Document:

Exhibit 10.2

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

    AGREEMENT made as of July 1, 2001 by and between JONES
APPAREL GROUP, INC., a Pennsylvania corporation (the "Company"), and
IRWIN SAMELMAN (the "Executive").

W I T N E S S E T H:

    WHEREAS, Executive has been serving as a senior executive
of the Company pursuant to an employment agreement dated as of July 1, 2000
between the Company and the Executive (the "Prior Agreement"), and

    WHEREAS, the Company wishes to continue to employ the
Executive, and the Executive wishes to continue employment with the Company, on
the terms and conditions hereinafter set forth.

    NOW, THEREFORE, it is agreed as follows:

    1. Employment. During the term of this Agreement,
the Company shall employ the Executive as the Executive Vice President-Marketing
of the Company, with such responsibilities and authority as Executive has
heretofore had as Executive Vice President-Marketing of the Company. The
Executive shall report directly to the Chief Executive Officer of the Company.
During the term of this Agreement, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
all of Executive's business time and attention to the business affairs of the
Company, and to perform such responsibilities in a professional manner.
Notwithstanding the foregoing, during the term of this Agreement, it shall not
be a violation of this Agreement for the Executive to (a) serve on civic or
charitable boards or committees; (b) deliver lectures, fulfill speaking
engagements or teach at educational institutions; (c) serve as a non-employee
member of a board of directors of a business entity which is not competitive
with the Company and as to which the Board of Directors of the Company has given
its consent; and (d) attend to personal business, so long as such activities do
not interfere with the performance of the Executive's responsibilities as a
senior executive of the Company in accordance with this Agreement.

    2. Term. The Company shall employ the Executive for
the period commencing as of July 1, 2001 and ending as of June 30, 2004 (the
"Expiration Date"), as renewed in accordance with the following
sentence (the "Term"). The Executive's employment with the Company
will continue, and this Agreement will be automatically extended without
limitation, for successive 12-month periods commencing July 1 and ending June 30
(a "Contract Year"), unless either party to this Agreement
advises the other in writing, no later than June 30, 2002 and no later than each
June 30 thereafter, that 

such party does not wish to extend (a "Non-extension Notice"). If
this Agreement shall be so extended, the "Expiration Date" shall mean
the then applicable extended "Expiration Date", and the
"Term" shall mean the period commencing July 1, 2001 and ending on the
then applicable extended "Expiration Date".

For example, (i) if by June 30, 2002, neither party has given a Non-extension
Notice to the other, the Term will be automatically extended through June 30,
2005, and (ii) if the Term is so extended through June 30, 2005, then if by June
30, 2003, neither party has given a Non-extension Notice to the other, the Term
will be automatically extended through June 30, 2006.

    3. Salary, Retirement Plans, Fringe Benefits and
Allowances.

        (a) Throughout the Term, the
Executive shall receive a salary at the annual rate of not less than $1,000,000.
The Executive's salary shall be payable at such regular times and intervals as
the Company customarily pays its senior executives from time to time, but no
less frequently than once a month.

        (b) During the Term, the Executive
shall be eligible to participate in all savings and retirement plans, practices,
policies and programs to the extent applicable generally to other senior
executives of the Company.

        (c)(i) During the Term, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare, fringe and
other benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription drug, dental, disability,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other senior executives of the Company.

            (ii)
During the period commencing with the termination of the Executive's
employment with the Company for any reason other than for Cause and ending with
the death of the Executive or death of the individual who was his spouse at the
date of termination of the Executive's employment, whichever occurs later, the
Company (at its sole expense) shall continue to provide the Executive and such
spouse (and eligible dependents, if any) with health care benefits comparable to
those which the Executive was receiving immediately prior to termination of
employment.

        (d) The Executive shall be
entitled to an aggregate of four (4) weeks paid vacation during each calendar
year of the Term. The Executive shall also be entitled to the benefits of the
Company's policies relating to sick leave and holidays.

        (e) The Executive shall have all
expenses reasonably incurred by Executive on behalf of the Company reimbursed by
the Company in accordance with the Company's standard policies and practices.
The Executive shall be entitled to first class seating for air travel on Company
business.

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        (f) The Company shall make
available to the Executive all perquisites that are made available to senior
executives of the Company.

    4. Calendar Year Bonus; Contract Year Bonus.

        (a) Executive shall participate in
the Company's Executive Annual Incentive Plan (the "Bonus Plan"),
pursuant to which the Executive may be entitled to receive annual bonus payments
for each full calendar year of employment which ends prior to the Expiration
Date and throughout which the Executive has been employed by the Company, and a
partial annual bonus payment for the calendar year in which this Agreement
expires (such full or partial year bonus payments being hereinafter referred to
as a "Calendar Year Bonus"), prorated for the portion of such year
preceding expiration, conditioned upon the attainment of annual criteria and
objectives established for participants in the Bonus Plan.

        (b)(i) In addition to the Calendar
Year Bonuses that the Executive may receive pursuant to Section 4(a)hereof, the
Executive shall be paid an aggregate bonus of $1,500,000 for each full Contract
Year throughout which the Executive has been employed by the Company during the
Term (the "Contract Year Bonus"). The Contract Year Bonus shall be
paid in two installments of $750,000 (each a "Contract Year Bonus
Installment"), payable within 10 days after the first day and the last day
of each Contract Year (except that the first Contract Year Bonus Installment for
the Contract Year beginning July 1, 2001 shall be paid within 10 days following
the execution of this Agreement).

            (ii)
Executive may elect to receive all or part of a Contract Year Bonus Installment
in shares ("Common Shares") of the Company's common stock (the
"Common Stock Amount"), by giving written notice of such election (a
"Stock Election Notice") to the Company no later than the July 10
immediately following the end of a Contract Year. If such Stock Election Notice
has been given, the number of Common Shares that the Company shall deliver to
the Executive shall be equal to the Common Stock Amount divided by the average
daily last sale price of the Company's common stock on the New York Stock
Exchange (adjusted for intervening stock dividends, stock splits,
recapitalizations and any other transactions having a similar effect ) during
the period from the day following the Company's receipt of the Stock Election
Notice and ending on the immediately following July 31 (the "Price
Calculation Period"). A stock certificate for the Common Shares comprising
the Common Stock Amount shall be delivered to the Executive no later than the
end of the fifth business day immediately following the end of the Price
Calculation Period.

    5. Stock Options; Restricted Stock. (a) In
anticipation of entering into this Agreement and as an inducement to the
Executive to do so, the Stock Option Committee of the Board of Directors of the
Company granted to the Executive (x) on June 15, 2001, an option to purchase
250,000 Common Shares, and (y) on July 9, 2001, 100,000 Restricted Shares, in
accordance with the terms of such grants contained in agreements relating
thereto between the Executive and the Company.

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        (b) Subject to the absolute
authority of the Stock Option Committee of the Board of Directors of the Company
from time to time to grant (or not to grant) to eligible individuals options to
purchase common stock of the Company ("Options"), it is the intention
of the Company and the expectation of the Executive that while the Executive is
employed hereunder, the Executive will receive Options annually, on the
following terms and conditions (and any Options so granted shall be subject to
the following terms and conditions, which shall govern any conflicts in the
terms hereof with any terms and conditions in any stock option agreement):

            (i) Target
awards will be in an amount (plus or minus 25%) equal to 150% of Executive's
salary;

            (ii) For
purposes of determining the number of shares subject to a given Option grant,
the value of such Option shall be determined using the Black-Scholes valuation
method, or another generally recognized valuation method which is being used
uniformly by the Company for its senior executives;

            (iii) The
exercise price per share of the Options shall be the fair market value of the
common stock on the date of grant, and the Options shall expire on the tenth
anniversary of the date of grant; and

            (iv) The
Options shall vest ratably on the first three anniversaries of the date of
grant; provided, however, that all such Options and all other options to
purchase Common Shares then held by the Executive which are not then vested (in
the aggregate being referred to herein as "Accelerated Options") shall
become fully vested and immediately exercisable during the remaining original
term of each such Accelerated Option, upon the occurrence of any of the
following events ("Acceleration Events"): Executive's Retirement (as
defined herein), death, Disability, a Change in Control (as defined herein), and
termination of Executive's employment by the Company without Cause or by the
Executive for Good Reason; and

            (v) The
Options shall be granted on such other terms and conditions as are generally
made applicable to Options granted to the other senior executives of the
Company.

            6. Termination of Employment.

        
        (a) By the Company for Cause, or by the Executive without Good Reason.
The Company may terminate the Executive's employment for Cause (as defined
herein) before the Expiration Date. If the Executive's employment is
terminated for Cause, or if Executive resigns during the Term without Good
Reason (as defined below), the Company shall pay to the Executive any unpaid
salary through the date of termination, as well as reimburse the Executive for
any unpaid reimbursable expenses incurred on behalf of the Company, and
thereafter the Company shall have no additional obligations to the Executive
under this Agreement.

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        (b) Death or Disability; Retirement. (i) If the Executive's
employment terminates before the Expiration Date because of Executive's death
or Disability or Retirement (as defined herein), the Company shall pay Executive
or Executive's duly appointed personal representative, as the case may be, (i)
any unpaid salary through the date of death or the Disability Termination Date
or the date of Retirement (as defined herein) and any bonus earned in the prior
year but not yet paid, as well as reimbursement of any unpaid reimbursable
expenses incurred on behalf of the Company, (ii) an amount equal to Executive's
monthly salary during each of the six (6) months following Executive's death
or the Disability Termination Date, (iii) the Target Bonus for the calendar year
in which Executive dies or becomes Disabled or Retires, prorated for the portion
of such year preceding Executive's death or the Disability Termination Date,
and (iv) the Contract Year Bonus for the Contract Year in which the Executive
dies or becomes Disabled or Retires, prorated for the portion of such year
preceding Executive's death or the Disability Termination Date, which shall be
paid not later than 120 days after the end of such year. Except as set forth in
this Section 6(b) and in Section 2(c)(ii) hereof, the Company shall have no
additional obligations to the Executive under this Agreement in the event of
Executive's termination of employment under this Section 6(b).

