Document:

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                                                                 EXHIBIT 10.17

                                LEASE AGREEMENT

                                    Between

                                BC12 99, Ltd.,

                                 as Landlord,

                                      and

                              Active Power, Inc.

                                  as Tenant,

               Covering approximately 126,750 gross square feet
                           of the Building known as

                                   Braker 12

                                  located at

                               2128 Braker Lane

                             Austin, Texas, 78758
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STANDARD INDUSTRIAL LEASE AGREEMENT
TRAMMELL CROW COMPANY - (AUS/91)

                                      Approximately 126,750 gross square feet
                                      2128 Braker Lane
                                      Austin, Texas 78758
                                      (Braker 12)

                                LEASE AGREEMENT

THIS LEASE AGREEMENT is made and entered into by and between BC12 99, Ltd., a
Texas limited partnership hereinafter referred to as "Landlord," and Active
Power, Inc., a Delaware corporation hereinafter referred to as "Tenant."

1.  PREMISES AND TERM.  In consideration of the mutual obligations of Landlord
and Tenant set forth herein, Landlord leases to Tenant, and Tenant hereby takes
from Landlord,  approximately 126,750 square feet of space (the "Premises")
shown on Exhibit "A" attached hereto and incorporated herein, located in the
building known as Braker 12, which building has an address of 2128 Braker Lane,
Austin, Travis County, Texas 78750 (the "Building").  The Building is located on
the real property described on Exhibit "A-1" attached hereto and incorporated
herein.  The term of this Lease shall commence on the Commencement Date
hereinafter set forth and shall end on the last day of the month that is forty-
eight (48) months after the Commencement Date (the "Expiration Date").
Notwithstanding anything to the contrary contained herein, on the Commencement
Date, Tenant shall lease only that portion of the Premises containing 85,000
square feet and shown on Exhibit "A-2" attached hereto and incorporated herein
(the "Initial Premises").  Tenant shall lease approximately 20,875 square feet
of the Premises shown on Exhibit "A-3" attached hereto and incorporated herein
(the "First Additional Premises") not later than the date which is the sixth
month anniversary of the Commencement Date  and Tenant shall lease the remaining
approximately 20,875 square feet of the Premises shown on Exhibit "A-4" attached
hereto and incorporated herein (the "Second Additional Premises") not later than
the first annual anniversary of the Commencement Date.  In the event Tenant
elects to lease the First Additional Premises prior to the six month anniversary
of the Commencement Date or Tenant elects to lease the Second Additional
Premises prior to the first annual anniversary of the Commencement Date, the
commencement date for such space shall be the date Tenant actually occupies the
First Additional Premises and/or the Second Additional Premises, as the case may
be, for the conduct of Tenant's business.  Further, notwithstanding anything to
the contrary set forth herein, Tenant shall have no obligations with respect to
or liability for the First Additional Premises or the Second Additional Premises
until the applicable commencement date for such space, except for the obligation
to pay one-half (1/2)  of the Operating Expenses attributable to such space as
provided in Paragraph 2C below.

  A.  Existing Building and Improvements.  The "Commencement Date" shall be May
      ----------------------------------
1, 2001, provided that the Commencement Date shall be delayed to the extent that
Landlord fails to deliver possession of the Initial Premises to Tenant for any
reason, including but not limited to, holding over by prior occupants.  However,
Landlord shall within fifteen (15) days after the execution of this Lease by
Landlord and Tenant, notify the existing tenant in the Premises that such tenant
shall not be permitted to hold over after the expiration of its lease and that
the Premises have been rented to a third party effective as of May 1, 2001.  If
the Commencement Date is delayed, the Expiration Date under the Lease shall be
similarly extended.  Notwithstanding the foregoing, if the Commencement Date
does not occur by July 1, 2001, Tenant shall be entitled to terminate this Lease
by giving Landlord written notice of termination on or before the occurrence of
the Commencement Date.  Landlord shall use its best efforts to deliver the
Initial Premises on May 1, 2001.  Upon Landlord's delivery of the Premises,
Landlord shall, at Landlord's sole cost and expense, re-key the Premises.  In
the event of holding over or retention of any third party tenant, tenants or
occupants of the Premises by the current tenant after April 30, 2001, Landlord
shall take all commercially reasonable steps necessary to evict such tenant as
soon as possible, including without limitation, the employment of legal counsel
to take steps required to evict such third party tenant, tenants or occupants.
Upon Tenant's occupancy of the Premises, Tenant shall be deemed to acknowledge
that subject to Paragraphs 4.B below, (i) it has inspected and accepts the
Premises in its "as is" condition, (ii) the buildings and improvements
comprising the same are suitable for the purpose for which the Premises are
leased, (iii) the Premises are in good and satisfactory condition, and (iv) no
representations as to the repair of the Premises nor promises to alter, remodel
or improve the Premises have been made by Landlord (unless otherwise expressly
set forth in this Lease).

2.  BASE RENT, SECURITY DEPOSIT AND ESCROW DEPOSITS.

  A.  Base Rent. Tenant agrees to pay Landlord base rent ("Base Rent") for the
      ---------
Premises, in advance, without demand, deduction or set off, except as otherwise
provided herein, at the rates set forth below for the following periods:

<TABLE>
<CAPTION>
          ----------------------------------------------------------------------------
               Months      Base Rental Rate PSF/Mo.  Square Feet  Base Monthly Rent
          ----------------------------------------------------------------------------
          <S>              <C>                       <C>          <C>
                1-6                 $0.48              85,000        $40,800.00
          ----------------------------------------------------------------------------
                7-12                $0.48              105,875       $50,820.00
          ----------------------------------------------------------------------------
               13-24                $0.48              126,750       $60,840.00
          ----------------------------------------------------------------------------
               25-48                $0.50              126,750       $63,375.00
          ----------------------------------------------------------------------------
</TABLE>

per month during the Term hereof.  One monthly installment of $40,800.00, shall
be due and payable on the date hereof and shall be applied to the first monthly
installment of Base Rent due hereunder, and the foregoing described monthly
installments shall be due and payable on or before the first day of each
calendar month succeeding the Commencement Date, except that all payments due
hereunder for any fractional calendar month shall be prorated.  In the event
Tenant elects to lease the First Additional Premises or the Second Additional
Premises prior to the sixth month anniversary of the Commencement Date and the
first annual anniversary of the Commencement Date, respectively, the Base Rent
Schedule set forth above shall be adjusted accordingly.

  B.  Security Deposit.  In addition, Tenant agrees to deposit with Landlord on
      ----------------
the date hereof the sum of Seventy Nine Thousand Two Hundred Eighteen and 75/100
Dollars ($79,218.75)  which shall be held by Landlord, without obligation for
interest, as security for the performance of Tenant's obligations under this
Lease (the "Security Deposit"), it being expressly understood and agreed that
the Security Deposit is not an advance rental deposit or a measure of Landlord's
damages in case of Tenant's default.  Upon occurrence of an Event of Default,
Landlord may use all or part of the Security Deposit to pay past due rent or
other payments due Landlord under this Lease or the cost of any other damage,
injury, expense or liability caused by such Event of Default, without prejudice
to any other remedy provided herein or provided by law.  The Security Deposit
shall be deemed the property of Landlord, but any remaining balance of the
Security Deposit shall be returned by Landlord to Tenant when all of Tenant's
obligations under this Lease have been fulfilled.

  C.  Operating Expenses.  Without limiting in any way Tenant's other
      ------------------
obligations under this Lease, Tenant agrees to pay to Landlord its Proportionate
Share (as defined in this Paragraph 2C below) of Operating Expenses (hereinafter
defined) for the Project (hereinafter defined).  Operating Expenses shall mean
(i) Taxes (hereinafter defined) payable by Landlord pursuant to Paragraph 3A
below, and the cost of any tax consultant to assist Landlord in determining the
fair tax valuation of the Building and land  upon which it is located (ii) the
cost of utilities for the common areas of the Project payable by Landlord
pursuant to Paragraph 8 below, (iii) Landlord's cost of maintaining any
insurance or insurance related expense applicable to the Building and Landlord's
personal property used in connection therewith including, but not limited to,
insurance pursuant to Paragraph 9A below, and (iv) Landlord's cost of
maintaining the Project which include but are not limited to  (a) maintenance
and repairs, (b) landscaping, (c) common area utilities, (d) water and sewer,
(e) roof repairs, (f) reasonable and customary management fees, (g) exterior
painting, and (h) parking lot maintenance and repairs. Operating Expenses shall
not include the following expenses: (a) any costs for interest, amortization, or
other payments on loans to Landlord, (b) expenses incurred in leasing or
procuring tenants, (c) legal expenses other than those incurred for the general
benefit of the Building's tenants, (d) allowances, concessions, and other costs
of renovating or otherwise improving space for occupants of the Building or
other buildings in the Project or vacant space in the Building or other
buildings in the Project, (e) rents under ground leases, (f) costs incurred in
selling, syndicating, financing, mortgaging, or hypothecating any of Landlord's
interests in the Building or the Project, (g) expenses for which Landlord is
actually reimbursed by another source (excluding tenant reimbursement for
Operating Expenses) including repair or replacement of any item covered by
warranty as well as insurance proceeds received by Landlord or paid by a tenant
or other third parties, (h) alterations attributable solely to individual
tenants of the Project, (i) the cost of capital improvements, depreciation,
interest, lease commissions, advertising and marketing costs, and principal
payments on mortgage and other non-operating debts of Landlord, (j) depreciation
of the Building or other buildings in the Project, (k) salaries paid to
employees above the Building manager level, commission to brokers, advertising
and promotion costs, and wages, salaries, fees and benefits paid to executive
personnel or officers or partners of Landlord, (l) the cost of tools and
equipment used initially in the construction of the Project, (m) costs incurred
in connection with the original construction of the Project or with any major
changes to same, including, but not limited to, additions or deletions of
corridor extensions, renovations and improvements of the common areas beyond the
costs caused by normal. wear and tear, and upgrades or replacement of major

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Project systems, (n) costs of correcting defects (including latent defects),
including any allowances for same, in the construction of the Project or its
related facilities; (o) expenses for the defense of Landlord's title to the
premises or the Building, (p) the cost of overtime or other expenses of Landlord
in performing work expressly provided in this Lease to be performed by Landlord,
at Landlord's expense and not as part of Operating Expenses, (q) any amounts
expended by Landlord as environmental response costs for removal, enclosure,
encapsulation, clean-up, remediation or other activities regarding Landlord's
compliance with federal, state, municipal or local hazardous waste and
environmental laws, regulations or ordinances, (r) any fines or penalties
incurred as a result of Landlord's violation or failure to comply with any
governmental regulations and rules or any court order, decree or judgment, (s)
costs of initially bringing the Building or Project into compliance with
applicable laws as of the date of this Lease, (t) attorneys fees incurred in
connection with negotiations or disputes with other tenants or occupants of the
Project, (u) any charge for Landlord's income taxes, excess profit taxes, or
franchise taxes, (v) any Operating Expenses representing an amount paid to a
related corporation, entity or person which is in excess of the amount which
would be paid in the absence of such relationship, (w) expenses paid directly by
Tenant for any reason (such as Tenant's electricity use), and (x) all costs for
which Tenant or any other tenant in the Project is being directly or separately
billed other than as a component of Operating Expenses.  Prior to the
Commencement Date and prior to January 1 of each calendar year during the Term,
Landlord shall make a good faith estimate of Operating Expenses for the upcoming
calendar year and Tenant's Proportionate Share of such expenses.  During each
month of the Term of this Lease, on the same day that Base Rent is due
hereunder, Tenant shall deposit in escrow with Landlord an amount equal to one-
twelfth (1/12) of the estimated amount of Tenant's Proportionate Share of the
Operating Expenses.  Tenant authorizes Landlord to use the funds deposited with
Landlord under this Paragraph 2C to pay such Operating Expenses.  The initial
monthly escrow payments are based upon the estimated amounts for the year in
question and shall be increased or decreased annually to reflect the projected
actual amount of all Operating Expenses.  As soon as is practical following the
end of each calendar year during the Term Landlord shall furnish to Tenant a
statement of Landlord's actual Operating Expenses for the previous calendar
year.  If the Tenant's total escrow deposits for any calendar year are less than
Tenant's actual Proportionate Share of the Operating Expenses for such calendar
year, Tenant shall pay the difference to Landlord within thirty (30) days after
receipt of the statement of Actual Operating Expenses.  If the total escrow
deposits of Tenant for any calendar year are more than Tenant's actual
Proportionate Share of the Operating Expenses for such calendar year, Landlord
shall retain such excess and credit it against Tenant's Proportionate Share of
Operating Expenses escrow deposits next maturing after such determination,
except in connection with the last calendar year of the Term, in which case
Landlord shall refund to Tenant any overpayment.  The Premises and the Building
are a part of a project or business park owned, managed or leased by Landlord or
an affiliate of Landlord (the "Project").  Tenant's "Proportionate Share" of the
Project, as used in this Lease, shall mean a fraction, the numerator of which is
the gross rentable area contained in the Premises and the denominator of which
is the gross rentable area contained in the Building, which is 126,750 square
feet.  Notwithstanding that the First Additional Premises and the Second
Additional Premises are not initially part of the Premises, Tenant shall pay,
commencing on the Commencement Date, one-half (1/2) of Tenant's Proportionate
Share of Operating Expenses attributable to such space.

