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EXHIBIT 4.2

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

 

To Purchase __________ Shares of Common Stock of

Matritech, Inc.

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) CERTIFIES that, for value received, _____________ (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the six month and one day anniversary of March 4, 2005 (the “Initial Exercise Date”) and on or prior to the close of business on the fifth anniversary of the First Closing Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Matritech, Inc., a corporation incorporated in the State of Delaware (the “Company”), up to ____________
shares (the “Warrant Shares”) of Common Stock, par value $0.01 per share, of the Company (the “Common Stock”).  The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $1.47, subject to adjustment hereunder.  The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Purchase Agreement (the “Purchase Agreement”), dated March 4, 2005, among the Company and the purchasers signatory thereto.

 

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1.    Title to Warrant.  Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed; provided, however, during any 12 month period and except for transfers to an Affiliate of the Holder, the Holder, collectively with successor Holders, may not transfer this Warrant in more than two transactions to more than four assignees per transaction.  The transferee shall sign an investment letter in form and substance reasonably
satisfactory to the Company.

2.    Authorization of Shares.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and in accordance with the terms hereof, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.

	
            3.
 	
            Exercise of Warrant.  
 

(a)  Except as provided in Section 4 herein, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company) and upon payment of the Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or by means of a cashless exercise pursuant to Section 3(d), the Holder shall be entitled to receive a certificate for the number of Warrant Shares so purchased.  Certificates for shares purchased hereunder shall be
delivered to the Holder within five (5) trading days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares, have been paid.  If the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the fifth trading day after the date of exercise, then the Holder will have the right to rescind such exercise.  In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares pursuant to an exercise by the fifth trading day after the date of exercise and the Holder has not rescinded such exercise pursuant to this Section 3(a), and if after such fifth trading day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of 

 

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the Warrant Shares which the Holder anticipated receiving upon such exercise (a "Buy-In"), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its
exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to
the terms hereof.

 

(b)  If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. 

(c)  The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act.  To the extent that the limitation contained in this Section 

 

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3(c) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.  For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be,
(y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of the Holder, the Company shall within two trading days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61st day
(or such later date, as determined by the Holder, as may be specified in such notice of waiver).

(d) If at any time after September 5, 2005 there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the daily volume weighted average price of the Common Stock on the trading day immediately preceding the date of such election;

 

(B) =  the Exercise Price of this Warrant, as adjusted; and 

 

(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

 

4.    No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

5.    Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental 

 

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expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6.    Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

	
            7.
 	
            Transfer, Division and Combination.  
 

(a)  Subject to compliance with any applicable securities laws and the conditions set forth in Sections 1 and 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.  

(b)  This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

 

(c)  The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

 

(d)  The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e)  If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the 1933 Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company 

 

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a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the 1933 Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the 1933 Act or a qualified institutional buyer as defined in Rule 144A(a) under the 1933 Act.

8.    No Rights as Shareholder until Exercise.  This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.  Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise pursuant to Section 3(d) hereof), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment. 

9.    Loss, Theft, Destruction or Mutilation of Warrant.  The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

10.  Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

	
            11.
 	
            Adjustments of Exercise Price and Number of Warrant Shares.  
 

(a)        If the Corporation shall issue or sell, or is, in accordance with subsections (b)(i) through (viii) below, deemed to have issued or sold, any additional shares of Common Stock, other than Excluded Stock (the “New Issuance Shares”), without consideration or for a consideration per share less than the Exercise Price in effect immediately prior to the time of such issue or sale (the lowest price at which such shares of Common Stock are issued or deemed to be issued hereunder is hereinafter referred to as the “New Issuance Price”), then and in each such case (a “Trigger Issuance”) the then-existing Exercise Price, shall be reduced, as of the close of
business on the effective date of the Trigger Issuance, to a price determined in accordance with the immediately succeeding paragraphs.

 

Prior to stockholder approval of the Proposal, the Exercise Price shall be reduced to the higher of (i) the New Issuance Price or (ii) $1.34 (appropriately adjusted for any stock split, reverse stock split, stock dividend or other reclassification or combination of the Common Stock occurring after the date hereof) (the “Full-Ratchet Floor Price”).  

