Document:

<PAGE>

Exhibit 4.4

                            DEBENTURE PLACEMENT AGREEMENT

              DEBENTURE PLACEMENT AGREEMENT ("Agreement") dated as of the __ day
of April 2000, by and between WILLIAMS CONTROLS, INC., a Delaware corporation
(the "Company"), TAGLICH BROTHERS, INC., a New York corporation, ("Placement
Agent"), either on its own behalf or on behalf of other lenders, and the persons
and entities listed on EXHIBIT A to this Agreement (such persons and entities
being referred to individually as "Lender" and collectively, as "Lenders").

                                W I T N E S S E T H :

       WHEREAS, in reliance upon the representations, warranties, terms and
conditions hereinafter set forth, Placement Agent will use its best efforts to
privately place a minimum of $2,000,000 (the "Minimum Amount') and a maximum of
$6,000,000 (the "Maximum Amount") in principal amount of 7.5% convertible
subordinated debentures of the Company due March 31, 2003 (the "Debentures"),
the Debentures being convertible into shares of common stock, $.01 par value per
share (the "Common Stock"), of the Company at $2.375 per share (the "Conversion
Price"); and

       WHEREAS, the Company will issue to each Lender a three (3) year warrant
to purchase an amount of shares of Common Stock of the Company equal to twenty
(20%) percent of the shares of Common Stock into which such Lender's Debenture
is convertible (the "Common Stock Warrants"), at an exercise price of $2.375 per
share, subject to adjustment; and

       WHEREAS, the Debentures and the Common Stock Warrants are being issued
pursuant to the Company's Confidential Private Placement Memorandum and Exhibits
thereto dated March 27, 2000, as amended April 18, 2000, and as same may be
further amended and/or supplemented from time to time (collectively, the
"Memorandum"); and

       WHEREAS, the Debentures and the Common Stock Warrants are being issued
pursuant to an exemption from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act").

       NOW, THEREFORE, in consideration of the premises and the respective
promises hereinafter set forth, the Company and the Placement Agent hereby agree
as follows:

       1.     SALE AND PURCHASE OF DEBENTURES.

              (a)    Subject to the terms and conditions of this Agreement, the
Company shall sell to the Lenders the Debentures and Common Stock Warrants.  The
forms of the Debenture and the

<PAGE>

Common Stock Warrant are included in the Memorandum.  The Company will execute
each Debenture and Common Stock Warrant.

              (b)    The initial sale and purchase described in Paragraph 1(a)
of this Agreement shall take place at a closing (the "Closing") at the offices
of ROBINSON SILVERMAN PEARCE ARONSOHN & BERMAN LLP, 1290 Avenue of the Americas,
New York, NY 10104 or such other place as shall be acceptable to the Company and
Placement Agent on such date or dates as Placement Agent shall advise the
Company on two (2) business days notice or such shorter notice as shall be
reasonably acceptable to the Company.  Subsequent sales and purchases of the
Debentures and Common Stock Warrants up to the Maximum Amount shall take place
at one or more Closings held on such dates as the Company and Placement Agent
shall mutually determine.  All Closings pursuant to this Agreement shall occur
not later than April 15, 2000, unless such date is extended for up to thirty
(30) days by mutual agreement of the Company and the Placement Agent, in their
sole and absolute discretion.  The initial Closing hereunder shall be referred
to as "Initial Closing", the final Closing hereunder shall be referred to as
"Final Closing" and the date of the Final Closing shall be referred to as the
"Final Closing Date".

              (c)    All defined terms used in this Agreement which are not
otherwise defined shall have the meanings ascribed to them in the Memorandum.

       2.     PAYMENT.  At each Closing, the Company or its agent shall deliver
to Placement Agent, on behalf of the Lenders, the original executed and sealed
Debentures being purchased by the Lenders, against its receipt of payment
therefor by certified or bank check drawn on a bank located in the United
States, or by Federal wire transfer, in the amount of the aggregate purchase
price for such Debentures being sold, less the amount of cash fees payable to
Placement Agent pursuant to Paragraph 10(a) of this Agreement.  All Debentures
being purchased by the Lenders shall be issued in the respective names of the
Lenders in accordance with instructions provided by Placement Agent not later
than the day of Closing.

       3.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company hereby
represents and warrants to and covenants and agrees with the Placement Agent, as
of the date hereof and as of the date of each Closing, as follows:

              (a)    The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
qualified and in good standing as a foreign corporation in each jurisdiction in
which the nature of the business conducted by the Company or the property owned
or leased by the Company requires such qualification.  Except as set forth in
this Agreement, the Memorandum and in the exhibits annexed to the Memorandum
(collectively, the "Exhibits"), the Company has no subsidiaries and does not own
any equity interest and has not made any loans or advances to or guarantees of
indebtedness to any person, corporation, partnership or other entity, except for
guarantees of subsidiary debt by Williams Controls, Inc. or Williams Controls
Industries, Inc.  Each of Williams Technologies, Inc., Williams World Trade,
Inc., Aptek Williams, Inc. and GeoFocus, Inc., each a wholly-owned subsidiary of
the Company (each a

                                         -2-
<PAGE>

"Subsidiary" and together, the "Subsidiaries") is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and each Subsidiary is qualified and in good standing as a foreign
corporation in each jurisdiction in which the nature of its business or the
property owned or leased by the Subsidiary requires such qualification.  Except
as disclosed in the Memorandum, no Subsidiary has any subsidiary and no
Subsidiary owns any equity interest in any other entity and no Subsidiary has
made any loans or advances to or guarantees of indebtedness to any person,
corporation, partnership or other entity.  The Company owns all of the issued
and outstanding shares of common stock of each of the Subsidiaries free and
clear of any lien, claim, encumbrance, pre-emptive rights or contractual rights
of first refusal.

              (b)    The authorized capital of the Company consists of
50,000,000 shares of Common Stock and 50,000 shares of Series A Preferred Stock
(the "Preferred Stock"), of which, as of the date of this Agreement, (i)
19,787,278 shares of Common Stock are issued and outstanding, (ii) 130,200
shares of Common Stock are held in treasury, (iii) 78,500 shares of Preferred
Stock are issued and outstanding, and (iv) 6,499,643 shares of Common Stock have
been reserved for issuance upon conversion or exercise of the outstanding
Preferred Stock, debentures, options, warrants and other rights to acquire
Common Stock and upon the exercise of options granted pursuant to the Company's
stock option plans and pursuant to other agreements, excluding the shares of
Common Stock issuable upon conversion of the Debentures (the "Conversion
Shares") , the shares of Common Stock issuable upon exercise of the Placement
Agent Warrants (as defined below) (the "PAW Exercise Shares") and the shares of
Common Stock issuable upon exercise of the Common Stock Warrants (the "CSW
Exercise Shares").  Except as set forth in the Memorandum, the Company is not a
party to any agreement to issue, nor has it issued, any warrants, options or
rights or preferred stock, notes or other evidence of indebtedness or other
securities, instruments or agreements upon the exercise or conversion of which
or pursuant to the terms of which additional shares of capital stock of the
Company may become issuable.  No holder of any of the Company's securities has
preemptive rights or contractual rights of first refusal.

              (c)    The Company has the full right, power and authority to
execute, deliver and perform under this Agreement, the Debentures, the Placement
Agent Warrants and the Common Stock Warrants.  This Agreement has been duly
executed by the Company and, at each Closing, the Debentures, the Common Stock
Warrants and the Placement Agent Warrants being issued will have been duly
executed by the Company, and this Agreement, the Debentures, the Common Stock
Warrants and the Placement Agent Warrants and the transactions contemplated by
this Agreement, the Common Stock Warrants and the Placement Agent Warrants have
been duly authorized by all necessary corporate action and each constitute, the
legal, valid and binding obligations of the Company, enforceable in accordance
with their respective terms.

              (d)    All of the issued and outstanding shares of Common Stock
and Preferred Stock of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable, with no personal liability
attaching to the holders thereof, and such shares of Common Stock and Preferred
Stock have not been issued in violation of the preemptive rights or rights of
first refusal of any holder of securities of the Company.  All of the issued and
outstanding

                                         -3-
<PAGE>

shares of Common Stock and Preferred Stock of the Company have been issued
pursuant to either a current effective registration statement under the 1933 Act
or an exemption from the registration requirements of the 1933 Act and were
issued in accordance with all applicable Federal and state securities laws.  All
of the issued and outstanding shares of common stock of each Subsidiary have
been duly and validly authorized and issued and are fully paid and
nonassessable.

              (e)    The Debentures and Common Stock Warrants to be issued at
each Closing and the shares of Common Stock included in the Conversion Shares,
in the PAW Exercise Shares and the CSW Exercise Shares have been validly
authorized for issuance and, when issued pursuant to this Agreement and the
terms of the Debenture, the Placement Agent Warrants and the CSW Exercise
Shares, as the case may be, will be duly and validly authorized and issued,
fully paid and nonassessable and free from preemptive rights or rights of first
refusal held by any person.

              (f)    The following financial statements of the Company
(hereinafter collectively, the "Financial Statements") are included in the
Memorandum: (i) consolidated balance sheets as of September 30, 1999 and
consolidated statements of operations, shareholders' equity and cash flows for
the fiscal year ended September 30, 1999 and the related notes thereto, which
have been audited by Arthur Andersen LLP, independent certified public
accountants, (ii) consolidated balance sheets as of September 30, 1998 and
consolidated statements of operations, shareholders' equity and cash flows for
the fiscal year ended September 30, 1998, and the related notes thereto, which
have been audited by Arthur Andersen LLP, independent certified public
accountants, and (iii) unaudited balance sheet as of December 31, 1999,  and
unaudited statement of operations and cash flows for the fiscal quarter ended
December 31, 1999, and the related notes thereto, which have been prepared by
the Company.  The Financial Statements, which are included in the Company's
Annual Report on Form 10-K and Form 10-K/A  for the year ended September 30,
1999 and  the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1999 (the "Form 10-Q"), were prepared in accordance with
generally accepted accounting principles consistently applied and present and
reflect fairly the financial position of the Company at the respective balance
sheet dates and the results of its operations, changes in stockholders' equity
and cash flows for the periods then ended, PROVIDED, HOWEVER, that the financial
statements included in the Form 10-Q are subject to normal year-end adjustments
and footnotes and other presentation items have been condensed or omitted.
During the period of Arthur Andersen LLP's engagement as the Company's
independent certified public accountants, there has been no disagreements
between the accounting firm and the Company on any matters of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure and no events required to be reported on a current report on Form 8-K
relating to the relationship between the Company and the accounting firm.  The
Company has made and kept books and records and accounts which are in reasonable
detail and which fairly and accurately reflect the activities of the Company,
subject only to year-end adjustments.

              (g)    The Company has good and marketable title to all of its
material property and assets and, except as set forth in the Memorandum or the
Financial Statements, none of such property or assets of the Company is subject
to any lien, mortgage, pledge, encumbrance or other security interest.

                                         -4-
<PAGE>

              (h)    Except as may be disclosed in the Memorandum, since
December 31, 1999, there has not been any material adverse change in the
financial condition or in the operations, business or prospects of the Company
or any of the Subsidiaries from that shown in the Financial Statements or any
damage or destruction, not covered by insurance, which affects the business,
property or assets of the Company or any of the Subsidiaries.

              (i)    Except as set forth in the Memorandum, the Company has not
filed any Current Reports on Form 8-K or other reports filed with the Securities
and Exchange Commission (the "SEC") subsequent to December 31, 1999.

              (j)    Except for any consents obtained at or prior to closing,
neither the execution or delivery of this Agreement, the Debentures, the Common
Stock Warrants or the Placement Agent Warrants by the Company nor the
performance by the Company of the transactions contemplated by this Agreement,
the Debentures, the Common Stock Warrants or the Placement Agent Warrants: (i)
requires the consent, waiver, approval, license or authorization of or filing
with or notice to any person, entity or public authority (except any filings
required by Federal or state securities laws, which filings have been or will be
made by the Company on a timely basis); (ii) violates or constitutes a default
under or breach of any law, rule or regulation applicable to the Company; or
(iii) conflicts with or results in a breach or termination of any provision of,
or constitutes a default under, or will result in the creation of any lien,
charge or encumbrance upon any of the property or assets of the Company with or
without the giving of notice, the passage of time or both, pursuant to (A) the
Company's certificate of incorporation or by-laws, (B) any mortgage, deed of
trust, indenture, note, loan agreement, security agreement, contract, lease,
license, alliance agreement, joint venture agreement, or other agreement or
instrument, or (C) any order, judgment, decree, statute, regulation or any other
restriction of any kind or character to which the Company is a party or by which
any of the assets of the Company may be bound.

              (k)    Neither the Company nor any of the Subsidiaries has any
indebtedness to any officer, director, 5% stockholder or other Affiliate (as
defined in the Rules and Regulations of the SEC under the 1933 Act) of the
Company.