     Tenant at its sole expense, shall have the right no more frequently than
once per calendar year, following thirty (30) days prior written notice to
Landlord, which notice must be given within one hundred eighty (180) days after
Tenant's receipt of Landlord's statement of actual Operating Expenses pursuant
to this Paragraph 2.C, to audit Landlord's books and records relating to
Operating Expenses at Landlord's office during Landlord's normal business hours.
Tenant shall be solely responsible for all costs, expenses and fees incurred for
the audit; provided, that if an audit by Tenant establishes that Landlord has
overstated Tenant's Proportionate Share of Operating Expenses by more than five
percent (5%) in any one calendar year, Landlord shall reimburse Tenant for the
reasonable costs of the audit. Within sixty (60) days after the books and
records are made available to Tenant, Tenant shall have the right to give
Landlord written notice (an "Objection Notice") stating in reasonable detail any
objection to Landlord's statement of Operating Expenses for that year. If Tenant
provides Landlord with a timely Objection Notice, Landlord and Tenant shall work
together in good faith to resolve any issues raised by Tenant's Objection
Notice. The records obtained by Tenant shall be treated as confidential.

3. TAXES

     A.   Real Property Taxes.  Subject to reimbursement under Paragraph 2C
          -------------------
herein, Landlord agrees to pay all taxes, assessments and governmental charges
of any kind and nature (collectively referred to herein as "Taxes") that accrue
against the Premises, the Building and/or the land of which the Premises or the
Building are a part. If at any time during the term of this Lease there shall be
levied, assessed or imposed on Landlord a tax directly on the rents received
therefrom and/or a franchise tax, assessment, levy or charge measured by or
based, in whole or in part, upon such rents from the Premises and/or
improvements of which the Premises are a part, then all such taxes, assessments,
levies or charges, or the part thereof so measured or based shall be deemed to
be included within the term "Taxes" for the purposes hereof.

     B.   Personal Property Taxes.  Tenant shall be liable for all taxes levied
          -----------------------
or assessed against any personal property or fixtures placed in or on the
Premises. If any such taxes are levied or assessed against Landlord or
Landlord's property and (i) Landlord pays the same or (ii) the assessed value of
Landlord's property is increased by inclusion of such personal property and
fixtures and Landlord pays the increased taxes, then Tenant shall pay to
Landlord, within thirty (30) days after receipt of an invoice therefor, together
with documentation substantiating that such taxes were solely attributable to
Tenant's personal property and fixtures, the amount of such taxes.

4. LANDLORD'S REPAIRS AND MAINTENANCE.

     A.   Structural Repairs.  Landlord, at its own cost and expense, shall
          ------------------
maintain the foundation and the structural soundness of the exterior walls of
the Building in good repair, reasonable wear and tear excluded. The term "walls"
as used herein shall not include windows, glass or plate glass, any doors,
special store fronts or office entries, and the term "foundation" as used herein
shall not include loading docks. Landlord shall further, at its sole cost and
expense (subject to inclusion as a component of Operating Expenses to the extent
such costs qualify as an Operating Expenses), repair, replace (as necessary) and
maintain in good working order, condition and repair, the roof, landscaping,
drainage, common area lighting facilities, parking lots and driveways of the
Project, sanitary sewers and water main in the Building, concealed plumbing
serving the Premises, all exterior common areas of the Project, and the exterior
of the Building. With respect to the foregoing areas of repair and maintenance,
Landlord shall maintain the Building in a manner reasonably consistent with
comparable industrial buildings in the North Austin submarket ("Comparable
Buildings"). Notwithstanding any other provision hereof, if the lack of such
maintenance and repair materially impairs Tenant's use of or access to the
Premises, and Landlord fails to make any required repairs within thirty (30)
days after the receipt of Tenant's written notice or, in the event the nature of
Landlord's obligation is such that more than thirty (30) days are required for
its performance and Landlord fails to commence performance with the thirty (30)
day period and thereafter diligently pursue the completion of same using
commercially reasonable efforts, Tenant may, at its option, make such repair or
replacement on Landlord's behalf and Landlord shall reimburse to Tenant, within
thirty (30) days of Tenant's written request therefor, Tenant's reasonable costs
and expenses in connection with the exercise of such right. Tenant shall
immediately give Landlord written notice of defect or need for repairs.

     B.   Delivery of Premises.  Landlord shall deliver the Premises to Tenant
          --------------------
in a "broom clean" condition with all systems in good working order, including
without limitation, all lights and lighting fixtures, plumbing fixtures and
systems, and with all dock doors and levelers in good working order.  Landlord
shall also deliver the Premises with those installations which are currently in
the Premises that are identified by Landlord and Tenant prior to the
Commencement Date.  Upon the request of either party, the other party shall
confirm in writing of such installations agreed to between Landlord and Tenant.
Landlord shall warranty the HVAC systems serving the Premises for a period of
thirty (30) days after the Commencement Date with respect to the Initial
Premises and for a period of thirty (30) days after the applicable commencement
date therefor, for the First Additional Premises and the Second Additional
Premises.  On or before the Commencement Date, Landlord shall provide Tenant
with a copy of the existing tenant's exit inspection of the Premises, including
an inspection report by a licensed engineer, evidencing that the HVAC and
electrical systems serving the Premises are in good working order.  On or before
the Commencement Date, Landlord shall also provide Tenant with a copy of
Landlord's most current roof inspecting evidencing that the roof of the Building
is in good condition and repair.  If the roof inspection reflects any condition
needing repair, Landlord shall provide Tenant with evidence that such repair was
performed, or Landlord shall promptly make the necessary repair.

     C.   Repainting of Building Exterior.  Prior to the Commencement Date,
          -------------------------------
Landlord shall, at its sole cost and expense (and not as a component of
Operating Expenses), repaint the exterior of the Building in a color mutually
approved by Landlord and Tenant.

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5. TENANT'S REPAIRS.

     A.   Maintenance of Premises.  Tenant, at its own cost and expense, shall
          -----------------------
(i) maintain all parts of the interior of the Premises and promptly make all
necessary repairs and replacements to the interior of the Premises (except those
for which Landlord is expressly responsible hereunder), and (ii) keep the
parking areas, driveways, alleyways and areas surrounding the loading docks free
of trash, debris and inventory, including but not limited to pallets, barrels,
and equipment from tenant use.  If Tenant fails to make any required repairs
within thirty (30) days after receipt of a written request from Landlord, or in
the event the nature of Tenant's obligation is such that more than thirty (30)
days is required for performance, and Tenant fails to commence performance
within the thirty (30) day period and thereafter diligently pursue the
completion of same using commercially reasonable efforts, then the Landlord  may
(but shall not be obligated to) perform such duties and the Tenant shall
reimburse Landlord within thirty (30) days of presentation of appropriate
statement.  Tenant's obligation to maintain, repair and make replacements to the
Premises shall cover, but not be limited to, pest control (including termites),
trash removal and the maintenance, repair and replacement of all HVAC,
electrical, plumbing,(but only to the extent it is not concealed), sprinkler and
other mechanical systems.

     B.   Parking.  Tenant and its employees, customers and licensees shall
          -------
have the right to use all of the parking areas that have been designated as
parking areas (which parking areas for the common use of tenants of the Project
are shown on the site plan attached as Exhibit "A-5" attached hereto and
incorporated herein), subject to (i) all reasonable rules and regulations
promulgated by Landlord, and (ii) rights of ingress and egress of other lessees
of the Project. Except in connection with Tenant's parking spaces in the
Adjacent Parking Facility, Landlord shall not be responsible for enforcing
Tenant's parking rights against any third parties. Tenant shall have the right
to take commercially reasonable efforts to enforce its parking rights with
respect to the parking spaces not located in the Adjacent Parking Facility,
including without limitation, the use of parking stickers and the right to tow
or obstruct improperly parked vehicles. Tenant agrees not to park on any public
streets or private roadways adjacent to or in the vicinity of the Premises.
Landlord shall make available to Tenant on the Commencement Date the use of
forty (40) parking spaces in the parking lot adjacent to the Project (the
"Adjacent Parking Facility") on an unreserved basis. The location of the
Adjacent Parking Facility is shown on Exhibit "A-6" attached hereto and
incorporated herein. Landlord shall use reasonable efforts to insure that such
spaces in the Adjacent Parking Facility shall be available for use by Tenant,
including without limitation, the towing of unauthorized vehicles. Additionally,
Landlord shall make available to Tenant in the Adjacent Parking Facility
additional parking spaces in accordance with the following schedule :

                                             Total Parking Spaces
                    Months               in Adjacent Parking Facility
                    ------               ---------------------------

                    Months   6 - 12                  80 Spaces
                    Months 13 - 24                  120 spaces
                    Months 25 - 48                  160 Spaces

Landlord has not and will not grant any other tenant of the Project the right to
use the parking spaces being made available to Tenant hereunder situated in the
Adjacent Parking Facility during the term of this Lease (including any renewal
thereof).  In consideration of Landlord's provision of the parking spaces in the
Adjacent Parking Facility, Tenant shall pay to Landlord, in addition to Base
Rent, the sum of $19.00 per parking space per month plus Tenant's proportionate
share of taxes, insurance and maintenance expenses applicable to the Adjacent
Parking Facility.  Such payments shall be due and payable at the same time as
Base Rent is due hereunder.

     C.   System Maintenance.  Landlord shall service HVAC equipment serving the
          ------------------
Premises within thirty (30) days of Tenant's occupancy (and within thirty (30)
days of Tenant's occupancy of the First Additional Premises and the Second
Additional Premises, as applicable) to ensure such HVAC equipment is in good
working order.  Tenant, at its own cost and expense, shall enter into a
regularly scheduled preventive maintenance/service contract with a maintenance
contractor reasonably approved by Landlord for servicing all hot water, heating
and air conditioning systems and equipment within the Premises.  The service
contract must include the replacement of filters on a regular basis and all
services suggested by the equipment manufacturer in its operations/maintenance
manual and must become effective within ninety (90) days of the date Tenant
takes possession of the applicable portion of the Premises.

6. ALTERATIONS.

     A.   Approval of Alterations.  Except as set forth below, Tenant shall not
          -----------------------
make any alterations, additions or improvements to the Premises without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed for alterations or improvements which do not affect the
structure of the Building or which do not adversely affect the mechanical,
electrical or plumbing systems of the Building. Landlord shall not be required
to notify Tenant of whether it consents to any alteration, addition or
improvement until it (a) has received plans and specifications therefor which
are sufficiently detailed to allow construction of the work depicted thereon to
be performed in a good and workmanlike manner (and if Landlord has provided
Tenant with a CAD disk with existing improvements, Tenant shall have updated
such CAD disk), and (b) has had fifteen (15) business days to review such plans.
If the alteration, addition or improvement will affect the Building's structure,
HVAC system, or mechanical, electrical, or plumbing systems, then the plans and
specifications therefor must be prepared by a licensed engineer reasonably
acceptable to Landlord and, in the event Landlord has delivered to Tenant a CAD
disk with all existing improvements and systems shown thereon, then Tenant shall
update such CAD disk with such plans and specifications. Landlord shall notify
Tenant whether it consents to any alteration, addition or improvement within
fifteen (15) business days after Landlord has received the foregoing described
plans. If Landlord fails to notify Tenant of its approval or disapproval of such
alteration, addition or improvement within the foregoing described fifteen (15)
business day period, Landlord shall be deemed to have approved such requested
alteration, addition or improvement. Landlord's approval of any plans and
specifications shall not be a representation that the plans or the work depicted
thereon will comply with law or be adequate for any purpose, but shall merely be
Landlord's consent to performance of the work. Upon completion of any
alteration, addition, or improvement, Tenant shall deliver to Landlord accurate,
reproducible as-built plans therefor and in the event Tenant has received a CAD
disk from Landlord with all existing improvements, Tenant shall update the CAD
disk to show such improvements. Tenant may erect shelves, bins, machinery and
trade fixtures provided that such items (1) do not alter the basic character of
the Premises or the Building; (2) do not overload the same; and (3) may be
removed without material damage to the Premises. Unless Landlord specifies in
writing otherwise, all alterations, additions, and improvements shall be
Landlord's property when installed in the Premises. All shelves, bins, machinery
and trade fixtures installed by Tenant shall be removed on or before the earlier
to occur of the day of termination or expiration of this Lease or vacating the
Premises, at which time Tenant shall repair any damage caused by such removal.
Additionally, subject to paragraph (a) of the Tenant Improvement section of
Exhibit C, Landlord shall have the right to require Tenant to remove any
---------
alterations made to the Premises by Tenant during the term of this Lease. In the
event Landlord requires Tenant to remove any such alterations, Landlord shall
provide Tenant written notice of such removal requirement prior to the
expiration of the term of this Lease, and Tenant shall be afforded a reasonable
time to accomplish such removal after the Expiration Date and Tenant shall
repair any damage caused by such removal. All work performed by a Tenant in the
Premises (including that relating to the installations, repair replacement, or
removal of any item) shall be performed in accordance with all applicable
governmental laws, ordinances, regulations, in a good and workmanlike manner,
and so as not to damage or alter the Building's structure or the Premises.
Tenant shall be responsible for compliance with The Americans With Disabilities
Act of 1990 (the "ADA") with respect to any alterations, additions or
improvements to the Premises made by Tenant; provided that in no event shall
Tenant be required to make any alterations to the Premises or make any
structural alterations or alterations to the base Building (including restrooms
located within the Premises) in order to comply with the ADA or any other
federal or state law related to handicap or disabled persons unless compliance
is necessary solely as a result of Tenant's specific use of the Premises (and
not as a result of Tenant's use of the Premises for the purposes set forth in
Paragraph 12.A below) and not merely due to the fact that Tenant is making
alterations.