 

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From and after the date of stockholder approval of the Proposal, if any, the Exercise Price shall be reduced to the New Issuance Price; provided, however, that in the event that such New Issuance Price shall be less than the Full-Ratchet Floor Price; the Exercise Price shall first be lowered to the Full-Ratchet Floor Price (to the extent it has not already been so lowered) and shall then be further adjusted as follows:

 

Adjusted Exercise Price = (A x B) + D

	
            A+C
 

 

	
            where
 

 

 “A” equals the number of shares of Common Stock outstanding immediately preceding such Trigger Issuance, (including shares of Common Stock issuable upon the conversion of (i) the Convertible Debentures and (ii) the outstanding Series A Preferred Stock);

 

 “B” equals the lesser of (i) the Full-Ratchet Floor Price or (ii) Exercise Price in effect immediately preceding such Trigger Issuance;

 

 “C” equals the number of New Issuance Shares issued or deemed issued hereunder as a result of the Trigger Issuance (but excluding any additional shares of Common Stock issuable hereunder as a result of adjustments made pursuant to this Section 11); and

 

 “D” equals the aggregate consideration, if any, received or deemed to be received by the Corporation upon such Trigger Issuance;

 

provided, however, that in no event shall the Exercise Price after giving effect to such Trigger Issuance be greater than the Exercise Price in effect prior to such Trigger Issuance.

 

For purposes of this subsection (a), “Excluded Stock” means (A) capital stock, Options (as defined in Section 11(b)(i)) or Convertible Securities (as defined in Section 11(b)(i)) issued to employees, consultants, officers or directors of the Corporation pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Corporation or a majority of the members of a committee of non-employee directors established for such purpose, (B) shares of Common Stock issued upon the conversion or exercise of Options or Convertible Securities issued prior to the date hereof, provided that such securities have not been amended since the date hereof to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof, (C) securities issued pursuant to the Purchase Agreement and
securities issued upon the exercise or conversion of those securities, (D) capital stock or Convertible Securities issued in a joint venture, strategic partnership or licensing arrangement, the primary purpose of which is not the raising of capital and (E) shares of Common Stock issued or issuable by reason of a dividend, stock split or other distribution on shares of Common Stock (but only to the extent that such a dividend, split or distribution results in an adjustment in the Exercise Price pursuant to the provisions herein). 

 

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Additionally, for purposes of this subsection (a), the following subsections (b)(i) to (viii) shall also be applicable:

 

(b)        (i)  Issuance of Rights or Options.  In case at any time the Corporation shall in any manner grant (directly and not by assumption in a merger or otherwise) any warrants or other rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or security convertible into or exchangeable for Common Stock (such warrants, rights or options being called “Options” and such convertible or exchangeable stock or securities being called “Convertible Securities”) whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of such Convertible
Securities (determined by dividing (i) the sum (which sum shall constitute the applicable consideration) of (x) the total amount, if any, received or receivable by the Corporation as consideration for the granting of such Options, plus (y) the aggregate amount of additional consideration payable to the Corporation upon the exercise of all such Options, plus (z), in the case of such Options which relate to Convertible Securities, the aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (ii) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options) shall be less than the Exercise Price in effect immediately prior to the time of the granting of such Options, then the total number of shares of Common Stock issuable upon the exercise
of such Options or upon conversion or exchange of the total amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued for such price per share as of the date of granting of such Options or the issuance of such Convertible Securities and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price.  Except as otherwise provided in subsection (b)(iii) of this Section 11, no adjustment of the Exercise Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such Options or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities.

 

 (ii)  Issuance of Convertible Securities.  In case the Corporation shall in any manner issue (directly and not by assumption in a merger or otherwise) or sell any Convertible Securities, whether or not the rights to exchange or convert any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (i) the sum (which sum shall constitute the applicable consideration) of (x) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus (y) the aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (ii) the total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be less than the Exercise Price in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common 

 

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Stock issuable upon conversion or exchange of all such Convertible Securities shall be deemed to have been issued for such price per share as of the date of the issue or sale of such Convertible Securities and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price, provided that (a) except as otherwise provided in subsection (b)(iii) of this Section 11, no adjustment of the Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities and (b) no further adjustment of the Exercise Price shall be made by reason of the issue or sale of Convertible Securities upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Exercise Price have been made pursuant to the other provisions of Section 11.

 (iii)  Change in Option Price or Conversion Rate.  Upon the happening of any of the following events, namely, if the purchase price provided for in any Option referred to in subsection (b)(i) hereof, the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in subsections (b)(i) or (b)(ii), or the rate at which Convertible Securities referred to in subsections (b)(i) or (b)(ii) are convertible into or exchangeable for Common Stock shall change at any time (including, but not limited to, changes under or by reason of provisions designed to protect against dilution), the Exercise Price in effect at the time of such event shall forthwith be readjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold.  On the termination of any Option for which any adjustment was made pursuant to subsections (a) and (b) hereof or any right to convert or exchange Convertible Securities for which any adjustment was made pursuant to this subsection (b) (including without limitation upon the redemption or purchase for consideration of such Convertible Securities by the Corporation), the Exercise Price then in effect hereunder shall forthwith be changed to the Exercise Price which would have been in effect at the time of such termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such termination, never been issued.