              (l)    The Company and each of the Subsidiaries are in compliance
with all laws, rules and regulations of all Federal, state and local government
agencies having jurisdiction over the Company and each of the Subsidiaries or
affecting the business, assets or properties of the Company or any of the
Subsidiaries, except where the failure to comply has not and will not have a
material adverse effect on the business, financial condition or results of
operations of the Company or its Subsidiaries, taken as a whole (a "Material
Adverse Effect").  The Company and each of the Subsidiaries possess all
licenses, permits, consents, approvals and agreements which are required to be
issued by any and all applicable Federal, state or local authorities necessary
for the operation of their respective business and/or in connection with their
respective assets or properties, except where the failure to possess such
licenses, permits, consents, approvals or agreements has not and will not have a
Material Adverse Effect.

                                         -5-
<PAGE>

              (m)    Except as disclosed in the Memorandum, neither the Company
nor any of the Subsidiaries is in default under any note, loan agreement,
security agreement, mortgage, contract, franchise agreement, distribution
agreement, lease, alliance agreement, joint venture agreement, agreement,
license, permit, consent, approval or instrument to which it is a party, and no
event has occurred which, with or without the lapse of time or giving of notice,
or both, would constitute such default thereof by the Company or any of the
Subsidiaries or would cause acceleration of any obligation of the Company or any
of the Subsidiaries or would adversely affect the business, operations,
financial condition or prospects of the Company or any of the Subsidiaries,
except where such default or event, whether with or without the lapse of time or
giving of notice, or both, has not and will not have a Material Adverse Effect.
To the best of the knowledge of the Company, except as disclosed in the
Memorandum, no party to any note, loan agreement, security agreement, mortgage,
contract, franchise agreement, distribution agreement, lease, alliance
agreement, joint venture agreement, agreement, license, permit, consent,
approval or instrument with or given to the Company or any of the Subsidiaries
is in default thereunder and no event has occurred with respect to such party,
which, with or without the lapse of time or giving of notice, or both, would
constitute a default by such party or would cause acceleration of any
obligations of such party.

              (n)     To the best of the Company's knowledge, except as set
forth in the Memorandum, no officer, director or 5% stockholder of the Company
and no Affiliate of any such person either (i) holds any interest in any
corporation, partnership, business, trust, sole proprietorship or any other
entity which is engaged in a business similar to that conducted by the Company
or any of the Subsidiaries (other than a passive immaterial interest in a public
company engaged in any such business) or (ii) engages in business with the
Company or any of the Subsidiaries.

              (o)    Except as set forth in the Memorandum, there are no
material (i.e., involving an asserted liability in excess of one hundred
thousand dollars ($100,000)) claims, actions, suits, proceedings or labor
disputes, inquiries or investigations (whether or not purportedly on behalf of
the Company or any of the Subsidiaries), pending or, to the best of the
Company's knowledge, threatened, against the Company or any of the Subsidiaries,
at law or in equity or by or before any Federal, state, county, municipal or
other governmental department, SEC, National Association of Securities Dealers,
Inc., board, bureau, agency or instrumentality, domestic or foreign, whether
legal or administrative or in arbitration or mediation, nor is there any basis
for any such action or proceeding except for litigation brought against Kenco
Williams, Inc. by Precision Plastics, Inc., which was in excess of $100,000.
Neither the Company, any of the Subsidiaries nor any of their respective assets
are subject to, nor is the Company or any of the Subsidiaries in default with
respect to, any order, writ, injunction, judgment or decree that could adversely
affect the financial condition, business, assets or prospects of the Company or
any of the Subsidiaries.

              (p)    The accounts receivable of the Company and the Subsidiaries
represent receivables generated from the sale of goods and services in the
ordinary course of business.  The Company knows of no material disputes
concerning accounts receivable of the Company and the Subsidiaries not disclosed
in the Memorandum.

                                         -6-
<PAGE>

              (q)    Except as set forth in the Memorandum, neither the Company
nor any of the Subsidiaries has (i) any written employment contracts and no oral
employment contracts not terminable at will by the Company or any Subsidiary, as
applicable, with any 5% percent shareholder, officer or director of the Company
or any Subsidiary, as applicable, (ii) any consulting agreement or other
compensation agreement with any 5% percent shareholder, officer or director of
the Company or any Subsidiary, as applicable, or (iii) any agreement or contract
with any 5% percent shareholder, officer or director of the Company or any
Subsidiary, as applicable,  that will result in the payment by the Company or
any Subsidiary, as applicable, or the creation of any commitment or obligation
(absolute or contingent), of the Company or any Subsidiary, as applicable, to
pay any severance, termination, "golden parachute", or similar payment to any
present or former personnel of the Company or any Subsidiary, as applicable,
following termination of employment.  No director, executive officer or other
key employee of the Company or any Subsidiary, as applicable, has advised the
Company that he or she intends to resign as director and/or executive officer of
the Company or any Subsidiary, as applicable, or to terminate his or her
employment with the Company or the Subsidiary, as applicable.

              (r)    The accounts payable of the Company and the Subsidiaries
represent bona fide payables to third parties incurred in the ordinary course of
business and represent bona fide debts for services and/or goods provided to the
Company and the Subsidiaries.

              (s)    Except as set forth in the Memorandum, neither the Company
nor any of the Subsidiaries is a party to a labor agreement  with respect to any
of their respective employees with any labor organization, union, group or
association and there are no employee unions (nor any similar labor or employee
organizations).  There is no labor strike or labor stoppage or slowdown pending,
or, to the knowledge of the Company, threatened against the Company or any of
the Subsidiaries nor has the Company or any of the Subsidiaries experienced in
the last five (5) years any work stoppage or other labor difficulty.  The
Company is in compliance with all applicable laws, rules and regulations
regarding employment practices, employee documentation, terms or conditions of
employment and wage and hours and the Company is not engaged in any unfair labor
practices, except where the failure to comply has not and will not have a
Material Adverse Effect.  There are no unfair labor practices charges or
complaints against the Company or any of the Subsidiaries pending before the
National Labor Relations Board or any other governmental agency.

              (t)    Except as set forth  in the Memorandum, there are no
employee pension, retirement or other benefit plans, maintained, contributed to
or required to be contributed to by the Company or any of the Subsidiaries
covering any employee or former employee of the Company or any of the
Subsidiaries.  Neither the Company nor any of the Subsidiaries has any liability
or obligation of any kind or nature, whether accrued or contingent, matured or
unmatured, known or unknown, under any provision of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or any provision of the
Internal Revenue Code of 1986, as amended, specifically relating to persons
subject to ERISA.

                                         -7-
<PAGE>

              (u)    The Company and each of the Subsidiaries have timely filed
with the appropriate taxing authorities all returns in respect of taxes required
to be filed through the date hereof, except for the 1999 North Carolina state
tax return for Agrotec Williams whose extension request was denied for untimely
filing, and each has timely paid all taxes that each is required to pay or has
established an adequate reserve therefor, except where the Company or the
Subsidiary, as applicable, has timely filed for extensions.  There are no
pending or, to the knowledge of the Company, threatened audits, investigations
or claims for or relating to any liability of the Company or any of the
Subsidiaries in respect of taxes except the audit of the 1996 federal tax return
which contains no proposed material tax adjustments.

              (v)    Neither the Company nor any of the Subsidiaries has any
liabilities of any kind or nature whether accrued or  contingent, matured or
unmatured, known or unknown, except as set forth in the Financial Statements,
the Memorandum and those liabilities incurred by the Company and each of the
Subsidiaries in the ordinary course of business since December 31, 1999.

              (w)    Except as set forth in the Memorandum, no customer of the
Company or any of the Subsidiaries during fiscal year 1999 accounted for more
than 5% of the revenues of the Company (on a consolidated basis) and to the best
of the Company's knowledge, no customer, other than the customers identified in
the Memorandum, will account for more than 5% of the Company's revenues (on a
consolidated basis) during fiscal year 2000 or fiscal year 2001.

              (x)    There are no finder's fees or brokerage commissions payable
with respect to the transactions contemplated by this Agreement, except as
provided in Paragraph 10 of this Agreement, and the Company agrees to indemnify
and hold harmless the Placement Agent from and against any and all cost, damage,
liability, judgment and expense (including reasonable fees and expenses of
counsel) arising out of or relating to claims for such fees or commissions and
to pay the Placement Agent pursuant to a separate agreement between the Company
and the Placement Agent.

              (y)    Except as set forth in the Memorandum, the Company is not
currently and has not during the past six (6) months been engaged in
negotiations with respect to: (i) any merger  or consolidation of the Company
where the Company would not be the surviving entity; or (ii) the sale of the
Company, any of its Subsidiaries or any of their respective assets other than
sales in the ordinary course of business, except (1) the Company has accepted an
offer for Hardee Williams, Inc. which was publicly announced April 4, 2000 and,
(2) the Company has been in discussions with prospective buyers and intends to
solicit additional offers for the purchase of PPT.

              (z)    The Company and each of the Subsidiaries has the right to
conduct their respective business in the manner in which their respective
business has been heretofore conducted.  To the knowledge of the Company, the
conduct of such businesses by the Company and each of the Subsidiaries do not
violate or infringe upon the patent, copyright, trade secret or other
proprietary rights of any third party, and neither the Company nor any of the
Subsidiaries has received any notice of any claim of any such violation or
infringement.

                                         -8-
<PAGE>

              (aa)   The Company and each of the Subsidiaries are currently in
compliance in all respects with all applicable Environmental Laws (as defined
below), including, without limitation, obtaining and maintaining in effect all
permits, licenses, consents and other authorizations required by applicable
Environmental Laws and the Company and each Subsidiary are each currently in
compliance with all such permits, licenses, consents and other authorizations,
except where the failure to comply has not and will not have a Material Adverse
Effect.  Neither the Company nor any of its Subsidiaries has received notice
from any property owner, landlord, tenant or Governmental Authority (as defined
below) that Hazardous Wastes (as defined below) are being improperly used,
stored or disposed of at any property currently or formerly owned or leased by
the Company or any of its Subsidiaries or that any soil or ground water
contamination has emanated from any such property.  For purposes hereof, the
term "Environmental Laws" means, collectively, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, the Toxic Substances Act, as amended, the Clean Air Act, as
amended, the Clean Water Act, as amended, any other "Superfund" or "Superlien"
law or any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect.  For purposes
hereof, the term "Governmental Authority" shall mean the Federal Government of
the United States of America, any state or any political subdivision of the
Federal Government or any state, including but not limited to courts,
departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.  For purposes hereof, the term "Hazardous Waste" shall mean
any regulated quantity of hazardous substances as listed by the United States
Environmental Protection Agency ("EPA") and the list of toxic pollutants
designated by the United States Congress and/or the EPA or defined by any other
Federal, state or local statute, law, ordinance, code, rule, regulation, order,
or decree regulating, relating to or imposing liability for standards of conduct
concerning any hazardous, toxic substance or material.  The disclosure in the
Memorandum regarding the status of the Company's property in Portland, Oregon,
is a full and accurate disclosure and does not omit to disclose any material
information known to the Company.

              (bb)   The information contained in the Financial Statements and
the Memorandum, taken together, describe in all material respects the business
and financial condition of the Company and its Subsidiaries, and such material,
taken together, does not contain any misstatement of a material fact or omit to
state a material fact necessary to make the information not misleading.  The
Lenders and Placement Agent shall be entitled to rely on such material
notwithstanding any investigation they or any of them may have made.

       4.     SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION.
The representations and warranties of the Company set forth in Section 3 of this
Agreement shall survive the execution and delivery of the Debentures.  The
indemnification obligations of the Company as set forth in the indemnification
rider identified as EXHIBIT B (the "Indemnification Rider") to the January 25,
2000 engagement letter between the Company and the Placement Agent, as same
shall be supplemented and/or amended, is hereby incorporated herein by reference
in its entirety as if more

                                         -9-

<PAGE>

fully set forth herein and the provisions of the Indemnification Rider shall
apply and be applicable to, among other things, all representations and
warranties of the Company.

       5.     USE OF PROCEEDS.  The net proceeds from the sale of the Debentures
will be used by the Company as disclosed in the Memorandum.

       6.     UNREGISTERED SECURITIES.  None of  the Debentures, the Conversion
Shares, the Placement Agent Warrants, the PAW Exercise Shares or the CSW
Exercise Shares have been registered under the 1933 Act, in reliance upon the
applicability of Section 4(2), 4(6) and/or Rule 506 of Regulation D of the 1933
Act to the transactions contemplated hereby.  The certificates representing the
Debentures, the Placement Agent Warrants and the Common Stock Warrants will bear
an investment legend and the certificate representing the Conversion Shares, the
PAW Exercise Shares and the CSW Exercise Shares issued prior to their respective
registration under Section 3 of the Debenture Purchase Agreement (a copy of
which is annexed as an exhibit to the Memorandum), Section 7 below and Section 4
of the Common Stock Warrants will also bear investment legends.