     B.   Permitted Alterations.  Notwithstanding the foregoing provisions to
          ---------------------
Paragraph 6, Landlord's consent shall not be required for (i) the movement,
installation or modification of trade fixtures (including, without limitation,
risers, utility feeds and related conduits and interior fresh air/exhaust
louvers, but excluding any trade fixture to be installed on the outside of the
Premises or the Building), furniture (including, without limitation, kitchen
appliances, demountable partitions, computer racking and similar demountable
fixtures) and trade equipment to be installed on the inside of the Premises or
the Building; provided, however, that all of the foregoing items may be removed
from the Premises without material injury thereto, or (ii) any alterations and
improvements to the interior of the Building which do not affect the Building
structure and which do not materially affect the Building's mechanical,
electrical or plumbing systems.

     C.   Exterior Installations.  Subject to Landlord's approval, not to be
          ----------------------
unreasonably withheld, Tenant shall have the right, at Tenant's sole cost and
expense, to install (i) a load bank yard and related equipment, and (ii)
additional transformers on the real

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<PAGE>

property described in Exhibit "A-1" as required by Tenant's permitted use of the
Premises, all in locations approved by Landlord, which approval shall not be
unreasonably withheld, provided that Tenant obtains all necessary approvals from
the City of Austin and all other governmental authorities having jurisdiction
over Tenant, the real property and the installations. Tenant shall remove the
foregoing described installations and all associated equipment at the end of the
Lease Term and shall repair all damage to the Project caused by such removal.
Tenant shall at its expense, maintain the installations in good and operable
condition and shall be responsible for the maintenance, repair, replacement and
removal thereof, as necessary. Landlord agrees that the location set forth on
Exhibit "A-7" is an approved location for the load bank yard.

7. SIGNS.  Any exterior signage Tenant desires for the Premises shall be
subject to Landlord's written approval, which approval shall not be unreasonably
withheld or delayed.  Subject to Landlord's approval of the design, location and
method of installation, which approval will not be unreasonably withheld  or
delayed, Tenant shall be entitled to install, at Tenant's sole cost and expense,
up to two (2) corporate identification signs on the exterior of the Building and
one (1) monument along the entrance to Braker Lane, in a location to be mutually
approved by Landlord and Tenant.  Upon the expiration or earlier termination of
this Lease, Tenant shall remove the two (2) corporate identification signs on
the exterior of the Building.  Tenant shall repair, paint and/or replace the
Building fascia surface to which its signs are attached upon Tenant's vacating
the Premises or the removal or alteration of its signage.  Tenant shall not,
without Landlord's prior written consent, (i) make any changes to the exterior
of the Premises, such as painting; (ii) install any exterior lights,
decorations, balloons, flags, pennants or banners; or (iii) except as otherwise
provided herein, 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.  All signs, decorations, advertising media,
blinds, draperies and other window treatment or bars or other security
installations visible from outside the Premises shall conform in all respects to
the criteria established by Landlord and attached hereto as Exhibit "D".
Landlord shall notify Tenant whether it consents to any exterior lighting or
other change or alteration to the exterior of the Premises or the Building
within ten (10) business days after Landlord has received plans and
specifications therefor, which detail, without limitation, the method of
attachment and location thereof.  If Landlord fails to notify Tenant of its
approval or disapproval of any requested exterior lighting, exterior cameras or
other exterior installation within such ten (10) business day period, Landlord
shall be deemed to have approved the installation of the same.

8. UTILITIES.  Landlord agrees to provide normal water, electricity, sewer and
gas service to the Premises.  Tenant shall pay for all water, gas, heat, light,
power, telephone, sewer, sprinkler charges and other utilities and services used
on or at the Premises, together with any taxes, penalties, surcharges or the
like pertaining to the Tenant's use of the Premises directly to the utility
providing the same.  All of said services except as provided below, shall be
separately metered to Tenant, at Tenant's expense.  Landlord shall not be liable
for any interruption or failure of utility service on the Premises, and Tenant
shall have no rights or claims as a result of any such failure.  Notwithstanding
the foregoing, in the event of a failure or interruption of electricity or water
to the Premises which prohibits or unreasonably interferes with Tenant's ability
to conduct business at the Premises and which (i) continues for forty-eight (48)
consecutive hours, and (ii) is caused by Landlord or Landlord's agents,
employees or contractors, Tenant shall be entitled to an abatement of rent
payable hereunder after the expiration of such forty-eight (48) hour period
until such electricity and/or is restored to the Premises to the extent
necessary to permit Tenant to conduct business.  In the event water is not
separately metered to Tenant, Tenant agrees that it will not use water and sewer
capacity for uses other than normal domestic restroom and kitchen usage without
first obtaining Landlord's consent.

9. INSURANCE.

     A.   Landlord's Insurance.  Landlord shall maintain during the Term of this
          --------------------
Lease, insurance covering the Building in an amount equal to the full
"replacement cost" thereof (exclusive of foundation and excavation costs),
insuring against the perils of fire, lightning, extended coverage, vandalism and
malicious mischief.  Landlord shall also maintain during the Term of this Lease
a policy or policies of commercial general liability insurance (including
endorsement or separate policy for owned or non-owned automobile liability)
covering the Project, with the premiums thereon fully paid on or before the due
date, issued by and binding upon an insurance company or companies qualified to
do business in the State of Texas.  Such insurance shall afford minimum
protection of not less than $1,000,000.00 per occurrence per person coverage for
bodily injury, property damage, personal injury, or combination thereof together
with an umbrella or excess policy in an amount not less than $5,000,000.00 over
Landlord's base coverage amount.  The term "personal injury" herein used means
false arrest, detention or imprisonment, malicious prosecution, wrongful entry,
libel and slander.  If only a combined single limit coverage is available, it
shall be for at least $3,000,000.00 per occurrence with an umbrella policy of at
least $5,000,000.00 combined single limit per occurrence.

     B.   Tenant's Insurance.  Tenant, at its own expense, shall maintain
          ------------------
during the Term of this Lease a policy or policies of workers' compensation
insurance in compliance with the laws of the State of Texas and commercial
general liability insurance, including personal injury and property damage, with
contractual liability endorsement, in the amount of Five Hundred Thousand
Dollars ($500,000.00) for property damage and One Million Dollars
($1,000,000.00) per occurrence and One Million Dollars ($1,000,000.00) in the
aggregate for personal injuries or deaths of persons occurring in or about the
Premises. Tenant, at its own expense, shall also maintain during the term of
this Lease fire and extended coverage insurance covering the replacement cost of
all of Tenant's personal property contained within the Premises. The commercial
general liability insurance policy shall (i) name the Landlord and the
management company for the Project as additional insureds and any workers'
compensation policy carried by Tenant, include a waiver of subrogation
endorsement in favor of Landlord; (ii) be issued by an insurance company which
is reasonably acceptable to Landlord; and (iii) provide that the issuer of such
policy shall endeavor to notify Landlord thirty (30) days prior to any
cancellation thereof. Certificates for such policies shall be delivered to
Landlord by Tenant on or before the Commencement Date and upon each renewal of
said insurance.

     C.   Prohibited Uses.  Tenant will not permit the Premises to be used for
          ---------------
any purpose or in any manner that would (i) void the insurance thereon, (ii)
increase the insurance risk or cost thereof, or (iii) cause the disallowance of
any sprinkler credits; including without limitation, use of the Premises for the
receipt, storage or handling of any product, material or merchandise that is
explosive or highly inflammable.  Landlord represents that Tenant's intended use
of the Premises shall not result in an increase in Landlord's insurance
premiums.    If any increase in the cost of any insurance on the Premises or the
Building is caused by Tenant's use of the Premises or because Tenant vacates the
Premises, then Tenant shall pay the amount of such increase to Landlord within
thirty (30) days after receipt of an invoice therefor together with evidence
substantiating that such increase was caused solely by Tenant.

10. FIRE AND CASUALTY DAMAGE.

     A.   Total or Substantial Damage and Destruction.  If the Premises or the
          -------------------------------------------
Building should be damaged or destroyed by fire or other peril, Tenant shall
immediately give written notice to Landlord of such damage or destruction.  If
the Premises or the Building should be so damaged by fire or other casualty
that, in Landlord's estimation, rebuilding or repairs cannot be completed within
one hundred eighty (180) days after the date of such damage (or within ninety
(90) days after the date of such damage, if the damage occurs during the last
twelve (12) months of the Lease Term, unless Tenant exercises its renewal
option, in which event the ninety (90) day period shall not apply), then either
Landlord or Tenant shall have the right to terminate this Lease, and in the
event of such termination, the rent shall be abated during the unexpired portion
of this Lease, effective upon the date of the occurrence of such damage.
Landlord shall notify Tenant within thirty (30) days after the date of the
damage of Landlord's estimated repair period (the "Repair Estimate") and in the
event the Repair Estimate reflects a repair period in excess of one hundred
eighty (180) days (or ninety (90) days, if applicable), the Repair Estimate
shall state whether Landlord elects to terminate this Lease.  In the event the
Repair Estimate reflects that the repair period is in excess of one hundred
eighty (180) days (or ninety (90) days, if applicable) and Landlord does not
elect to terminate this Lease, Tenant shall be entitled to terminate this Lease
by delivering written notice of termination to Landlord within fifteen (15)
business days after Tenant's receipt of the Repair Estimate.  In the event
neither Landlord nor Tenant terminate this Lease pursuant to this Paragraph
10A., Landlord, at its sole expense, shall perform Landlord's Restoration Work
(hereinafter defined) with reasonable diligence and continuity.  "Landlord's
Restoration Work" shall mean all of the work necessary to repair and restore the
Building (exclusive of Tenant's property) to substantially the same condition as
that in which its was in immediately prior to the happening of the fire or other
casualty.

     B.   Partial Damage or Destruction.  If the Premises or the Building should
          -----------------------------
be damaged by any peril covered by the insurance to be provided by Landlord
under Paragraph 9A above and, the Repair Estimate reflects that rebuilding or
repairs can be substantially completed within one hundred eighty (180) days (or
ninety (90) days, if applicable) after the date of such damage, or in the event
the damage cannot be repaired within one hundred eighty (180) days (or ninety
(90) days, if applicable) but neither Landlord nor Tenant terminates this Lease
under Paragraph 10A., then this Lease shall not terminate and Landlord shall
promptly commence Landlord's Restoration Work.

                                       4
<PAGE>

     C.   Lienholders' Rights in Proceeds.  Notwithstanding anything herein to
          -------------------------------
the contrary, in the event the holder of any indebtedness secured by a mortgage
or deed of trust covering the Premises requires that the insurance proceeds be
applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within fifteen
(15) days after such requirement is made known to Landlord by any such holder,
whereupon all rights and obligations hereunder shall cease and terminate.

     D.   Rent Abatement.  If the Premises shall be rendered untenantable or
          --------------
inaccessible as a result of a fire or other casualty, then all rent payable
hereunder (including, without limitation the Tenant's Proportionate Share of
Operating Expenses) shall be abated in proportion to the area of the Premises
that has been rendered untenantable, inaccessible or unfit for Tenant's use and
occupancy for the period from the date of such damage or destruction until the
earlier of the date on which Tenant reoccupies the Premises (or such portion
thereof) for the normal conduct of its business.