 

 (iv)  Stock Dividends.  Subject to the provisions of subsections (a) and (b) hereof, in case the Corporation shall declare a dividend or make any other distribution upon any stock of the Corporation (other than the Common Stock) payable in Common Stock, Options or Convertible Securities, then any Common Stock, Options or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration.

 

(v)  Subdivision or Combination of Stock. In case the Corporation shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares or shall declare or pay a dividend on its outstanding shares of Common Stock payable in shares of Common Stock, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock of the Corporation shall be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased.

 

 

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 (vi)  Consideration for Stock.  In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor.  In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be deemed to be the fair value of such consideration as determined in good faith by the Board of Directors of the Corporation.  In case any Options shall be issued in connection with the issue and sale of other securities of the Corporation, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto,
such Options shall be deemed to have been issued for nominal consideration.  If Common Stock, Options or Convertible Securities shall be issued or sold by the Corporation and, in connection therewith, other Options or Convertible Securities (the “Additional Rights”) are issued without any specific consideration allocated to such Additional Rights, then the consideration received or deemed to be received by the Corporation for such Additional Rights shall be deemed to be nominal.

 

 (vii)  Record Date.  In case the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them (i) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (ii) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 

 (viii)  Treasury Shares.  The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation or any of its wholly-owned subsidiaries, and the disposition of any such shares (other than the cancellation or retirement thereof) shall be considered an issue or sale of Common Stock for the purpose of this Section 11.

 

(c)        Stock Splits and Dividends.  If the Corporation shall, at any time or from time to time while Warrants are outstanding, pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares or issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing corporation), then the Exercise Price in effect immediately prior to the date upon which such change shall become effective shall be adjusted by the Corporation so that the Holder shall be
entitled to receive the number of shares of Common Stock or other capital stock which such Holder would have received had this Warrant been exercised immediately prior to such event.  Such adjustments shall be made successively whenever any event listed above shall occur.

 

 

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(d).       Reorganization or Reclassification.  If any capital reorganization or reclassification of the capital stock of the Corporation shall be effected in such a way (including, without limitation, by way of consolidation or merger) that holders of Common Stock but not holders of Company Warrants shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Stock then, as a condition of such reorganization or reclassification, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to receive, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock of the Corporation immediately theretofore receivable upon the exercise of this Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of such stock immediately theretofore so receivable had such reorganization or reclassification not taken place and in any such case appropriate provision shall be made with respect to the rights and interests of such Holder to the end that the provisions hereof (including without limitation provisions for adjustments of the Exercise Price) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise of such rights (including an immediate adjustment, by reason of such reorganization or reclassification, of the Exercise Price to the value for the Common Stock reflected by the terms of such reorganization or reclassification if the value so reflected is less than the Exercise Price in effect immediately prior to such reorganization or
reclassification).  In the event of a merger or consolidation of the Corporation as a result of which a greater or lesser number of shares of common stock of the surviving corporation are issuable to holders of the Common Stock of the Corporation outstanding immediately prior to such merger or consolidation, the Exercise Price in effect immediately prior to such merger or consolidation shall be adjusted in the same manner as though there were a subdivision or combination of the outstanding shares of Common Stock of the Corporation.

 

(e).       Distributions.  In case the Corporation shall fix a payment date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Corporation is the continuing corporation) of evidences of indebtedness or assets (other than cash dividends or cash distributions payable out of consolidated earnings or earned surplus or dividends or distributions referred to in subsection (c) of this Section 11), or subscription rights or warrants, the Exercise Price to be in effect after such payment date shall be determined by multiplying the Exercise Price in effect immediately prior to such payment date by a fraction, the numerator of which shall be the total number of shares of Common Stock
outstanding multiplied by the Market Price (as defined below) per share of Common Stock immediately prior to such payment date, less the fair market value (as determined by the Corporation’s Board of Directors in good faith) of said assets or evidences of indebtedness so distributed, or of such subscription rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such Market Price per share of Common Stock immediately prior to such payment date.  “Market Price” as of a particular date (the “Valuation Date”) shall mean the following: (a) if the Common Stock is then listed on a national stock exchange, the closing sale price of one share of Common Stock on such exchange on the last trading 

 