       7.     REGISTRATION RIGHTS AND "PIGGY-BACK" REGISTRATION RIGHTS.

              (a)    The Company shall prepare and file with the SEC, within
ninety (90) days following the Final Closing Date, a registration statement
("Registration Statement") on the appropriate form under the 1933 Act, with
respect to the Conversion Shares, the PAW Exercise Shares and the CSW Exercise
Shares (collectively, the "Registrable Securities"), time being of the essence.
The Company will use its best efforts to have such Registration Statement
declared effective as soon as possible thereafter, but in no event later than
one hundred eighty (180) days following the Final Closing Date and shall keep
such Registration Statement current and effective for at least three (3) years
from the effective date thereof or until such earlier date as all of the
Registrable Securities have been sold or otherwise transferred.  If the
Registration Statement is not filed within ninety (90) days following the Final
Closing Date, the Conversion Price shall be reduced (and concomitantly, the
number of Conversion Shares, the PAW Exercise Shares and the CSW Exercise Shares
shall increase) by three (3%) percent for each thirty (30) day period, or any
part thereof, beyond said ninety (90) day period until the Registration
Statement covering the Registrable Securities is filed with the SEC.
Notwithstanding anything to the contrary contained herein, and in addition to
the adjustments set forth in the preceding sentence, if the Registration
Statement has been filed but is not declared effective within one hundred eighty
(180) days after the Final Closing Date, then the Conversion Price shall be
reduced (and concomitantly the number of Conversion Shares, the PAW Exercise
Shares and the CSW Exercise Shares shall increase) by three (3%) percent for
each thirty (30) day period, or any part thereof, beyond said one hundred eighty
(180) day period until the Registration Statement described herein covering the
Registrable Securities is declared effective.  Notwithstanding the foregoing,
the Conversion Price shall not be reduced pursuant to this Section 7 by more
than 36% in the aggregate.

              (b)    If the Company effects any registration under the 1933 Act
of any Registrable Securities pursuant to Paragraphs 7(a) above or 7(g) below,
the Company shall indemnify, to the

                                         -10-
<PAGE>

extent permitted by law, and hold harmless each holder of the Registrable
Securities (each a "Registered  Holders") whose Registrable Securities are
included in such Registration Statement (each, a "Seller"), any underwriter, any
officer, director, employee or agent of any Seller or underwriter, and each
other person, if any, who controls any Seller or underwriter within the meaning
of Section 15 of the 1933 Act, against any losses, claims, damages or
liabilities, judgment, fines, penalties, costs and expenses, joint or several,
or actions in respect thereof (collectively, the "Claims"), to which each such
indemnified party becomes subject, under the 1933 Act or otherwise, insofar as
such Claims arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement or
prospectus or any amendment or supplement thereto or any document filed under a
state securities or blue sky law (collectively, the "Registration Documents") or
insofar as such Claims arise out of or are based upon the omission or alleged
omission to state in any Registration Document a material fact required to be
stated therein or necessary to make the statements made therein not misleading,
and will reimburse any such indemnified party for any legal or other expenses
reasonably incurred by such indemnified party in investigating or defending any
such Claim; provided that the Company shall not be liable in any such case to a
particular indemnified party to the extent such Claim is based upon an untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission of a material fact made in any Registration Document in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such indemnified party specifically for use in the preparation of such
Registration Document.

              (c)    In connection with any registration statement in which any
Seller is participating, each Seller, severally and not jointly, shall
indemnify, to the extent permitted by law, and hold harmless the Company, each
of its directors, each of its officers who have signed the registration
statement, each other person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act, each other Seller and each underwriter,
any officer, director, employee or agent of any such other Seller or underwriter
and each other person, if any, who controls such other Seller or underwriter
within the meaning of Section 15 of the 1933 Act against any Claims to which
each such indemnified party may become subject under the 1933 Act or otherwise,
insofar as such Claims (or actions in respect thereof) are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Document, or insofar as any Claims are based upon the omission or
alleged omission to state in any Registration Document a material fact required
to be stated therein or necessary to make the statements made therein not
misleading, and will reimburse any such indemnified party for any legal or other
expenses reasonably incurred by such indemnified party in investigating or
defending any such claim; provided, however, that such indemnification or
reimbursement shall be payable only if, and to the extent that, any such Claim
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Registration Document in reliance
upon and in conformity with written information furnished to the Company by the
Seller specifically for use in the preparation thereof.

              (d)    Any person entitled to indemnification under Paragraphs
7(b) or 7(c) above shall notify promptly the indemnifying party in writing of
the commencement of any Claim if a claim for indemnification in respect thereof
is to be made against an indemnifying party under this

                                         -11-
<PAGE>

Paragraph 7(d), but the omission of such notice shall not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than under Paragraph 7(b) or 7(c) above, except to the extent that
such failure shall materially adversely affect any indemnifying party or its
rights hereunder.  In case any action is brought against the indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it chooses, to assume the defense thereof with counsel reasonably satisfactory
to the indemnified party; and, after notice from the indemnifying party to the
indemnified party that it so chooses, the indemnifying party shall not be liable
for any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that (i) if the indemnifying party fails to
take reasonable steps necessary to defend diligently the Claim within twenty
(20) days after receiving notice from the indemnified party that the indemnified
party believes it has failed to do so; (ii) if the indemnified party who is a
defendant in any action or proceeding which is also brought against the
indemnifying party reasonably shall have concluded that there are legal defenses
available to the indemnified party which are not available to the indemnifying
party; or (iii) if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional conduct, the
indemnified party shall have the right to assume or continue its own defense as
set forth above (but with no more than one firm of counsel for all indemnified
parties in each jurisdiction, except to the extent any indemnified party or
parties reasonably shall have concluded that there are legal defenses available
to such party or parties which are not available to the other indemnified
parties or to the extent representation of all indemnified parties by the same
counsel is otherwise inappropriate under applicable standards of professional
conduct) and the indemnifying party shall be liable for any reasonable expenses
therefor; provided, that no indemnifying party shall be subject to any liability
for any settlement of a Claim made without its consent (which may not be
unreasonably withheld, delayed or conditioned).  If the indemnifying party
assumes the defense of any Claim hereunder, such indemnifying party shall not
enter into any settlement without the consent of the indemnified party if such
settlement attributes liability to the indemnified party.

              (e)    If for any reason the indemnity provided in Paragraphs 7(b)
or 7(c) above is unavailable, or is insufficient to hold harmless, an
indemnified party, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of any Claim in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and  the indemnified party on the other from
the transactions contemplated by this Agreement.  If, however, the allocation
provided in the immediately preceding sentence is not permitted by applicable
law, or if the indemnified party failed to give the notice required by Paragraph
7(d) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations.  The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and

                                         -12-
<PAGE>

opportunity to correct or prevent such statement or omission.  The amount paid
or payable in respect of any Claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such Claim.  Notwithstanding the foregoing, no
underwriter or controlling person thereof, if any, shall be required to
contribute, in respect of such underwriter's participation as an underwriter in
the offering, any amount in excess of the amount by which the total price at
which the Registrable Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.  The obligation of any underwriters to
contribute pursuant to this paragraph (e) shall be several in proportion to
their respective underwriting commitments and not joint.

              (f)    The provisions of Paragraphs 7(b) through 7(e) of this
Agreement shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law or contract
and shall remain operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any indemnified party and shall
survive the transfer of the Registrable Securities by any such party.

              (g)    If the registration statement as filed pursuant to Section
7(a) above is not then effective, the Registered Holders shall have certain
"piggy-back" registration rights with respect to the Registrable Securities as
hereinafter provided:

                     A.     If at any time after the Initial Closing Date (as
defined in the Memorandum), the Company shall file with the SEC a registration
statement under the 1933 Act registering any shares of Common Stock, except for
any registration on Forms S-4, S-8 or other similar or successor Forms, the
Company shall give written notice to each Registered Holder thereof prior to
such filing.

                     B.     Within fifteen (15) days after such notice from the
Company, each Registered Holder shall give written notice to the Company whether
or not the Registered Holder desires to have all of the Registered Holder's
Registrable Securities included in the registration statement.  If a Registered
Holder fails to give such notice within such period, such Registered Holder
shall not have the right to have Registered Holder's Registrable Securities
registered pursuant to such registration statement.  If a Registered Holder
gives such notice, then the Company shall include such Registered Holder's
Registrable Securities in the registration statement, at the Company's sole cost
and expense, subject to the remaining terms of this Paragraph 7(g).

                     C.     If the registration statement relates to an
underwritten offering, and the underwriter shall determine in writing that the
total number of shares of Common Stock to be included in the offering, including
the Registrable Securities, shall exceed the amount which the underwriter deems
to be appropriate for the offering, the number of shares of the Registrable

                                         -13-
<PAGE>

Securities shall be reduced in the same proportion as the remainder of the
shares in the offering and each Registered Holder's Registrable Securities
included in such registration statement will be reduced proportionately.  For
this purpose, if other securities in the registration statement are derivative
securities, their underlying shares shall be included in the computation.  The
Registered Holders shall enter into such agreements as may be reasonably
required by the underwriters and the Registered Holders shall pay to the
underwriters commissions relating to the sale of their respective Registrable
Securities.

                     D.     Each Registered Holder shall have two (2)
opportunities to have the Registrable Securities registered under this Paragraph
7(g).

                     E.     A Registered Holder shall furnish in writing to the
Company such information as the Company shall reasonably require in connection
with a registration statement.

              (h)    If and whenever the Company is required by the provisions
of this Paragraph 7 to use its best efforts to register any Registrable
Securities under the 1933 Act, the Company shall, as expeditiously as possible
under the circumstances:

                     A.     Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective as soon as possible
after filing and remain effective.

                     B.     Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement current and
effective and to comply with the provisions of the 1933 Act, and any regulations
promulgated thereunder, with respect to the sale or disposition of all
Registrable Securities covered by the registration statement required to effect
the distribution of the securities, but in no event shall the Company be
required to do so for a period of more than three (3) years following the
effective date of the registration statement.

                     C.     Furnish to the Registered Holders participating in
the offering, copies (in reasonable quantities) of summary, preliminary, final,
amended or supplemented prospectuses, in conformity with the requirements of the
1933 Act and any regulations promulgated thereunder, and other documents as
reasonably may be required in order to facilitate the disposition of the
securities, but only while the Company is required under the provisions hereof
to keep the registration statement current.

                     D.     Use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions of the United States as the
Registered Holders participating in the offering shall reasonably request, and
do any and all other acts and things which may be reasonably necessary to enable
each participating Registered Holder to consummate the disposition of the
Registrable Securities in such jurisdictions, provided that the Company will not
be required to (i) qualify

                                         -14-
<PAGE>

generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (D), (ii) subject itself to taxation
in any such jurisdiction by reason of such registration or qualification of any
Registrable Securities, or (iii) consent to general service of process in any
such jurisdiction.

                     E.     Notify each Registered Holder selling Registrable
Securities, at any time when a prospectus relating to any such Registrable
Securities covered by such registration statement is required to be delivered
under the 1933 Act, of the Company's becoming aware that the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits  to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing, and promptly prepare and furnish to each
such Registered Holder selling Registrable Securities a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.

                     F.     As soon as practicable after the effective date of
the registration statement, and in any event within eighteen (18) months
thereafter, make generally available to Registered Holders participating in the
offering an earnings statement (which need not be audited) covering a period of
at least twelve (12) consecutive months beginning after the effective date of
the registration statement which earnings statement shall satisfy the provisions
of Section 11(a) of the 1933 Act, including, at the Company's option, Rule 158
thereunder.  To the extent that the Company files such information with the SEC
in satisfaction of the foregoing, the Company need not deliver the above
referenced earnings statement to Registered Holders.

                     G.     Upon request, deliver promptly to counsel for each
Registered Holder participating in the offering copies of all correspondence
between the SEC and the Company, its counsel or auditors and all memoranda
relating to discussions with the SEC or its staff with respect to the
registration statement and permit each such Registered Holder to do such
investigation at such Registered Holder's sole cost and expense, upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary.  Each Registered Holder
agrees that it will use its best efforts not to interfere unreasonably with the
Company's business when conducting any such investigation and each Registered
Holder shall keep any such information received pursuant to this Paragraph 7G
confidential.

                     H.     Provide a transfer agent and registrar located in
the United States for all such Registrable Securities covered by such
registration statement not later than the effective date of such registration
statement.

                     I.     List the Registrable Securities covered by such
registration statement on such exchanges and/or on the National Association of
Securities Dealers Automated Quotation National Market System ("NASDAQ") as the
Common Stock is then currently listed upon.

