Except for damage caused
by Lessor's negligence or willful misconduct, Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under
no circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.

9.       DAMAGE OR DESTRUCTION.

         9.1      DEFINITIONS.

                  (a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction
to the improvements on the Premises, other than Lessee Owned Alterations and
Utility installations, which can reasonably be repaired in six (6) months or
less from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.

                  (b) "PREMISES TOTAL DESTRUCTION" shall mean damage or
destruction to the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in six (6)
months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within thirty (30) days from the date of the damage or
destruction as to whether or not the damage is Partial or Total.

                  (c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.

                  (d) "REPLACEMENT COST" shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depredation.

                  (e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence
or discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

         9.2      PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect; provided, however, that Lessee shall, at
Lessor's election, make the repair of any damage or destruction the total cost
to repair of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the

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Insuring Party shall promptly contribute the (ILLEGIBLE) in proceeds (except as
to the deductible which(ILLEGIBLE) responsibility) as and when required
to complete said repairs. In the event, however, (ILLEGIBLE) was due to
the fact that, by reason of (ILLEGIBLE) a nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, the party responsible for making the repairs
shall complete them as soon as reasonably possible and this Lease shall remain
in full force and effect. If such funds or assurance are not received. Lessor
may nevertheless elect by written notice to Lessee within ten (10) days
thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this Lease
Shan remain in full force and effect, or have this Lease terminate thirty (30)
days thereafter. Lessee shall not be entitled to reimbursement of any funds
contributed by Lessee to repair any such damage or destruction. Premises Partial
Damage due to flood or earthquake shall be subject to Paragraph 9.3.
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such Insurance shall be made available for the repairs If made by either
Party.

         9.3      PARTIAL DAMAGE - Uninsured Loss. If a Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense. In which event this Lease shall continue in full force and
effect or (ii) terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within ten (10) days after receipt of the termination notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage without reimbursement from Lessor. Lessee shall provide Lessor with
said funds or satisfactory assurance thereof within thirty (30) days after
making such commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not make the
required commitment, this Lease shall terminate as of the date specified in the
termination notice.

         9.4      TOTAL DESTRUCTION. Notwithstanding any other provision hereof,
If a Premises Total Destruction occurs, this Lease shall terminate as of the
date of such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided In Paragraph 8.6.

         9.5      Damage Near End of Term. If at any time during the last six
(6) months of this Lease there is damage for which the cost to repair exceeds
one (1) month's Base Rent, whether or not an Insured Loss, Lessor may terminate
this Lease effective sixty (60) days following the date of occurrence of such
damage by giving a written termination notice to Lessee within thirty (30) days
after the date of occurrence of such damage. Notwithstanding the foregoing, if
Lessee at that time has an exercisable option to extend this Lease or to
purchase the Premises, then Lessee may preserve this Lease by, (a) exercising
such option and (b) providing Lessor with any shortage in insurance proceeds (or
adequate assurance thereof) needed to make the repairs on or before the earlier
of (i) the dale which is ten days after Lessee's receipt of Lessor's written
notice purporting to terminate this Lease, or (ii) the day prior to the date
upon which such option expires. If Lessee duly exercises such option during such
period and provides Lessor with funds (or adequate assurance thereof) to cover
any shortage in insurance proceeds, Lessor shall, at Lessor's commercially
reasonable expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee falls to exercise such
option and provide such funds or assurance during such period, then this Lease
shall terminate on the date specified in the termination notice and Lessee's
option shall be extinguished.

         9.6      ABATEMENT OF RENT; LESSEE'S REMEDIES.

                  (a) ABATEMENT. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.

                  (b) REMEDIES. If Lessor shall be obligated to repair or
restore the Premises and does not commence, In a substantial and meaningful way,
such repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than sixty (60) days following the giving of such notice. If Lessee gives
such notice and such repair or restoration is not commenced within thirty (30)
days thereafter, this Lease shall terminate as of the date specified in said
notice. If the repair or restoration is commenced within said thirty (30) days,
this Lease shall continue in full force and effect. "Commence" shall mean either
the unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.

         9.7      TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance. Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then required to be, used by Lessor.

         9.8      WAIVE STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.

10.      REAL PROPERTY TAXES.

         10.1     DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term
"REAL PROPERTY TAXES" shall include any form of assessment; real estate,
general, special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor In
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Building address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a Jurisdiction within which the Premises are located. The
term "REAL PROPERTY TAXES" shall also Include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including but not limited to, a change in the ownership
of the Premises. Notwithstanding anything to the contrary contained herein;
Lessee shall not be responsible for increases in real property taxes that
results from a sale or other transfer of interest in the Lessor or the building,
other improvements and the land of which the premises are a part.

         10.2

                  (a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b), all such payments shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any overpayment. If Lessee shall fall to pay any required
Real Property Taxes, Lessor shall have the right to pay the same, and Lessee
shall reimburse Lessor therefor upon demand.

                  (b) ADVANCE PAYMENT. In the event Lessee incurs a late charge
on any Rent payment, Lessor may, at Lessor's option, estimate the current Real
Property Taxes, and require that such taxes be paid in advance to Lessor by
Lessee, either: (i) in a lump sum amount equal to the installment due, at least
twenty (20) days prior to the applicable delinquency date, or (ii) monthly in
advance with the payment of the Base Rent. If Lessor elects to require payment
monthly in advance, the monthly payment shall he an amount equal to the amount
of the estimated installment of taxes divided by the number of months remaining
before the month in which said installment becomes delinquent. When the actual
amount of the applicable tax bill is known, the amount of such equal monthly
advance payments shall be adjusted as required to provide the funds needed to
pay the applicable taxes. If the amount collected by Lessor is insufficient to
pay such Real Property Taxes when due, Lessee shall pay Lessor, upon demand,
such additional sums as are necessary to pay such obligations. All monies paid
to Lessor under this Paragraph may be intermingled with other monies of Lessor
and shall not bear interest. In the event of a Breach by Lessee in the
performance of its obligations under this Lease, then any balance of funds paid
to Lessor under the provisions of this Paragraph may, at the option of Lessor,
be treated as an additional Security Deposit.

         10.3     JOINT ASSESSMENT. If the Premises are not separately assessed.
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.

         10.4     PERSONAL PROPERTY TAXES. Lessee shall pay, prior to
delinquency, all taxes assessed against and levied upon Lessee Owned
Alterations, Utility Installations Trade Fixtures, furnishings, equipment and
all personal property of Lessee. When possible, Lessee shall cause such property
to be assessed and billed separately from the real property of Lessor. If any of
Lessee's said personal property shall be assessed with Lessor's real property
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement.

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11.      UTILITIES. Lessee shall pay for all [ILLEGIBLE], light, power,
telephone, trash disposal [ILLEGIBLE] utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.

12.      ASSIGNMENT AND SUBLETTING.

         12.1     LESSOR'S CONSENT REQUIRED.

                  (a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or encumber (collectively, "assign or assignment") or
sublet all or any part of Lessee's Interest in this Lease or in the Premises
without Lessor's prior written consent.