            (ii) In addition to the foregoing and notwithstanding any other agreement
between the Executive and the Company, all Accelerated Options which were held
by the Executive at the time of the Executive's Retirement, death or the
Disability Termination Date, shall become fully exercisable and shall remain
exercisable by the Executive or by the Executive's estate or his
representative, as the case may be, during the remaining original term of the
Accelerated Option in the case of the Executive's Retirement or Disability, or
during the 3-year period following the date of the Executive's death.

        (c) By the Company without Cause, or by the Executive for Good
Reason. (i) The Company may terminate the Executive's employment
before the Expiration Date without Cause, and the Executive may terminate
Executive's employment before the Expiration Date for Good Reason, upon
30-days written notice to the other party. If the Executive's employment is so
terminated by the Company without Cause, or by the Executive for Good Reason, as
the case may be, the Company shall pay and provide to the Executive (i) any
unpaid salary through the date of termination and any bonus earned in the prior
year but not yet paid, as well as reimbursement of any unpaid reimbursable
expenses incurred on behalf of the Company, (ii) the Target Bonus for the
calendar year in which termination occurs, prorated for the portion of such year
preceding termination (payable no later than the 30th day immediately
following termination of employment), (iii) the Contract Year Bonus for the
Contract Year in which termination occurs, prorated for the portion of such year
preceding termination (payable no later than the 30th day immediately
following termination of employment), (iv) during each month of the Severance
Period (as defined below), an amount equal to the sum of (x) Executive's
monthly salary at the rate in effect immediately preceding termination and (y)
one-twelfth of the Executive's Target Bonus for the calendar year in which
termination occurs, and (z) one-twelfth of the Contract Year Bonus, (v)
throughout the 

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 Severance Period, continuation of Executive's participation
(including the Company's contributions thereto) in all benefit plans and
practices in which Executive was participating immediately preceding
termination, and (vi) reimbursement to the Executive for up to $10,000 of
executive outplacement services. Except as set forth in this Subsection 6(c),
the Company shall not have any additional obligations to the Executive under
this Agreement in the event of Executive's termination of employment under
this Subsection 6(c).

            (ii) In addition to the foregoing and notwithstanding any other agreement
between the Executive and the Company, all options to purchase the Company's
common stock which were held by the Executive at the time of the termination of
the Executive's employment by the Company without Cause or by the Executive
for Good Reason (whether or not following a Change of Control), shall become
fully exercisable and shall remain exercisable for the same period following
termination as would apply if the Executive's employment had not terminated.

        (d) Change in Control. If, following a "Change in
Control" (as defined herein) and prior to the Expiration Date, the Company
terminates the Executive's employment without Cause, or the Executive
terminates employment hereunder for Good Reason, the Company shall pay to the
Executive, within 20 days following termination, (i) any unpaid salary through
the date of termination and any bonus earned in the prior year but not yet paid,
as well as reimbursement of any unpaid reimbursable expenses incurred on behalf
of the Company, (ii) the Target Bonus for the calendar year in which termination
occurs, prorated for the portion of such year preceding termination, (iii) the
Contract Year Bonus for the Contract Year in which the termination occurs,
prorated for the portion of such year preceding termination, (iv) a lump-sum
payment equal to (x) 200% of Executive's yearly salary at the rate in effect
immediately preceding termination multiplied by (y) the Severance Multiple (as
defined herein), (v) reimbursement to the Executive for up to $10,000 of
executive outplacement services, and (vi) a lump-sum equal to the Company's
cost for life insurance and retirement benefits for the Severance Period.

        (e) Special Termination Provision. (i) Any other provision in
this Agreement notwithstanding, during the period commencing either when Sidney
Kimmel first does not hold the position of Chief Executive Officer of the
Company or a Change in Control has occurred, and ending on the 90th
day immediately following either such event, Executive may give written notice
(an "Early Termination Notice") to the Company that he is terminating
his employment effective on the 30th day following the giving of such
Early Termination Notice.

            (ii) If the Executive's employment is so terminated by the Executive, the
Company shall pay to the Executive, within 20 days following termination, (i)
any unpaid salary through the date of termination, as well as reimbursement of
any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the
Target Bonus for the calendar year in which termination occurs, prorated for the
portion of such year preceding termination, (iii) the Contract Year Bonus for
the Contract 

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 Year in which termination occurs, prorated for the portion of such
year preceding termination (payable no later than the 30th day
immediately following termination of employment, plus, if the Severance Period
ends after the termination of employment, (iv) a lump-sum payment equal to (x)
200% of Executive's yearly salary at the rate in effect immediately preceding
termination multiplied by (y) the Severance Multiple (as defined herein), (v)
reimbursement to the Executive for up to $10,000 of executive outplacement
services, and (vi) a lump-sum equal to the Company's cost for life insurance
and retirement benefits for the Severance Period.

                    (f)  As used herein:

            (i) the term "Cause" shall mean (v) the Executive's commission of
an act of fraud or dishonesty or a crime involving money or other property of
the Company; (w) the Executive's conviction of a felony or a plea of guilty or
nolo contendere to an indictment for a felony; (x) if, in carrying out
Executive's duties hereunder, the Executive engages in conduct which
constitutes willful misconduct or gross negligence; (y) the Executive's
failure to carry out a lawful order of the Board of Directors of the Company or
its Chief Executive Officer; or (z) a material breach by the Executive of this
Agreement. Any act or failure to act on the part of the Executive which is based
upon authority given pursuant to a resolution duly adopted by the Board of
Directors of the Company or authorized in writing by the Chief Executive Officer
of the Company, or based upon the advice of counsel for the Company, shall not
constitute Cause as used herein. For purposes of this provision only, a breach
shall be "material" if it is demonstrably injurious to the Company,
its affiliates or any of its respective business units, financially or
otherwise.

            Cause shall not exist unless and until the Company (i) has delivered to the
Executive a written Notice of Termination that specifically identifies the
events, actions, or non-actions, as applicable, that the Company believes
constitute Cause hereunder, and, in the case of termination for Cause under
clauses (x), (y) or (z) above, the Executive has been provided with an
opportunity to cure the offending conduct (if curable) within 30 days after
delivery of the written Notice of Termination, and has not so cured such conduct
(if curable), and (ii) the Executive has been provided an opportunity to be
heard (with counsel) within 30 days after delivery of the notice of Termination;
provided, however, that in the case of termination for Cause under clauses (x),
(y), and (z) above, the date of termination shall be no earlier than 35 days
after delivery of the Notice of Termination.

                       
            (ii) the term "Good Reason" shall mean any one of the
            following:

               
(1) a material breach of the Company's obligations under this Agreement,
which breach has not been cured within 20 business days after the Company's
receipt of written notice from the Executive of such breach;

               
              (2) a reduction in the Executive's then annual base salary;

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(3) the relocation of the Executive's office to a location more than 30
miles from Executive's present office;

               
(4) the failure to pay the Executive any undisputed portion of the Executive's
compensation within 15 business days after the date of receipt of written notice
that such compensation or payment is due;

               
(5) the failure to continue in effect any compensation or benefit plan in
which the Executive is participating, unless either (i) an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan; or (ii) the failure to continue the Executive's
participation therein (or in such substitute or alternative plan) does not
discriminate against the Executive, both with respect to the amount of benefits
provided and the level of the Executive's participation, relative to other
similarly situated participants;

               
(6) a reduction in the Executive's title and status as Executive Vice
President-Marketing of the Company, or any change in the Executive's status
as reporting directly to the Chief Executive Officer; or the assignment to the
Executive of any duties materially inconsistent with the Executive's position
(including, without limitation, status, office, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
1 of this Agreement, or any other action by the Company which results in a
material diminution in such position, authority, duties or responsibilities,
excluding for this purpose any action not taken in bad faith and which is
remedied by the Company no later than thirty (30) days after written notice by
the Executive; or

               
(7) any purported termination by the Company of the Executive's employment
otherwise than as expressly permitted in this Agreement.

            (iii) the terms "Disabled" or "Disability" shall mean the
Executive's physical or mental incapacity which renders the Executive
incapable, even with a reasonable accommodation by the Company, of performing
the essential functions of the duties required of Executive by this Agreement
for one hundred twenty (120) or more consecutive days; the term "Disability
Termination Date" shall mean the date as of which the Executive's
employment with the Company is terminated, either by the Executive or by the
Company, following the suffering of a Disability by the Executive.

            (iv) the term "Severance Period" shall mean the period commencing
with the termination of the Executive's employment and ending with the
Expiration Date, as renewed in accordance with Section 2 hereof.

            (v) the term "Severance Multiple" shall mean 3 times.

            (vi) the term "Change in Control" shall have the same meaning as in
the Company's 1999 Stock Option Plan, as in effect on the date hereof.

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            (vii) the term "Target Bonus" shall mean 75% of Executive's
annual salary for any given year during the Term.

            (viii) The term "Retirement" shall mean voluntary retirement by the
Executive after attaining age 55 with 10 years of service with the Company, or,
if the Executive has not attained age 55 and/or less than 10 years of service
with the Company, the Company determines that circumstances exist that warrant
the granting of Retirement status.

        (g) The Executive shall have no obligation to seek other employment or
otherwise mitigate the Company's obligations to make payments under this
Section 6, and the Company's obligations shall not be reduced by the amount,
if any, of other compensation or income earned or received by the Executive
after the effective date of Executive's termination.

    7. Effect of Section 280G of the Internal Revenue Code.

        (a) Notwithstanding any other provision of this Agreement to the contrary,
and except as provided in Section 7(b), to the extent that any payment or
distribution of any type to or for the benefit of the Executive by the Company
(or by any affiliate of the Company, any person or entity who acquires ownership
or effective control of the Company or ownership of a substantial portion of the
Company's assets (within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations thereunder),
or any affiliate of such person or entity, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Total Payments"), is or will be subject to the excise
tax imposed under Section 4999 of the Code (the "Excise Tax"), then
the Total Payments shall be reduced (but not below zero) if and to the extent
that a reduction in the Total Payments would result in the Executive retaining a
larger amount, on an after-tax basis (taking into account federal, state and
local income taxes and the Excise Tax), than if the Executive received the
entire amount of such Total Payments. Unless the Executive shall have given
prior written notice specifying a different order to the Company to effectuate
the foregoing, the Company shall reduce or eliminate the Total Payments, by
first reducing or eliminating the portion of the Total Payments which are not
payable in cash and then by reducing or eliminating cash payments, in each case
in reverse order beginning with payments or benefits which are to be paid the
farthest in time from the Determination (as defined herein). Any notice given by
the Executive pursuant to the preceding sentence shall take precedence over the
provisions of any other plan, arrangement or agreement governing the Executive's
rights and entitlements to any benefits or compensation.