     E.   Waiver of Subrogation.  Notwithstanding anything to the contrary set
          ---------------------
forth herein, Tenant and Landlord each hereby waives on behalf of itself and
their respective insurers (none of which shall ever be assigned any such claim
or be entitled thereto due to subrogation or otherwise) any and all rights of
recovery, claim, action, or cause of action, against the other of them or their
respective agents, officers, and employees, for any loss or damage that may
occur to the Premises, or any improvements thereto or the Building of which the
Premises or the Project are a part, or any improvements thereto, or any personal
property therein, by reason of fire, the elements, or any other cause(s) which
are, or could be, insured against under the terms of a standard fire and
extended coverage insurance policy issued in the state of Texas, regardless of
whether such insurance is actually maintained and REGARDLESS OF THE CAUSE OR
ORIGIN OF THE DAMAGE INVOLVED, INCLUDING THE SOLE JOINT OR CONCURRENT,
NEGLIGENCE OF THE RELEASED PARTY OR ITS AGENTS, OFFICERS, EMPLOYEES OR BUILDING
MANAGER.

     F.   Termination Right.  In any case where the Repair Estimate does not
          -----------------
give rise to Tenant's termination right as aforesaid (as well as any case where
Tenant does not elect to exercise its termination right as aforesaid), Tenant
shall have the right to terminate this Lease, if for any reason, Landlord's
Restoration Work is not completed by the Outside Restoration Date (as defined
below).  Tenant may exercise the termination right described in the preceding
sentence by delivering written notice thereof to Landlord at any time following
the Outside Restoration Date and prior to the date Landlord completes Landlord's
Restoration Work; provided however, Landlord may nullify such termination notice
if Landlord completes Landlord's Restoration Work within thirty (30) days after
its receipt of such notice, in which case this Lease shall continue in full
force and effect.  If Tenant terminates this Lease as provided in this Section
10.F, then such termination shall be effective on the date specified in Tenant's
notice of termination but no later than one hundred eighty (180) days after the
date of such notice as if said date were the date fixed for the expiration of
the Term.  Any rent paid by Tenant for a period beyond the date of termination
of this Lease or for any period of abatement shall promptly be refunded by
Landlord to Tenant.  For purposes of this Lease, the term "Outside Restoration
Date", with respect to any fire or other casualty, shall mean the date which is
the day following the date of the casualty plus the repair period set forth in
the Repair Estimate; provided, however, that the Outside Restoration Date shall
be postponed by one day for each day that Landlord is actually delayed in
completing such Landlord's Restoration Work as a result of one or more events of
force majeure; provided, further, however, that (i) the Outside Restoration Date
shall not be postponed by more than thirty (30) days in the aggregate as a
result of events of force majeure, no matter how many days Landlord is actually
delayed in completing Landlord's Restoration Work as a result of one or more
events of force majeure, and (ii) Landlord shall not be deemed to have been
actually delayed in completing the Landlord's Restoration Work by an event of
force majeure unless, within five (5) days after such event of force majeure,
Landlord shall have notified Tenant of such event of such event of force majeure
and of the fact that the same is going to delay Landlord in completing the
Landlord's Restoration Work.

     The provisions of this Paragraph 10 shall be considered an express
agreement governing any case of damage or destruction of the Building or the
Premises by fire or other casualty and any law now or hereafter in force which
is inconsistent with the provisions of this Paragraph 10 shall have no
application.

11.  LIABILITY AND INDEMNIFICATION.  Except for any claims, rights of recovery
and causes of action that Landlord has released, Tenant shall hold Landlord
harmless from and defend Landlord against any and all claims or liability for
any injury or damage (i) to any person or property whatsoever occurring in, on
or about the Premises or any part thereof, the Building and/or other common
areas, the use of which Tenant may have in accordance with this Lease, if (and
only if) and to the extent (and only to the extent) such injury or damage shall
be caused in whole or in part by the act, neglect, fault or omission of any duty
by Tenant, its agents, employees or contractors; and (ii) all costs, counsel
fees, expenses and liabilities incurred in connection with any such claim or
action or proceeding brought thereon.  The provisions of this Paragraph 11 shall
survive the expiration or termination of this Lease.  Landlord shall not be
liable in any event for personal injury or loss of Tenant's property caused by
fire, flood, water leaks, rain, hail, ice, snow, smoke, lightning, wind,
explosion, interruption of utilities or other occurrences.  Landlord strongly
recommends that Tenant secure Tenant's own insurance in excess of the amounts
required elsewhere in this Lease to protect against the above occurrences if
Tenant desires additional coverage for such risks.  Tenant shall give prompt
notice to Landlord of any significant accidents involving injury to persons or
property.  Furthermore, Landlord shall not be responsible for lost or stolen
personal property, equipment, money or jewelry from the Premises or from the
public areas of the Building or the Project, regardless of whether such loss
occurs when the area is locked against entry.  Landlord shall not be liable to
Tenant or Tenant's employees, customers or invitees for any damages or losses to
persons or property caused by any lessees in the Building or the Project, or for
any damages or losses caused by theft or burglary.  Landlord strongly recommends
that Tenant provide its own security systems and services and secure Tenant's
own insurance in excess of the amounts required elsewhere in this Lease to
protect against the above occurrences if Tenant desires additional protection or
coverage for such risks.  Landlord may, but is not obligated to, enter into
agreements with third parties for the provision, monitoring, maintenance and
repair of any courtesy patrols or similar services or fire protective systems
and equipment and, to the extent same is provided at Landlord's sole discretion,
Landlord shall not be liable to Tenant for any damages, costs or expenses which
occur for any reason in the event any such system or equipment is not properly
installed, monitored or maintained or any such services are not properly
provided.  Landlord shall use reasonable diligence in the maintenance of
existing lighting, if any, in the parking areas servicing the Premises, and
Landlord shall not be responsible for additional lighting or any security
measures in the Project, the Premises, or parking areas.

12.  USE AND COMPLIANCE WITH LAWS.

     A.   Tenant's Use.  The Premises shall be used only for the purpose of
          ------------
receiving, storing, shipping and selling (other than retail) products, materials
and merchandise made and/or distributed by Tenant, for manufacturing (to the
extent permitted by law) and assembly, and for such other lawful purposes as may
be incidental thereto.  Except as otherwise provided herein, outside storage,
including without limitation storage of trucks and other vehicles, is prohibited
without Landlord's prior written consent.

     B.   Tenant's Compliance Obligations.  Subject to Paragraphs 4 and 12C
          -------------------------------
hereof, Tenant shall comply with all governmental laws, ordinances and
regulations applicable to Tenant's specific use of the Premises and shall
promptly comply with all governmental orders and directives for the correction,
prevention and abatement of nuisances in, upon or connected with the Premises,
all at Tenant's sole expense. Tenant shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the
Premises, nor take any other action that would constitute a nuisance or would
disturb, unreasonably interfere with or endanger Landlord or any other lessees
of the Building or the Project.

     C.   Landlord's Compliance Obligations.  Landlord shall be responsible at
          ---------------------------------
Landlord's expense for compliance with all federal , state and local laws,
ordinances and regulations (including without limitation the ADA and the Texas
Architectural Barriers Act) applicable to the Premises, the common areas of the
Project and the exterior of the Building unless, such compliance is necessary
solely as a result of Tenant's specific use of the Premises (and not as a result
of Tenant's use of the Premises set forth in Paragraph 12 A above) and not
merely due to the fact that Tenant is making alterations to the Premises.

13.  HAZARDOUS WASTE.  The term "Hazardous Substances," as used in this Lease,
shall mean pollutants, contaminants, toxic or hazardous wastes, radioactive
materials or any other substances, the use and/or the removal of which is
required or the use of which is restricted, prohibited or penalized by any
"Environmental Law," which term shall mean any federal, state or local statute,
ordinance, regulation or other law of a governmental or quasi-governmental
authority relating to pollution or protection of the environment or the
regulation of the storage or handling of Hazardous Substances.  Tenant hereby
agrees that:  (i) no activity will be conducted on the Premises that will
produce any Hazardous Substances, except for such activities that are part of
the ordinary course of Tenant's business activities (the "Permitted
Activities"), provided said Permitted Activities are conducted in accordance
with all Environmental Laws and have been approved in advance in writing by
Landlord and, in connection therewith, Tenant shall be

                                       5
<PAGE>

responsible for obtaining any required permits or authorizations and paying any
fees and providing any testing required by any governmental agency; (ii) the
Premises will not be used in any manner for the storage of any Hazardous
Substances, except for the temporary storage of such materials that are used in
the ordinary course of Tenant's business (the "Permitted Materials"), provided
such Permitted Materials are properly stored in a manner and location meeting
all Environmental Laws and have been approved in advance in writing by Landlord,
and, in connection therewith, Tenant shall be responsible for obtaining any
required permits or authorizations and paying any fees and providing any testing
required by any governmental agency; (iii) no portion of the Premises will be
used as a landfill or a dump; (iv) Tenant will not install any underground tanks
of any type; (v) Tenant will not cause any surface or subsurface conditions to
come into existence that constitute, or with the passage of time may constitute,
a public or private nuisance; and (vi) Tenant will not permit its agents or
employees to bring any Hazardous Substances onto the Premises, except for the
Permitted Materials, and if so brought thereon, the same shall be immediately
removed, with proper disposal, and all required clean-up procedures shall be
diligently undertaken by Tenant at its sole cost pursuant to all Environmental
Laws. Landlord and Landlord's representatives shall have the right but not the
obligation to enter the Premises upon reasonable prior notice for the purpose of
inspecting the storage, use and disposal of any Permitted Materials to ensure
compliance with all Environmental Laws; provided that Tenant's business
operations are not unreasonably disturbed and Landlord repairs all damage
resulting from such inspection. Should it be determined that any Permitted
Materials are being improperly stored, used or disposed of, then Tenant shall
immediately take such corrective action as is reasonable under the
circumstances. If at any time during or after the term of this Lease, the
Premises is found to be contaminated with Hazardous Substances which were
brought onto the Premises by Tenant or Tenant's employees or agents, Tenant
shall diligently institute proper and thorough clean-up procedures, at Tenant's
sole cost. Tenant agrees to indemnify and hold Landlord harmless from all
claims, demands, actions, liabilities, costs, expenses, damages, penalties and
obligations of any nature arising from or as a result of any contamination of
the Premises with Hazardous Substances brought onto the Premises by Tenant or
Tenant's agents or employees. The foregoing indemnification and the
responsibilities of Tenant shall survive the termination or expiration of this
Lease.

     Notwithstanding anything to the contrary contained in this Lease, Landlord
(and not Tenant) shall be liable for, and Tenant shall not be deemed to have
waived by taking possession of the Premises or otherwise, any violations of
applicable laws (including applicable laws pertaining to health and the
environment) or restrictive covenants or other encumbrances relating to the
Project that: (i) occurred in whole or in part prior to the date hereof,
including any violation continuing as of the date hereof; or (ii) result in
whole or in part from the failure of the Project (as opposed any particular
operation or conduct of Tenant in the Premises which may violate applicable laws
or other provisions of this Lease) to comply with applicable laws or restrictive
covenants or other encumbrances (excluding, however, any such failure that is
caused by alterations to the Premises made by Tenant); or (iii) result in whole
or in part from the presence, release or disposal of asbestos or other Hazardous
Substances on or from the Project, excluding only Hazardous Substances placed on
the Project by Tenant.  In the event any asbestos or asbestos containing
materials is found in the Premises and the same was not placed therein by Tenant
or Tenant's agents or employees, Landlord shall, at Landlord's sole cost and
expense, promptly cause the removal of all such asbestos and asbestos containing
materials, whether or not such removal is required under applicable laws.

14.  INSPECTION.  Landlord's agents and representatives shall have the right to
enter the Premises at any reasonable time during business hours (or at any time
in case of emergency) upon reasonable prior notice (i) to inspect the Premises,
(ii) to make such repairs as may be required or permitted pursuant to this
Lease, and/or (iii) during the last six (6) months of the Lease Term, for the
purpose of showing the Premises.  In addition, during the last six (6) months of
the Term Landlord shall have the right to erect a suitable sign on the Premises
stating the Premises are available for lease.

15.  ASSIGNMENT AND SUBLETTING.

     A.   Tenant shall not assign, sublease, transfer or encumber this Lease or
any interest therein without the prior written consent of Landlord, which
consent shall not be unreasonably withheld.  Any such attempted assignment in
violation of the terms and covenants of this Paragraph shall, exercisable in
Landlord's sole and absolute discretion, be voidable.  If Tenant requests
Landlord's consent to an assignment or sublease, Tenant shall submit to
Landlord, in writing, the  name of the proposed assignee or subtenant and the
nature and character of the business of the proposed assignee or subtenant, the
term, use, rental rate and all other material terms and conditions of the
proposed assignment or sublease.  Landlord shall within twenty (20) days after
Landlord's receipt of such written request and information either consent to or
refuse to consent to such assignment or sublease in writing (but no such consent
to an assignment or sublease shall relieve Tenant of its obligations under this
Lease of any liability hereunder).  If Landlord should fail to notify Tenant in
writing of its decision within such twenty (20) day period, Landlord shall be
deemed to have consented to such assignment or sublease.