                  (e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
Notwithstanding anything contained in this Lease to the contrary, Lessee shall
have the right to assign this Lease or sublet all or any portion of the
Premises, without Lessor's consent, to (I) any entity which controls, Is
controlled by, or is under common control with Lessee, (II) any entity which
acquires all or substantially all of the assets of Lessee, or (III) any entity
with which Lessee may merge or consolidate (collectively, (I), (II) and (III) a
"permitted transferee")

         12.2     TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

                  (a) Regardless of Lessor's consent, any assignment or
subletting shall not: (I) be effective without the express written assumption by
such assignee or sublessee of the obligations of Lessee under this Lease; (II)
release Lessee of any obligations hereunder, or (III) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.

                  (b) Lessor may accept Rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach.

                  (c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.

                  (d) In the event of any Default or Breach by Lessee, Lessor
may proceed directly against Lessee, any Guarantors or anyone else responsible
for the performance of Lessee's obligations under this Lease, including any
assignee or sublessee, without first exhausting Lessor's remedies against any
other person or entity responsible therefore to Lessor, or any security held by
Lessor.

                  (e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee. Including but not limited
to the intended use and/or required modification of the Premises; Lessee agrees
to provide Lessor with such other or additional information and/or documentation
as may be reasonably requested.

                  (f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed to
have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or performed by Lessee
during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to
which Lessor has specifically consented to in writing.

         12.3     ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

                  (a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee's obligations under this Lease: provided,
however, that until a Breach shall occur in the performance of Lessee's
obligations. Lessee may collect said Rent. Lessor shall not, by reason of the
foregoing or any assignment of such sublease, nor by reason of the collection of
Rent, be deemed liable to the sublessee for any failure of Lessee to perform and
comply with any of Lessee's obligations to such sublessee. Lessee hereby
Irrevocably authorizes and directs any such sublessee, upon receipt of a written
notice from Lessor stating that a Breach exists in the performance of Lessee's
obligations under this Lease, to pay to Lessor all Rent due and to become due
under the sublease. Sublessee shall rely upon any such notice from Lessor and
shall pay all Rents to Lessor without any obligation or right to inquire as to
whether such Breach exists, notwithstanding any claim from Lessee to the
contrary.

                  (b) In the event of a Breach by Lessee, Lessor may, at its
option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.

                  (c) Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.

                  (d) No sublessee shall further assign or sublet all or any
part of the Premises without Lessor's prior written consent.

13.      DEFAULT; BREACH; REMEDIES.

         13.1     DEFAULT; BREACH. A "Default" is defined as a failure by the
Lessee to comply with or perform any of the terms, covenants, conditions or
rules under this Lease. A "Breach" is defined as the occurrence of one or more
of the following Defaults, and the failure of Lessee to cure such Default within
any applicable grace period:

                  (a) The abandonment of the Premises; or the vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 is jeopardized
as a result thereof, or without providing reasonable assurances to minimize
potential vandalism.

                  (b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) business days following written notice to Lessee.

                  (c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) a
Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42
(easements), or (viii) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of ten (10) days following written notice to
Lessee.

                  (d) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c) above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature or Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.

                  (e) The occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii)

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becoming a "DEBTOR" as defined in 11 U.S.C. Section 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within sixty (60) days); (iii) the [ILLEGIBLE] of a trustee or
receiver to take possession [ILLEGIBLE] [ILLEGIBLE] all of Lessee's assets
located at the Premises or of lessee's interest in this Lease, where possession
is not restored to lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this subparagraph 13.1 (e) is contrary to any
applicable law, such provision shall be of no force or effect, and not affect
the validity of the remaining provisions.

                  (f) The discovery that any financial statement of Lessee or of
any Guarantor given to Lessor was materially false.

                  (g) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a Guarantor; (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty; (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing; (iv) a Guarantor's refusal to honor the
guaranty; or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, within sixty (60) days following
written notice of any such event, to provide written alternative assurance or
security, which, when coupled with the then existing resources of Lessee, equals
or exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease.

         13.2     REMEDIES. If Lessee is in breach of its affirmative duties or
obligations, within ten (10) days after written notice(or in case of an
emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier's check. In the event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:

                  (a) Terminate Lessee's right to possession of the Promises by
any lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of retelling, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent (1%), Efforts by Lessor to mitigate
damages caused by Lessee's Breach of this Lease shall not waive Lessor's right
to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.

                  (b) Continue the Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor's interests, shall
not constitute a termination of the Lessee's right to possession.

                  (c) Pursue any other remedy now or hereafter available under
the laws or judicial decisions of the state wherein the Premises are located.
The expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.

         13.3     INDUCEMENT RECAPTURE. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee's entering into this
Lease, all of which concessions are hereinafter referred to as "INDUCEMENT
PROVISIONS," shall be deemed conditioned upon Lessee's full and faithful
performance of all of the terms, covenants and conditions of this Lease. Upon
termination of this lease because of a Breach of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and the unamortized portion over the initial term
of this Lease of any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an inducement Provision
shall be immediately due and payable by Lessee to Lessor. The acceptance by
Lessor of Rent or the cure of the Breach which initiated the operation of this
paragraph shall not be deemed a waiver by Lessor of the provisions of this
paragraph unless specifically so stated in writing by Lessor at the time of such
acceptance.

         13.4     LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to ten percent (10%) of each such overdue
amount. The Parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary. Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.

         13.5     INTEREST. Any monetary payment due Lessor hereunder, other
than late charges, not received by Lessor, when due as to scheduled payments
(such as Base Rent) or within thirty (30) days following the date on which it
was due for non-scheduled payment, shall bear interest from the date when due,
as to scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("INTEREST") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when due plus four percent (4%), but shall not exceed the maximum rate
allowed by law. Interest is payable in addition to the potential late charge
provided for in Paragraph 13.4.

         13.6     BREACH BY LESSOR.

                  (a) NOTICE OF BREACH. Lessor shall not be deemed in breach of
this Lease unless Lessor falls within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and any Lender whose name and address shall have been furnished Lessee
in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days are
reasonably required for its performance, then Lessor shall not be in breach if
performance is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.

                  (b) PERFORMANCE BY LESSEE ON BEHALF OF LESSOR. In the event
that neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to the greater of one month's Base
Rent or the Security Deposit, and to pay an excess of such expense under
protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor.

14.      CONDEMNATION. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (collectively "CONDEMNATION"), this Lease shall terminate as to the part
taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than ten percent (10%) of any building portion
of the Premises, or more than twenty-five percent (25%) of the land area portion
of the Premises not occupied by any building, is taken by Condemnation, Lessee
may, at Lessee's option, to be exercised in writing within ten (10) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that Base Rent shall be

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reduced in proportion to (the reduction in utility (ILLEGIBLE) premises caused
by such Condemnation and (ILLEGIBLE) repair any damage caused to the Premises
caused by such condemnation. Condemnation awards (ILLEGIBLE) payments shall be
the property of Lessor,(ILLEGIBLE) award shall be made as compensation for
diminution in value of the leasehold, the value of the part taken, or for
severance damages; provided, however, that Lessee shall be entitled to any
compensation for Lessee's relocation expenses, loss of business goodwill and/or
Trade Fixtures, without regard to whether or not this Lease is terminated
pursuant to the provisions of this Paragraph. All Alterations and Utility
installations made to the Premises by Lessee, for purposes of Condemnation only,
shall be considered the property of the Lessee and Lessee shall be entitled to
any and all compensation which is payable therefor. in the event that this Lease
is not terminated by reason of the Condemnation, Lessor shall repair any damage
to the Premises caused by such Condemnation.