        (b) The determination of whether the Total Payments shall be reduced as
provided in this Section 7 and the amount of such reduction shall be made at the
Company's expense by an accounting firm selected by the Company from among its
independent auditors and the five (5) largest accounting firms (an
"Eligible Accounting Firm") in the United States (the "Accounting
Firm"). The Accounting Firm shall provide 

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 its determination (the
"Determination"), together with detailed supporting calculations and
documentation to the Company and the Executive within ten (10) days of the last
day of Executive's employment. If the Accounting Firm determines that no
Excise Tax is payable by the Executive with respect to the Total Payments, it
shall furnish the Executive with an opinion reasonably acceptable to the
Executive that no Excise Tax will be imposed with respect to any such payments
and, absent manifest error, such Determination shall be binding, final and
conclusive upon the Company and the Executive. If the Accounting Firm determines
that an Excise Tax would be payable, the Executive shall have the right to
accept the Determination of the Accounting Firm as to the extent of the
reduction, if any, pursuant to this Section 7, or to have such Determination
reviewed by another Eligible Accounting Firm selected by the Executive, at the
expense of the Company, in which case the determination of such second
accounting firm shall be binding, final and conclusive upon the Company and
Executive.

    8. Company Property. Any trade name or mark, program, discovery,
process, design, invention or improvement which the Executive makes or develops,
which relates, directly or indirectly, to the business of the Company or its
affiliates, or Executive's employment by the Company, shall be considered as
"made for hire" and shall belong to the Company and shall be promptly
disclosed to the Company. During the Executive's employment and thereafter,
the Executive shall, without additional compensation, execute and deliver to or
as requested by the Company, any instruments of transfer and take such other
action as the Company may reasonably request to carry out the provisions hereof,
including filing, at the Company's sole expense, trademark, patent or
copyright applications for any trade name or mark, invention or writing covered
hereby and assigning such applications to the Company.

    9. Confidential Information. The Executive shall not, either during
the term of Executive's employment by the Company or thereafter, disclose to
anyone or use (except, in each case, in the performance of Executive's
responsibilities hereunder and in the regular course of the Company's
business), any information acquired by the Executive in connection with or
during the period of Executive's employment by the Company, with respect to
any confidential, proprietary or secret aspect of the affairs of the Company or
any of its affiliates, including but not limited to the requirements and terms
of dealings with existing or potential licensors, licensees, designers,
suppliers and customers and methods of doing business, all of which the
Executive acknowledges are confidential and proprietary to the Company, and any
of its affiliates, as the case may be.

    10. Competition; Recruitment; Non-Disparagement.

         (a) The Executive shall not, at any time during Executive's employment by
the Company and during the Severance Period (provided that the Company is making
the payments to Executive which may be required hereby during such Severance
Period) (the "Non-Compete Period") and under the following
circumstances, engage or become interested (as an owner, stockholder, partner,
director, officer, employee, consultant or otherwise) in any business which then
competes, directly or indirectly, with the business then conducted by the
Company or any of its subsidiaries or affiliates. The ownership 

10

 of less than 5%
of the stock of a publicly owned company which competes with the Company, any of
its subsidiaries or affiliates, in and of itself, shall not be considered a
violation of the provisions of this Section 10.

        (b) The Executive shall not, at any time during Executive's employment by
the Company and thereafter until the second anniversary of the expiration of the
Non-Compete Period, recruit, solicit for employment, hire or engage, or assist
any person or entity in recruiting, soliciting for employment, hiring or
engaging, any employee or consultant of the Company, any of its subsidiaries or
affiliates, or any person who was an employee or consultant of the Company, any
of its subsidiaries or affiliates within one year before the termination of the
Executive's employment.

        (c) For the longer of any period applicable under this Section 10 or a period
of three years immediately following the date of termination, (i) the Company,
and its respective affiliates and employees shall not disparage the Executive,
and (ii) the Executive shall not disparage the Company, or its respective
affiliates and employees.

        (d) The Executive acknowledges that these provisions are necessary for the
protection of the Company, and its subsidiaries and affiliates and are not
unreasonable, because the Executive would be able to recruit and hire personnel
other than employees of the Company, and any of their subsidiaries and
affiliates. The Executive further agrees that a breach of Section 8, 9 or 10 of
this Agreement shall result in the immediate cessation of any payments pursuant
to this Section 10 and Section 6 hereof, if applicable. The duration and the
scope of these restrictions on the Executive's activities are divisible, so
that if any provision of this Section 10 is held or deemed to be invalid, that
provision shall be automatically modified to the extent necessary to make it
valid.

    11. Notices. Any notice or other communication to the Company or to
the Executive under this Agreement shall be in writing and shall be considered
given when mailed by certified mail, return receipt requested, to such party at
Executive's latest address on the Company's payroll records, or to the
Company at 1411 Broadway, New York, New York 10018, Attention: General Counsel
(or at such other address as such party may specify by written notice to the
other party).

    12. Successors; Binding Agreement.

         (a)  Company's Successors. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company,
except that such rights or obligations may be assigned or transferred pursuant
to a merger or consolidation in which the Company is not the continuing entity,
or the sale or liquidation of all or substantially all of the business or assets
of the Company, provided that the assignee or transferee is the successor to all
or substantially all of the business or assets of the Company and such assignee
or transferee assumes all of the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law. The Company will require any such successor to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company 

11

 would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business or assets as aforesaid,
which executes and delivers the agreement provided for in this Section 12 or
which otherwise becomes bound by all the terms and provisions of this Agreement
or by operation of law.

         (b) Executive's Successors. This Agreement shall not be
assignable by the Executive. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. Upon the Executive's death, all amounts
to which Executive is entitled hereunder, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee, to the
Executive's estate.

     13. Indemnification. The Company shall indemnify Executive and hold
the Executive harmless, to the maximum extent permitted by applicable law, from
and against all claims, actions, suits, proceedings, loss, damage, liability,
costs, charges and expenses, including reasonable attorneys' fees and costs
arising in connection with the Executive's performance of Executive's duties
hereunder or Executive's status as an employee, officer, director or agent of
the Company or its affiliates, in accordance with the Company's indemnity
policies for its senior executives.

     14. Interest on Late Payments. "Undisputed Late Obligations"
shall bear interest beginning on the Due Date until paid in full at an annual
rate of one percent (1.0%) plus the prime rate as declared from time to time by
The Chase Manhattan Bank. For purposes hereof, "Undisputed Late
Obligations" shall mean any obligation which remains unpaid 5 days after
written notice thereof is delivered to the other party in accordance with
Section 11 (the "Due Date") for money under this Agreement owing from
one party to another, which obligation (i) is not subject to any bona fide
dispute or (ii) has been adjudicated by an arbitration panel or court of
competent jurisdiction to be due and payable.

    15. Arbitration. Except as otherwise provided herein, all
controversies, claims or disputes arising out of or related to this Agreement
shall be settled under the rules of the American Arbitration Association then in
effect in the State of New York, as the sole and exclusive remedy of either
party, and judgment upon such award rendered by the arbitrator(s) may be entered
in any court of competent jurisdiction.

    16. Attorneys' Fees. The Company shall reimburse the Executive (or
the Executive shall reimburse the Company) for all reasonable costs, including
without limitation reasonable attorneys' fees, of the Executive or the
Company, as the case may be, in any dispute, arbitration or proceeding arising
under this Agreement (collectively, a "Proceeding"), so long as the
Executive or the Company, as the case may be, "prevails in substantial
part" with respect to Executive's or the Company's claims or defenses
in such Proceeding. For purposes hereof, the Executive shall be deemed to have
"prevailed in 

12

 substantial part" if (i) the Executive is the party
originally demanding a Proceeding, and the arbitrator(s) shall have awarded the
Executive at least 75% of the amount originally demanded by the Executive, or
(ii) the Company is the party originally demanding a Proceeding, and the
arbitrator(s) shall have denied the Company the relief originally requested. The
Company shall be deemed to have "prevailed in substantial part" if the
Executive is the party originally demanding a Proceeding and the arbitrator(s)
shall have awarded the Executive less than 25% of the amount originally demanded
by the Executive.

    17. Miscellaneous.

        (a) Given that a breach of the provisions of this Agreement would injure the
Company irreparably, the Company may, in addition to its other remedies, obtain
an injunction or other comparable relief restraining any violation of this
Agreement, and no bond, security or other undertaking shall be required of the
Company in connection therewith.

        (b) The provisions of this Agreement are separable, and if any provision of
this Agreement is invalid or unenforceable, the remaining provisions shall
continue in full force and effect.

        (c) This Agreement constitutes the entire understanding and agreement between
the parties, and supersedes the Prior Agreement and all other existing
agreements between them and cannot be amended, unless such amendment is in
writing and signed by both parties to this Agreement.

        (d) This Agreement shall be governed by and construed in accordance with the
laws of the State of New York (other than its choice of laws rules), where it
has been entered and where it is to be performed. The parties hereto consent to
the exclusive jurisdiction of any federal or state court in the State of New
York to resolve any dispute arising under this Agreement or otherwise.

        (e) The headings in this Agreement are solely for convenience of reference
and shall not affect its interpretation.

        (f) The failure of either party to insist on strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. For any waiver of a provision of this
Agreement to be effective, it must be in writing and signed by the party against
whom the waiver is claimed.

        (g) The obligations of the Executive and the Company hereunder shall survive
the termination of the term of this Agreement and the Executive's employment
hereunder, to the extent necessary to give full effect to the provisions of this
Agreement.

14

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first above written.

  
  		
JONES APPAREL GROUP, INC.