     B.   In addition to the rent hereunder, Tenant hereby covenants and agrees
to pay to Landlord fifty percent (50%) of any Net Profits (as hereinafter
defined) which it receives which is in excess of the rent (including Base Rent,
Operating Expenses and parking rent) payable hereunder within ten (10) days
following receipt thereof by Tenant.  The term "Net Profits" as used herein
shall mean such portion of the rent payable by an assignee or subtenant under
the applicable assignment or sublease in excess of the rent payable by Tenant
under this Lease (or pro rata portion thereof in the event of a subletting) for
the corresponding period, after deducting from such excess rent the following:
(i) all of Tenant's reasonable costs associated with such assignment or
subletting, including, without limitation, broker commissions, architectural
fees, engineers' fees and attorney fees; (ii) any reasonable costs incurred by
Tenant to prepare or alter the Premises, or portion thereof, for the assignee or
sublessee; (iii) any design, construction or moving allowances, rental
concessions or other out-of-pocket concession or costs incurred by Tenant.  The
provisions of this subparagraph B shall not apply to a Permitted Transfer, as
hereinafter defined.  Notwithstanding the foregoing, during the occurrence of an
Event of Default under Paragraph 19A, Landlord shall be entitled to receive and
Tenant shall pay to Landlord all rent payable by an assignee or subtenant,
without deduction for any costs or expenses incurred by Tenant.

     C.   If at any time during the Lease Term the person or persons who own the
voting shares of Tenant at the time of the execution of this Lease cease for any
reason, including but not limited to merger, consolidation or other
reorganization involving another corporation, to own a majority of such shares
(except as the result of transfers by gift, bequest or inheritance to or for the
benefit of members of the immediate family of such original shareholder(s)),
such an event shall be deemed to be an assignment.  The preceding sentence shall
not apply whenever Tenant is a corporation, the outstanding stock of which is
listed on a recognized security exchange, or if at least eighty percent (80%) of
its voting stock is owned by another corporation, the voting stock of which is
so listed.

     D.   Notwithstanding anything herein to the contrary, Tenant may assign its
entire interest under this Lease or sublet the Premises to a wholly-owned
corporate or controlled subsidiary or parent of Tenant or to any successor to
Tenant by purchase, merger, consolidation or reorganization (hereinafter
collectively referred to "Corporate Transfer") without the consent of Landlord
provided: (i) Tenant is not in default under this Lease beyond any applicable
cure period; (ii) if such proposed transferee is a successor to Tenant by
purchase, said proposed transferee shall acquire all or substantially all of the
stock or assets of Tenant's business or, if such proposed transferee shall
acquire all or substantially all of the stock or assets of Tenant's business or,
if such proposed transferee is a successor to Tenant by merger, consolidation or
reorganization, the continuing or surviving corporation shall own all or
substantially all of the assets of Tenant; (iii) in no event shall any transfer,
release or relief of Tenant from any of its obligations under this Lease, unless
Tenant ceases to exist as a result of the Corporate Transfer; and (iv) such
transferee assumes in writing Tenant's obligations under this Lease or such
transferee assumes Tenant's obligations under this Lease by operation of law.
Tenant shall give Landlord written notice at least twenty (20) days prior to the
effective date of such Corporate Transfer.  As used herein, the terms "control"
or "subsidiary" shall mean a corporate entity wholly-owned by Tenant or at least
51 percent of its voting stock is owned by Tenant.  A transfer pursuant to the
provisions of this Paragraph 15D shall sometimes be referred to herein as a
"Permitted Transfer".

16.  CONDEMNATION.  If any portion of the Premises is taken for any public or
quasi-public use under governmental law, ordinance or regulation, or by right of
eminent domain or private purchase in lieu thereof, and the taking prevents or
materially interferes with the use of the remainder of the Premises for the
purpose for which they were leased to Tenant or, in Tenant's reasonable opinion,
the remaining portion of the Premises is not suitable for Tenant's use, then
Tenant shall have the right to terminate this Lease by delivering written notice
of termination to Landlord within thirty (30) days of the taking, and the rent
shall be abated during the unexpired portion of this Lease, effective on the
date of such taking.  In the event Tenant does not elect to terminate this
Lease, the rent payable hereunder during the unexpired portion of this Lease
shall be reduced to such extent as may be fair and reasonable under all of the
circumstances.  All compensation awarded in connection with or as a result of
any of the foregoing proceedings shall be the property of Landlord, and Tenant
hereby assigns any interest in any such award to Landlord; provided, however,
Landlord shall have no interest in any award made to Tenant for loss of business
or goodwill or for the taking of Tenant's trade fixtures and personal property,
if a separate award for such items is made to Tenant.

                                       6
<PAGE>

17.  HOLDING OVER.  At the termination of this Lease by its expiration or
otherwise, Tenant shall immediately deliver possession of the Premises to
Landlord with all repairs and maintenance required herein to be performed by
Tenant completed.  If, for any reason, Tenant retains possession of the Premises
after the expiration or termination of this Lease, unless the parties hereto
otherwise agree in writing, such possession shall be deemed to be a tenancy at
will only, and all of the other terms and provisions of this Lease shall be
applicable during such period, except that Tenant shall pay Landlord from time
to time, upon demand, as rental for the period of such possession, an amount
equal to one and one-half (1 1/2) times the Base Rent in effect on the date of
such termination of this Lease, computed on a daily basis for each day of such
period.  No holding over by Tenant, whether with or without consent of Landlord,
shall operate to extend this Lease except as otherwise expressly provided.  The
preceding provisions of this Paragraph 17 shall not be construed as consent for
Tenant to retain possession of the Premises in the absence of written consent
thereto by Landlord.

18.  QUIET ENJOYMENT.  Landlord represents that it has the authority to enter
into this Lease and that, so long as Tenant pays all amounts due hereunder and
performs all other covenants and agreements herein set forth, Tenant shall
peaceably and quietly have, hold and enjoy the Premises for the term hereof
without hindrance or molestation from Landlord, subject to the terms and
provisions of this Lease.

19.  EVENTS OF DEFAULT.  The following events (herein individually referred to
as an "Event of Default") each shall be deemed to be a default in or breach of
Tenant's obligations under this Lease:

     A.   Tenant shall fail to pay any installment of the rent herein reserved
when due, or any other payment or reimbursement to Landlord required herein when
due, and such failure shall continue for a period of five (5) days from the date
Tenant receives written notice that such payment was not made when due; provided
however, that Landlord shall not be required to provide such written notice to
Tenant more than two (2) times in any calendar year.

     B.   Tenant shall fail to discharge any lien placed upon the Premises in
violation of Paragraph 22 hereof within twenty (20) days after Tenant's receipt
of notice of any such lien or encumbrance being filed against the Premises.

     C.   Tenant shall fail to comply with any term, provision or covenant of
this Lease (other than those listed above in this paragraph) and shall not cure
such failure within thirty (30) days after written notice thereof from Landlord,
(except that if compliance cannot reasonably be achieved within the thirty (30)
day period, there shall be no event of default so long as Tenant commences the
cure within the thirty (30) day period and diligently and continuously pursues
actions intended to bring about compliance and brings about such compliance
within sixty (60) days after the expiration of the initial thirty (30) day
period).

20.  REMEDIES.  Upon each occurrence of an Event of Default, Landlord shall have
the option to pursue any one or more of the following remedies without any
notice or demand:

     (a)  Terminate this Lease;

     (b)  Enter upon and take possession of the Premises without terminating
this Lease;

     (c)  Make such payments and/or take such action and pay and/or perform
whatever Tenant is obligated to pay or perform under the terms of this Lease;
and/or

     (d)  Alter all locks and other security devices at the Premises, with or
without terminating this Lease, and pursue, at Landlord's option, one or more
remedies pursuant to this Lease, and Tenant hereby expressly agrees that
Landlord shall not be required to provide to Tenant the new key to the Premises,
regardless of hour, including Tenant's regular business hours;

and in any such event Tenant shall immediately vacate the Premises, and if
Tenant fails to do so, Landlord, without waiving any other remedy it may have,
may enter upon and take possession of the Premises and expel or remove Tenant
and any other person who may be occupying such Premises or any part thereof,
without being liable for prosecution or any claim of damages therefore.  The
provisions of this Lease are intended to supersede Section 93.002 of the Texas
Property Code and Tenant hereby expressly waives any and all rights and remedies
Tenant may have under Paragraph (g) of such Section 93.002.  Notwithstanding
anything to the contrary contained in this Lease, in no event shall Tenant be
liable for special or consequential damages as a result of a breach of or
default under this Lease.

     A.   Damages Upon Termination.  If Landlord terminates this Lease at
          ------------------------
Landlord's option, Tenant shall be liable for and shall pay to Landlord the sum
of all rental and other payments owed to Landlord hereunder accrued to the date
of such termination, plus, as liquidated damages, an amount equal to the
positive difference, if any, of (i) the present value calculated at an interest
rate of ten percent (10%) of the total rental and other payments owed hereunder
for the remaining portion of the Lease term, calculated as if such term expired
on the date set forth in Paragraph 1, less (ii) the present value calculated at
an interest rate of ten percent (10%) of the then fair market rental for the
Premises for such period.

     B.   Damages Upon Repossession.  If Landlord repossesses the Premises
          -------------------------
without terminating this Lease, Tenant, at Landlord's option, shall be liable
for and shall pay Landlord on demand all rental and other payments owed to
Landlord hereunder, accrued to the date of such repossession, plus all amounts
required to be paid by Tenant to Landlord until the date of expiration of the
term as stated in Paragraph 1, diminished by all amounts actually received by
Landlord through reletting the Premises during such remaining term (but only to
the extent of the rent herein reserved). Actions to collect amounts due by
Tenant to Landlord under this paragraph may be brought from time to time, on one
or more occasions, without the necessity of Landlord's waiting until expiration
of the Lease term.

     C.   Costs of Reletting, Removing, Repairs and Enforcement.  Upon an
          -----------------------------------------------------
Event of Default, in addition to any sum provided to be paid under this
Paragraph 20, Tenant also shall be liable for and shall pay to Landlord (i)
brokers' fees and all other costs and expenses incurred by Landlord in
connection with reletting the whole or any part of the Premises to the extent
the same are not reimbursed under a new lease covering the Premises; (ii) the
costs of removing, storing or disposing of Tenant's or any other occupant's
property; (iii) the costs of repairing, altering, remodeling or otherwise
putting the Premises into condition acceptable to a new tenant or tenants to the
extent the same are not reimbursed under a new lease covering the Premises; (iv)
any and all costs and expenses incurred by Landlord in effecting compliance with
Tenant's obligations under this Lease; and (v) all reasonable expenses incurred
by Landlord in enforcing or defending Landlord's rights and/or remedies
hereunder, including without limitation all reasonable attorneys' fees and all
court costs incurred in connection with such enforcement or defense.

     D.   Late Charge.  In the event Tenant fails to make any payment due
          -----------
hereunder within five (5) days after such payment is due, including without
limitation any rental or escrow payment, in order to help defray the additional
cost to Landlord for processing such late payments and not as interest, Tenant
shall pay to Landlord on demand a late charge in an amount equal to five percent
(5%) of such payment. 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 liquidated damages or as limiting Landlord's remedies in any
manner. Notwithstanding the foregoing, Tenant shall not be required to pay a
late charge on the first two (2) late payments in any calendar year provided
that such payments are made within ten (10) days after receipt of notice that
the same were not paid when due.

     E.   Interest on Past Due Amounts.  If Tenant fails to pay any sum which
          ----------------------------
at any time becomes due to Landlord under any provision of this Lease as and
when the same becomes due hereunder, and such failure continues for thirty (30)
days after the due date for such payment, then Tenant shall pay to Landlord
interest on such overdue amounts from the date due until paid at an annual rate
which equals the lesser of (i) eighteen percent (18%) or (ii) the highest rate
then permitted by law.

     F.   No Implied Acceptances or Waivers.  Exercise by Landlord of any one or
          ---------------------------------
more remedies hereunder granted or otherwise available shall not be deemed to be
an acceptance by Landlord of Tenant's surrender of the Premises, it being
understood that such surrender can be effected only by the written agreement of
Landlord.  Tenant and Landlord further agree that forbearance by Landlord or
Tenant to enforce any of its rights under this Lease or at law or in equity
shall not be a waiver of such party's right to enforce any one or more of its
rights, including any right previously forborne, in connection with any existing
or subsequent default.  No re-entry or taking possession of the Premises by
Landlord shall be construed as an election on its part to terminate this Lease,
unless a written notice of such intention is given to Tenant, and,
notwithstanding any such reletting or re-entry or taking possession of the
Premises, Landlord may at any time thereafter elect to terminate this Lease for
a previous default.  Pursuit of any remedies

                                       7
<PAGE>

hereunder shall not preclude the pursuit of any other remedy herein provided or
any other remedies provided by law, nor shall pursuit of any remedy herein
provided constitute a forfeiture or waiver of any rent due to Landlord hereunder
or of any damages occurring to Landlord by reason of the violation of any of the
terms, provisions and covenants contained in this Lease. Landlord's acceptance
of any rent following an Event of Default hereunder shall not be construed as
Landlord's waiver of such Event of Default and Tenant's payment of rent after a
Landlord default shall not be construed as a waiver of such default. No waiver
by Landlord or Tenant of any violation or breach of any of the terms, provisions
and covenants of this Lease shall be deemed or construed to constitute a waiver
of any other violation or default.