15.      BROKERS' FEE.

         15.3 REPRESENTATIONS AND INDEMNITIES OF BROKER RELATIONSHIPS. Lessee
and Lessor each represent and warrant to the other that it has had no dealings
with any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith. Lessee and
Lessor do each hereby agree to Indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, Including any costs,
expenses, and/or attorneys' fees reasonably incurred with respect thereto.

16.      ESTOPPEL CERTIFICATES.

                  (a) Each Party (AS "RESPONDING PARTY") shall within ten (10)
days after written notice from the other Party (the "REQUESTING PARTY") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "ESTOPPEL CERTIFICATE" form published by the
American Industrial Real Estate Association, plus such additional Information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

                  (b) If the Responding Party shall fall to execute or deliver
the Estoppel Certificate within such ten day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect without modification except as may be represented by the Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting Party, not more than one month's Rent has
been paid in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.

                  (c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee and all Guarantors shall deliver to any
potential lender or purchaser designated by Lessor such financial statements as
may be reasonably required by such lender or purchaser All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

17.      DEFINITION OF LESSOR. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. in the event of
a transfer of Lessor's title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above, and subject to the provisions of Paragraph
20 below, the original Lessor under this Lease, and all subsequent holders of
the Lessor's interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6 above.

18.      Severability. The Invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.

19.      DAYS. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.

20.      LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17
above, the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, rents and insurance proceeds, and to no other assets of
Lessor, for the satisfaction of any liability of Lessor with respect to this
Lease, and shall not seek recourse against the individual partners of Lessor, or
its or their individual partners, directors, officers or shareholders, or any of
their personal assets for such satisfaction.

21.      TIME OF ESSENCE. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.

22.      NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains
all agreements between the Parties with respect to any matter mentioned herein,
and no other prior or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers that it
has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease
and as to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and reasonable
Attorneys' fees), of any Broker with respect to negotiation, execution, delivery
or performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

23.      NOTICES.

         23.1 NOTICE REQUIREMENTS. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by courier)
or may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notices. Either Party may by written
notice to the other specify a different address for notice, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice A copy of all notices' to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.

         23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.

24.      WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of monies or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.

25       RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of

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this Lease for recording purposes. The Party [ILLEGIBLE] recordation shall be
responsible for payment [ILLEGIBLE] applicable thereto.

26.      NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of
the Premises or any part thereof beyond the expiration or termination of this
Lease. In the event that Lessee holds over, then the Base Rent shall be
increased to one hundred fifty percent (150%) of the Base Rent applicable during
the month immediately preceding the expiration or termination. Nothing contained
herein shall be construed as consent by Lessor to any holding over by Lessee.

27.      CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28.      COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both Parties
had prepared it.

29.      BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated In the
county in which the Premises are located.

30.      SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

         30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (In this Lease together
referred to as "LESSOR'S LENDER") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of Its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof.

         30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor; or (iii) be bound by
prepayment of more than one (1) month's rent.

         30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor prior to or after the execution of this Lease, Lessee's subordination of
this Lease shall be subject to receiving a commercially reasonable
non-disturbance agreement (a "NON-DISTURBANCE AGREEMENT") from the Lender which
Non-Disturbance Agreement provides that Lessee's possession of the Premises, and
this Lease, including any options to extend the term hereof, will not be
disturbed so long as Lessee is not in Breach hereof and attorns to the record
owner of the Premises. Further as of the execution of this Lease, Lessor
shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement as of the execution date of this Lease, then Lessee
may, at Lessee's option, directly contact Lessor's lender and attempt to
negotiate for the execution and delivery of a Non-Disturbance Agreement.

         30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31.      ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term,
"PREVAILING PARTY" shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys' fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lesser shall be
entitled to attorneys' fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach.

32.      LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times (and upon prior reasonable notice
of not less than 24 hours) for the purpose of showing the same to prospective
purchasers, lenders, or lessees, and making such alterations, repairs,
improvements or additions to the Premises as Lessor may deem necessary. All such
activities shall be without abatement of rent or liability to Lessee. Lessor may
at any time place on the Premises any ordinary "FOR SALE" signs and Lessor may
during the last six (6) months of the term hereof place on the Premises any
ordinary "FOR LEASE" signs. Lessee may at any time place on or about the
Premises any ordinary "FOR SUBLEASE" sign.

33.      AUCTIONS. Lessee shall not conduct, not permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.

34.      SIGNS. Except for ordinary "FOR SUBLEASE" signs, Lessee shall not place
any sign upon the Premises without Lessor's prior written consent which consent
shall not be unreasonably withheld or delayed. All signs must comply with all
Applicable Requirements.

35.      TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises: provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.

36.      CONSENTS. Except as otherwise provided herein, wherever in this Lease
the consent of a Party is required to an act by or for the other Party, such
consent shall not be unreasonably withheld or delayed. Lessor's actual
reasonable costs and expenses (including, but not limited to, reasonable
architects', attorneys', engineers' and other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including, but not limited to, consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor. Lessor's consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular condition to Lessor's consent shall
not preclude the imposition by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the particular matter
for which consent is being given. In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests the
reasons for such determination, the determining party shall furnish its reasons
in writing and in reasonable detail within ten (10) business days following such
request.

37.      GUARANTOR.

         37.1 EXECUTION. The Guarantor is required to execute the Guaranty of
Lease attached hereto.

38.      QUIET POSSESSION. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee's part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.

39.      OPTIONS.

         39.1 DEFINITION. "Option" shall mean: (a) the right to extend the term
of or renew this Lease; (b) the right of first refusal or first offer to lease
the Premises; (c) the right to purchase or the right to first refusal to
purchase the Premises.

                                                    Initials [ILLEGIBLE]
                                                             -----------

                                  Page 10 of 12

(c)1997 - AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION  REVISED  FORM STN-6-2/97E
<PAGE>

 By: /s/ Robert A. Gray                  By: /s/ John C. Holtz
     --------------------------------        -----------------------------------
 Name Printed: Robert A. Gray            Name Printed: John C. Holtz
 Title:                                  Title: President

 By: /s/ Robert A. Gray                  By: /s/
     --------------------------------        -----------------------------------
 Name Printed: Robert A. Gray            Name Printed:
 Title:                                  Title:
 Address: P.O. Box 1016                  Address: 9660 SW Herman Road
          Sherwood, OR 97140                      Tualatin, OR 97062
Telephone: (503) 692-4675                Telephone: (503) 625-2251
Facsimile:(503) 692-9292                 Facsimile: (503) 625-4989
Federal ID No.-----------------------    Federal ID No.-------------------------

NOTE: These forms are often modified to meet the changing requirements of law
      and industry needs. Always write or call to make sure you are utilizing
      the most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700
      So. Flower Street, Suite 600, Los Angeles, California 90017.
      (213)687-8777. Fax No. (213)687-8616

                                  Page 12 of 12

(c)1997 - AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION  REVISED  FORM STN-6-2/97E
<PAGE>

          g.   Such other terms and conditions not inconsistent with the terms
               hereof as the escrow holder may require.

51.4  TERMINATION OF OPTIONS TO PURCHASE: Lessee's failure to exercise any of
      the options to purchase created in this Section 51 during the specified
      time periods shall render each such option to purchase null and void, but
      shall not void any option to purchase for which the applicable time period
      has not expired.