By: /s/ Sidney Kimmel

Chairman and Chief Executive Officer

      
      /s/ Irwin Samelman

      ExecutiveExhibit 10.2

                                 LEASE AGREEMENT

      1. Parties. This Lease, dated June 12, 1996, effective for the term as
hereafter provided, as made by and between NATIONAL PRESTO INDUSTRIES, INC.
(herein called "Lessor") and JETTAR, LTD., a Wisconsin corporation (herein
called "Lessee").

      2. Premises and Common Areas.

      2. 1 Premises. Lessor hereby leases to Lessee and Lessee leases from
Lessor for the term, at the rental, and upon all the conditions set forth
herein, real property situated in the County of Chippewa, State of Wisconsin,
consisting of 58,725 square feet as outlined on the attached Exhibit "A,"
(herein referred to as the "Premises,") including rights to common areas as
hereinafter specified. The Premises are a portion of the Lessor's Building #104
herein referred to as the "Building." The Premises, the Building and the Common
Areas, along with all other buildings and improvements, are herein collectively
referred to as the "Presto Facility." If at any time during any term or renewal
term of this Lease, Lessor receives and is willing to accept a bona fide offer
from a third party to lease that portion of Lessors building which is adjacent
to the Premises (identified on Exhibit "A" as "Future Expansion,") then lessor
shall promptly deliver to Lessee a notice of its intent to lease the Future
Expansion Premises. Lessee shall have a period of thirty (30) days within which
to exercise its right of first refusal to lease the Future Expansion Premises
upon the terms and conditions of this Lease, but at a rate as acceptable to the
proposed third party tenant. If, however, the Lessor has available space in the
Future Expansion Premises, but has not received a bona fide offer from a third
party to lease said Premises, Lessee may lease that space in addition to the
Premises described herein. In that case, the lease of that Future Expansion
Premises shall be at the same rental and governed by the same terms and
conditions as outlined in this Lease Agreement. In either case, the parties
hereto shall enter into an amendment to this Lease Agreement describing the
additional space to be leased and the term of that rental.

      2.2 Common Areas - Definition. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the Presto Facility that
are provided and designated by Lessor from time to time for the general
nonexclusive use of Lessor, Lessee and other lessees of the Presto Facility and
their respective employees, suppliers, shippers, customers and invitees. Common
Areas include parking areas, loading and unloading areas, roadways, sidewalks,
walkways, driveways, rest rooms and cafeteria.

      Notwithstanding the foregoing to the contrary, those parking areas
reserved to the Lessee for its office space, as well as for its employees and
shipping area, all as outlined on the attached Exhibit "A," shall remain and be
defined as the Premises and not Common Areas.

      2.3 Common Areas - Lessee's Rights. Lessor hereby grants to Lessee, for
the benefit of Lessee and its employees, suppliers, shippers, customers and
invitees, during the

                                      -1-
<PAGE>

term of this Lease, the nonexclusive right to use in common with others entitled
to such use, the Common Areas as they exist from time to time, subject to any
rights, powers and privileges reserved by Lessor under the terms hereof or under
the terms of any rules and regulations or restrictions governing the use of the
Presto Facility. Under no circumstances shall the right herein granted to use
the Common Areas be deemed to include the right to store any property,
temporarily or permanently, in the Common Areas. Any such storage shall be
permitted only by the prior written consent of Lessor.

      2.4 Common Areas - Rules and Regulations. Lessor shall have the exclusive
control and management of the Common Areas and shall have the right, from time
to time, to establish, modify, amend and enforce reasonable rules and
regulations with respect thereto. Lessee agrees to abide by and conform to all
such rules and regulations, and to cause its employees, suppliers, shippers,
customers, and invitees to so abide and conform. Lessor shall not be responsible
to Lessee for the noncompliance with said rules and regulations by other Lessees
of the Presto Facility.

      2.5 Common Areas - Changes. Lessor shall have the right, in Lessor's sole
discretion, from time to time, to make changes to the Common Areas, including
changes in the location, size, shape and access to those Common Areas.

      3. Term.

      3.1 Term. The Term of this Lease shall commence with respect to occupancy
of any portion of the Building and continue until December 31, 2001.

      3.2 Additional Terms. Lessee, having fully performed all of its
obligations, terms, conditions and covenants and paid all of the rent payable to
Lessor under the original term of this Lease, is hereby granted the right and
option to renew this Lease for two additional successive terms of five (5) years
each (each hereinafter called a "Renewal Term") upon the same terms, covenants
and conditions as provided in this Lease for said original term, provided,
however, that rentals for that additional term shall be increased in accordance
with Paragraph 4.2 herein and further provided that Lessee shall give written
notice to Lessor of its intent to renew the term of this Lease at least one
hundred eighty (180) calendar days prior to the expiration of the original term
of this Lease.

      4. Rent.

      4.1 Rent. Lessee shall pay to Lessor, as rent for the Premises, without
any offset or deduction, except as may be otherwise expressly provided in this
Lease, on the first day of each month of the term hereof, monthly payments in
advance, at a rate of $3.20 per square foot per annum, multiplied by the square
footage of the Premises, divided by twelve (12). Rent for any period during the
term hereof which is for less than one month shall be a prorated portion of the
monthly rent. Rent shall be payable in lawful money of the United States to
Lessor at the address stated herein, or to such other persons or such other
places as Lessor may designate in writing. Lessee shall have the right to occupy
the office portion of the building on or after August 1, 1996, and pay only that
portion of the rent associated with

                                      -2-
<PAGE>

respect to the office space. In the event that the office space is not completed
in accordance with the provisions of Exhibit "B", Lessor agrees to provide
temporary office space for Lessee's use as near as possible to the actual office
space to be rented hereunder. The rent for the office space alone shall be
determined in accordance with the terms of this lease for the square footage as
occupied therein. Rent with respect to the manufacturing and warehouse facility
shall commence no later than November 15, 1996.

      4.2 Rent Increases for Additional Terms. Provided Lessee has exercised its
option to renew the Lease according to the terms hereof, the monthly rent
payable under Paragraph 4.1 shall be an amount equal to the monthly rent payable
during the original term of this Lease adjusted by the increase in the Producer
Price Index (PPI) as published by the Bureau of Labor Statistics of the
Department of Labor (All Commodities). The rental for the first year of the
additional term shall be calculated as follows: the rent as set forth in
paragraph 4.1 of this Lease shall be multiplied by a fraction, the numerator of
which shall be the PPI for the calendar month ending June 30, 2001 and the
denominator of which shall be the PPI for the calendar month ending December 31,
1996. The sum so calculated shall constitute the monthly rental for the first
year of the additional term. Thereafter, for each year of the additional term or
terms, the rental shall be adjusted by a percentage increase or decrease in the
PPI calculated as follows: the rent as set forth in this paragraph for the prior
calendar year of the additional term shall be multiplied by a fraction, the
numerator of which shall be the PPI of the calendar month ending December 31st
prior to the next succeeding year of the additional term and the denominator of
which shall be the PPI for the calendar month ending December 31st of the prior
lease year.

      For purposes of this paragraph, the formula can be illustrated as follows:

      1. For example. Initial year of additional term (using assumed PPI):

      3.20 x [June 30, 2001 (125.50) / December 31, 1996 (115.98) = 1.0828] =
              3.46

              $3.46 new rental rate for first year of additional term.

      2. For second year of additional term (using assumed PPI):

      3.46 x [December 31, 2002 (125.50) / December, 2001 (121.9) = 1.0295] =
              3.56

             $3.56 rent for second year of additional year.

      If the PPI is not published by the Bureau of Labor Statistics or another
governmental agency at any time during the term of this Lease, then the
foregoing calculation shall be made using the closest comparable statistics as
published by a responsible financial authority and agreed to by the parties.

The Lessor shall calculate the Adjusted Rental Rate for the first year of the
additional term and notify Lessee of the rental adjustment at least ninety (90)
days prior to the expiration of the original term of this Lease. Lessee shall
then have thirty (30) calendar days to consider

                                      -3-
<PAGE>

this rental adjustment and provide Lessor with written acceptance of the same.
The rental adjustment shall take effect for the first month's rent payable of
the additional term and shall continue in effect for each month thereafter
during the first year of the additional term. If Lessee does not accept the
rental adjustment in writing within the thirty (30) calendar day time period,
this Lease shall terminate at the end of the existing lease term.

      5. Use.

      5.1 Use. Premises shall be used and occupied for the purpose of
manufacturing facilities and any other use which is reasonably comparable to
that use or which does not interfere with the zoning applicable to the Premises.

      5.2 Compliance with Laws. Lessee shall, at Lessee's expense, promptly
comply with all applicable statutes, ordinances, rules, regulations, orders,
covenants, permits and restrictions of record, and requirements of any insurance
policies, now in effect or which may hereafter come into effect, during the term
or any part of the term hereof, or extensions to those terms, relating, in any
manner, to the occupation and use of the Premises by Lessee. Any required
changes to the structure of the Building or Presto Facility shall be the sole
responsibility of the Lessor. Lessee shall conduct its business in a lawful
manner and shall not use or permit the use of the Premises or the Common Areas
in any manner that will tend to create waste or a nuisance or shall tend to
disturb other occupants of the Building or Presto Facility.

      6. Lessor's Construction. Lessor agrees to construct the alterations and
improvements necessary to ready the Premises for the occupancy of the Lessee by
performing the work required on Exhibit "B" which is attached hereto and
incorporated herein by reference.

      6.1 Notice of Completion. Lessor shall give Lessee at least thirty (30)
days prior written notice of the anticipated date of substantial completion of
the work to be performed on the Premises. Lessee may enter upon the Premises in
advance of the commencement date to accommodate its office preparation so long
as such occupancy does not interfere with the work to be completed by Lessor.
Any early use or occupancy of the Premises by the Lessee shall be deemed to be
under all the terms, covenants and conditions of the Lease except with respect
to rent, which shall be required to be paid in accordance with the terms hereof.
In the event that Lessor cannot complete the construction of the manufacturing
and warehouse portion of the Premises by November 15, 1996, the Lessor agrees to
give Lessee a minimum sixty (60) day notice in advance that it is unable to
complete the construction in accordance with the timetable herein. Lessee shall
then have the opportunity to take over the construction remaining to be done by
the Lessor through its own sources and charge back to the Lessor any expenses
incurred with respect thereto.