     G.   Reletting of Premises.  In the event of any termination of this Lease
          ---------------------
and/or repossession of the Premises for an Event of Default, Landlord shall use
reasonable efforts to relet the Premises and to collect rental after reletting,
with no obligation to accept any lessee that Landlord deems undesirable or to
expend any funds in connection with such reletting other than customary expenses
incurred in connection with new leases or collection of rents therefrom.  Tenant
shall not be entitled to credit for or reimbursement of any proceeds of such
reletting in excess of the rental owed hereunder for the period of such
reletting.  Landlord may relet the whole or any portion of the Premises, for any
period, to any tenant and for any use or purpose.

     H.   Landlord's Default.  If Landlord fails to perform any of its
          ------------------
obligations hereunder within thirty (30) days after written notice from Tenant
specifying such failure except as otherwise provided herein, Tenant's exclusive
remedy shall be an action for damages. Unless and until Landlord fails to so
cure any default after such notice, Tenant shall not have any remedy or cause of
action by reason thereof. All obligations of Landlord hereunder will be
construed as covenants, not conditions; and all such obligations will be binding
upon Landlord only during the period of its ownership of the Premises and not
thereafter; provided that the subsequent owner of the Premises assumes in
writing Landlord's obligations accruing hereunder accruing after the date of
such transfer. The term "Landlord" 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 covenants and obligations of the Landlord thereafter accruing, provided
that such covenants and obligations shall be binding during the Lease term upon
each new owner for the duration of such owner's ownership. Notwithstanding any
other provision of this Lease, Landlord shall not have any personal liability
hereunder. In the event of any breach or default by Landlord in any term or
provision of this Lease, Tenant agrees to look solely to the equity or interest
then owned by Landlord in the Project; however, in no event shall any deficiency
judgment or any money judgment of any kind be sought or obtained against any
Landlord.

     I.   Tenant's Personal Property.  If Landlord repossesses the Premises
          --------------------------
pursuant to the authority herein granted, or if Tenant vacates or abandons all
or any part of the Premises, then, in addition to Landlord's rights under
Paragraph 27 hereof, Landlord shall have the right to (i) keep in place and use,
or (ii) remove and store, all of the furniture, fixtures and equipment at the
Premises, including that which is owned by or leased to Tenant, at all times
prior to any repossession thereof by any lessor thereof or third party having a
lien thereon. In addition to the Landlord's other rights hereunder, Landlord may
dispose of the stored property if Tenant does not claim the property within ten
(10) days after the date the property is stored. Landlord shall give Tenant at
least ten (10) days prior written notice of such intended disposition. Landlord
shall also have the right to relinquish possession of all or any portion of such
furniture, fixtures, equipment and other property to any person ("Claimant") who
presents to Landlord a copy of any instrument represented by Claimant to have
been executed by Tenant (or any predecessor of Tenant) granting Claimant the
right under various circumstances to take possession of such furniture,
fixtures, equipment or other property, without the necessity on the part of
Landlord to inquire into the authenticity or legality of said instrument. The
rights of Landlord herein stated shall be in addition to any and all other
rights that Landlord has or may hereafter have at law or in equity, and Tenant
stipulates and agrees that the rights granted Landlord under this paragraph are
commercially reasonable.

     J.   Landlord's Termination Right.  In the event Tenant vacates all or
          ----------------------------
substantially all of the Premises for any period of one hundred twenty (120) or
more consecutive days (other than a vacancy due to a casualty, condemnation, or
a vacancy for which Tenant is expressly entitled to abatement of Rent under this
Lease), Tenant shall not be in default hereunder; provided however, Landlord
shall have the right, but not the obligation, to terminate this Lease by
delivering written notice of termination to Tenant prior to the date that Tenant
re-occupies all or substantially all of the Premises and upon such termination,
Tenant shall have no further obligation hereunder (except for any obligation
that expressly survives termination of this Lease).

21.  MORTGAGES.  Tenant accepts this Lease subject and subordinate to any
mortgages and/or deeds of trust now or at any time hereafter constituting a lien
or charge upon the Premises or the improvements situated thereon or the
Building, provided that the foregoing subordination in respect to any mortgage
or deed of trust placed on the Project after the date hereof shall not become
effective until and unless the holder of such mortgage or deed of trust delivers
to Tenant a non-disturbance agreement permitting Tenant, if Tenant is not then
in default under this Lease after the expiration of all applicable notice and
cure periods, to remain in occupancy of the Premises in accordance with the
terms of this Lease in the event of a foreclosure of any such mortgage or deed
of trust; and further provided, however, that if the mortgagee, trustee or
holder of any such mortgage or deed of trust elects to have Tenant's interest in
this Lease superior to any such instrument, then by notice to Tenant from such
mortgagee, trustee or holder, this Lease shall be deemed superior to such lien,
whether this Lease was executed before or after said mortgage or deed of trust.
Tenant, at any time hereafter within fifteen (15) days after receipt of a
request therefor, shall execute a commercially reasonable instrument or other
document that may be reasonably requested by any mortgagee, trustee or holder
for the purpose of evidencing the foregoing subordination.  Tenant shall not
terminate this Lease or pursue any other remedy available to Tenant hereunder
for any default on the part of Landlord without first giving written notice by
certified or registered mail, return receipt requested, to any mortgagee,
trustee or holder of any such mortgage or deed of trust, the name and post
office address of which Tenant has received written notice, specifying the
default in reasonable detail and affording such mortgagee, trustee or holder a
reasonable opportunity (but in no event less than thirty (30) days) to make
performance, at its election, for and on behalf of Landlord.  Landlord
represents that the current holder of a mortgage on the Building is Nationwide
Life Insurance Company and Landlord shall deliver a subordination, non-
disturbance and attornment agreement from the current mortgage holder in the
form of Exhibit "B"  attached hereto prior to the Commencement Date. In the
event Landlord fails to deliver such subordination, non-disturbance and
attornment agreement prior to the Commencement Date, Tenant shall be entitled to
terminate this Lease by delivering written notice of such termination to
Landlord prior to Landlord's delivery of the same to Tenant.

22.  MECHANIC'S LIENS.  Tenant has no authority, express or implied, to create
or place any lien or encumbrance of any kind or nature whatsoever upon, or in
any manner to bind, the interest of Landlord or Tenant in the Premises.  Tenant
will save and hold Landlord harmless from any and all loss, cost or expense,
including without limitation attorneys' fees, based on or arising out of
asserted claims or liens against the leasehold estate or against the right,
title and interest of the Landlord in the Premises or under the terms of this
Lease.

23.  MISCELLANEOUS.

     A.   Interpretation.  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. Any reference in this Lease to rentable area shall
mean the gross rentable area as determined by the roofline of the building in
question.

     B.   Binding Effect.  Except as otherwise herein expressly provided, the
          --------------
terms, provisions and covenants and conditions in this Lease shall apply to,
inure to the benefit of and be binding upon the parties hereto and upon their
respective heirs, executors, personal representatives, legal representatives,
successors and assigns. Landlord shall have the right to transfer and assign, in
whole or in part, its rights and obligations in the Premises and in the Building
and other property that are the subject of this Lease.

     C.   Evidence of Authority.  Tenant agrees to furnish to Landlord, promptly
          ---------------------
upon demand, a corporate resolution, proof of due authorization by partners or
other appropriate documentation evidencing the due authorization of such party
to enter into this Lease.

     D.   Force Majeure.  Neither Landlord nor Tenant shall be held responsible
          -------------
for delays in the performance of its obligations hereunder (other than the
payment of any sum due hereunder) when caused by material shortages, acts of
God, labor disputes or other events beyond the control of such party.

     E.   Payments Constitute Rent.  Notwithstanding anything in this Lease to
          ------------------------
the contrary, all amounts payable by Tenant to or on behalf of Landlord under
this Lease, whether or not expressly denominated as rent, shall constitute rent.

     F.   Estoppel Certificates.  Tenant agrees, from time to time, within
          ---------------------
fifteen (15) days after request of Landlord, to deliver to Landlord, or
Landlord's designee, an estoppel certificate stating that this Lease is in full
force and effect, the date to which rent has been paid, the unexpired term of
this Lease, any defaults existing under this Lease (or the absence thereof) and
such other factual

                                       8
<PAGE>

matters pertaining to this Lease as may be reasonably requested by Landlord. It
is understood and agreed that Tenant's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Landlord's
execution of this Lease.

     G.   Entire Agreement.  This Lease constitutes the entire understanding and
          ----------------
agreement of Landlord and Tenant with respect to the subject matter of this
Lease, and contains all of the covenants and agreements of Landlord and Tenant
with respect thereto.  Landlord and Tenant each acknowledge that no
representations, inducements, promises or agreements, oral or written, have been
made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant,
which are not contained herein, and any prior agreements, promises, negotiations
or representations not expressly set forth in this Lease are of no force or
effect.  EXCEPT AS SPECIFICALLY PROVIDED IN THIS LEASE, TENANT HEREBY WAIVES THE
BENEFIT OF ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE
FOR ANY PARTICULAR PURPOSE.  Landlord's agents and employees do not and will not
have authority to make exceptions, changes or amendments to this Lease, or
factual representations not expressly contained in this Lease.  Under no
circumstances shall Landlord or Tenant be considered an agent of the other.
This Lease may not be altered, changed or amended except by an instrument in
writing signed by both parties hereto.

     H.   Survival of Obligations.  All obligations of Landlord and Tenant
          -----------------------
hereunder not fully performed as of the expiration or earlier termination of the
term of this Lease shall survive the expiration or earlier termination of the
term hereof, including without limitation all payment obligations with respect
to taxes and insurance and all obligations concerning the condition and repair
of the Premises. Upon the expiration or earlier termination of the term hereof,
and prior to Tenant vacating the Premises, Tenant shall pay to Landlord any
amount reasonably agreed by Landlord and Tenant as necessary to put the Premises
in good condition and repair, reasonable wear and tear excluded, including
without limitation the cost of repairs to and replacements of all heating and
air conditioning systems and equipment therein, if the same is required. Tenant
shall also, prior to vacating the Premises, pay to Landlord the amount, as
reasonably estimated by Landlord, of Tenant's obligations hereunder for real
estate taxes and insurance premiums for the year in which the Lease expires or
terminates. All such amounts shall be used and held by Landlord for payment of
such obligations of Tenant hereunder, with tenant being liable for any
additional costs therefore upon demand by Landlord, or with any excess to be
returned to Tenant after all such obligations have been determined and
satisfied, as the case may be. Any Security Deposit held by Landlord may, at
Landlord's option, be credited against any amounts due from Tenant under this
Paragraph 23.H.

     I.   Severability of Terms.  If any clause or provision of this Lease is
          ---------------------
illegal, invalid or unenforceable under present or future laws effective during
the term of this Lease, then, in such event, it is the intention of the parties
hereto that the remainder of this Lease shall not be affected thereby, and 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.

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

     K.   Brokers' Commission.  Tenant represents and warrants that it has dealt
          -------------------
with and will deal with no broker other than Hill Partners (represented by Chris
Whitworth), agent or other person in connection with this transaction or future
related transactions and that no other broker, agent or other person brought
about this transaction, 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.  Landlord agrees to pay the
commissions of Hill Partners due in connection with this Lease pursuant to a
separate written agreement with Hill Partners.

     L.   Ambiguity.  Landlord and Tenant hereby agree and acknowledge that this
          ---------
Lease has been fully reviewed and negotiated by both Landlord and Tenant, and
that Landlord and Tenant have each had the opportunity to have this Lease
reviewed by their respective legal counsel, and, accordingly, in the event of
any ambiguity herein, Tenant does hereby waive the rule of construction that
such ambiguity shall be resolved against the party who prepared this Lease.

     M.   Joint Several Liability.  If there be more than one Tenant, the
          -----------------------
obligations hereunder imposed upon Tenant shall be joint and several.  If there
be a guarantor of Tenant's obligations hereunder, the obligations hereunder
imposed upon Tenant shall be joint and several obligations of Tenant and such
guarantor, and Landlord need not first proceed against Tenant before proceeding
against such guarantor, nor shall any such guarantor be released from its
guaranty for any reason whatsoever, including, without limitation, in case of
any amendments hereto, waivers hereof or failure to give such guarantor any
notices hereunder.