PARAGRAPH 52: LESSEE IMPROVEMENTS

Upon mutual lease execution, Lessor shall commence with the following
improvements at Lessor's expense:

1.    Design and build an approximate 76,580 sq. ft. manufacturing building
      including office space, built to suit Lessee's desired needs. The details
      of the actual design and specifications shall be mutually approved by
      Lessor and Lessee and attached to this lease as Exhibit B. All work shall
      be completed in a quality workmanship-like fashion and in conformance with
      local building codes.

PARAGRAPH 53: FIRST RIGHT TO PURCHASE

(a)Restriction on Transfer: Lessor shall not at any time during the term of this
Lease (including any extensions thereof) sell, contract to sell, transfer,
exchange, or otherwise dispose of the Premises (or any portion thereof or
interest therein) to anyone other than Lessee, unless Lessor shall have first
communicated to Lessee, by written notice, a written offer to sell the
Premises to Lessee, which offer (hereinafter called the Lessor's Offer) shall
specify, in commercially reasonable detail, the price, terms, and conditions
upon which Lessor is willing to sell the Premises. This right is in addition to,
and does not affect the Option. Lessee shall retain any and all option rights
granted in Paragraph 51 in the event Lessor sells, transfers, exchanges, or
otherwise disposes of the Premises. The Company shall have the right to purchase
the Premises under this Paragraph 53 at the lower of the current option price,
as provided in Paragraph 51, or the price offered by the other prospective
purchaser.

(b)Sale to Third Party: If Lessee does not accept the Lessor's Offer, Lessor may
sell the Premises to any other party which sale shall be subject to Lessee's
option as provided in Paragraph 51, and Lessee's right to renew or extend this
Lease, provided that such a sale must be consummated (a) within 180 days
following the earlier of the expiration of the acceptance period for the
Lessor's Offer or the date of any written rejection of Lessor's Offer by Lessee,
and (b) for and upon the same price, terms, and conditions as those specified in
the Lessor's Offer.

PARAGRAPH 54: OPTION TO EXTEND LEASE

While this Lease is in full force and effect, provided Lessee is not and has not
been in default of any of the terms, covenants and conditions thereof, Lessor
grants to Lessee two (2) option(s) to extend the term of the Lease for a period
of ten (10) years, commencing upon the expiration of the immediately preceding
term, exercisable by giving Lessor notice in writing not later than twelve (12)
months prior to the expiration of the immediately preceding lease term. Such
extension shall be on the same terms, covenants and conditions as provided for
in the Lease except that the Monthly Base Rent during the extended term shall be
at the fair market rental then in effect for lease extensions at equivalent
properties, of equivalent size, in equivalent areas and excluding any
concessions including tenant improvements and free rent. However, in no event
shall the Monthly Base Rent in the extended term be below the Monthly Base Rent
in the final month of the immediately preceding term of the Lease. In the event
the demised Premises is sublet, the Lease is assigned or the Lease is extended,
this renewal option will be null and void and of no further effect.

---------------                                                   --------------
Initial                                                           Initial
<PAGE>

PARAGRAPH 55: PERSONAL GUARANTY

The obligations of Lessee under this Lease are to be guaranteed by John C.
Holtz. If Lessee is not in default of its obligation to pay either Base Rent or
Real Property Taxes pursuant to the terms of this Lease, the Guaranty of Lease
shall be terminated after the first sixty (60) months of the original lease
term.

/s/ [ILLEGIBLE]                                         /s/ [ILLEGIBLE]
---------------------                                   ---------------------
Initial                                                 Initial

<PAGE>

                                     EXHIBIT

                                  [FLOOR PLAN]

<PAGE>

                                   EXHIBIT B

This Exhibit B shall be replaced by final working drawings and specifications
for the improvements to be constructed.

This lease shall not become effective until the referenced Exhibit B outlining
final working drawings and specifications have been approved by Lessor and
Lessee.

<PAGE>

                                GUARANTY OF LEASE

         THIS Guaranty of Lease ("Agreement") is made this 26th day of July,
2001 by JOHN C. HOLTZ ("Guarantor"), to ROBERT A. GRAY ("Lessor").

                                    RECITALS

         A.       Robert A. Gray and Poly Concepts, Inc. ("PCI") are about to
execute a Standard Industrial/Commercial Lease--Net (the "Lease") dated July
26, 2001 concerning the Premises located at 9660 S.W. Herman Road, Tualatin,
Oregon, 97062. Lessor will construct a building designed specifically for PCI.

         B.       John C. Holtz, as President of PCI, has a financial interest
in the Lease.

         C.       Lessor will not execute the Lease unless Guarantor executes
this Agreement.

         NOW, THEREFORE, based upon the foregoing Recitals, and in consideration
of Lessor's execution of the Lease, and as a material inducement to Lessor to
execute the Lease:

         Guarantor hereby unconditionally guarantees the prompt payment by PCI
of the Base Rent (as set forth in paragraph 1.5 of the Lease) and the Real
Property Taxes (as set forth in paragraph 10.2 (a) of the Lease) for the first
60 months of the original term of the Lease; provided that this Guaranty shall
not terminate after 60 months, and shall continue until any uncured default by
PCI of its obligation to pay Base Rent and/or Real Property Taxes has been
cured.

         It is specifically, agreed that the terms of the Lease may be modified
by written agreement between PCI and Lessor without consideration or notice to
Guarantor (so long as Guarantor is, at the time of any such modification, a
director or officer of PCI or the owner of not less than thirty percent (30%) of
the outstanding common stock PCI) and that this Guaranty shall guaranty the
payment of the Base Rent and Real Property Taxes under the Lease as modified.

         This Guaranty shall not be released, modified or altered by the failure
or delay on the part of Lessor to enforce any of the rights or remedies of the
Lessor under the Lease, whether pursuant to the terms thereof or at law or in
equity.

         So long as Guarantor is a director or office of PCI or owns not less
than thirty percent (30%) of the outstanding common stock of PCI, no notice of
default by PCI of its obligation to pay either Base Rent or Real Property Taxes
need be given to Guarantor, it being specifically agreed that the guarantee of
the undersigned is a continuing guarantee under which Lessor may proceed
directly against PCI, and/or against Guarantor following any default by PCI of
its obligation to pay either Base Rent or Real Property Taxes.

         If at any time Guarantor is neither a director nor an officer of PCI
and owns less than thirty percent (30%) of the outstanding stock of PCI, any
requirement to give Guarantor notice that would otherwise become effective under
this Agreement shall not take effect until Guarantor gives Lessor written notice
that such circumstances exist.

         Lessor shall have the right to proceed against Guarantor following any
breach by PCI of its obligation to pay either Base Rent or Real Property Taxes,
without first proceeding against PCI, and without previous demand upon PCI or
Guarantor.

         Guarantor waives (a) notice of acceptance of this Guaranty, (b) demand
of payment, presentation and protest, (c) any right to require Lessor to proceed
against PCI or any other guarantor or any other person or entity liable to
Lessor for Base Rent, or Real Property Taxes, (d) any right to require Lessor to
apply to any default any security deposit or other security it may hold under
the Lease, (f) any right to require Lessor to proceed under any other remedy
Lessor may have before proceeding against Guarantor, and (g) any right of
subrogation.