      6.2 Substantial Completion. Upon substantial completion by the Lessor, a
representative of the Lessor and Lessee shall survey the Premises for the
purposes of determining which items of Lessor's work remain to be completed and
which the parties shall reduce to an itemized "Punch List." The Lessor shall
complete the items on the Punch

                                      -4-
<PAGE>

List within a reasonable time thereafter but in any event, not exceeding the
commencement date as set forth below.

      6.3 Plans and Specifications. Lessor, or its general contractors, shall at
all times during the construction of the improvements and alterations to the
Premises have available for Lessee's use, a complete set of plans, drawings
(including shop drawings and specifications pertaining to the work and
anticipated construction schedules) and shall submit the same to Lessee for its
approval prior to commencement of construction.

      6.4 Completion Deadline. Time is expressly declared to be of the essence
with respect to the construction to be performed by the Lessor and the
completion deadline shall coincide with commencement date of the Premises. The
work to be performed by the Lessor shall require that all trash, dirt, leftover
materials shall be removed from the Premises and that all structural components,
including specifically the office and break room air conditioning and the
heating, shall be in an operating condition.

      6.5 Condition of Premises Upon Delivery. Lessor shall deliver the Premises
to Lessee in a clean condition on the commencement date, and Lessor warrants to
Lessee that the lighting and heating systems in the premises shall be in good
operating condition and provide the heat requirements as set forth on Exhibit
"B."

      7. Maintenance, Repairs, and Alterations.

      7.1 Lessor's Obligations. Lessor shall keep the Presto Facility, including
the Building, Premises and Common Areas, in good condition and repair. There
shall be no abatement of rent or liability of Lessee on account of any injury or
interference with Lessee's business with respect to any improvements,
alterations or repairs made by Lessor to the Presto Facility, Building or any
part thereof. Notwithstanding the foregoing to the contrary, Lessor shall take
all reasonable steps as necessary to avoid injury or interference with Lessee's
business when making such improvements, alterations or repairs. Lessor's
obligations shall include specifically, but not by way of limitation, heating,
office and break room air conditioning, utility facilities, electrical
facilities, floor, roof, ceilings, plumbing, ventilating and providing
replacement of all light bulbs, fluorescent lights and sealed lights above
manufacturing equipment. Lessor also agrees to maintain and repair and replace
as necessary the dedicated parking areas for the use of Lessee and shall remove
all snow accumulations thereon on driveways, sidewalks adjacent thereto.

      7.2 Lessee's Obligations. Lessee shall keep, repair and maintain and not
misuse the Premises so that on the last day of the term hereof, or any
extensions or sooner termination, Lessee shall surrender the Premises to Lessor
in the same condition as received, ordinary wear and tear excepted, clean and
free of debris. Any damage or deterioration of the Premises shall not be deemed
ordinary wear and tear if the same could have been prevented by good maintenance
practices by Lessee. Lessee shall repair any damage to the Premises occasioned
by the installation or removal of Lessee's trade fixtures, alterations,
furnishings and equipment. Lessee shall be responsible for all repair and
maintenance of the automatic dock levelers servicing the Premises.

                                      -5-
<PAGE>

      7.3 Alterations and Additions. Lessee shall not, without Lessor's prior
written consent, make any alterations, improvements, additions, utility
installations or utility repairs, on or about the Premises, Building or Presto
Facility. Should Lessee make any alterations, improvements, additions or utility
installations or repairs without the prior written approval of Lessor, or use a
contractor not expressly approved by Lessor, Lessor may, at any time during the
term of this Lease, require that Lessee, at Lessee's expense, remove any part or
all of the same. If Lessor shall give its consent to Lessee's making such
alterations, improvements, additions or utility installations or repairs, the
consent shall be conditioned upon Lessee acquiring a permit to do so from the
appropriate governmental agencies, furnishing a copy thereof to Lessor prior to
the commencement of the work and compliance by Lessee with all conditions of
said permit in a prompt and expeditious manner. Lessee shall pay, when due, all
claims for labor or materials furnished or alleged to have been furnished to or
for Lessee at or for use in the Premises, which claims are or may be secured by
any mechanics or materialmen's lien against the Premises, the Building, Presto
Facility or any interest therein. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense, defend itself and Lessor against the same and shall pay and satisfy any
such adverse judgement that may be rendered thereon before the enforcement
thereof against the Lessor, the Building, Presto Facility or the Premises. All
alterations, improvements, additions and utility installations or repairs shall
be made in a good and workmanlike manner and of good and sufficient quality and
materials and shall be the property of Lessor and remain upon and be surrendered
with the Premises at the expiration of the Lease term. Provided Lessee is not in
default, Lessee's personal property and equipment, other than that which is
affixed to the Premises so that it cannot be removed without material damage to
the Premises, Building or the Presto Facility, and other than utility
installations, shall remain the property of Lessee and may be removed by Lessee
subject to the provisions of Paragraph 7.2.

      7.4 Utility Additions. Lessor reserves the right to install new or
additional utility facilities throughout the Building or Presto Facility for the
benefit of Lessor or Lessee, or any other Lessee of the Building or Presto
Facility including, but not limited to such utilities as plumbing, electrical
systems, communication systems, and fire protection and detection systems, so
long as such installations do not unreasonably interfere with Lessee's use of
the Premises.

      8. Insurance/Indemnity.

      8.1 Liability Insurance - Lessee. Lessee shall, at Lessee's expense,
obtain and keep in force during the term of this Lease a policy of Comprehensive
General Liability insurance in an amount of not less than $2,000,000 per
occurrence of bodily injury and property damage combined and shall name Lessor
as an additional insured against liability arising out of the use, occupancy or
maintenance of the Premises. Compliance with the above requirement shall not,
however, limit the liability of Lessee hereunder.

      8.2 Property Insurance - Lessee. Lessee shall, at Lessee's expense, obtain
and keep in force during the term of this Lease for the benefit of Lessee,
replacement cost fire and extended coverage insurance in an amount sufficient to
cover not less than one hundred

                                      -6-
<PAGE>

percent (100%) of the full replacement costs, as the same exists from time to
time, of all of Lessee's personal property, fixtures, equipment and tenant
improvements.

      8.3 Property Insurance - Lessor. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Building and Presto Facility, but not Lessee's personal property,
fixtures, equipment or tenant improvements. Lessee shall not do or permit to be
done anything which shall invalidate the insurance policies carried by Lessor.
Lessee shall pay the entirety of any increase in the property insurance premium
for the Building or Presto Facility over what it was immediately prior to the
commencement of the term of this Lease if the increase is specified by Lessor's
insurance carrier as being caused by the nature of Lessee's occupancy, use or
any act or omission of Lessee.

      8.4 Insurance Policies. Lessee shall deliver to Lessor copies of liability
insurance policies required under Paragraph 8.1 and 8.2, or certificates
evidencing the existence and amounts of such insurance within seven days after
the commencement date of this Lease. No such policy shall be cancelable or
subject to reduction of coverage or other modification except after thirty (30)
days prior written notice to Lessor. Lessee shall, at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with renewals thereof.

      8.5 Indemnity by Lessee. Lessee shall indenmify and hold harmless Lessor
and its officers, directors, and its employees from and against any and all
claims for damage to the person or property of anyone or any entity arising from
Lessee's use of the Building, Common Areas, Presto Facility or Premises or from
the conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee or Lessee's employees, agents, suppliers,
shippers, customers and invitees in or about the Premises, Building, Common
Areas, Presto Facility or elsewhere. Lessee shall further indemnify and hold
harmless Lessor from and against any and all claims, costs and expenses arising
from any breach or default in the performance of any obligation on Lessee's part
to be performed under the terms of this' Lease, or arising from any act or
omission of Lessee, or any of Lessee's agents, contractors, employees,
suppliers, shippers, customers or invitees, and from and against all costs and
attorneys fees, expenses and liabilities incurred by Lessor as a result of any
such use, conduct, activity, work, things done, permitted or suffered, breach,
default or negligence and in dealing reasonably therewith, including, but not
limited to the defense or pursuit of any claim or any action or proceeding
involved therein. In case any action or proceeding be brought against Lessor by
reason of any such matter, Lessee, upon notice from Lessor, shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense.

      8.6 Exemption of Lessor from Liability. Except as otherwise provided
herein, Lessee hereby agrees that Lessor shall not be liable for injury to
Lessee's business or any loss of income therefrom or for the loss of or damage
to the goods, wares, merchandise, or other property of the Lessee. Lessee's
employees, invitees, customers, or any other person in or about the Premises,
the Building or the Facility, nor shall Lessor be liable for injury to the
person of Lessee, Lessee's employees, agents, contractors, or invitees except as
otherwise provided herein. Lessor shall not be liable for any occupant, or user
of the

                                      -7-
<PAGE>

Facility or the Building, nor from the failure of Lessor to enforce the
provisions of any other lease of any other lessee of the Facility or Building.
Lessee, as material part of the consideration to Lessor, hereby assumes all risk
of damage to Lessee or injury to persons in, upon, or about the Facility or
Building, including the Premises, arising from any cause (with the exception of
the negligent acts, omissions, or willful or reckless conduct of Lessor, its
employees or agents) and Lessee hereby waives all claims in respect thereof
against Lessor.

      8.7 Waiver of Subrogation. Neither party shall be liable to the other and
hereby expressly releases the other for any liability, business interruption, or
any loss or damage to the Premises or its contents due to fire or any peril
included in the coverage of any applicable material damage insurance, however
caused, including such losses as may be due to the negligence or other fault of
Lessor or Lessee, or of their respective agents, employees, subtenants,
licensees, or assignees. This release shall apply to the extent that such
business interruption or loss or damage to property is covered by insurance,
regardless of whether such insurance is payable to or protects Lessor or Lessee,
or both. Nothing herein shall be construed to impose any other or greater
liability upon either Lessor or Lessee than would have existed in the absence of
this provision. This release shall be in effect only so long as the applicable
insurance policies contain a clause to the effect that this release shall not
affect the right of the insured to recover under such policies. Such clauses
shall be obtained by the parties whenever possible. If Lessee fails to maintain
in force any insurance required by this Lease to be carried by it, then, for
purposes of this waiver of subrogation, it shall be deemed to have been fully
insured and to have recovered the entire amount of its loss.