     N.   Third Party Rights.  Nothing herein expressed or implied is intended,
          ------------------
or shall be construed, to confer upon or give to any person or entity, other
than the parties hereto, any right or remedy under or by reason of this Lease.

     O.   Exhibits and Attachments.  All exhibits, attachments, riders and
          ------------------------
addenda referred to in this Lease, and the exhibits listed herein below and
attached hereto, are incorporated into this Lease and made a part hereof for all
intents and purposes as if fully set out herein. All capitalized terms used in
such documents shall, unless otherwise defined therein, have the same meanings
as are set forth herein.

     P.   Applicable Law.  This Lease has been executed in the State of Texas
          --------------
and shall be governed in all respects by the laws of the State of Texas. It is
the intent of Landlord and Tenant to conform strictly to all applicable state
and federal usury laws. All agreements between Landlord and Tenant, whether now
existing or hereafter arising and whether written or oral, are hereby expressly
limited so that in no contingency or event whatsoever shall the amount
contracted for, charged or received by Landlord for the use, forbearance or
retention of money hereunder or otherwise exceed the maximum amount which
Landlord is legally entitled to contract for, charge or collect under the
applicable state or federal law. If, from any circumstance whatsoever,
fulfillment of any provision hereof at the time performance of such provision
shall be due shall involve transcending the limit of validity prescribed by law,
then the obligation to be fulfilled shall be automatically reduced to the limit
of such validity, and if from any such circumstance Landlord shall ever receive
as interest or otherwise an amount in excess of the maximum that can be legally
collected, then such amount which would be excessive interest shall be applied
to the reduction of rent hereunder, and if such amount which would be excessive
interest exceeds such rent, then such additional amount shall be refunded to
Tenant.

24.  NOTICES.  Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivering of notice or the making of any payment by
Landlord to Tenant or with reference to the sending, mailing or delivering of
any notice or the making of any payment by Tenant to Landlord shall be deemed to
be complied with when and if the following steps are taken:

     (i)     All rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address for Landlord set
forth below or at such other address as Landlord may specify from time to time
by written notice delivered in accordance herewith.

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

     (iii)   Except as expressly provided herein, any written notice, document
or payment required or permitted to be delivered hereunder shall be deemed to be
delivered when received or, whether actually received or not, upon first
attempted delivery on a business day, when sent by United States Mail, postage
prepaid, Certified or Registered Mail, addressed to the parties hereto at the
respective addresses set out below, or at such other address as they have
theretofore specified by written notice delivered in accordance herewith.

25.  ADDITIONAL PROVISIONS.  See EXHIBIT "C" attached hereto and incorporated
herein by reference.

27.  LANDLORD'S LIEN.  Landlord hereby waives all statutory and contractual
liens to which it may be entitled on Tenant's property located in or about the
Premises.

                                       9
<PAGE>

     EXECUTED BY LANDLORD as of the 27/th/ day of September, 2000.

<TABLE>
<S>                                          <C>
                                             BC12 99, Ltd. a Texas limited partnership

                                             By:     ORI, Inc., a Texas corporation, General Partner

                                             ________________________________________________________________
Attest/Witness                               By:
                                             ----------------------------------------------------------------
______________________________________       Title:
                                             ----------------------------------------------------------------
Title:                                       Address:  c/o Trammell Crow Central Texas, Inc.
--------------------------------------       ----------------------------------------------------------------
                                             301 Congress Avenue, Suite 1300, Austin, TX 78701
______________________________________       ----------------------------------------------------------------
</TABLE>

     EXECUTED BY TENANT as of the 27/th/ day of September, 2000.

<TABLE>
<S>                                          <C>
                                             Active Power, Inc., a Delaware corporation

                                             ________________________________________________________________
Attest/Witness                               By:      Dave Gino
                                             ----------------------------------------------------------------
______________________________________       Title:   Vice President/Chief Financial Officer
                                             ----------------------------------------------------------------
Title:                                       Address: 11525 Stonehollow Drive, Suite 135
--------------------------------------       ----------------------------------------------------------------
                                                      Austin, Texas 78758
______________________________________       ----------------------------------------------------------------
                                             Phone:   512-491-3134
                                             ----------------------------------------------------------------
</TABLE>

EXHIBIT "A"      Description of Premises
EXHIBIT "A-1"    Legal Description
EXHIBIT "A-2"    Initial Premises
EXHIBIT "A-3"    First Additional Premises
EXHIBIT "A-4"    Second Additional Premises
EXHIBIT "A-5"    Site Plan of Project
EXHIBIT "A-6"    Adjacent Parking Facility
EXHIBIT "A-7"    Approved Location of Load Bank Yard
EXHIBIT "B"      Form Subordination, Non-Disturbance and Attornment Agreement
EXHIBIT "C"      Additional Provisions
EXHIBIT "D"      Sign Criteria

                                      10
<PAGE>

                                  EXHIBIT "A"

                          FLOOR PLAN OF THE PREMISES

                                       1
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                                 EXHIBIT "A-1"

                               LEGAL DESCRIPTION

     Lot 5, Block C, Kramer Lane 65, Section 2, a subdivision in Travis County,
Texas, according to the map or plat thereof recorded in Volume 81, Page 323, 324
and 325 of Plat Records of Travis County, Texas.

                                       1
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                                 EXHIBIT "A-2"

                        FLOOR PLAN FOR INITIAL PREMISES

                                       2
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                                 EXHIBIT "A-3"

                   FLOOR PLAN FOR FIRST ADDITIONAL PREMISES

                                       1
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                                 EXHIBIT "A-4"

                   FLOOR PLAN OF SECOND ADDITIONAL PREMISES

                                       1
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                                 EXHIBIT "A-5"

                             SITE PLAN OF PROJECT

                                       1
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                                 EXHIBIT "A-6"

                           ADJACENT PARKING FACILITY

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                                 EXHIBIT "A-7"

                      APPROVED LOCATION OF LOAD BANK YARD

                                       1
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                                  EXHIBIT "B"

                    FORM OF SUBORDINATION, NON-DISTURBANCE
                           AND ATTORNMENT AGREEMENT

                   NON-DISTURBANCE AND ATTORNMENT AGREEMENT
                   ----------------------------------------

Premises: 126,750 square feet of space located at 2128 Braker Lane, Austin,
Texas 78758

Lease Date: September 27, 2000, by and between BC12 99, Ltd., a Texas limited
partnership ("Landlord") and Active Power, Inc., a Delaware corporation
("Tenant").

This Agreement is made by and between Tenant, Landlord and Nationwide Life
Insurance Company, One Nationwide Plaza, Columbus, Ohio 43216, Attention: Real
Estate Investments, 01-34-02, ("Lender") , the holder or proposed holder of a
note or other obligation secured, or to be secured, by a mortgage/deed of trust
("Mortgage") upon the Premises and assignee, or proposed assignee of the Lease
under an assignment of leases, rents and profits ("Lease Assignment").

     1.   Tenant hereby agrees as follows:

     a.   The Lease and the rights of Tenant thereunder are, and shall be,
subject and subordinate to the lien of the Mortgage and to all of the terms,
conditions and provisions thereof, to all advances made or to be made
thereunder, to the full extent of the principal sum and interest thereon from
time to time secured thereby, and to an renewal, substitution, extension,
modification or replacement thereof, including any increase in the indebtedness
secured thereby or any supplements thereto.

     b. Tenant will not pay any rent under the Lease more than one (1) month in
advance of its due date.

     c.   Tenant will not consent to the modification of any of the terms of the
Lease, or to the termination thereof by Landlord, without written approval of
Lender, which approval shall not be unreasonably withheld or delayed.

     d.   Tenant will not seek to terminate the Lease or to setoff or abate any
rent under the Lease by reason of any act or omission of Landlord, until Tenant
has given prompt written notice of such act or omission to Lender (at the last
address furnished to Tenant) and until Lender has received such notice and has
been given the opportunity, but without undertaking Landlord's obligations, to
cure the default within a sixty (60) day time period. In he event Lender has
begun action to cure the default, but has not completed the same during the
sixty (60) day period, Tenant agrees that Lender shall have a reasonable period
of time thereafter to so do. If the default is such that it cannot practically
be cured by Lender without taking possession of the Premises, Tenant agrees that
any right it may have to terminate the Lease or to setoff or abate any rent
under the Lease shall be suspended for a reasonable period of time so long as
Lender is diligently proceeding to acquire possession of the Premises, by
foreclosure or otherwise in order to cure said default.

          e.   Tenant will attorn to and recognize Lender or any purchaser at a
foreclosure sale under the Mortgage, any transferee who acquires the Premises by
deed in lieu of foreclosure, and the successors and assigns of such purchaser(s)
as its landlord for the unexpired balance (and any extensions, if exercised) of
the term of the Lease upon the same terms and conditions set forth in the Lease.
Tenant further agrees that Lender or such purchaser shall not be: (i) liable for
any act or omission of any prior landlord (including Landlord); (ii) liable for
the return of any security deposit not actually received by Lender or such
purchaser; (iii) subject to any offsets or defenses which Tenant might have
against any prior landlord (including Landlord); (iv) bound by an advance
payment of rent or additional rent made by Tenant to Landlord, except for rent
or additional rent applicable to the then current month, or (v) bound by any
amendment or modification of the Lease made without the written consent of
Lender, which consent shall not be unreasonably withheld or delayed.

          f.   Upon receipt of notice from Lender, Tenant shall pay all monies
then due or becoming due from Tenant under the Lease, to or at the direction of
Lender, notwithstanding any provision of the Lease to the contrary. Tenant
agrees that neither Lender's demanding or receiving any such payments, nor
Lender's exercising any other right, remedy, privilege, power or immunity
granted by the Mortgage or the Lease Assignment, will operate to impose any
liability upon Lender for performance of any obligation of Landlord under the
Lease unless and until Lender elects otherwise in writing. Such payments shall
continue until Lender directs Tenant otherwise in writing.

          g.   Tenant agrees that, notwithstanding any provision in the Lease to
the contrary, all insurance proceeds payable with respect to any casualty loss
at the Premises or the real property of which the Premises are a part and any
and all awards or other compensation that may be payable for the condemnation of
all or any portion of the Premises or the real property of which the Premises
are a part, may be applied by Lender, at its option and to the extent set forth
in the Mortgage or the Lease Assignment, to the indebtedness secured by the
Mortgage.

     2.   Lender agrees that, provided Tenant is not in default under the terms
of the Lease beyond any applicable notice or grace periods, Tenant's right of
possession to the Premises shall not be affected or disturbed by Lender in the
exercise of any of its rights under the Mortgage or the note secured thereby ,
the leasehold estate granted by the Lease be not be affected in any manner and
the rights of Tenant granted under the Lease shall not be affected in any
manner.

     3.   The agreements herein contained shall be binding upon and shall inure
to the benefit of the parties hereto, their respective participants, successors
and permitted assigns.

     4.   If Lender shall (a) advise Tenant that Landlord is in default under
the Mortgage, and (b) direct Tenant to pay directly to Lender all monies then
due or becoming due from Tenant under the Lease, then the Landlord hereby
authorizes Tenant to pay directly to Lender all monies then due and thereafter
coming due under the Lease, without any further authorization by Landlord and
notwithstanding any protest by Landlord; and Landlord hereby agrees that any
sums paid by Tenant to Lender pursuant to the provisions of this Paragraph 4
shall be deemed to have been paid by Tenant to Landlord under the Lease, and
Tenant shall have no liability to Landlord whatsoever for any sums so paid by
Tenant directly to Lender, whether or not Landlord protests the same.

                                      1
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DATED:  _________________, 20___

                      TENANT:

                      ACTIVE POWER, INC., a Delaware corporation

                      By:____________________________________________
                      Name:__________________________________________
                      Title:_________________________________________

                      LANDLORD:

                      BC12 99 LTD., a Texas limited partnership

                      By:     ORI, Inc., a Texas corporation, general partner

                              By:____________________________________
                              Name:__________________________________
                              Title:_________________________________

                      LENDER:

                      NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation

                      By:____________________________________________
                      Name: Robert H. McNaghten
                      Title: Vice President

STATE OF OHIO        )
         ----
                     )
COUNTY OF FRANKLIN   )
          --------

The foregoing instrument was acknowledged before me this _____ day of
________________, 2000 by Robert H. McNaghten, Vice President of Nationwide Life
Insurance Company, an Ohio corporation, on behalf of the corporation.

[NOTARIAL SEAL]                              __________________________________
                                             Notary Public

My commission expires:

____________________________

STATE OF TEXAS             )
                           )
COUNTY OF TRAVIS           )

The foregoing instrument was acknowledged before me this _____ day of
________________, 2000 by ______________________, __________________________ of
Active Power, Inc., a Delaware corporation, on behalf of the corporation.