1

<PAGE>

         Guarantor subrogates all existing or future indebtedness of Lessee to
Guarantor to the obligations to pay Base Rent and Real Property Taxes owed to
Lessor under the Lease and this Guaranty.

         Guarantor agrees that (a) if he becomes married, recourse may be had
against his separate property for all of the obligations he has guaranteed by
this Agreement, and (b) unless his spouse agrees in writing to be bound as a
guarantor under this Agreement, Guarantor shall not transfer to his spouse, or
permit to be transferred, any property other than residence, household
furnishings and personal effects, that Guarantor owns at the time of his
marriage.

         The term "Lessor" refers to and means the Lessor named in the Lease and
also Lessor's successors and assigns. The term "Lessee" refers to and means the
Lessee named in the Lease and also Lessee's successors and assigns.

         In the event any action is brought to enforce this Agreement, the
unsuccessful party in such action shall pay to the prevailing party a reasonable
attorneys' fee, which shall be fixed by the court.

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

Executed at:
14960 S.W. Tualatin-Sherwood Road
Sherwood, Oregon 07140

By  /s/ JOHN C. HOLTZ
    -----------------------------
    JOHN C. HOLTZ, Guarantor

2

<PAGE>

      POLY CONCEPTS, INC.                         BANK OF THE WEST
14960 SW TUALATIN SHERWOOD RD                        90-78-1211
          SUITE 103
      SHERWOOD, OR 97140
        (503) 625-2251

PAY Seventy Thousand & 00/100 Dollars
TO THE                                      DATE                   AMOUNT
ORDER OF                                 07/26/2001             US$70,000.00

         BANK OF THE WEST - ACCT # 159850585
         Tualatin Branch
         TUALATIN  OR 97062

                                        CHECKS OVER $5000 REQUIRE TWO SIGNATURES

                                        /s/ [ILLEGIBLE]
                                        ----------------------------------------

                                        /s/ [ILLEGIBLE]
                                        ----------------------------------------

BANK OF THE WEST                   VENDOR # 000675               CHECK NO 23653

POLY CONCEPTS, INC.

<TABLE>
<CAPTION>
INVOICE NUMBER        INVOICE DATE     INVOICE BALANCE      DISCOUNTS          TOTAL APPLIED
<S>                   <C>              <C>                  <C>                <C>
  7/26/01              07/26/2001         70,000.00           0.00               70,000.00

                      ----------------------------------------------------------------------
         Totals                           70,000.00           0.00               70,000.00
</TABLE>

[POLY CONCEPTS, INC. LOGO]

                                                           CHECK DATE 07/26/2001

<PAGE>

                     BUSINESS / NON-PERSONAL SIGNATURE CARD

[ILLEGIBLE] account is governed by Federal and State Laws and the Bank's present
and future [ILLEGIBLE] and practices. By signing below, the depositor(s)
acknowledge(s) receipt of and [ILLEGIBLE] to the terms, conditions, rates and
charges established by the Bank for the type of [ILLEGIBLE] being opened, as
disclosed in the Bank's Deposit Account Disclosures. These [ILLEGIBLE] may be
changed by the Bank at any time and from time to time, upon advance notice to
depositor, if such is required by law.

By signing below, depositor(s) agree to:

-    Open one or more deposit accounts. All accounts have the same ownership and
     signers as shown on this card.

-    Authorize the Bank to verify any information provided on this card with any
     governmental or credit agency.

For [ ] Real Estate [ ] Attorney [ ] Insurance [ ] Travel Services Accounts:
This account is established by the fiduciary(ies) who have signed below for the
benefit of his/her/their clients, as required by the laws and regulations
relating to the aforementioned profession. It is understood that the Bank, in
opening this type of account, is not responsible for determining whether any
transactions made by those authorized are done so in accordance with
his/her/their fiduciary duties.

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

   Account Name and Address

POLY CONCEPTS INC                               Bus Phone: 503-625-2251
14960 SW TUALATIN SHERWOOD                      Bus Tin: 931160022
SHERWOOD, OR 97140-8552                         Type of Bus: Manufacturer

Ownership: Corporation - Corporation Only

Authorized Signatures:

/s/ John C Holtz                          /s/ Robert Gray
-----------------------------             ---------------------------
JOHN C HOLTZ                              Robert Gray

[ILLEGIBLE] License/ID# 5691902 OR        Drivers License/ID# 586 544

[ILLEGIBLE] Security #: ###-##-####       Social Security #: ###-##-####

     Chex Systems                               Chex Systems
---------------------------------------  ---------------------------------------
Code/Date/Apprvd By Code/Date/Apprvd By  Code/Date/Apprvd By Code/Date/Apprvd BY
---------------------------------------  ---------------------------------------
[ILLEGIBLE]

Drive by Date(s)/By:
                     ----------------------------------------------------------

Card Recd Date:           Card Replaced Date:         Effective Date:
               -----------                   ---------               ----------

<TABLE>
<CAPTION>
  ACCOUNT         ACCT      OPENING        DATE       OPENED   APPRVD.     DATE CLOSED/
   NUMBER         TYPE      DEPOSIT       OPENED        BY       BY          REASON
---------------------------------------------------------------------------------------
<S>               <C>      <C>          <C>           <C>      <C>         <C>
 159-850585        031     $70,000.00   07/26/2001
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
</TABLE>
<PAGE>

TAX CERTIFICATION: By signing below, I authorize the following Taxpayer
identification Number (TIN) to be used for Tax reporting purposes:

[ILLEGIBLE] identification Number: 931160022 [ILLEGIBLE] of perjury, I certify
that:

1)    [ILLEGIBLE] shown on this form it my correct taxpayer identification
      number, and

2)    I am not subject to backup withholding either because: (a) I am exempt
      from backup withholding, or (b) I have not been notified by the Internal
      Revenue Service that I am subject to backup withholding as a result of a
      failure to report all interest or dividends, or (c) the Internal Revenue
      Service has notified me that I am no longer subject to backup withholding,
      and

3)    I am a U.S. person (Including a U.S. resident alien).

Certification instructions: You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
you have failed to report all Interest and dividends on your tax return.

POLY CONCEPTS INC                    [ILLEGIBLE]               7/26/01
----------------------------   ------------------------        -------
NAME OF U.S. PERSON (PRINT)    SIGNATURE OF U.S. PERSON          DATE

[ ]   NON-RESIDENT ALIEN: Signed Certification(s) of Foreign Status on file.
      Form(s) W-8BEN received: ________________________
                                      (Date)

       CORPORATE/LODGE/ASSOCIATION RESOLUTION TO OPEN BANK ACCOUNT(S) WITH
       THE PRESIDENT OR SECRETARY HAVING THE AUTHORITY TO OPEN ADDITIONAL
                BANK ACCOUNT(S) WITH THE SAME AUTHORIZED SIGNERS

Resolved That The President (title) of this organization is authorized to open
or maintain the account(s) with Bank of the West as reflected in the Bank's
signature card and pursuant to the terms and conditions of the signature card
and Deposit Account Disclosure.

Further Resolved That: The persons listed as signers on the signature card are
authorized to endorse, on behalf of this organization, any checks or other items
payable to the organization or its order, to deposit such checks and other items
to the account(s) with or without such endorsement: to negotiate any of such
checks or other items for cash without depositing them into the account(s) if
approved by the Bank and to direct withdrawals from the account(s)by check drawn
in the account(s) or otherwise, Including withdrawals to anyone who is an
authorized signer.