                                         -15-
<PAGE>

                     J.     Pay all Registration Expenses (as defined below)
incurred in connection with a registration of Registrable Securities, whether or
not such registration statement shall become effective; provided that each
Registered Holder shall pay all underwriting discounts, commissions and transfer
taxes, and their own counsel and accounting fees, if any, relating to the sale
or disposition of such Registered Holder's Registrable Securities pursuant to a
registration statement.  As used herein, "Registration Expenses" means any and
all reasonable and customary expenses incident to performance of or compliance
with the registration rights set forth herein, including, without limitation,
(i) all SEC and stock exchange or NASDAQ registration and filing fees, (ii) all
fees and expenses of complying with state securities or blue sky laws (including
reasonable fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities but no other expenses
of the underwriters or their counsel), (iii) all printing, messenger and
delivery expenses, and (iv) the reasonable fees and disbursements of counsel for
the Company and the Company's independent public accountants.

              (i)    The Company acknowledges that there is no adequate remedy
at law for failure by it to comply with the provisions of this Paragraph 7 and
that such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Paragraph 7 may be specifically
enforced.  In the event that the Company shall fail to file such registration
statement when required pursuant to Paragraph 7(a) above or to keep any
registration statement effective as provided in this Paragraph or otherwise
fails to comply with its obligations and agreements in this Paragraph 7, then,
in addition to any other rights or remedies Sellers may have at law or in
equity, including without limitation, the right of rescission, the Company shall
indemnify and hold harmless each holder of Placement Agent Warrants from and
against any and all manner or loss which they may incur as a result of such
failure.  In addition, the Company shall also reimburse such holders for any and
all reasonable legal fees and expenses incurred by them in enforcing their
rights pursuant to this Paragraph 7, regardless of whether any litigation was
commenced; provided, however, that the Company shall not be liable for the fees
and expenses of more than one law firm, which firm shall be designated by the
Placement Agent.

       8.     CONDITIONS.  The following obligations of the Company shall be
satisfied or fulfilled on or prior to the date of each Closing, unless otherwise
agreed to in writing by the Placement Agent:

              (a)    The Company shall have delivered to the Placement Agent, at
the Initial Closing, (i) a currently-dated long-form good standing certificate
or telegram from the Secretary of State where the Company and each Subsidiary is
incorporated and each other jurisdiction in which the Company and any of the
Subsidiaries is qualified to do business as a foreign corporation; (ii) the
certificate of incorporation of the Company and each Subsidiary, as currently in
effect, certified by the Secretary of State of the state where the Company and
each Subsidiary is incorporated; (iii) by-laws of the Company certified by the
secretary of the Company; and (iv) certified resolutions of the Board of
Directors of the Company approving this Agreement, the sale of the Debentures,
the

                                         -16-
<PAGE>

Common Stock Warrants and the Placement Agent Warrants, and the registration of
the Registrable Securities.

              (b)    There shall have occurred no event which had a Material
Adverse Effect on the Company or the Subsidiaries or any of their respective
businesses, assets, prospects or the Company's securities since the date of this
Agreement.

              (c)    No litigation or administrative proceeding shall have been
threatened or commenced against the Company or any of the Subsidiaries which (i)
seeks to enjoin or otherwise prohibit or restrict the consummation of the
transactions contemplated by this Agreement or (ii) if adversely determined,
would have a Material Adverse Effect on the Company or the Company's securities.

              (d)    The Company shall have delivered to the Placement Agent a
certificate of its principal executive and financial officers as to the matters
set forth in Paragraphs 8(a), (b) and (c) of this Agreement and to the further
effect that (i) neither the Company nor any Subsidiary is in default, in any
respect, under any note, loan agreement, security agreement, mortgage, deed of
trust, indenture, contract, alliance agreement, lease, license, joint venture
agreement, agreement or other instrument to which it is a party, except as
disclosed in the Financial Statements or the Memorandum and except where such
default has not and will not have a Material Adverse Effect; however, Eldred V.
Hardee has given notice of an event of default related to the note payable to
him in the amount of $750,000 as a result of an alleged late payment of
interest.  The Company attempted to deliver the interest and Eldred Hardee
refused the check and therefore the Company contends that the note is not in
default; (ii) the Company's representations and warranties contained in this
Agreement are true and correct in all respects on such date with the same force
and effect as if made on such date; (iii) there has been no amendment or changes
to the Company's or Subsidiaries' certificates of incorporation or by-laws or
authorizing resolutions from those delivered pursuant to Paragraph 8(a) of this
Agreement; and (iv) no event has occurred which, with or without the lapse of
time or giving of notice, or both, would constitute a breach or default thereof
by the Company or any Subsidiary or would cause acceleration of any obligation
of the Company or any Subsidiary, or could adversely affect the business,
operations, financial condition or prospects of the Company.

              (e)    The Placement Agent shall have received the opinion of
Friedlob Sanderson Paulson & Tourtillot, LLC, counsel for the Company, dated as
of the Closing date in form and substance reasonably satisfactory to the
Placement Agent and its counsel.

              (f)    The Company shall have prepared and filed or delivered to
counsel for filing with the SEC and any states in which such filing is required,
a Form D relating to the sale of the Debentures and such other documents and
certificates as are required.

              (g)    Subscriptions for at least the Minimum Amount of Debentures
shall have been accepted by the Company.

                                         -17-
<PAGE>

              (h)    In addition to the right of the Placement Agent to
terminate this Agreement and not consummate the transactions contemplated by
this Agreement as a result of the failure of the Company to comply with any of
its obligations set forth in this Agreement, this Agreement may be terminated by
the Placement Agent by written notice to the Company at any time prior to the
Initial Closing if, in the Placement Agent's sole judgment, (i) the Company
and/or Subsidiaries shall have sustained a loss that is material to the Company
or its Subsidiaries, taken as a whole, whether or not insured, by reason of
fire, earthquake, flood, accident or other calamity, or from any labor dispute
or court or government action, order or decree; (ii) trading in securities on
any exchange or system shall have been suspended or limited, either generally or
specifically, with respect to the Company's Common Stock; (iii) material
governmental restrictions have been imposed on trading in securities, generally
or specifically, with respect to the Company's Common Stock (not in force and
effect on the date of this Agreement); (iv) a banking moratorium shall have been
declared by Federal or New York State authorities; (v) an outbreak of major
international hostilities or other national or international calamity shall have
occurred; (vi) the Congress of the United States or any state legislative body
shall have passed or taken any action or measure, or such bodies or any
governmental body or any authoritative accounting institute, or board, or any
governmental executive shall have adopted any orders, rules or regulations,
which the Placement Agent reasonably believes is likely to have a Material
Adverse Effect on the business, financial condition or financial statements of
the Company or the market for the Common Stock; (vii) the Common Stock shall
have been delisted from NASDAQ or the Company shall have received notice from
NASDAQ advising the Company of its intention to have the Common Stock delisted
from NASDAQ, whether conditional or otherwise, or the Company shall fail to meet
the requirements for continued listing on NASDAQ; or (viii) there shall have
been, in the Placement Agent's judgment, a material decline in the Dow Jones
Industrial Index or the market price of the Common Stock at any time subsequent
to the date of this Agreement.

       9.     COVENANTS OF THE COMPANY.  The Company agrees at all times as long
as the Debentures or Placement Agent Warrants may be converted or exercised, to
keep reserved from the authorized and unissued Common Stock, such number of
shares of Common Stock as may be, from time to time, issuable upon conversion of
the Debentures and exercise of the Placement Agent Warrants.

       10.    FEES.

              (a)    Upon the receipt by the Company of the payment from the
Lenders, the Company will pay the Placement Agent a fee, in cash, (the "Cash
Fee") equal to seven (7.0%) percent of the gross proceeds from the sale of the
Debentures sold in the transaction contemplated by this Agreement.  Such amount
of the Cash Fee may be deducted by the Placement Agent from the payment being
made to the Company pursuant to Section 2 of this Agreement.  In addition, the
Company shall issue to the Placement Agent at the Final Closing, five (5) year
Warrants to purchase an amount of shares of the Company's Common Stock equal to
seven (7.0%) percent of the total number of shares of Common Stock issuable upon
conversion of the Debentures sold in the

                                         -18-
<PAGE>

transaction contemplated by this Agreement, at an exercise price of 120% of the
Conversion Price (the "Placement Agent Warrants").

              (b)    The Company shall reimburse the Placement Agent for up to
$35,000 of its reasonable expenses (including reasonable fees and expenses of
its counsel) incurred in connection with the transaction contemplated by this
Agreement.

              (c)    The Company shall pay any fees required in connection of
the qualification of the sale of the Debentures under the state securities or
"blue sky" laws of any state which the Placement Agent reasonably deems
necessary and any other out-of-pocket expenses incurred by the Placement Agent
in connection with the transaction contemplated by this Agreement.

              (d)    All payments in connection with the sale of the Debentures
shall be made pursuant to the terms and conditions of the escrow agreement dated
as of March 24, 2000 between Placement Agent and American Stock Transfer & Trust
Company, an executed copy of which has been delivered to and acknowledged by the
Company.

       11.    NOTICES.  All notices provided for in this Agreement shall be in
writing signed by the party giving such notice, and delivered personally or sent
by overnight courier or messenger against receipt thereof or sent by registered
or certified mail, return receipt requested, or by facsimile transmission, if
confirmed by mail as provided in this Paragraph 11.  Notices shall be deemed to
have been received on the date of personal delivery or facsimile or, if sent by
certified or registered mail, return receipt requested, shall be deemed to be
delivered on the third business day after the date of mailing.  Notices shall be
sent to the following addresses:

              TO THE COMPANY:

                     WILLIAMS CONTROLS, INC.
                     14100 SW 72nd Avenue
                     Portland, Oregon 97224
                     FACSIMILE:    (503) 624-3822
                     Attention:    Gerard A. Herlihy, Chief Financial Officer

              WITH A COPY TO:

                     FRIEDLOB SANDERSON PAULSON
                           & TOURTILLOTT, LLC
                     1400 Glenarm Place, Third Floor
                     Denver, Colorado 80202
                     FACSIMILE: (303) 595-3159
                     Attention: John W. Kellogg, Esq.

              TO PLACEMENT AGENT:

                                         -19-
<PAGE>

                     TAGLICH BROTHERS, INC.
                     1370 Avenue of the Americas
                     New York, NY 10019
                     FACSIMILE:    (212) 265-4111
                     Attention:    Mr. Richard C. Oh

              WITH A COPY TO:

                     ROBINSON SILVERMAN PEARCE AROHNSON
                            & BERMAN LLP
                     1290 Avenue of the Americas
                     New York, New York 10104
                     FACSIMILE:     (212) 541-4630
                     Attention:    Robert G. Leonard, Esq.

or to such other address as any party shall designate in the manner provided in
this Paragraph 11.

       12.    MISCELLANEOUS.

              (a)    This Agreement constitutes the entire agreement between the
parties relating to the subject matter hereof, superseding any and all prior or
contemporaneous oral and prior written agreements and understandings.  This
Agreement may not be modified or amended nor may any right be waived except by a
writing which expressly refers to this Agreement, states that it is a
modification, amendment or waiver and is signed by all parties with respect to a
modification or amendment or the party granting the waiver with respect to a
waiver.  No course of conduct or dealing and no trade custom or usage shall
modify any provisions of this Agreement.

              (b)    This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such state.  Each party hereby consents to
the exclusive jurisdiction of the Federal and state courts situated in New York
County, New York in connection with any action arising out of or based upon this
Agreement and the transactions contemplated by this Agreement.

              (c)    This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective personal representatives,
successors and permitted assigns.

              (d)    In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said
provision.

              (e)    Each party shall, without payment of any additional
consideration by any other party, at any time on or after the date of any
Closings take such

                                         -20-
<PAGE>

further action and execute such other and further documents and instruments as
the other party may request in order to provide the other party with the
benefits of this Agreement.

              (f)    The captions and headings contained herein are solely for
convenience and reference and do not constitute a part of this Agreement.

              (g)    All references to any gender shall be deemed to include the
masculine, feminine or neuter gender, the singular shall include the plural and
the plural shall include the singular.

              (h)    This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same document.

                                         -21-
<PAGE>

       IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first aforesaid.

WILLIAMS CONTROLS, INC.                   TAGLICH BROTHERS, INC.

By:                                       By:
   ---------------------------               ----------------------------
   Name:   Gerard A. Herlihy                 Name:   Richard C. Oh
   Title:  Chief Financial Officer           Title:  Vice President<PAGE>

                                 LEASE AGREEMENT

                             Basic Lease Information

Lease Date:                JANUARY 1, 2000

Lessor:                    PTF for Operating Engineers, LLC (Member: BNY Western
                           Trust Company, as Corporate Co-Trustee for the
                           Pension Trust Fund for Operating Engineers).