      9. Damage or Destruction.

      9.1 Definitions.

            (a) "Premises Partial Damage" shall mean if the Premises are damaged
      or destroyed to the extent that the cost of repair is less than thirty
      percent (30%) of the then replacement cost of the Premises.

            (b) "Premises Total Destruction" shall mean if the Premises are
      damaged or destroyed to the extent that the cost of repair is thirty
      percent (30%) or more of the then replacement cost of the Premises.

            (c) "Building Partial Damage" shall mean if the Building of which
      the Premises are a part is damaged or destroyed to the extent that The
      cost to repair is less than thirty percent (30%) of the then replacement
      cost of the Building.

            (d) "Building Total Destruction" shall mean if the Building of which
      the Premises are a part is damaged or destroyed to the extent that the
      cost to repair is thirty percent (30%) or more of the then replacement
      cost of the Building.

      9.2 Premises Partial Damage: Building Partial Damage. Subject to the
provisions of Paragraphs 9.4 and 9.5, if at any time during the term of this
Lease there is damage which falls within a classification of Premises Partial
Damage or Building Partial Damage,

                                      -8-
<PAGE>

unless caused by the negligent or willful acts of Lessee (in which event Lessee
shall make the repairs at Lessee's expense), which damage prevents Lessee from
using the Premises, Lessor shall repair such damage as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in full
force and effect. The repair shall be completed within thirty (30) days of the
casualty.

      9.3 Premises Total Destruction: Building Total Destruction. Subject to the
provisions of Paragraphs 9.4 and 9.5, if at any time during the term of this
Lease there is damage which falls into the classification of either Premises
Total Destruction or Building Total Destruction, this Lease shall be canceled
and terminated as of the date of occurrence of such damage.

      9.4 Abatement of Rent: Lessee's Remedies. During the repair or restoration
of the Premises by the Lessor pursuant to the provisions of Paragraph 9.2 above,
the rent payable hereunder for the period during which such damage, repair or
restoration continues shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired. Except for abatement of rent, if any,
Lessee shall have no claim against Lessor for any damage suffered by reason of
such damage, destruction, repair or restoration.

      9.5 Termination. Upon termination of this Lease pursuant to this Section
9, an equitable adjustment shall be made concerning advanced rent and any
advance payments made by Lessee to Lessor.

      9.6 Damage Near End of Term. If at anytime during the last six (6) months
of the term of this Lease (or any additional term thereof), there is damage
which falls within the classification of Premises Partial Damage, Lessor may, at
Lessor's option, cancel and terminate this Lease as of the date of the
occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) calendar days after the date of the
occurrence of such damage.

      10. Taxes.

      10.1 Payment of Taxes. Lessor shall pay the real property tax applicable
to the Presto Facility.

      10.2 Additional Improvements. Lessee shall pay to Lessor within thirty
(30) days of Lessor's request the entirety of any increase in real property tax
if assessed solely by reason of additional improvements placed upon the Premises
by Lessee or at Lessee's request, which improvements shall not refer to the
construction to be performed by Lessor in Exhibit "B" attached hereto.

      10.3 Definition of Real Property Tax. As used herein, the term real
property tax shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Presto Facility or any portion
thereof by any authority having a direct or indirect power to tax, including any
city, county, state or federal government, or any school,

                                      -9-
<PAGE>

agricultural, sanitary, fire, street, or other improvement district thereof, as
against any legal or equitable interests of Lessor in the Presto Facility or in
any portion thereof.

      10.4 Joint Assessment. If the improvements or property, the taxes for
which are to be paid separately by Lessee under Paragraph 10.2 or 10.5 are not
separately assessed, Lessee's portion of that tax shall be equitably determined
by Lessor from the respective valuations assigned in the assessor's work sheets
or such other information as may be reasonably available.

      10.5 Personal Property Taxes. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Lessee contained in the Premises or
elsewhere. If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay to Lessor the taxes attributable to
Lessee within thirty (30) days after receipt of a written statement setting
forth the taxes applicable to Lessee's property.

      11. Utilities.

      11.1 Services Provided by Lessor. Lessor shall provide heating,
ventilation, office and break room air conditioning and electricity for normal
lighting and office machines, water for reasonable laboratory, manufacturing and
normal drinking, and replacement light bulbs and/or fluorescent tubes and
ballasts for standard overhead fixtures, including the sealed lighting fixtures
over the manufacturing equipment. These shall be provided at the expense of the
Lessor.

      11.2 Services Provided by Lessee. Lessee shall pay for all gas,
electricity for its manufacturing process, which shall be separately metered,
telephone and other utilities and services specially or exclusively supplied
and/or metered exclusively to the Premises or to the Lessee, together with any
taxes thereon, except as to be provided by Lessor under Paragraph 11.1 above.
Lessee shall also be responsible for providing its own janitorial services for
the Premises. In addition, Lessee shall be responsible for the removal of all
waste generated in the operations of its business.

      11.3 Hours of Service. Said services and utilities shall be provided
during generally accepted business days and hours or such other days or hours as
may hereafter be set forth. At the time of the execution of this Lease
Agreement, utilities shall be provided on a three-shift, seven-day per week
usage basis.

      11.4 Interruptions. There shall be no abatement of rent and Lessor shall
not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessor's
reasonable control or in cooperation with government request or directions.

      12. Assignment and Subletting. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of

                                      -10-
<PAGE>

Lessee's interest in the Lease or in the Premises, without Lessor's prior
written consent, which Lessor shall not unreasonably withhold. Lessor shall
respond to Lessee's request for consent hereunder in a timely manner and any
attempted assignment, transfer, mortgage, encumbrance or subletting without such
consent shall be void, and shall constitute a material default and breach of
this Lease without the need for notice to Lessee under Paragraph 13.1.
Regardless of Lessor's consent, no assignment or subletting shall release Lessee
of Lessee's obligations hereunder or alter the primary liability of Lessee to
pay the rent and other sums due Lessor hereunder, limited, however, to the
balance of the then current term or Renewal Term of the Lease. The consent by
Lessor to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting by Lessee or to any subsequent or successive
assignment or subletting by sublessee. Lessor reserves the right to impose
conditions upon any approval to assign or sublet the Premises.

      13. Default: Remedies.

      13.1 Default. The occurrence of any one or more of the following events
shall constitute a material default of this Lease by Lessee:

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

            (b) Failure by Lessee to make any payment of rent or any other
      payment required to be made by Lessee hereunder as and when due where such
      failure shall continue for a period of ten (10) days after written notice
      thereof from Lessor to Lessee.

            (c) Except as otherwise provided in this Lease, the failure by
      Lessee to observe or perform any of the covenants, conditions or
      provisions of this Lease to be observed or performed by Lessee, other than
      described in Paragraph (b) above, where such failure shall continue for a
      period of thirty (30) days after written notice thereof from Lessor to
      Lessee; provided, however, that if the nature of Lessee's noncompliance is
      such that more than thirty (30) days are reasonably required for its cure,
      then Lessee shall not be deemed to be in default if Lessee commenced such
      cure within said thirty (30) day period and thereafter diligently
      prosecutes such cure to completion.

            (d) Notwithstanding the foregoing to the contrary, Lessor shall in
      all instances be required to mitigate its damages hereunder.

            (e) The making by Lessee of any general arrangement or general
      assignment for the benefit of creditors.

            (f) The classification of Lessee as a debtor as defined by state
      and/or federal bankruptcy laws (unless, in the case of a petition filed
      against Lessee, the same is dismissed within sixty (60) days).

                                      -11-
<PAGE>

            (g) The appointment of a trustee or receiver to take possession of
      substantially all of Lessee's assets located at the Premises or of
      Lessee's interests in this Lease, where possession is not restored to
      Lessee within thirty (30) days.

            (h) The attachment, execution or other judicial seizure of
      substantially all of Lessee's assets located at the Premises or of
      Lessee's interest in this Lease, where such seizure is not discharged
      within thirty (30) days.

      In the event that any provision of this paragraph is contrary to any
applicable law, such provision shall be of no force or effect.

      13.2 Remedies. In the event of any such material default by Lessee, Lessor
may, at any time thereafter, with or without notice or demand and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such default:

            (a) Terminate Lessee's right to possession of the Premises by any
      lawful means, in which case this Lease and the term hereof shall terminate
      and Lessee shall immediately surrender possession of the Premises to
      Lessor. In such event, Lessor shall be entitled to recover from Lessee all
      damages incurred by Lessor by reason of Lessee's default including, but
      not limited to, the cost of recovering possession of the Premises,
      expenses of reletting, including necessary renovation and alteration of
      the Premises, reasonable attorneys' fees, and any real estate commission
      actually paid.

            (b) Maintain Lessee's right to possession, in which case this Lease
      shall continue in effect whether or not Lessee shall have vacated or
      abandoned Premises. In such event, Lessor shall be entitled to enforce all
      of Lessor's rights and remedies under this Lease, including the right to
      recover the rent as it becomes due hereunder.

            (c) Pursue any other remedy now or hereafter available to Lessor
      under laws or judicial decisions of the state wherein the Premises are
      located. Unpaid installments of rent and other unpaid monetary obligations
      of Lessee under the terms of this Lease shall bear interest from the date
      due at the maximum rate then allowable by law.

      13.3 Default by Lessor. Lessor shall not be in default unless Lessor fails
to perform obligations required of Lessor within a reasonable time, but in no
event later than thirty (30) days after written notice by Lessee to Lessor
specifying wherein Lessor has failed to perform such obligation; provided,
however, that if the nature of Lessor's obligation is such that more than thirty
(30) days are required for performance, then Lessor shall not be in default if
Lessor commences performance within such thirty (30) day period and thereafter
diligently pursues the same to completion.