Further Resolved That: This organization agrees that either the President or
Secretary of this organization is authorized open one or more additional Bank
account(s) at a future date, and In such event the Bank may add additional bank
account(s) to this same signature card, provided that the authorized signer on
the additional bank account(s) are the same persons listed as authorized signers
on this signature card. All of the resolutions herein shall apply with equal
[ILLEGIBLE] and effect to such additional bank account(s).

Further Resolved That: This organization hereby ratifies and confirms the acts
of Its officers, agents and/or employees heretofore opening the account(s) with
the Bank together with any acts performed In relation thereto.

certify that I am the secretary of Poly Concepts [ILLEGIBLE] corporation
[ILLEGIBLE] unincorporated association: the [ILLEGIBLE] a copy of resolutions
adopted by the Board of Directors of said organization on [ILLEGIBLE] is the
Corporate Secretary (title) said organizations, the signature card signed on
[ILLEGIBLE] by said officer of the organization is a signature card contemplated
by the foregoing resolutions: [ILLEGIBLE] of the signatures appearing for
authorized signers on a signature card referenced by said resolutions are those
of the persons authorized to withdraw funds in accordance [ILLEGIBLE] said
resolutions until such authority is revoked by giving written notice to the Bank
signed by authorized officers of is [ILLEGIBLE] and these resolutions are still
in force and [ILLEGIBLE] .

                                                  [ILLEGIBLE]
                                          -----------------------------
July 26 2001                                 Signature of Secretary

[ILLEGIBLE] signatures for unincorporated association:

[ILLEGIBLE] being the former [ILLEGIBLE] on the account contemplated above,
[ILLEGIBLE] the foregoing.

-------------------          ---------------------           -------------------
<PAGE>

                            [BANKT OF THE WEST LOGO]

                                                                     JUL 30 2001

July 27, 2001

Pat Dunn
Poly Concepts Inc.
14960 SW Tualatin-Sherwood Rd. #103
Sherwood, OR 97140

RE: Certificate of Deposit

Dear Pat:

Please find enclosed a new Certificate of Deposit receipt. This Certificate
replaces the CD number 159850585. Yesterday I incurred an error when attempting
to put the CD on our computer system. As a result I had to assign the $70,000.00
CD a new number, 159850643.

I apologize for any inconvenience this may have caused. If you have any
questions, please call me at (503) 691-1699.

Thank you.

Sincerely,

/s/ Angela Fanucchi
Angela Fanucchi
Financial Services Consultant

Enc.

<PAGE>

[BANK OF THE WEST LOGO]

                                                  CERTIFICATE OF DEPOSIT RECEIPT

Branch Name:     Tualatin            Date of Deposit;                 07/26/2001

Account Number:  159-850643          Amount of Deposit:               $70,000.00

Today's Date:    07/26/2001          Maturity Date:                   03/26/2002

Tax ID Number:   ###-##-####         Initial Interest Rate:           3.45

Branch Approval: Angela Fanucchi     Initial Annual Percentage Yield: 3.51

Customer Name POLY CONCEPTS INC      Interest Payment Method:         Redeposit
and Address 14960 SW TUALATIN
            SHERWOOD 103 SHERWOOD,   Pay Interest to Account #:       000-000000
            OR 97140-8552
                                     Interest Payment Frequency:      1 Month(s)

Phone                                Term: 8 Months

Deposit receipt not needed for       Renewal: Automatically Renew
redemption.

Thank you for opening a Certificate of Deposit with Bank of the West. Your
account has been opened for the amount and terms shown above. Any questions
regarding your Certificate of Deposit can be answered by your branch or by
calling the Bank's Telephone Banking Center (800-488-BANK or 408-947-5030).

              INFORMATION REGARDING CERTIFICATE OF DEPOSIT ACCOUNTS

I Minimum Opening Balance $ 25,000.00

Minimum balance required to earn APY $ 25,000.00

ADDITIONAL DEPOSITS - If you wish to add funds to your Certificate, you may do
so during the 10 calendar day grace period following the account's maturity
date. For 7-31 days Certificates, you may add funds during the 1 calendar day
grace period following the maturity date. Interest on the additional funds both
cash end noncash begins to accrue on the business day you deposit it and at the
same rate in effect for the renewed Certificate. The additional funds will
mature at the same time as the renewed Certificate, the minimum amount for an
additional deposit is $100.00.

WITHDRAWALS - Interest which has been reinvested may be withdrawn at any time.
If the account term and interest rate have not changed since the renewal.
Additional withdrawals without penalty are permitted, during the 10 calendar day
grace period following maturity (1 calendar day grace period for 7-31 days
Certificates) for automatically renewable Certificates, or upon the death or
mental incapacity of the depositor. Accounts closed during the grace period will
forfeit any interest accrued during the grace period. Withdrawals at any other
time may be permitted at the bank's discretion and are subject to early
withdrawal penalties.

INTEREST - Interest is accrued on the daily balance. The annual percentage yield
assumes that interest earned is reinvested in the account monthly and all funds
remain on deposit for one year from the date of deposit, and the Interest rate
does not change. Interest withdrawn during the term of the account will reduce
the annual percentage yield earned. TERMS OF 32 DAYS OR LONGER - You may choose
the frequency of interest payments. Interest can be paid as frequently as
monthly, but must be paid at least once a year, Interest may be reinvested into
the account, credited to another Bank of the West checking or savings account,
or paid by check. TERMS OF 7-31 DAYS. You will receive interest at maturity
only. Interest may be reinvested into the Certificate of Deposit, or as a
deposit to a Bank of the West checking or savings account.

MATURITY - Automatically renewable Certificates of Deposit renew automatically
at the rate in effect on the maturity date, for the same term and under the same
conditions last disclosed [unless we tell you otherwise). We will mail a
maturity notice approximately 15 days prior to the maturity date (except for
7-14 days terms). The notice will Include a phone number you can call on the
maturity date lor shortly after) to find out the interest rate and annual
percentage yield on your renewed Certificate of Deposit. A non-renewable
Certificate of Deposit will not earn interest beyond the maturity date, and will
not renew automatically at maturity.

EARLY WITHDRAWAL PENALTIES- All penalties are calculated on a simple interest
basis. The penalty assessed may reduce the balance remaining on your account
after the withdrawal. The penalty Is calculated at the interest rate in effect
at the time the Certificate of Deposit was opened or last renewed. The penalties
on the amount withdrawn are: 7-31 DAYS TERM - 7 days simple interest lost, 32
DAYS - 1 YEAR TERM - 30 days simple interest lost, or OVER 1 YEAR TERM - 90 days
simple Interest lost.

CHANGES IN TERMS & CONDITIONS - When you open a deposit account with us, you
agree to abide by the terms & conditions detailed on this page and in the
Account Agreement you sign. We can change these terms 81 conditions at any time.
We'll notify you in advance of any changes that affect your rights and
obligations to the extent required by law. You indicate that you accept a change
we make by continuing your account relationship with us or, if the change
affects your certificate of deposit, by allowing the certificate to renew after
the change becomes effective.

DISCLOSURE OF YOUR ACCOUNT - Account Information may be disclosed to third
parties when it is required for governmental reporting for legal processes, or
to persons or companies who the Bank believes would legitimately use such
Information. Certain transactions are also automatically reportable to the
government.