Lessor's Address:          340 El Camino Real South, Salinas, CA  93901

Lessee:                    MONTEREY PASTA COMPANY, A DELAWARE CORPORATION

Lessee's Address:          1528 MOFFETT STREET
                           SALINAS, CA 93905

Premises:                  Approximately 18,000 square feet of warehouse space
                           and approximately 1,845 square feet of office space
                           as shown on EXHIBIT A to this Lease

Premises Address:          340 El Camino Real South, Salinas, CA  93901

                           Building: SPACE 38
                           Park:     Firestone Business Park

Commencement Date:         JANUARY 1, 2000

Termination Date:          DECEMBER 31, 2004

Option To Extend Term:     NONE

Base Rent:                 YEAR 1: SIX THOUSAND SIX HUNDRED DOLLARS ($6,600)
                           YEAR 2: SIX THOUSAND SEVEN HUNDRED NINETY-EIGHT
                           DOLLARS ($6,798)
                           YEAR 3: SEVEN THOUSAND TWO DOLLARS ($7,002)
                           YEAR 4: SEVEN THOUSAND TWO HUNDRED TWELVE DOLLARS
                           ($7,212)
                           YEAR 5: SEVEN THOUSAND FOUR HUNDRED TWENTY-EIGHT
                           DOLLARS ($7,428)

Security Deposit:          SIX THOUSAND SIX HUNDRED DOLLARS ($6,600)

Lessee's Share of Jointly Billed or Metered Utilities: NONE

Permitted Uses:            WAREHOUSING AND DISTRIBUTION OF LESSEE'S PRODUCTS AND
                           ASSOCIATED OFFICE USE.

Insurance Amount:          Bodily injury limit of not less than $1 million per
                           occurrence. Property damage limit of not less than $1
                           million per occurrence.

Parking Spaces:            TEN (10)_undesignated parking spaces

Exhibits:                  Exhibit A - Premises
                           Exhibit B - Landlord's Work
                           Exhibit C - Rules and Regulations
                           Exhibit D - Estoppel Certificate

Addenda:                   None

                                       1
<PAGE>

                                 LEASE AGREEMENT

DATE:             This Lease is made and entered into as of the Lease Date
                  defined on Page 1. The Basic Lease Information set forth on
                  Page 1 and this Lease are and shall be construed as a single
                  instrument.

1.       PREMISES: Lessor hereby leases to Lessee upon the terms and conditions
         contained herein the Premises. Lessee shall have the non-exclusive
         right to use common areas of the Park designated by Lessor from time to
         time for the use of all tenants of the Park ("Common Areas").

2.       TERM: The term of this Lease shall commence on the Commencement Date
         set forth on Page 1 and shall end on the Termination Date set forth on
         Page 1. If Lessor cannot deliver possession of the Premises on the
         Commencement Date, Lessor shall not be subject to any liability nor
         shall the validity of the Lease be affected; provided the Lease term
         and the obligation to pay Rent shall commence on the date possession is
         tendered and the Termination Date shall be extended by a period of time
         equal to the period computed from the Commencement Date to the date
         possession is tendered. In the event that Lessor permits Lessee to
         occupy the Premises prior to the Commencement Date, such occupancy
         shall be subject to all the provisions of this Lease.

3.       RENT: Lessee agrees to pay Lessor, without prior notice or demand, the
         Base Rent described on Page 1, payable in advance at Lessor's address
         shown on Page 1 on the first day of each month throughout the term of
         the Lease. In addition to the Base Rent set forth on Page 1, Rent also
         includes Lessee's share of Jointly Billed or Metered Utilities as
         specified in Paragraph 7 of this Lease, and the term "Rent" whenever
         used herein refers to all these amounts. Upon execution of this Lease
         by Lessor and Lessee, Lessee shall pay to Lessor the Base Rent for the
         first month of the Lease Term.

4.       ERISA CERTIFICATION: The pension trusts defined as "Lessor" in this
         Lease are governed by, and subject to, regulation under the Employee
         Retirement Income Security Act of 1974 ("ERISA"). ERISA prohibits
         pension trusts, such as Lessor, from leasing their property to certain
         persons defined in ERISA as "parties-in-interest." (See section 3(14)
         of ERISA). In order for Lessor to lease the Premises, the Lessee must
         not have any of the following relationships with any one or more of the
         pension trusts comprising Lessor:

                  (a) Fiduciary, administrator, officer, trustee or custodian;

                  (b) Counsel;

                  (c) Employee;

                  (d) Service provider;

                  (e) Contributing employer;

                  (f) Union, any of whose members are covered by a pension
         program of the pension trusts;

                  (g) Fifty percent (50%) or more owner, directly or indirectly,
         of any such employer or union;

                  (h)      Spouse, ancestor, lineal descendant or spouse of
         lineal descendant of any of the above;

                  (i) Corporation, partnership, trust or estate of which fifty
         percent (50%) or more is owned or held, directly or indirectly, by any
         of the above; or

                                       2
<PAGE>

                  (j) Employee, officer, director, individual with powers or
         responsibilities similar to those of officers or directors, a ten
         percent (10%) or more shareholder, directly or indirectly, or a ten
         percent (10%) or more partner or joint venture, directly or indirectly,
         of any of the above.

         Lessee hereby covenants, warrants and represents that it does not have
         any of the above relationships with the Lessor pension trusts, and the
         Lessor pension trusts will rely thereon in completing this Lease.

5.       SECURITY DEPOSIT: Upon Lessee's execution of this Lease, Lessee shall
         deposit with Lessor as a Security Deposit for the performance by Lessee
         of its obligations under this Lease the amount described on Page 1. If
         Lessee is in default, Lessor may use the Security Deposit, or any
         portion thereof, to cure the default or to compensate Lessor for all
         damage sustained by Lessor resulting from Lessee's default. Lessee
         shall immediately on demand pay to Lessor a sum equal to the portion of
         the Security Deposit so applied so as to maintain the Security Deposit
         in the sum initially deposited with Lessor. As soon as practicable
         after the termination of this Lease, Lessor shall return the Security
         Deposit to Lessee, less such amounts as are reasonably necessary to
         remedy Lessee's defaults. Lessor shall not be required to keep the
         Security Deposit separate from other funds and, unless otherwise
         required by law, Lessee shall not be entitled to interest on the
         Security Deposit.

6.       LANDLORD'S WORK: PRIOR to the Commencement Date Lessor shall install
         the improvements on the Premises described as "Landlord's Work" in
         EXHIBIT B, which is attached and incorporated herein by this reference,
         in accordance with the criteria set forth therein.

7.       UTILITIES: Lessee shall pay the cost of all water, sewer use and
         connection fees, gas, heat, electricity, telephone and utilities billed
         or metered separately to Lessee. For utility fees or use charges that
         are not billed separately to Lessee, Lessee shall pay the amount which
         is attributable to Lessee's use of the Premises as set forth on Page 1
         as "Lessee's Share of Jointly Billed or Metered Utilities."

8.       LATE CHARGES: Lessee acknowledges that late payment by Lessee to Lessor
         of Rent, expenses, utility costs or other sums due hereunder, will
         cause Lessor to incur costs not contemplated by this Lease and the
         exact amount of such costs are extremely difficult and impracticable to
         fix. Such costs include, without limitation, processing and accounting
         charges, and late charges that may be imposed on Lessor by the terms of
         any note secured by any encumbrance against the Premises. Therefore, if
         any installment of Rent or other sums due from Lessee is not received
         by Lessor when due, Lessee shall pay to Lessor a sum equal to ten
         percent (10%) of such overdue amount as a late charge. The parties
         agree that this late charge represents a fair and reasonable estimate
         of the costs that Lessor will incur by reason of late payment by
         Lessee. Acceptance of any late charge shall not constitute a waiver of
         Lessee's default with respect to the overdue amount, nor prevent Lessor
         from exercising any of the other rights and remedies available to
         Lessor.

9.       USE OF PREMISES: The Premises are to be used for the uses stated on
         Page 1 and for no other purposes without Lessor's prior written
         consent, which shall not be unreasonably withheld. Lessor may withhold
         its consent to any change of use on any commercially reasonable
         grounds, including, but not limited to, the following grounds which are
         hereby deemed by Lessee to be reasonable:

                  (a) if the proposed changed use will conflict or be
         incompatible with other uses in the Park;

                  (b) if such proposed changed use would impact the Common Areas
         or result in increased requirements for services or utilities furnished
         by Lessor;

                  (c) if such proposed changed use would cause unusual wear and
         tear on the Premises or overload or overburden the structure or create
         undue vibration;

                                       3
<PAGE>

                  (d) if such proposed changed use would require the use of
         heavy machinery and equipment on or about the Premises;

                  (e) if such proposed changed use would require the use by
         Lessee on the Premises of Hazardous Materials at a level which creates
         more risk than the use of Hazardous Materials by Lessee in its business
         as of the date of this Lease; or

                  (f) if such proposed changed use creates inappropriate or
         dangerous uses of the of the Premises.

         Lessee shall not do or permit anything to be done in or about the
         Premises nor keep or bring anything therein which will in any way
         increase the existing rate of or affect any policy of fire or other
         insurance upon the Building or any of its contents, or cause a
         cancellation of any insurance policy. Lessee shall not do or permit
         anything to be done in or about the Premises which will in any way
         obstruct or interfere with the rights of other tenants or occupants of
         the Building or other buildings in the Park or injure or annoy other
         tenants or use or allow the Premises to be used for any improper,
         immoral, unlawful or objectionable purpose, nor shall Lessee cause,
         maintain or permit any nuisance in, on or about the Premises. Lessee
         shall not damage or deface or otherwise commit or suffer to be
         committed any waste in or upon the Premises. Lessee shall honor the
         terms of all recorded covenants conditions and restrictions relating to
         the property on which the Premises are located. Lessee shall honor the
         rules and regulations attached to and made a part of this Lease as
         EXHIBIT C and any other reasonable regulations of the Lessor related to
         parking and the operation of the Park. Lessee shall, at Lessee's
         expense, faithfully observe and comply with all Municipal, State and
         Federal statutes, rules, regulations, ordinances, requirements, and
         orders, pertaining to the Premises of Lessee's use thereof, including
         without limitation, all statutes, rules, regulations, ordinances,
         requirements, or orders affecting the Premises, the Building or the
         Park now in force or which may hereafter be in force; provided,
         however, that Lessee shall not be required to make structural changes
         to the Premises not related to Lessee's specific use of the Premises
         unless the requirement for such changes is imposed as a result of any
         improvements or additions made or proposed to be made at Lessee's
         request.

10.      ALTERATIONS AND ADDITIONS: Lessee shall not install any signs, fixtures
         or improvements to the Premises without the prior written consent of
         Lessor, which consent shall not be unreasonably withheld or delayed.
         Lessee shall keep the Premises and the property on which the Premises
         are situated free from any liens arising out of any work performed,
         materials furnished or obligations incurred by or on behalf of Lessee.
         Lessee shall give Lessor ten (10) days' prior written notice of any
         improvements by Lessee, together with a statement of the cost thereof,
         to give Lessor the opportunity to post and record a notice of
         non-responsibility. As a condition to Lessor's consent to the
         installation of any fixtures or improvements, Lessor may require Lessee
         to post a completion bond for up to 150% of the cost of the work. Upon
         termination of this Lease, Lessee shall remove any improvements made by
         Lessee and repair any damage caused by the installation or removal of
         such signs, fixtures, furniture, furnishings and improvements and leave
         the Premises in as good condition as they were in at the time of the
         commencement of this Lease, except for reasonable wear and tear,
         casualty damage and condemnation.

         Any work performed at the Building or on the Premises by Lessee or
         Lessee's contractor in connection with improvements shall be subject to
         the following additional requirements:

         (a)      Such work shall not proceed until Lessor has approved (which
                  approval shall not be unreasonably withheld or delayed) in
                  writing: (i) Lessee's contractor, (ii) the amount and coverage
                  of public liability and property damage insurance, with the
                  Lessor named as an additional insured, carried by Lessee's
                  contractor, (iii) complete and detailed plans and
                  specifications for such work, and (iv) a schedule for the
                  work.

         (b)      All work shall be done in conformity with a valid permit when
                  required, a copy of which shall be furnished to Lessor before
                  such work is commenced. In any case, all such work shall be
                  performed in accordance with all applicable laws.

                                       4
<PAGE>

                  Notwithstanding any failure by Lessor to object to any such
                  work, Lessor shall have no responsibility for Lessee's failure
                  to comply with applicable laws.

         (c)      All work by Lessee or Lessee's contractor shall be done with
                  union labor in accordance with all union labor agreements
                  applicable to the trades being employed.

11.      REPAIRS AND MAINTENANCE: Lessee shall, at Lessee's sole cost and
         expense, maintain the Premises and adjacent areas in good, clean and
         safe condition and repair to the satisfaction of the Lessor any damage
         caused by Lessee or its employees, agents, invitees, licensees or
         contractors. Without limiting the generality of the foregoing, Lessee
         shall be solely responsible for maintaining and repairing all plumbing,
         electrical wiring and equipment, lighting and interior walls, and
         maintaining the heating, ventilation and air conditioning system
         ("HVAC") serving the Premises. Lessee shall keep and maintain and
         provide Lessor with a copy of a service contract for the maintenance of
         the HVAC system.