      13.4 Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

                                      -12-
<PAGE>

      14. Condemnation. If the Premises or any portion thereof or the Presto
Facility is taken under the power of eminent domain, or sold under the threat of
the exercise of said power (all of which are herein called "condemnation"), this
Lease shall terminate as to the parts so taken as of the date the condemning
authority takes title or possession, whichever first occurs. If more than ten
percent (10%) of the floor area of the Premises is taken by condemnation, Lessee
may, at Lessee's option, to be exercised in writing within ten (10) days after
Lessor shall have given Lessee written notice of such taking, terminate this
Lease as of the date the condemning authority takes such possession. If Lessee
does not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the rent shall be reduced in the proportion that the floor area of
the Premises taken bears to the total floor area of the Premises. Lessor shall
have the option in its sole discretion to terminate this Lease as of the taking
of possession by the condemning authority, by giving written notice to Lessee of
such election within thirty (30) days after receipt of notice of taking by
condemnation of any part of the Premises or the Presto Facility. Any award for
the taking of all or any part of the Premises or the Presto Facility under the
power of eminent domain or any payment made under threat of the exercise of such
power, shall be the property of Lessor; provided, however, that Lessee shall be
entitled to any separate award for loss of or damage to Lessee's trade fixtures,
removable personal property, unamortized tenant improvements that have been paid
for by Lessee and relocation expenses of Lessee's business.

      15. Hazardous Substances.

      15.1 General Prohibition. Lessee covenants and agrees that, during the
term of this Lease, neither Lessee nor any of Lessee's agents, employees,
contractors, invitees, assignees or sublessees shall cause any hazardous
substance to be brought upon, kept or used in, on or about the Premises or
transported to or from the Premises unless Lessee demonstrates to Lessor that
the hazardous substance: (a) is necessary or useful to Lessee's business; (b)
would be used, kept, stored and disposed of in a manner that fully complies with
all laws, rules, statutes, ordinances, orders, requirements or policies of any
governmental agency or authority or any fire insurance underwriters applicable
to any such hazardous substance (collectively "Hazardous Substance Laws"); and
(c) would not substantially increase the risk of fire or other casualty to the
Premises. Lessee covenants and agrees that, to the extent Lessee or any of
Lessee's agents, employees, contractors, invitees, assignees or sublessees shall
cause any hazardous substance to be kept, used or present in, on or about the
Premises, Lessee shall ensure that such hazardous substance is in full
compliance with Hazardous Substance Laws.

      15.2 Indemnification of Landlord. If Lessee breaches any of its
obligations contained in this section, or if any act or omission of Lessee or
any of its agents, employees, contractors, invitees, assignees or sublessees
causes any hazardous substance to be discharged or released from, on or in the
Premises, then Lessee shall indemnify Lessor against and hold Lessor harmless
from any and all claims, judgments, damages, penalties, fines, costs,
liabilities, losses and expenses (including, without limitation, reasonable
attorneys' fees, consultant fees and expert fees) arising during or after the
term of this Lease as a result of that breach or that discharge or release. This
indemnification includes, without limitation,

                                      -13-
<PAGE>

costs incurred in connection with the investigation of site conditions or any
cleanup, repair, removal, detoxification work or oversight costs required by any
federal, state or local governmental agency or political subdivision. Without
limiting the foregoing, if the presence of any hazardous substance in the
Premises caused by Lessee or any of Lessee's agents, employees, contractors,
invitees, assignees or sublessees results in any discharge or release of
hazardous substance from, in or on the Premises, Lessee shall promptly take all
actions, at its sole expense, as necessary or appropriate to return the Premises
to the condition existing before that discharge or release; provided, however,
Lessee shall first obtain Lessor's prior approval, including, without
limitation, approval of any contractors Lessee proposes to hire to perform the
remedial work, which approval Lessor shall not unreasonably withhold, so long as
Lessee demonstrates to Lessor's satisfaction that those actions would not have
any significant adverse long-term or short-term effect on the Premises.

      15.3 Definition of Hazardous Substance. As used herein, the term
"hazardous substance" means any hazardous or toxic substance, material or waste
which is or becomes regulated by any local governmental authority, the State of
Wisconsin or the United States Government. The term "hazardous substance"
includes, without limitation, any material or substance which is (a) defined as
a "hazardous substance" under Chapter 144 of the Wisconsin Statutes and the
administrative rules promulgated thereunder; (b) defined as a "hazardous waste"
under Chapter 144 of the Wisconsin Statutes and the administrative rules
promulgated thereunder; (c) "flammable or combustible liquids" under Wisconsin
Administrative Code Chapter ILHR1O; (d) petroleum; (e) asbestos or
asbestos-containing material; (f) designated as a "hazardous substance" pursuant
to ss.311 of the Federal Water Pollution Control Act, 33 U.S.C. ss.1321(7)
defined as a "hazardous waste" pursuant to ss.1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. ss.6901, et. seq. (42 U.S.C. ss.6903);
(g) defined as a "hazardous substance" pursuant to ss.101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.9601, et.
seq., as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. ss.9601, et. seq.; (h) polychlorobiphenyls; (i) solvents such as
trichloroethylene and trichioroethane; (j) pesticides; or (k) "hazardous
substances" as defined under the Clean Water Act, 33 U.S.C. ss.1251, et. seq.

      15.4 Indemnification of Lessee. Lessor shall indemnify Lessee against and
hold Lessee harmless from any and all claims, judgments, damages, penalties,
fines, costs, liabilities, losses and expenses (including, without limitation,
reasonable attorney fees, consultant fees and expert fees) during or after the
term of this Lease as a result of any discharge, release or presence during the
occupancy of Lessee or prior to the occupancy of Lessee if the discharge,
release or presence of any hazardous substance was or is caused by the Lessor or
any of Lessor's agents, employees, contractors, invitees, assignees, sublessees
or lessees. The indemnification includes, without limitation, costs incurred in
connection with the investigation of site conditions or any cleanup, repair or
removal or detoxification work required by any federal, state or local
governmental agency or political subdivision. Lessor shall promptly take all
actions at its sole expense, as necessary or appropriate to return the Premises
to the condition existing before the discharge or release, provided, however,
that such actions necessary to remediate the hazardous substance shall not
interfere with the continued use and occupancy of the Lessee.

                                      -14-
<PAGE>

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

      17. Interest on Past-Due Obligations. Except as expressly herein provided,
any amount due to Lessor not paid when due shall bear interest at the rate of
two (2%) percent over the then prime rate as published in The Wall Street
Journal from the due date. Payment of such interest shall not excuse or cure any
default by Lessee under this Lease, provided, however, that interest shall not
be payable on late charges incurred by Lessee nor on any amounts upon which late
charges are paid by Lessee.

      18. Time of Essence. Time is of the essence with respect to the
obligations to be performed under this Lease.

      19. Incorporation of Prior Agreements: Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
or contemporaneous agreement or understanding pertaining to any such matter
shall be effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise stated
in this Lease, Lessee hereby acknowledges that neither Lessor nor any employee
or agents of Lessor has made any oral or written warranties or representations
to Lessee relative to the condition or use by Lessee of the Premises or the
Presto Facility and Lessee acknowledges that Lessee assumes all responsibility
regarding the Occupational Safety Health Act, the legal use and adaptability of
the Premises and the compliance thereof with all applicable laws and regulations
in effect during the term of this Lease.

      20. Notices. Any notice, request, demand, approval, consent, or other
communication which Lessor or Lessee is required or permitted to give to the
other party shall be in writing and mailed by registered or certified mail,
return receipt requested, to such party at the address specified below, or to
such other address or addresses that either party has designated from time to
time by written notice to the other party. The initial designated address(es) of
the parties are as follows:

         If to Lessor:
         National Presto Industries, Inc.
         Attn: Director of Manufacturing
         3925 North Hastings Way
         Eau Claire, WI 54703

                                      -15-
<PAGE>

         If to Lessee:
         Jettar, Ltd.
         Attn: Mr. Todd Nelson
         3925 North Hastings Way
         Eau Claire, WI 54703

         With a copy to:
         Jettar, Ltd.
         do The Belson Co.
         Attn: Mr. Thomas Hall, President
         730 Lambeau Street
         Green Bay, WI 54303

         With a copy to:
         Schober & Ulatowski, S.C.
         Attn: Mr. Adrian T. Ulatowski
         414 East Walnut Street
         P.O. Box 1780
         Green Bay, WI 54305-1780

      Such notice or other communication shall be deemed given upon receipt or
refusal to accept delivery.

      21. Waivers. No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.

      22. Holding Over. If Lessee, with Lessor's consent, remains in possession
of the Premises or any part thereof after the expiration of the term hereof,
such occupancy shall be a tenancy from month to month upon all the provisions of
this Lease pertaining to the obligations of Lessee, except that the rent payable
shall be one hundred twenty-five percent (125 %) of the rent payable immediately
preceding the termination date of this Lease, and all options, if any, granted
under the terms of this Lease, shall be deemed terminated and be of no further
effect during said month to month tenancy.

      23. Binding Effect: Choice of Law. Subject to any provisions hereof,
restricting assignment or subletting by Lessee, this Lease shall bind the
parties, their personal representatives, successors and assigns. This Lease
shall be governed by the lays of the State of Wisconsin. Any and all disputes
related to or arising from this Lease shall be determined exclusively by the
courts of competent jurisdiction within the State of Wisconsin.

                                      -16-
<PAGE>

The parties hereto hereby consent to the jurisdiction of the courts of the State
of Wisconsin, U.S.A.

      24. Attorneys' Fees. If either party named herein brings an action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
such action, on trial or appeal, shall be entitled to his reasonable attorneys'
fees to be paid by the losing party.

      25. Lessor's Access. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting the same
and making such alterations, repairs, improvements or additions to the Premises
or to the Presto Facility of which they are a part, as Lessor may deem necessary
or desirable. In addition, Lessor reserves the right to utilize the loading
docks adjacent to the Premises and, if necessary, move equipment or property
through the Premises for removal and transportation. All activities of Lessor
pursuant to this paragraph shall be without abatement of rent, nor shall Lessor
have any liability to Lessee for the same.

      26. Quiet Possession. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof, subject to all of the
provisions of this Lease.