OTHER INFORMATION REGARDING DEPOSIT ACCOUNTS - Additional Information pertaining
to the rules & regulations governing deposit accounts can be provided if you
request a current copy of the Bank of the West Deposit Account Disclosure which
Is available by phone or in person at any of the Bank's branch offices. You may
also call our Telephone Banking Center and request that we send you a Deposit
Account Disclosure.

                    NON-NEGOTIABLE                 NOT TRANSFERABLE

                                                                     MEMBER FDIC

<PAGE>

                                                             TRAMMELLCROWCOMPANY

                        AGENCY DISCLOSURE ACKNOWLEDGMENT

(A) INITIAL ACKNOWLEDGMENT OF SELLER
By my signature below, I acknowledge:

(1) I have received and read and I understand the material set out on the back
of this disclosure form.

(2) I understand that a seller's agent, including a listing real estate
licensee, is the agent of the seller exclusively, unless the seller and the
buyer otherwise agree.

(3) I understand that, unless otherwise disclosed in writing, all real estate
licensees including real estate licensees participating in a multiple listing
service are agents of the seller exclusively.

(4) I understand that a buyer's agent is the agent of the buyer exclusively.

(5) I understand that John_E. Fettig (name of licensee) of Trammell Crow Company
(name of real estate organization), the agent presenting this form to me, is
(check applicable relationship):

X my agent as a seller's agent.

X an agent as buyer's agent.

(B) INITIAL ACKNOWLEDGMENT OF PROSPECTIVE BUYER
By my signature below, I acknowledge:

(1) I have received and read and I understand the material set out on the back
of this disclosure form.

(2) I understand that a seller's agent, including a listing agent, is the agent
of the seller exclusively, unless the [ILLEGIBLE] and the buyer otherwise agree.

[ILLEGIBLE] I understand that, unless otherwise disclosed in writing, all real
estate licensees including real estate [ILLEGIBLE] participating in a multiple
listing service are agents of the seller exclusively.

(4) I understand that I may engage my own agent to be my buyer's agent.

(5) I understand that John E. Fettig (name of licensee) of Trammell Crow Company
(name of real estate organization), the agent presenting this form to me, is
(check applicable relationship):

X an agent of the seller.

X my agent as buyer's agent.

(C) SIGNATURES

- Buyer/Seller: [ILLEGIBLE]                         Dated: 7/24/01
                ---------------------------
                Poly Concepts, Inc.

- Buyer/Seller: /s/ Robert A. Gray                  Dated: July 25, 01
                ---------------------------
                Robert A. Gray

Agent to sign and date:

July 24, 2001 Real Estate Licensee

Trammell Crow Company Real Estate Organization
<PAGE>

                                                      [TRAMMELLCROWCOMPANY LOGO]

                                IN-COMPANY SALES

(1) A licensee, acting either alone or through one or more licensees within the
same real estate organization, may give limited representation to both the
seller and the buyer in a real estate transaction.

(2) In an in-company agreement, the agent acting as an in-company agent has the
following affirmative obligations to both the seller and the buyer:

(a) Loyalty, obedience, disclosure, confidentiality and accounting in dealings
with both the seller and the buyer. HOWEVER, IN REPRESENTING BOTH THE SELLER AND
THE BUYER, THE LICENSEE SHALL NOT, WITHOUT THE EXPRESS WRITTEN PERMISSION OF THE
RESPECTIVE PERSON, DISCLOSE TO THE OTHER PERSON:

(i) That the seller will accept a price lower than or terms less favorable than
the listing price or terms; or

(ii) That the buyer will pay a price higher than or terms more favorable than
the offering price and terms; or

(iii) Other than price and terms, confidential information specifically
designated as such in writing by the buyer or seller as set out on the front of
this disclosure form or attached to it.

(b) Reasonable care and diligence.

(c) Honest dealing.

                          BUYER'S LIMITED AUTHORIZATION
                           REGARDING IN-COMPANY SALES

By my initials below, I acknowledge:

(1) A situation may arise wherein the licensee I have hired to be my agent may
also be the agent for the seller of specific [ILLEGIBLE] property I wish to
acquire.

[ILLEGIBLE] If this situation arises, I authorize my agent to act as an
in-company agent for that specific real property after making a [ILLEGIBLE]
diligent effort to contact me in order to obtain my consent.

(3) I have read and understand the "In-Company Sales" section on the reverse
side of this form.

(4) The following information, which has previously been disclosed by the buyer
to the agent, is confidential and is not to be disclosed to the seller.

________________________________________________________________________________

________________________________________________________________________________

UNDERSTOOD AND AGREED
     (Initials)

                         SELLER'S LIMITED AUTHORIZATION
                           REGARDING IN-COMPANY SALES

By my initials below, I acknowledge:

(1) A situation may arise wherein the licensee I have hired to be my agent may
also be the agent for the buyer who wishes to acquire my real property.

(2) If this situation arises, I authorize my agent to act as an in-company agent
for that specific real property after making a reasonably diligent effort to
contact me in order to obtain my consent.

(3) I have read and understand the "In-Company Sales" section on the reverse
side of this form.

(4) The following information, which has previously been disclosed by the seller
to the agent, is confidential and is not to be disclosed to the buyer.

________________________________________________________________________________

________________________________________________________________________________

UNDERSTOOD AND AGREED
     (Initials)

<PAGE>

                   DISCLOSURE REGARDING AGENCY RELATIONSHIP(S)
              (As required by Oregon Revised Statutes Chapter 696)

An agency relationship arises whenever two persons agree that one is to act on
behalf of the other and in accordance with the other's directions. The creation
of an agency relationship imposes certain legal duties on the agent.

Before a seller or a buyer enters into a discussion with a real estate licensee
regarding a real property transaction, the seller and the buyer should each
understand what type of agency relationship or representation the buyer and the
seller may have with each agent in that transaction.

                                 SELLER'S AGENT

An agent who acts under a listing agreement with the seller acts as the agent
for the seller only. A seller's agent has affirmative obligations (under ORS
696.805):

(1) To the seller: The fiduciary duties of loyalty, obedience, disclosure,
confidentiality, reasonable care and diligence, and accounting in dealings with
the seller.

(2) To the buyer and to the seller: Honest dealing and disclosure.

                                  BUYER'S AGENT

A real estate licensee other than the seller's agent can agree with the buyer to
act as the agent for the buyer only. In this situation, the buyer's agent is not
representing the seller, even if the buyer's agent is receiving compensation for
services rendered, either in full or in part, from the seller or through the
seller's agent. A buyer's agent has the affirmative obligations (under ORS
696.810):

(1) To the buyer: The fiduciary duties of loyalty, obedience, disclosure,
confidentiality, reasonable care and diligence, and accounting in dealings with
the buyer.

(2) To the buyer and to the seller: Honest dealing and disclosure.

                               SELLERS AND BUYERS

None of the foregoing duties of the agent in a real estate transaction relieves
a seller or a buyer from the responsibility to protect the seller's or buyer's
own interests respectively. The seller and the buyer should carefully read all
agreements to assure that the agreements adequately express the seller's or the
buyer's understanding of the transaction.