         Except for repairs rendered necessary by the negligence of Lessee, its
         agents, customers, employees and invitees, Lessor shall keep in good
         repair the structural portions of the roof, foundations and exterior
         walls of the Premises [exclusive of glass and exterior doors) and
         underground utility and sewer pipes outside the exterior walls of the
         Building.

         Except for normal maintenance and repair of the items outlined above,
         Lessee shall have no right of access to or install any device on the
         roof of the Building nor make any penetrations of the roof of the
         Building without the express prior written consent of Lessor.

         Notwithstanding the provisions of the Lease to the contrary, any costs
         incurred by Lessor in providing auxiliary aids or services or in
         undertaking barrier removal efforts as defined in and pursuant to the
         Americans with Disabilities Act of 1990 and the regulations promulgated
         thereunder, as the same may be amended or supplemented from time to
         time, or in any similar federal, state or local law or ordinance which
         are directly attributable to or arise primarily from Lessee's use or
         occupancy of the Premises or improvements made to the Premises by
         Lessee shall be deemed additional rent, and shall be paid in full by
         Lessee within thirty (30) days after Lessor gives Lessee written notice
         that such cost has been incurred by Lessor.

12.      INSURANCE: Lessee shall at all times during the term of this Lease, and
         at its sole cost and expense, maintain worker's compensation insurance
         with not less than the minimum limits required by law and "broad form"
         commercial general liability insurance against liability for bodily
         injury and property damage with liability limits as set forth on Page 1
         with such insurance naming Lessor as an additional insured and
         including such endorsements as may be required by the Lessor. In no
         event shall the limits of said policy or policies be considered as
         limiting the liability of Lessee under this Lease.

         Lessee shall maintain in full force and effect on all of its personal
         property, furniture, furnishings, trade or business fixtures and
         equipment on the Premises a policy or policies of fire or extended
         coverage insurance. Lessor will not carry insurance on Lessee's
         personal property.

         All insurance shall be with companies licensed to do business with the
         Insurance Commissioner of the State of California rated A:X or better
         in Best's Key Rating Guide. Such commercial general liability policy or
         policies shall be issued as primary policies and not contributing with
         or in excess of coverage that Lessor may carry. A certificate in form
         ACORD 27 of such liability insurance shall be delivered to the Lessor
         prior to the Commencement Date of this Lease, and as requested by
         Lessor thereafter over the term of the Lease, which shall certify that
         the policy names Lessor as an additional insured and that the policy
         shall not be canceled or altered without thirty (30) days' prior
         written notice to Lessor.

13.      LIMITATION OF LIABILITY AND INDEMNITY: Except for damage resulting from
         the sole active negligence of Lessor or its authorized representatives,
         Lessee agrees to save and hold Lessor harmless and indemnify Lessor
         from and against all claims, losses,

                                       5
<PAGE>

         proceedings, damages, causes of action, liabilities, costs, or expenses
         (including attorneys' fees, costs of court and expenses necessary in
         the prosecution or defense of any litigation) by reason of injury to
         person or property, from whatever cause, while in or on the Premises,
         or in any way connected with the Premises or with the improvements or
         personal property therein, including any liability for injury to person
         or property of Lessee, its agents or employees or third party persons.

         Except for damage resulting from the sole active negligence of Lessor
         or its authorized representatives, Lessor shall not be liable to Lessee
         for any damage to Lessee or Lessee's property, for any injury to or
         loss of Lessee's business or for any damage or injury to any person
         from any cause.

14.      ASSIGNMENT AND SUBLEASING: Lessee shall not assign or transfer this
         Lease nor sublet all or any portion of the Premises without the written
         consent of Lessor, which shall not be unreasonably withheld. If Lessee
         seeks to sublet or assign all or any portion of the Premises, a copy of
         the proposed sublease or assignment agreement and all agreements
         collateral thereto, shall be delivered to Lessor at least thirty (30)
         days prior to the commencement of the sublease or assignment (the
         "Proposed Effective Date"). In the event of an assignment or in the
         event of a sublease where the sublease (1) by itself or taken together
         with prior or other sublease(s) covers or totals, as the case may be,
         more than twenty-five percent (25%) of the rentable square feet of the
         Premises or (2) is for a term which by itself or taken together with
         prior or other subleases is greater than fifty percent (50%) of the
         period remaining in the term of this Lease as of the time of the
         Proposed Effective Date, then Lessor shall have the right, to be
         exercised by giving written notice to Lessee, to recapture the space
         described in the sublease or the entire Premises in the event of an
         assignment. If such recapture notice is given, it shall serve to
         terminate this Lease with respect to the proposed sublease space, or,
         if the proposed sublease space covers all the Premises or in the event
         of an assignment, it shall serve to terminate the entire Lease, in
         either case as of the Proposed Effective Date. However, no termination
         of this Lease with respect to part or all of the Premises shall become
         effective without the prior written consent, where necessary, of the
         holder of each deed of trust encumbering the Premises or any part
         thereof. If this Lease is terminated pursuant to the foregoing with
         respect to less than the entire Premises, the Rent shall be adjusted on
         the basis of the proportion of square feet originally demised and this
         Lease as so amended shall continue thereafter in full force and effect.
         Each permitted assignee or sublessee shall assume and be deemed to
         assume this Lease and shall be and remain liable jointly and severally
         with Lessee for payment of Rent and for the due performance of, and
         compliance with all the terms, covenants, conditions and agreements
         herein contained on Lessee's part to be performed or complied with, for
         the term of this Lease. In the event of any sublease or assignment of
         all or any portion of the Premises where the Rent reserved in the
         sublease or assignment exceeds the Rent or pro rata portion of the
         Rent, as the case may be, for such space reserved in the Lease, Lessee
         shall pay Lessor monthly, as additional Rent, at the same time as the
         monthly installments of Rent hereunder, one-half (1/2) of the excess of
         the Rent reserved in the sublease over the Rent reserved in this Lease
         applicable to the sublease space.

15.      SUBROGATION: Subject to the approval of their respective insurers,
         Lessor and Lessee hereby mutually waive their respective rights of
         recovery against each other from loss or damage to any of their
         property located on or about the Premises that is caused by or results
         from perils covered by property insurance carried by the respective
         parties, to the extent of the proceeds of such insurance actually
         received with respect to such loss or damage. Each party shall obtain
         any special endorsements, if required by their insurer, to evidence
         compliance with the aforementioned waiver.

16.      AD VALOREM TAXES: Lessee shall pay before delinquent all taxes assessed
         against the personal property of the Lessee and all taxes attributable
         to any leasehold improvements made by Lessee.

I7.      SUBORDINATION: Lessee shall, upon request of the Lessor, execute any
         instrument necessary or desirable to subordinate this Lease and all its
         rights contained hereunder to any and all encumbrances now or hereafter
         in force against the Park and the Building.

                                       6
<PAGE>

         In the event any proceedings are brought for foreclosure or in the
         event of the exercise of the power of sale under any deed of trust made
         by Lessor covering the Premises or a deed in lieu of foreclosure
         thereunder, Lessee shall attorn to the purchaser upon any such
         foreclosure or sale and recognize as the Lessor under this Lease any
         such purchaser or such transferee who acquires the Premises by deed in
         lieu of foreclosure.

18.      RIGHT OF ENTRY: Lessee grants to Lessor or its agents the right to
         enter the Premises at all reasonable times for purposes of inspection,
         exhibition, repair or alteration. Lessor shall at all times have and
         retain a key with which to unlock all the doors in, upon and about the
         Premises, excluding Lessee's vaults and safes, and Lessor shall have
         the right to use any and all means Lessor deems necessary to enter the
         Premises in an emergency. Lessor shall also have the right to place
         "for rent" and/or "for sale" signs on the outside of the Premises.
         Lessee hereby waives any claim for any of the foregoing arising out of
         the negligent acts or omissions of Lessor or its authorized
         representatives.

19.      ESTOPPEL CERTIFICATE: Lessee shall execute and deliver to Lessor, upon
         not less than five (5) days' prior written notice, a statement in the
         form attached as EXHIBIT D certifying that this Lease is unmodified and
         in full force and effect (or, if modified, stating the nature of such
         modification) and the date to which the Rent and other charges are paid
         in advance, if any, and acknowledging that there are not, to Lessee's
         knowledge, any uncured defaults on the part of Lessor hereunder or
         specifying such defaults as are claimed. Any such statement may be
         conclusively relied upon by any prospective purchaser or encumbrancer
         of the Premises. Lessee's failure to deliver such statement within such
         time shall be conclusive upon the Lessee that (1) this Lease is in full
         force and effect, without modification except as may be represented by
         Lessor; (2) there are no uncured defaults in the Lessor's performance;
         and (3) not more than one month's rent has been paid in advance.

20.      LESSEE'S DEFAULT: The occurrence of any one or more of the following
         events shall constitute a default and breach of this Lease by Lessee:

         (a)      The vacation or abandonment of the Premises by the Lessee.

         (b)      The failure by Lessee to make any payment of Rent or any other
                  payment required hereunder on the date said payment is due.

         (c)      The failure of Lessee to observe, perform or comply with any
                  of the conditions or provisions of this Lease for a period,
                  unless otherwise noted herein, of ten (10) days after written
                  notice.

         (d)      The Lessee becoming the subject of any bankruptcy (including
                  reorganization or arrangement proceedings pursuant to any
                  bankruptcy act) or insolvency proceeding whether voluntary or
                  involuntary.

         (e)      The Lessee using or storing Hazardous Materials on the
                  Premises other than as permitted by the provisions of
                  Paragraph 29 below, or the release of any hazardous substance,
                  or failure to notify Lessor or appropriate federal, state, or
                  local agencies of any such release.

         (f)      The Lessee entering any of the relationships listed in
                  Paragraph 4 above (ERISA Certification) with the Pension Trust
                  Fund comprising the Lessor.

21.      REMEDIES FOR LESSEE'S DEFAULT: In the event of Lessee's default or
         breach of the Lease, Lessor may terminate Lessee's right to possession
         of the Premises by any lawful means, in which case this Lease shall
         terminate and Lessee shall immediately surrender possession of the
         Premises to Lessor. In addition, the Lessor shall have the immediate
         right of re-entry, and if this right of re-entry is exercised following
         abandonment of the Premises by Lessee, Lessor may consider any personal
         property belonging to Lessee and left on the Premises to also have been
         abandoned.

         If Lessee breaches this Lease and abandons the Premises before the end
         of the term, or if Lessee's right to possession is terminated by Lessor
         because of a breach of the Lease, then in either such case, Lessor may
         recover from Lessee all damages suffered by Lessor

                                       7
<PAGE>

         as a result of Lessee's failure to perform its obligations hereunder,
         including, but not restricted to, the worth at the time of the award
         (computed in accordance with paragraph (3) of the subdivision (a) of
         Section 1951.2 of the California Civil Code) of the amount by which the
         Rent then unpaid hereunder for the balance of the Lease term exceeds
         the amount of such loss of Rent for the same period which the Lessee
         proves could be reasonably avoided by Lessor and in such case, Lessor,
         prior to the award, may relet the Premises for the purpose of
         mitigating damages suffered by Lessor because of Lessee's failure to
         perform its obligations hereunder; provided, however, that even though
         Lessee has abandoned the Premises following such breach, this Lease
         shall nevertheless continue in full force and effect for as long as the
         Lessor does not terminate Lessee's right of possession, and until such
         termination, Lessor may enforce all its rights and remedies under this
         Lease, including the right to recover the Rent from Lessee as it
         becomes due hereunder. The "worth at the time of the award" within the
         meaning of Subparagraphs (a)(l) and a)(2) of Section 1951.2 of the
         California Civil Code shall be computed by allowing interest at the
         rate of ten percent (10%) per annum.

         The foregoing remedies are not exclusive; they are cumulative in
         addition to any remedies now or later allowed by law or to any
         equitable remedies Lessor may have, and to any remedies Lessor may have
         under bankruptcy laws or laws affecting creditor's rights generally.
         The waiver by Lessor of any breach of any term of this Lease shall not
         be deemed a waiver of such term or of any subsequent breach thereof.

22.      HOLDING OVER: If Lessee holds possession of the Premises after the term
         of this Lease with Lessor's consent, Lessee shall become a tenant from
         month to month upon the terms specified at a monthly Rent of 150% of
         the Base Rent due on the last month of the Lease term, payable in
         advance on or before the first day of each month. All other sums due as
         Rent hereunder shall be paid by Lessee and all other provisions of this
         Lease shall remain in effect. All options, if any, granted under the
         terms of this Lease shall be deemed terminated and be of no effect
         during said month to month tenancy. Lessee shall continue in possession
         until such tenancy shall be terminated by either Lessor or Lessee
         giving written notice of termination to the other party at least thirty
         (30) days prior to the effective date of termination.