[NOTARIAL SEAL]                              __________________________________
                                             Notary Public

My commission expires:

____________________________

                                       2
<PAGE>

STATE OF TEXAS           )
                         )
COUNTY OF TRAVIS         )

The foregoing instrument was acknowledged before me this _____ day of
________________, 2000 by ______________________, the ___________________ of
ORI, Inc., a Texas corporation, as general partner of BC 12 99, Ltd., a Texas
limited partnership, on behalf of said limited partnership.

[NOTARIAL SEAL]                              ___________________________________
                                             Notary Public

My commission expires:

____________________________

                                       3
<PAGE>

                                  EXHIBIT "C"

                             ADDITIONAL PROVISIONS

TENANT FINISH ALLOWANCE
------------------------

(a) Tenant, at its sole cost and expense (subject to payment with the Finish
Allowance (hereinafter defined)), shall submit to Landlord (i) architectural and
engineering drawings of the work to be performed by Tenant in the Premises (the
"Tenant's Work") and specifications for Tenant's Work (such architectural and
engineering drawings and specifications are herein collectively referred to as
the "Tenant's Plans").  Within ten (10) days after receipt by Landlord of
Tenant's Plans, Landlord (i) shall give its written approval thereto or (ii) if
Landlord reasonably believes that the work reflected on the Tenant's Plans does
not comply with the Approval Criteria (hereinafter defined), shall request
revisions or modifications to the Tenant's Plans (but only to the extent the
same fails to comply with the Approval Criteria).  Tenant shall submit such
revisions or modifications to Landlord.  Within five (5) days following receipt
by Landlord of such revisions or modifications, Landlord shall give its written
approval thereto or shall request other revisions or modifications therein (but
relating only to the extent Tenant has failed to comply with Landlord's earlier
requests).  The preceding two sentences shall be implemented repeatedly until
Landlord gives its written approval to the Tenant's Plans.  If Landlord shall
fall to respond to Tenant's Plans with its approval or request for revision
s/modification within the time period(s) provided above, such failure shall be
deemed Landlord's approval of Tenant's Plans.  The Tenant's Plans as approved
(or deemed approved) by Landlord shall herein be referred to as the "Final
Tenant's Plans".  Notwithstanding anything to the contrary set forth herein or
in the Lease, Tenant shall not be required to remove any portion of Tenant's
Work contained in the existing office portion of the Premises (the location of
which is shown on Exhibit A-1 attached hereto) at the end of the Lease Term
                  -----------
unless Landlord shall notify Tenant of such requirement in writing (which shall
specifically describe that portion of the Tenant's Work that must be removed) at
the time Landlord approves the Tenant's Plans.

(b)  Landlord shall be entitled to object to any proposed Tenant Work, which
when completed, either (x) will adversely affect the structural integrity of the
Building or (y) will adversely affect the functioning outside the Premises of
any Building System (in either case, other than to a de minimus extent) (the
criteria specified in clauses (x) and (y) are herein referred to as the
"Approval Criteria").

(c)  Except as otherwise set forth in the Lease, Tenant may perform the Tenant's
Work with any general contractor(s), construction manager(s), subcontractors and
trade contractors as Tenant elects. Tenant shall perform the Tenant's Work in
accordance with (i) the Final Tenant's Plans (subject to part (d) below)), (ii)
good construction practices, and (iii) all applicable laws.

(d)  At any time after the Final Tenant's Plans are approved (or deemed
approved) by Landlord and thereafter throughout Tenant's prosecution of the
Tenant's Work, Tenant shall be permitted to direct changes in the Tenant's Work
(each a "Tenant Change Order") (it being agreed, however, that Tenant must
obtain Landlord's consent before prosecuting any Tenant Change Order that
constitutes a material alteration (each, a "Material Tenant Change Order")).
Within seven (7) days after its receipt of any proposed Material Tenant Change
Order, Landlord (i) shall give its written approval thereto or (ii) if Landlord
reasonably believes that such Material Tenant Change Order does not comply with
the Approval Criteria, shall request revisions or modifications to such Material
Tenant Change Order (but only to the extent the same fails to comply with the
Approval Criteria). Upon its receipt of any such request from Landlord, Tenant,
if it wishes to pursue such Material Tenant Change Order, shall submit such
revisions or modifications to Landlord. Within five (5) days following receipt
by Landlord of such revisions or modifications, Landlord shall give its written
approval thereto or shall request other revisions or modifications therein (but
relating only to the extent Tenant has failed to comply with Landlord's earlier
requests). The preceding two sentences shall be implemented repeatedly until
Landlord gives its written approval to the Material Tenant Change Order in
question. If Landlord falls to make a submission or furnish a response timely in
accordance with the provisions of this paragraph (d), Landlord shall be deemed
to have approved the Material Tenant Change Order in question. Once approved or
deemed approved by Landlord, a Material Tenant Change Order shall become part of
the Final Tenant's Plans and the work shown on such Material Tenant Change Order
shall be part of the Tenant's Work

(e)  Landlord, at Tenant's expense, shall reasonably cooperate with Tenant's
efforts to obtain any permits, certificates or final approvals in connection
with any portion of the Tenant's Work including, without limitation, executing
and delivering any documents or instruments that Landlord is required to sign
and which are reasonably required by Tenant in connection therewith. If, as a
result of any failure by any tenant of the Building to comply with the terms of
such tenant's lease, Tenant cannot obtain any required permits, approvals or
certificates in connection with any portion of the Tenant's Work, then Landlord
shall use commercially reasonable efforts to cause such tenant to comply with
the terms of such tenant's lease to the extent necessary to enable Tenant to
obtain such permits, approvals or certificates. Landlord shall not be entitled
to impose upon Tenant any charges or fees of any kind (including, without
limitation, charges or fees for profit, overhead or supervision) in connection
with any Tenant's Work.

(f)  Landlord shall provide Tenant with a Tenant Finish Allowance (the "Finish
Allowance") equal to One Hundred Thousand and no/100 Dollars ($100,000.00) to be
used by Tenant to pay the cost of the Tenant's Work, including without
limitation, space planning costs, architectural and engineering fees, general
contractor fees and other similar fees and expenses. Tenant shall bear the
entire cost of any Tenant's Work in excess of the Finish Allowance and shall pay
for such excess over the Finish Allowance directly to the contractors performing
the Tenant's Work. Landlord shall pay the Finish Allowance to Tenant within
thirty (30) days after substantial completion of the Tenant's Work and Tenant's
delivery to Landlord of final lien waivers from all contractors performing the
Tenant's Work.

RENEWAL OPTION
--------------

Provided that there is no Event of Default existing at the time of Tenant's
election renew or as of the commencement of any renewal term, Tenant shall have
the right and option to renew this Lease for one (1) additional term of three
(3) years (the "First Renewal Term") and one (1) additional term of two (2)
years (the "Second Renewal Term") by delivering written notice of Tenant's
exercise of such renewal option to Landlord at least One Hundred Eighty (180)
days prior to the expiration date of the then current Lease term.  Upon the
delivery of said notice and subject to the conditions set forth in the preceding
sentence, this Lease shall be extended upon the same terms, covenants and
conditions as provided in this Lease, except that the Base Rent payable during
First Renewal

                                       1
<PAGE>

Term and the Second Renewal Term, as applicable, shall be the greater of (i) the
Base Rent for the last day of the initial Lease Term, or (ii) the Base Rent
determined pursuant to the Consumer Price Index calculation below, and the rent
payable for the parking spaces in the Adjacent Parking Facility shall be
mutually determined by Landlord and Tenant.

                     Renewal Base Rent = Base Rentn x  (CPI of Dec, of yearn)
                                                        --------------------
                                                       (CPI of Dec, of yearn-1)
                                 //n// = last year of current term

The monthly Base Rent shall increase five percent (5%) halfway through the
applicable renewal term.

PRIVATE DRIVE:
-------------

Tenant desires that the private drive providing access to the Building and the
building known as Braker K currently known as Dell Drive be re-named to Active
Power Drive.  Tenant acknowledges that the private drive is not owned by the
Landlord and therefore the Landlord does not have the authority to rename the
drive Active Power Drive.  Landlord agrees to cooperate with Tenant to
facilitate the desired name changed.

                                       2
<PAGE>

                                  EXHIBIT "D"

                                 SIGN CRITERIA

                                       1<PAGE>

                                                                   EXHIBIT 10.18

                  SIXTH AMENDMENT TO LEASE AGREEMENT BETWEEN
               METROPOLITAN LIFE INSURANCE COMPANY, AS LANDLORD
                                      AND
                         ACTIVE POWER, INC., AS TENANT

          To be attached to and form a part of Lease made the 12/th/ day of
          March 1996 (which together with any amendments, modifications and
          extensions thereof, is hereinafter called the Lease), between Landlord
          and Tenant.

     THIS SIXTH AMENDMENT TO LEASE AGREEMENT (this "Sixth Amendment) made and
                                                    ---------------
entered into as of the ________ day of _________________, 2000 by and between
METROPOLITAN LIFE INSURANCE COMPANY ("Landlord") and ACTIVE POWER, INC.,
                                      --------
("Tenant").

                             W I T N E S S E T H:

     Landlord and Tenant entered into that certain Lease Agreement dated March
12, 1996 (the "Lease" for space in Stonehollow 1), amended by the First
               -----
Amendment dated June 24, 1996 increasing the square footage to 8,100 square feet
in Stonehollow 1, Suite 135, amended by the Second Amendment dated September 4,
1996 notifying Landlord of a name change from "Magnetic Bearing Technologies" to
"Active Power, Inc." amended by the Third Amendment dated October 10, 1997
expanding into STONEHOLLOW 2 for approximately an additional 15,080 square feet
of space located at 11525 Stonehollow Drive, Suite 255, Austin, Texas for a
total of 23,180 square feet of space, amended by the Fourth Amendment dated
August 20, 1999 extending the term in Stonehollow 2, Suite 255 for an additional
twelve months, and amended by the Fifth Amendment dated February 9, 2000
extending the lease term for Suite 135 and Suite 255 to expire on March 31, 2003
and expansion into Suites 120, 110 and 130 to expire March 31, 2003.

     Landlord and Tenant now desire to further amend the Lease Agreement and
Amendments in certain respects as more fully hereinafter set forth. Landlord and
Tenant agree as follows:

     1.   Landlord and Tenant agree that Tenant shall expand into an additional
          4,050 square feet of space located at 11525 Stonehollow Drive
          (Stonehollow 1) Suite 155 as outlined on the attached Exhibit "A" as
          "expansion space".

     2.   Landlord grants Tenant a finishout allowance of $8,100.00.

     3.   Commencement Date for the "expansion space" (Suite 155) is estimated
          to be December 15, 2000, however this date is contingent upon existing
          tenant vacating the premises.

     4.   The Monthly Base Rental Rate for the "expansion space" (Suite 155)
          shall be as follows:

        Stonehollow 1 - "Expansion Space" (Suite 155) 4,050 square feet

          Commencement - 03/31/03  =  $0.90/sf ($3,645.00 per month)

     5.   Tenant agrees to pay to Landlord an Additional Security Deposit in the
          amount of $4,100.00.

     6.   Except as specifically amended hereby, the Lease shall remain
          unaffected hereby and in full force and effect as originally written.

                            Signatures on next page
<PAGE>

           DATED AS OF THE ______ DAY OF ____________________, 2000.

 WITNESS:                             LANDLORD:

                                      Metropolitan Life Insurance Company, a New
                                      York Corporation; on behalf of a
                                      commingled separate account
__________________________________
                                      BY: SSR Realty Advisors, Inc., a Delaware
                                      corporation, as Investment Advisor to
                                      Metropolitan Life Insurance Company

                                      By:_______________________________________
                                      Name:     ________________________________
                                      Title:    ________________________________
                                      Address:  ________________________________
                                                ________________________________
                                                ________________________________
                                      Telephone:________________________________
                                      Fax:      ________________________________

           DATED AS OF THE ______ DAY OF ____________________, 2000.

 WITNESS:                             TENANT:

                                      ACTIVE POWER, INC.
__________________________________
                                      By:_______________________________________
                                      Name:     ________________________________
                                      Title:    ________________________________
                                      Address:  ________________________________
                                                ________________________________
                                                ________________________________
                                      Telephone:________________________________
                                      Fax:      ________________________________
<PAGE>

                                  Exhibit "A"
                                  -----------

Stonehollow 1
=============

Address:            11525 Stonehollow Drive, Suite 155 (expansion space)
                    Austin, Texas 78758

Legal Description:  Lot 1-A, Block A, Stonehollow Section 4-A Resubdivision of
                    Lots 2 and 3 Stonehollow Section Four, a subdivision in
                    Travis County, Texas according to the map or plat of record
                    in Volume 98, Pages 36-37 in the Plat Records of Travis
                    County, Texas

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