      27. Security Measures. Lessee hereby acknowledges that Lessor shall have
no obligation whatsoever to provide guard service or other security measures for
the benefit of the Premises or the Presto Facility. Lessee assumes all
responsibility for the protection of the persons and property of Lessee, its
employees, suppliers, shippers, customers, agents and invitees from acts of
third parties.

      28. Easements. Lessor reserves to itself the right, from time to time, to
grant such easements, rights and dedications that Lessor deems necessary or
desirable, provided such easements, rights or dedications granted do not
unreasonably interfere with the use of the Premises by Lessee.

      29. Authority. Lessor and Lessee acknowledge and represent that the
individual executing this Lease on behalf of each entity represents and warrants
that he or she is duly authorized to execute and deliver this Lease on behalf of
said party.

      30. Security Deposit. Lessee agrees to pay as a security deposit Forty
Thousand Dollars ($40,000), which shall be retained by the Lessor to assure
performance of the terms and conditions of the Lease hereunder by the Lessee,
and which shall be deposited in an interest-bearing account segregated for the
benefit of the Lessee, which upon termination of this Lease, shall be returned,
assuming no other defaults or obligations are due and owing to the Lessor at
that time.

                                      -17-
<PAGE>

      Lessor and Lessee have carefully read and reviewed this Lease and each
term and provision contained herein and, by the execution of this Lease, show
their informed and voluntary consent thereto. The parties hereby agree that, at
the time this Lease is executed, the terms of this Lease are reasonable and
effectuate the intent and purposes of Lessor and Lessee with respect to the
Premises.

         LESSOR:                                  LESSEE:
         NATIONAL PRESTO INDUSTRIES, INC.         JETTAR, LTD.
         3925 North Hastings Way                  ______________________________
         Eau Claire, WI 54703                     ______________________________

                                                         Thomas R. Hall
By:________________________________          By: -------------------------------
       Director of Manufacturing                   Thomas R. Hall, President

Date: 6-12-96                                 Date: 6-7-96

                                      -18-
<PAGE>

                                   EXHIBIT "B"
                  CONSTRUCTION OF ALTERATIONS AND IMPROVEMENTS
                                    BY LESSOR

      1. Drinking Water. Lessor shall provide during the Term, bottled drinking
water for Lessee's employees, lab and cafeteria usage in sufficient quantities
at no cost or expense to Lessee. Lessee has been apprised by Lessor that the
site is currently on an EPA Superfund List and drinking water is not available.
At such time that the drinking water is safe for human consumption, this
requirement shall cease. Evidence of safety for human consumption shall be
provided by the appropriate local, state and federal authorities.

      2. Docks. Lessor shall construct loading docks as depicted on Exhibit "A"
consisting of the following configuration:

            (a) One well and two doors;

            (b) One well and four doors.

The doors and wells to be located at the direction of Lessee. The wells shall
provide for adequate drainage, gradual slope to facilitate easy ingress and
egress in inclement weather, include automatic load levelers, pads, and overhead
doors, specifications of which shall be submitted to Lessee prior to
installation, but shall include Kelley Dyna-Load mechanical dockleveler (Model
#M6X6W) and Kelly Tufseal exterior skirt.

      3. Office Area. The office area as depicted on Exhibit "A" shall be
modified as follows:

            (a) Lessor shall install windows as directed by Lessee and a double
      door to serve as main entrance to the office facility;

            (b) The interior/exterior office windows shall be double glass to
      insulate this area from the manufacturing facility installed per plan;

            (c) Lessor shall install carpeting in the office space;

            (d) Lessor shall finish all walls, plaster board taped seams and
      paint said walls as directed by Lessee. If wallpaper is chosen by Lessee,
      such cost shall be at Lessee's expense;

            (e) Lessor shall install plumbing, sink and fixtures for bathroom
      facility within the office space in the area as directed by Lessee;

            (f) Lessor shall frame and finish 2 x 4 interior walls for interior
      offices and lab which walls shall be plaster board taped seams, and
      painted as directed by Lessee, and if wallpaper is chosen, that cost shall
      be at Lessee's expense;

                                      -1-
<PAGE>

            (g) Lessor shall provide sink and potable water for a lab facility
      within the office space;

            (h) Lessor shall install a drop low noise ceiling within the office
      space;

            (i) Lessor shall provide appropriate fluorescent lighting to
      accommodate Lessee's office design;

            (j) Lessor shall make office and its facilities handicapped
      accessible;

            (k) Lessor shall install wood trim in office area which shall be
      painted or stained at Lessee's direction; and

            (1) Lessor shall provide air conditioning for the office.

            (m) Attached is a copy of the proposed modifications and interior
      offices for the Lessee listed as Exhibit "B-1"

      4. Break Room. A break room shall be constructed at the approximate
location as set forth on Exhibit "A" and include:

            (a) Sink, countertop, and extension of electrical services for
      microwave, coffee machines, vending machines and other standard break room
      necessities;

            (b) Vinyl floor in this area is acceptable;

            (c) Lessor shall install double glass windows in a location as
      directed by Lessee to view the production process;

            (d) Break room shall accommodate male/female rest rooms with a
      minimum of two (2) toilets in the female bathroom and a toilet and urinal
      in the male bathroom; and

            (e) Lessor shall provide a new wall air conditioner in break room.

      5. Cement Floor. Lessor shall clean the cement floor and thereafter seal
the floor in order to prevent cement dust from interfering with the products to
be produced by Lessee. The area which has a fourteen (14) foot ceiling area may
need to be shot blasted for appropriate cleaning. Lessee may inspect the cement
floor area after Lessor's initial cleaning to determine if shot blasting is
necessary. Lessor acknowledges that the product to be manufactured by Lessee is
of a hygienic quality and further acknowledges that paper dust; as utilized in
the process, may make an inappropriately sealed floor dangerous and slippery to
Lessee's employees. The sealant is to address both of these issues. Lessor is to
keep Lessee's designated personnel involved during this process for inspection
purposes.

                                      -2-
<PAGE>

      6. Lighting in Production/Warehouse and Dock Area. Lessor shall replace
the fluorescent lights above the machines in the manufacturing area and install
sodium lights that are sealed over the area designated as Paper Machine No. 1
and future Paper Machine No. 2.

      7. Railroad Door and Track. Lessor agrees to cement over the tracks so
that the floor is uniform and will not crack or chip through use of Lessee in
accordance with Paragraph 5 above. Lessor shall appropriate insulate the
railroad door but this will remain in place for use by Lessee.

      8. Dividing Wall. Lessor shall construct a dividing wall between the
Leased Premises and the Future Expansion premises as set forth on Exhibit "A".
Lessor shall comply with all code requirements as to fire rated walls.

      9. New Drive Through Area. The existing wall in the Leased Premises, which
will form a 90 degree angle to the divider wall (refer to paragraph 8 above),
shall be opened to accommodate Lessee's traffic and Lessee's flow of raw
materials.

      10. Parking. Lessor shall provide a minimum eight (8) stalls with signage
for exclusive use by Lessee's office personnel, vendors, customers and invitees
nearest to Lessee's office space, which shall be utilized on a weekday basis
when security gate is being manned.

      11. Parking - Production/Receiving. The parking area to the west of the
building shall be marked with signage for exclusive use by Lessee's production
employees, shipping and receiving use on a line extended parallel from the
Leased Premises through the existing parking lot as set forth on Exhibit "A".
Lessor shall repave and restripe the parking lot for employee's usage as well as
for proper demarkation of loading and unloading of product as directed by
Lessee. Although the parking and shipping areas will be for the exclusive use of
Lessee, Lessor reserves the right for routing general traffic ingress and egress
for other tenants in this area.

      12. Future Expansion Premises. Same provisions as to parking set forth
above for the production and receiving areas shall also apply with respect to
the right of first refusal premises identified as the Future Expansion on
Exhibit "A".

      Upon the exercise of right of first refusal by Lessee to the Future
Expansion premises, Lessor agrees to construct loading docks to accommodate this
space in the same proportion to that of the Leased Premises as directed by
Lessee.

      13. Ventilation. The Lessor agrees to provide appropriate ventilation for
the production area once the needs of the Lessee are determined (use of doors
for ventilation will not be allowed due to hygienic product of Lessee).

                                      -3-
<PAGE>

      14. Compressors. Lessor shall provide use of compressors throughout the
Leased Premises at 100 PSI. The line from the compressors shall be extended to
the production area as directed by Lessee.

      15. Access to Cafeteria. Employees of Lessee shall have access to Lessor's
cafeteria during its normal operating times.

      16. Usage/Employee Entrance. Lessor acknowledges that due to this usage
and its limited access security gate, that Lessee needs an alternative entrance
and Lessor will construct the same at a location to be determined by Lessee.

      17. Usage. Lessor understands that usage of the Leased Premises shall be
made by Lessee on a three shifts/seven day basis.

      18. Signage. Lessor agrees to provide signage for ingress and egress to
facility by customers, employees, licensees or invitees similar to that
currently provided for Lessor and to provide appropriate building identification
as Lessee requests.

      19. Exterior Paint. Lessor shall paint or touch-up the exterior of the
building.

      20. Interior Paint. Lessor shall paint the entire interior of the
warehouse.

      21. Power Lessor shall provide 3,000 KW of electrical power of 480 volt
three phase which can be increased at no cost to Lessee to 10,000 KW. Buss ducts
shall be made available to Lessee for use in its production. Power used by
Lessee shall be separately metered. Lessee to pay as additional rent for
extension of power and other construction hereunder the sum of $0.06 KW as
metered to Lessee.

      22. Sprinkler System. The interior sprinkler system shall be in good
operating condition. Lessee to comply with industry safety requirements/fire
codes.

      23. Removal of Trailer Lessor shall remove the trailer outside of the
proposed office area as set forth on Exhibit "A" to an area which does not
interfere with the aesthetics or use of Lessee's space.

      24. Heating. Lessor shall provide heating satisfactory to the Lessee
throughout the production, warehouse and dock areas; approximately 720 in the
office and break room area; 60~65c in the manufacturing area and varying, but
not less than 550 in the dock areas.

      25. Tool Room. Lessor shall install appropriate lighting and double doors
for ingress and egress to the manufacturing facility from that area identified
as a tool room set forth on Exhibit "A".

                                      -4-

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