23.      LESSOR'S DEFAULT: Lessee agrees to give holder of a deed of trust
         encumbering the Premises ("Trust Deed Holders"), by certified mail, a
         copy of any notice of default served upon the Lessor by Lessee,
         provided that prior to such notice Lessee has been notified in writing
         (by way of Notice of Assignment of Rents and Leases, or otherwise) of
         the address of such Trust Deed Holder. Lessee further agrees that if
         Lessor shall have failed to cure such default within the time, if any,
         provided for in this Lease, then the Trust Deed Holders shall have an
         additional thirty (30) days within which to cure such default or if
         such default cannot be cured within that time, then such additional
         time as may be necessary, if within such thirty (30) days, the Trust
         Deed Holder has commenced and is diligently pursuing the remedies
         necessary to cure such default (including, but not limited to,
         commencement of foreclosure proceedings, if necessary, to effect such
         cure), in which event this Lease shall not be terminated while such
         remedies are being so diligently pursued.

24.      PARKING: Lessee shall have the use of the number of undesignated
         parking spaces set forth on Page 1. Lessor shall exercise its best
         efforts to insure that such spaces are available to Lessee for its use,
         but Lessor shall not be required to enforce Lessee's right to use the
         same.

25.      SALE OF PREMISES: In the event of any sale of the Premises by Lessor,
         Lessor shall be and is hereby released from its obligation to perform
         under this Lease and the purchaser at such sale or any subsequent sale
         of the Premises shall be deemed, without any further agreement between
         the parties or their successors in interest or between the parties and
         any such purchaser, to have assumed and agreed to carry out any and all
         of the covenants and obligations of the Lessor under this Lease.

26.      WAIVER: No delay or omission in the exercise of any right or remedy of
         Lessor or any default by Lessee shall impair such a right of remedy or
         be construed as a waiver.

                                       8
<PAGE>

         The subsequent acceptance of Rent by Lessor after breach by Lessee of
         any covenant or term of this Lease shall not be deemed a waiver of such
         breach, and shall not prevent Lessor from maintaining an unlawful
         detainer or other action based on such breach.

         No payment by Lessee or receipt by Lessor of a lesser amount than the
         monthly Rent and other sums due hereunder shall be deemed to be other
         than on account of the earliest Rent or other sums due, nor shall any
         endorsement or statement on any check or accompanying any check or
         payment be deemed an accord and satisfaction and Lessor may accept such
         check or payment without prejudice to Lessor's right to recover the
         balance of such Rent or other sum or pursue any other remedy provided
         in this Lease.

27.      CASUALTY DAMAGE: If the Premises or any part thereof shall be damaged
         by fire or other casualty, Lessee shall give prompt written notice
         thereof to Lessor. In case the Building shall be so damaged by fire or
         other casualty that substantial alteration or reconstruction of the
         Building shall, in Lessor's reasonable opinion, be required (whether or
         not the Premises shall have been damaged by such fire or other
         casualty), Lessor may, at its option, terminate this Lease by notifying
         Lessee in writing of such termination within sixty (60) days after the
         date of such damage, in which event the Rent shall be abated as of the
         date of such damage. If Lessor does not elect to terminate this Lease,
         Lessor shall within ninety (90) days after the date of such damage
         commence to repair and restore the Building and shall proceed with
         reasonable diligence to restore the Building (except that Lessor shall
         not be responsible for delays outside its control) to substantially the
         same condition in which it was immediately prior to the happening of
         the casualty, except that Lessor shall not be required to rebuild,
         repair. or replace any part of Lessee's furniture, furnishings or
         fixtures and equipment removable by Lessee or any improvements
         installed by Lessee under the provisions of this Lease. Lessor shall
         not in any event be required to spend for such work an amount in excess
         of the insurance proceeds actually received by Lessor as a result of
         the fire or other casualty. Lessor shall not be liable for any
         inconvenience or annoyance to Lessee, injury to the business of Lessee,
         loss of use of any part of the Premises or the Lessee's personal
         property resulting in any way from such damage or the repair thereof,
         except that, subject to the provisions of the next sentence, Lessor
         shall allow Lessee a fair diminution of Rent during the time and to the
         extent the Premises are unfit for occupancy. If the Premises or any
         other portion of the Building be damaged by fire or other casualty
         resulting from the fault or negligence of Lessee or any of Lessee's
         agents, employees, or invitees, the Rent shall not be diminished during
         the repair of such damage and Lessee shall be liable to Lessor for the
         cost and expense of the repair and restoration of the Building caused
         thereby to the extent such cost and expense of the repair and
         restoration of the Building caused thereby is not covered by insurance
         proceeds.

         Except as otherwise provided in this Paragraph 27, Lessee hereby waives
         the provisions of Sections 1932(2), 1933(4), 1941 and 1942 of the
         California Civil Code.

28.      CONDEMNATION: If twenty-five percent (25%) or more of the Premises is
         taken for any public or quasi-public purpose of any lawful governmental
         power or authority or sold to a governmental entity to prevent such
         taking, the Lessee or the Lessor may terminate this Lease as of the
         date when physical possession of the Premises is taken by the taking
         authority. Lessee shall not because of such taking assert any claim
         against the Lessor or the taking authority for any compensation because
         of such taking, and Lessor shall be entitled to receive the entire
         amount of any award without deduction for any estate of interest or
         interest of Lessee. If a substantial portion of the Building or the
         Park is so taken, Lessor at its option may terminate this Lease. If
         Lessor does not elect to terminate this Lease, Lessor shall, if
         necessary, promptly proceed to restore the Premises or the Building to
         substantially its same condition prior to such partial taking, allowing
         for the reasonable effects of such taking, and a proportionate
         allowance shall be made to Lessee for the Rent corresponding to the
         time during which, and to the part of the Premises of which, Lessee is
         deprived on account of such taking and restoration. Lessor shall not be
         required to spend funds for restoration in excess of the amount
         received by Lessor as compensation awarded.

29.      HAZARDOUS MATERIALS: The Lessee, at its sole cost and expense, shall
         comply with all laws, ordinances, regulations, and standards regulating
         or controlling hazardous wastes or hazardous substances, including,
         without limitation, the Comprehensive Environmental

                                       9
<PAGE>

         Response, Compensation, and Liability Act of 1980, as amended, 42
         U.S.C. 9601, et seq., the Hazardous Material Transportation Act, 49
         U.S.C. 1801, et seq., the Resource Conservation and Recovery Act, 42
         U.S.C. 6901, et seq., the Carpenter-Presley-Tanner Hazardous Substance
         Account Act, Health and Safety Code section 25300, et seq., the
         Underground Storage of Hazardous Substance Act, Health and Safety
         section 25280, et seq., the Safe Drinking Water and Toxic enforcement
         Act of 1986 (Health and Safety Code section 25249.S, et seq., and the
         Hazardous Waste Control Law, Health and Safety Code section 25100, et
         seq. (collectively, the "Environmental Laws"). The Lessee hereby
         indemnifies and at all times shall indemnify and hold harmless the
         Lessor, the Lessor's trustees, directors, officers, employees,
         investment manager(s), attorneys, agents, and any successors to the
         Lessor's interest in the chain of title to the Property, their
         trustees, directors, officers, employees, and agents from and against
         any and all claims, suits, demands, response costs, contribution costs,
         liabilities, losses, or damages, directly or indirectly arising out of
         the existence, use, generation, migration, storage, transportation,
         release, threatened release, or disposal of Hazardous Materials
         (defined below) in, on, or under the Property or in the groundwater
         under the Property and the migration or transportation of Hazardous
         Materials to or from the Property or the groundwater underlying the
         Property. This indemnity extends to the costs incurred by the Lessor or
         its successors to reasonably repair, clean up, dispose of, or remove
         such Hazardous Materials in order to comply with the Environmental
         Laws, provided the Lessor gives the Lessee not less than thirty (30)
         days' advance written notice of its intention to incur such costs. The
         Lessee's obligations pursuant to the foregoing indemnification and hold
         harmless agreement shall survive the termination of this Lease. The
         subtenants, contractors, agents, or invitees of the Lessee shall not
         use, generate, manufacture, store, transport, release, threaten
         release, or dispose of Hazardous Materials in, on, or about the Park
         unless the Lessee shall have received the Lessor's prior written
         consent therefore, which the Lessor may withhold or revoke at any time
         in its reasonable discretion, and shall not cause or permit the release
         or disposal of Hazardous Materials from the Park except in compliance
         with applicable Environmental Laws. The Lessee shall not permit any
         person, including its subtenants, contractors, agents, or invitees to
         use, generate, manufacture, store, transport, release, threaten
         release, or dispose of Hazardous Materials in, on, or about the Park or
         transport Hazardous Materials from the Park unless the Lessee shall
         have received the Lessor's prior written consent therefore, which the
         Lessor may hold or revoke at any time in its reasonable discretion and
         shall not cause or permit the release or disposal of Hazardous
         Materials. The Lessee shall promptly deliver written notice to the
         Lessor if it obtains knowledge sufficient to infer that Hazardous
         Materials are located on the Park that are not in compliance with
         applicable Environmental Laws or if any third party, including without
         limitation, a governmental agency, claims a significant disposal of
         Hazardous Materials occurred in the Park or is being or has been
         released from the Park, or any such party gives notice of its intention
         to declare the Park to be Border Zone Property (as defined in section
         25117.4 of the California Health and Safety Code). Upon reasonable
         written request of the Lessor, the Lessee, through its professional
         engineers and at its cost, shall thoroughly investigate suspected
         Hazardous Materials contamination of the Park. The Lessee, using duly
         licensed and insured contractors, shall promptly commence and
         diligently complete the removal, repair, clean-up, and detoxification
         of any Hazardous Materials from the Park as may be required by
         applicable Environmental Laws.

         Notwithstanding anything to the contrary in this Lease, nothing herein
         shall prevent the Lessee from using materials other than Hazardous
         Materials on the Premises as would be used in the ordinary course of
         the Lessee's business as contemplated by this Lease. The Lessee does
         not in the course of the Lessee's current business use Hazardous
         Materials. If during the term of this Lease, the Lessee contemplates
         utilizing such materials (or subleases/assigns this Lease to a
         subtenant or assignee who utilizes Hazardous Materials), the Lessee
         shall obtain prior written approval from the Lessor, which approval
         shall not be unreasonably withheld. The Lessor, at its option, and at
         the Lessee's expense, may cause an engineer selected by the Lessor, to
         review (a) the Lessee's operations, including materials used,
         generated, stores, disposed, and manufactured in the Lessee's business
         and (b) the Lessee's compliance with the terms of this paragraph. The
         Lessee shall provide the engineer with such information reasonably
         requested by the engineer to complete the review. The first such review
         may occur prior to or shortly following commencement of the term of
         this Lease. Thereafter, such review shall not occur more frequently
         than once each year unless cause exists for some other review schedule.
         One-

                                       10
<PAGE>

         half (1/2) of the fees and costs of the engineer shall be paid promptly
         by the Lessee to the Lessor upon receipt of written notice of such fees
         and costs.

         "Hazardous Materials" means any hazardous waste or hazardous substance
         as defined in any federal, state, county, municipal, or local statute,
         ordinance, rule, or regulation applicable to the Property, including,
         without limitation, the Environmental Laws. "Hazardous Materials" shall
         also include asbestos or asbestos-containing materials, radon gas,
         petroleum or petroleum fractions, urea formaldehyde foam insulation,
         transformers containing levels of polychlorinated biphenyls greater
         than 50 parts per million, and chemicals known to cause cancer or
         reproductive toxicity, whether or not defined as a hazardous waste or
         hazardous substance in any such statute, ordinance, rule, or
         regulation.

30.      FINANCIAL STATEMENTS: Within ten (10) days after Lessor's request,
         Lessee shall deliver to Lessor the then current audited financial
         statements of Lessee (including interim periods following the end of
         the last fiscal year for which annual statements are available) which
         statements shall be prepared or compiled by a certified public
         accountant and shall present fairly the financial condition of Lessee
         at such dates and the result of its operations and changes in its
         financial positions for the periods ended on such dates.

31.      REPRESENTATIONS AND WARRANTIES OF LESSEE: If Lessee is a partnership,
         corporation or limited liability company, Lessee hereby makes the
         following representations and warranties, each of which is material and
         being relied upon by Lessor, is true in all respects as of the date of
         this Lease, and shall survive the expiration or termination of the
         Lease.

                  (a) Lessee is duly organized, validly existing and in good
         standing under the laws of the state of its organization and the
         persons executing this Lease on behalf of Lessee have the full right
         and authority to execute this Lease on behalf of Lessee and to bind
         Lessee without the consent or approval of any other person or entity.
         Lessee has full power, capacity, authority and legal right to execute
         and deliver this Lease and to perform all of its obligations hereunder.
         This Lease is a legal, valid and binding obligation of Lessee,
         enforceable in accordance with its terms.