                        THE ACTS OF THE AGENTS MAY CAUSE
                       LEGAL LIABILITY TO THE PRINCIPALS.
                            A REAL ESTATE LICENSEE IS
                             QUALIFIED TO ADVISE ON
                                  REAL ESTATE;
                  IF YOU DESIRE LEGAL ADVICE, CONSULT A LAWYER.
<PAGE>

                             TRAMMELL CROW COMPANY

                                                                RE: AMENDMENT #1

September 20, 2002

Randy Green
Vice President, Global Facilities & Safety
Celerity Group, Inc.
400 Parker Drive, Suite 1100
Austin, TX 78728

RE:     9660 SW Herman Road, Tualatin, Oregon

Dear Randy:

Enclosed for your file is a fully executed First Amendment to Standard
Industrial Lease dated September 19, 2002 for the above-referenced property in
Tualatin, Oregon.

We will continue to work with Mariann and ensure that the punchlist process
takes place in a timely fashion and that John Holtz is ultimately satisfied with
the condition of the property as delivered from Landlord.

Thank you for working through these last few issues together. I am confident
that the Celerity Group will be very satisfied and productive in their new
facility.

Should you have any questions or need additional information anytime please give
me a call.

Sincerely,

/s/ John E. Fettig

John E. Fettig
Vice President

JEF/kas

cc: John Holtz
    Mariann Deering
    John Dennett

<PAGE>

                                 ROBERT A. GRAY
                         C/O ROBERT GRAY PARTNERS, INC.
                                  P.O. BOX 1000
                               SHERWOOD, OR 97140

                                  May 30, 2003

BY CERTIFIED MAIL - RETURN RECEIPT REQUESTED

Celerity Group, Inc.
9660 SW Herman Road
Tualatin, OR 97062

Attn:   John C Holtz, Vice President and General Manager

         Re:     Lease of 9660 SW Herman Road, Tualatin, Oregon

Dear Mr. Holtz:

         I write you in connection with the Standard Industrial/Commercial
Tenant Lease - Net dated July 17, 2001, between me and Poly Concepts, Inc., as
amended by the First Amendment to Standard Industrial Lease dated September 19,
2002, between me and Celerity Group, Inc., (collectively the "Lease").

         Please note that I have transferred to Herman Road Investors, LLC, an
Oregon limited liability company of which my wife and I are majority owners, (1)
the real property that is the subject of the Lease (commonly known as 9660 SW
Herman Road, Tualatin, Oregon), and (2) my interest as Lessor in the Lease. All
future payments made by Celerity Group, Inc. under the Lease should be made
payable to Herman Road Investors, LLC. Deering Management Group, Inc. will
continue to handle management of the real property as before.

         Please contact me if you have any question.

                                        Sincerely,

                                        /s/ Robert A. Gray
                                        ----------------------------------
                                        Robert A. Gray

cc:    Deering Management Group, Inc.
       I. Kenneth Davis, Esq.

<PAGE>

                                                          CELERITY LFN: K100-117

                  FIRST AMENDMENT TO STANDARD INDUSTRIAL LEASE

         This First Amendment to Standard Industrial Lease ("Amendment") is made
and entered into this 19th day of September, 2002 by and between ROBERT A. GRAY
("Lessor") and CELERITY GROUP, INC. a California corporation as successor in
interest to Poly Concepts, Inc.("Lessee").

                                    Recitals

         A.       On July 17, 2001, Lessor and Lessee entered into a Standard
Industrial/Commercial Single-Tenant Lease - Net, a copy of which is attached as
Exhibit A (the "Lease").

         B.       On May 6, 2002, Poly Concepts, Inc. merged into Kinetic Fluid
Systems, Inc., a California corporation. On August 26, 2002, the legal name of
Kinetic Fluid Systems, Inc. was changed to Celerity Group, Inc.

         C.       Lessor and Lessee (collectively "the Parties") desire to
modify certain provisions of the Lease as set forth below:

                                    Agreement

         1.       The Parties acknowledge and agree to the assignment of the
Lease to Celerity Group, Inc. as Lessee pursuant to all the terms of the Lease
governing such assignment. Lessor hereby consents to the assignment.

         2.       The Commencement Date specified in paragraph 1.3 of the Lease
shall be September 3, 2002.

         3.       Base Rent specified in paragraph 1.5 of the Lease commences on
the Commencement Date.

         4.       Base Rent Upon Execution specified in paragraph 1.6 of the
Lease shall be increased to $37,124.70. The difference between the Base Rent
paid upon execution of the Lease and the amount specified in this paragraph 4 of
this Amendment shall be paid upon execution of this Amendment.

         5.       The Rent Schedule in paragraph 50 of the Lease shall be
deleted and replaced with the following:

<TABLE>
<CAPTION>
Years                      $ Per Month
-----                      -----------
<S>                        <C>
 1-5                       $37,124.70 per month, triple net consisting of
                           $35,000 plus $2,124.70 for reimbursement of "above
                           standard improvement costs" of $100,000 amortized at
                           10% over the initial 5-year lease term.

6-10                       $40,000.00 per month, triple net.
</TABLE>

1 - FIRST AMENDMENT TO STANDARD INDUSTRIAL LEASE

<PAGE>

         6.       After each purchase price specified in paragraph 51 of the
Lease, the following language shall be inserted: "together with a cash payment
consisting of all unamortized costs for above standard improvements calculated
as of the closing date."

         7.       (a) The following language shall be inserted as paragraph
13.2(d) of the Lease:

                  "Declare all unamortized costs for above standard improvements
                  calculated as of the date of the breach, immediately due and
                  payable. In such event, Lessor shall be entitled to recover
                  from Lessee the full amount of such unamortized costs."

                  (b) The following language shall be a new subsection inserted
                  as paragraph 6.2(h)

                  "Airborne Contaminants: In the event Lessee provides Lessor
                  written notification including air quality test results
                  establishing risks to life, safety or health resulting from
                  any airborne contaminants or airborne Hazardous Substances
                  released by adjacent property owners, Lessor agrees, at its
                  sole expense, to take prompt and reasonable action to prevent
                  future harmful emissions by the responsible party(s). For
                  purposes of this subsection "reasonable action" includes but
                  is not limited to notifying applicable federal and state
                  environmental agencies about the release(s) and if mutually
                  agreed by Lessor and Lessee, filing an injunction to prevent
                  the responsible party(s) from subsequent releases of the
                  airborne contaminants or airborne Hazardous Substances.
                  Additionally, upon Lessee's prior written notification, Lessor
                  shall reimburse Lessee for one half of any and all costs
                  Lessee actually incurs that are directly related to reasonable
                  annual (calendar year) air quality testing in and around the
                  Premises. The first air quality testing shall take place no
                  later than December 31, 2002 and shall be coordinated and paid
                  for by the Lessor and Lessee shall reimburse Lessor for one
                  half of the direct testing costs."

         8.       Except as specifically modified herein, all other terms,
conditions and covenants of the Lease, including without limitation the Guaranty
provided in paragraph 55, shall remain in full force and effect.

         9.       This Amendment shall become effective on the date first set
forth above upon complete execution by Lessor and Lessee.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed effective on the date first set forth above.

LESSOR                                   LESSEE

                                         Celerity Group, Inc.

/s/ Robert A. Gray                       By: /s/ Randy Green
---------------------------                  -------------------------
Robert A. Gray                               Randy Green

                                         Its: Vice President Global Facilities

2 - FIRST AMENDMENT TO STANDARD INDUSTRIAL LEASE

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