                  (b) Lessee has not (1) made a general assignment for the
         benefit of creditors, (2) filed any voluntary petition in bankruptcy or
         suffered the filing of an involuntary petition by any creditors, (3)
         suffered the appointment of a receiver to take possession of all or
         substantially all of its assets, (4) suffered the attachment or other
         judicial seizure of all or substantially all of its assets, (5)
         admitted in writing its inability to pay its debts as they come due, or
         (6) made an offer of settlement, extension or composition to its
         creditors generally.

32.      GENERAL PROVISIONS:

                  (a) TIME. Time is of the essence in this Lease and with
         respect to each and all of its provisions in which performance is a
         factor.

                  (b) SUCCESSORS AND ASSIGNS. The covenants and conditions
         herein contained, subject to the provisions as to assignment, apply to
         and bind the heirs, successors, executors, administrators and assigns
         of the parties hereto.

                  (c) RECORDATION. Lessee shall not record this Lease or a short
         form memorandum hereof without prior written consent of the Lessor.

                  (d) LESSOR'S PERSONAL LIABILITY. The liability of Lessor
         (which, for purposes of this Lease, shall include Lessor and the owner
         of the Building if other than the Lessor) to Lessee for any default by
         Lessor under the terms of this Lease shall be limited to the actual
         interest of Lessor and its present or future partners in the Building
         and Lessee agrees to look solely to Lessor's or Lessor's present or
         future partners' actual interest in the Building for the recovery of
         any judgment against Lessor, it being intended that Lessor shall not be
         personally liable for any judgment or deficiency. The liability of
         Lessor under this Lease is limited to its actual period of ownership of
         title to the Building, and Lessor shall be released from liability upon
         transfer of title to the Building.

                                       11
<PAGE>

                  (e) SEPARABILITY. Any provisions of this Lease which shall
         prove to be invalid, void or illegal shall in no way affect, impair or
         invalidate any other provisions hereof and such other provision shall
         remain in full force and effect.

                  (f) CHOICE OF LAW. This Lease shall be governed by the laws of
         the State of California.

                  (g) ATTORNEYS' FEES. In the event any legal action is brought
         to enforce or interpret the provisions of this Lease, the prevailing
         party therein shall be entitled to recover all costs and expenses
         including reasonable attorneys' fees.

                  (h) ENTIRE AGREEMENT. This Lease supersedes any prior
         agreements and contains the entire agreement of the parties on matters
         covered. No other agreement, statement or promise made by any party
         that is not in writing and signed by all parties to this Lease shall be
         binding. This Lease shall not be construed to create any form of
         partnership or joint venture between Lessor and Lessee.

                  (i) WARRANTY OF AUTHORITY. Each person executing this
         agreement on behalf of a party represents and warrants that (1) such
         person is duly and validly authorized to do so on behalf of the entity
         it purports to so bind, and (2) if such party is a partnership,
         corporation or trustee, that such partnership, corporation or trustee
         has full right and authority to enter into this Lease and perform all
         of its obligations hereunder.

                  (j) NOTICES. All notices and demands required or permitted to
         be sent to the Lessor or Lessee shall be in writing and shall be sent
         by United States mail, postage prepaid, certified or by personal
         delivery or by overnight courier, addressed to Lessor at Firestone
         Business Park, 340 El Camino Real South, Salinas, California 93901, or
         to Lessee at the address listed on Page 1 prior to the Commencement
         Date and following the Commencement Date at the Premises, or to such
         other place as such party may designate in a notice to the other party
         given as provided herein. Notice shall be deemed given upon the earlier
         of actual receipt or the third day following deposit in the United
         States mail.

                  (k) INTERLINEATION. The use of underlining or strikeouts
         within the Lease is for reference purposes only. No other meaning or
         emphasis is intended by this use, nor should any be inferred.

33.      BLANKET ENCUMBRANCE: Lessee is aware of the fact that the lot on which
         the Premises are located may be subject to a deed of trust, mortgage,
         or other lien known as a "Blanket Encumbrance." According to California
         law, Lessee could lose its interest through foreclosure of the Blanket
         Encumbrance or other legal process even though Lessee is not delinquent
         in Lessee's payments or other obligations under the Lease.

         IN WITNESS WHEREOF, this Lease is executed on the date and year first
written above.

LESSEE: MONTEREY PASTA COMPANY

By:      /S/                                 By:      /S/
   -------------------------------              -------------------------------
         Stephen L. Brinkman                          R. Lance Hewitt
Its:     Chief Financial Officer             Its:     Chief Executive Officer
   -------------------------------              -------------------------------

LESSOR:  PTF for Operating Engineers, LLC (Member: BNY Western Trust Company, as
         Corporate Co-Trustee for the Pension Trust Fund for Operating
         Engineers).

By:      McMorgan & Company
Its:     Investment Manager

By:      /S/
         -----------------------------
         Patrick Murray
Its:     Vice President

                                       12
<PAGE>

                                    EXHIBIT A

                                    PREMISES

                                       13
<PAGE>

                                    EXHIBIT B

                                 LANDLORD'S WORK

1.       LESSEE EXCEPTS PREMISES IN "AS IS" CONDITION.

                                       14
<PAGE>

                                    EXHIBIT C

                             FIRESTONE BUSINESS PARK
                              RULES AND REGULATIONS

PURPOSE:
     In a business park setting, it is imperative that certain activities be
     prohibited because they represent a threat to good order and discipline
     which directly impact on the health, safety or welfare of our lives. These
     Rules and Regulations are for the mutual benefit and protection of all
     current and future lessees with Firestone Business Park. Accordingly, each
     lessee agrees to accept these Rules and Regulations.

Furthermore, Firestone Business Park will enforce these provisions according to
     its business judgment in its sole discretion. It is agreed and understood
     that Firestone Business Park shall not be subject to any claim of any kind
     for damages or losses suffered as a result of a breach of these Rules and
     Regulations by another party, or the alleged failure of the Firestone
     Business Park to enforce the provisions of these Rules and Regulations.

EFFECTIVE DATE:

These Rules and Regulations are effective as of January 15, 1992 and hereby
     supersede all previous Rules and Regulations.

CONTROLLED SUBSTANCES:

     It is strictly forbidden to enter the Firestone Business Park under the
     influence of any controlled substance, or to transport, carry, consume or
     use any intoxicants, narcotics, stimulants, depressants or hallucinogens.
     The giving, selling or delivering of any controlled substance to any other
     person on the premises or trafficking for the sale or delivery of such
     items is forbidden and is illegal. Ethical pharmaceutical drugs on a
     doctor's prescription and over-the-counter drugs are allowed.

SPEED LIMITS:

     A 25 MPH speed limit is in effect for safety reasons and it will be
     strictly enforced. Flagrant abusers of the speed limit or repeat violators
     will be prohibited from driving in the Firestone Business Park. This
     prohibition extends to both employees and to trucking or transportation
     companies servicing your business.

PARKING:

     All parking shall be in designated parking areas only. Illegally parked
     vehicles, improperly parked vehicles taking two or more spaces, or those
     parked in undesignated areas will be removed at the expense of the lessee.

VEHICULAR STORAGE:

     Due to insurance liability limitations, there shall be no storage of vans,
     cars, trucks, trailers, boats or other vehicles of any sort outside of the
     lessee's leased space.

OUTSIDE STORAGE:

     There shall be no outside storage of wares, goods, materials, containers,
     boxes or pallets. Such material is a fire hazard that threatens safety and
     is absolutely prohibited.

                                       15
<PAGE>

LOADING AND STAGING:

     All loading and unloading must be conducted entirely at the lessee's
     loading docks or interior lease space. Staging is the term applied to the
     preparation, presentation or stacking of merchandise for shipping in a
     convenient, ready-to-load location. All staging of materials must be
     accomplished within each lessee's space.

REFUSE AND TRASH:

     Each lessee is responsible for the safe storage and removal of trash and
     refuse generated by its respective business. Trash containers shall not be
     allowed to overflow and, in wind conditions, trash containers must be
     tarped to prevent the blowing of trash around the Firestone Business Park
     and into other leased spaces.

VEHICULAR MAINTENANCE AND REPAIR:

     There shall be no maintenance or repairs performed on any automobile,
     truck, cab, van, trailer or other vehicle, whether it is parked on
     concrete, asphalt, blacktop, dirt or any other surface in Firestone
     Business Park. With the exception of such minor repairs or assistance such
     as jump-starting dead batteries, all vehicles must be removed from the
     Firestone Business Park for servicing. This prohibition also applies to oil
     changes, filter changes and lubrication.

POLLUTION AND NUISANCE:

     Any type of activity or business application that produces offensive noise,
     dirt, smoke, odor or other nuisance is strictly prohibited. This
     prohibition extends to the running of gasoline or diesel engines inside
     warehousing or other enclosed spaces. Firestone Business Park management
     has the sole discretion to determine whether any business activity that
     produces noise, dirt, smoke, odor or other nuisances is of a nature that
     should be prohibited.

SAFETY AND SECURITY:

     The personnel of the Safety and Security Force may not be utilized to halt
     shipments, stop trucking or engage in other activities resulting from
     internal labor-management disputes. The Safety and Security Force is
     authorized to act in the event there has been a criminal act committed and
     to provide safety-related services.

ANIMALS:

     No animals shall be brought or kept upon the Firestone Business Park,
except seeing eye dogs.

                                       16
<PAGE>

                                    EXHIBIT D

                              ESTOPPEL CERTIFICATE

LEASE DATED:      JANUARY 1, 2000

BETWEEN: PTF for Operating Engineers, LLC (Member: BNY Western Trust Company, as
         Corporate Co-Trustee for the Pension Trust Fund for Operating
         Engineers). as "Lessor"

AND:     MONTEREY PASTA COMPANY, A DELAWARE CORPORATION
         as "Lessee", demising premises located and addressed as:
         Space:   38
                  340 EL CAMINO REAL SOUTH
                  SALINAS, CA  93901

Ladies and Gentlemen:

The undersigned Lessee hereby certifies with respect to the above described
Lease as follows:

1.     All space and improvements leased by Lessee pursuant to the Lease have
       been completed and furnished in accordance with the provisions of the
       Lease, and Lessee has accepted and taken possession of the Premises. All
       obligations of Lessor to Lessee with respect to improvements to the
       Premises have been performed;

2.     Lessor has satisfied all commitments made to induce Lessee to enter into
       the Lease, and Lessor is not in any respect in default in the performance
       by Lessor of its obligations under the Lease;

3.     Lessee is not in any respect in default under the Lease and has not
       assigned, consigned, sublet, transferred or hypothecated its interest or
       any part thereof under the Lease;

4.     The Lease (including any option or renewal term) is for a total term of
       approximately FIVE (5) years commencing JANUARY 1, 2000 "Commencement
       Date") and ending DECEMBER 31, 2004. The Lease is in full force and
       effect and has not been modified, altered or amended and contains the
       entire agreement between Lessor and Lessee except:

       NONE

5.     Rental under the Lease has been paid through JANUARY 31, 2000 and was
       payable from the Commencement Date: JANUARY 1, 2000;

6.     The Base Rent is $6,600 (SIX THOUSAND SIX HUNDRED DOLLAR) per month at
       this time;

7.     There are no offsets or credits against Rent payable under the Lease, and
       Lessee has made no payment to Lessor as a security deposit or advance or
       prepaid rental except: (i) payments expressly provided for in the Lease
       or in an amendment or modification to the Lease described above; and (ii)
       payments made no earlier than ten (10) days prior to the date upon which
       such payments are due;

8.     Except as expressly provided in the Lease or in an amendment or
       modification to the Lease which is described above, Lessee does not have
       any right to renew or extend the term of the Lease nor any option or
       preferential right to purchase all or any part of the Premises or all or
       any part of the building of which the Premises are a part, nor any right,
       title or interest with respect to the Premises other than as Lessee under
       the Lease;

9.     Lessee acknowledges that this certificate is a material inducement to
       prospective lenders and/or purchasers to incur financial obligation in
       respect hereof, and that such lenders or purchasers will rely upon the
       statements contained herein;

                                       17
<PAGE>

10.    That the above described Lease represents the entire agreement between
       the parties as to said leasing.

       The undersigned hereby agrees:

       (a)    To disclaim all right, title or interest in said Premises except
              the rights granted by said Lease;

       (b)    To send a copy of any notice or demand given or made to the Lessor
              pursuant to the provisions of said Lease, by certified mail to the
              owner and holder of any first mortgage on the demised Premises, or
              its assignee upon being notified in writing of such mortgagee's or
              assignee's name and address; and

       (c)    To give to the holder of said mortgage or its assignee the same
              right as the Lessor has to cure any default complained of in said
              notice or demand.

Executed this 2nd day of February , 2000.

______________________________

______________________________

By: /s/ R. Lance Hewitt
    --------------------------

Its: President and CEO
    --------------------------

By: /s/ Stephen L. Brinkman
    --------------------------

Its: CFO
    --------------------------

                                       18

<PAGE>

                                                                     EXHIBIT A

                         [MAP OF FIRESTONE BUSINESS PARK]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00012-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00012-of-00352.parquet"}]]