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day prior to the Valuation Date; (b) if the Common Stock is then quoted on The Nasdaq Stock Market, Inc. (“Nasdaq”), the National Association of Securities Dealers, Inc. OTC Bulletin Board (the “Bulletin Board”) or such similar exchange or association, the closing sale price of one share of Common Stock on Nasdaq, the Bulletin Board or such other exchange or association on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high bid and the low asked price quoted thereon on the last trading day prior to the Valuation Date; or (c) if the Common Stock is not then listed on a national stock exchange or quoted on Nasdaq, the Bulletin Board or such other exchange or association, the fair market value of one share of Common Stock as of the Valuation Date, shall be determined in good faith by the Board of
Directors of the Corporation.  If the Common Stock is not then listed on a national securities exchange, the Bulletin Board or such other exchange or association, the Board of Directors of the Corporation shall respond promptly, in writing, to an inquiry by the Holder prior to the exercise hereunder as to the fair market value of a share of Common Stock as determined by the Board of Directors of the Corporation.  In the event that the Board of Directors of the Corporation and the holders of Company Warrants (as defined in Section 14 hereof) representing at least 75% of the number of shares of Common Stock then subject to all outstanding Company Warrants (the “Majority Holders”) are unable to agree upon the fair market value in respect of subsection (c) hereof, the Corporation and the Majority Holders shall jointly select an appraiser, who is experienced in such matters.  The decision of such appraiser shall be final and
conclusive, and the cost of such appraiser shall be borne equally by the Corporation and such holders.  Such adjustment shall be made successively whenever such a payment date is fixed.

 

(f).        Effective Date of Adjustment.  An adjustment to the Exercise Price shall become effective immediately after the payment date in the case of each dividend or distribution and immediately after the effective date of each other event which requires an adjustment.

 

(g).       Subsequent Adjustments.  In the event that, as a result of an adjustment made pursuant to this Section 11, the Holder shall become entitled to receive any shares of capital stock of the Corporation other than shares of Common Stock, the number of such other shares so receivable upon the exercise of this Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein.

 

12.  Voluntary Adjustment by the Company.  The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

13.  Notice of Adjustment.  Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price for such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

 

12

 

 

 

14.  Call Provision.  Notwithstanding any other provision contained herein to the contrary, in the event that the closing bid price of a share of Common Stock as traded on the American Stock Exchange, Inc. (or such other exchange or stock market on which the Common Stock may then be listed or quoted) equals or exceeds $2.64 (appropriately adjusted for any stock split, reverse stock split, stock dividend or other reclassification or combination of the Common Stock occurring after the date hereof) for twenty (20) consecutive trading days commencing after the Registration Statement (as defined in the Registration Rights Agreement) has been declared effective, the Company, upon thirty (30) days prior written notice (the “Notice Period”) given to the Holder within one business day
immediately following the end of such twenty (20) trading day period, may call this Warrant, in whole or in part, at a redemption price equal to $1.47 per share of Common Stock then purchasable pursuant to this Warrant; provided that (i) all of Warrant Shares issuable upon the exercise of this Warrant either (A) are registered pursuant to an effective Registration Statement (as defined in the Registration Rights Agreement) which has not been suspended and for which no stop order is in effect, and pursuant to which the Holder is able to sell such shares of Common Stock at all times during the Notice Period or (B) no longer constitute Registrable Securities (as defined in the Registration Rights Agreement): (ii) the number of shares of Common Stock issuable upon the exercise of Warrants included in such notice of redemption does not exceed the cumulative trading volume of the Common Stock on any stock exchange or market on which the Common Stock may then be traded for the thirty (30)
consecutive trading days prior to the first day of the Notice Period; (iii) the Company has not issued a warrant redemption notice on any other series of warrants within 60 days of the first day of the Notice Period; and (iv) the first day of such Notice Period is not within 365 days of the First Closing Date or within 90 days of the Termination Date.  In the event that less than all of the Company Warrants (as defined below) are called pursuant to this Section 14, any call of less than all the Company Warrants shall be on a pro rata basis for each holder of Company Warrants.  Notwithstanding any such notice by the Company, the Holder shall have the right to exercise this Warrant prior to the end of the Notice Period.  The term “Company Warrants” means a series of Warrants of like tenor issued by the Company pursuant to the Purchase Agreement and initially covering an aggregate of 4,991,434 shares of Common Stock.

	
            15.
 	
            Notice of Corporate Action.  If at any time:
 

(a)        the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

 

(b)        there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

 

(c)        there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

 

 

13

 

 

 

then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same shall take place.  Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or
right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up.  Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

16.  Authorized Shares.  The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as
may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

 

 

14

 

 

 

	
            17.
 	
            Miscellaneous.
 

(a)  Jurisdiction.  This Warrant shall constitute a contract under the laws of New York, without regard to its conflict of law, principles or rules.

(b)  Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

(c)  Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(d)  Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

(e)  Limitation of Liability.  No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f)   Remedies.  Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(g)  Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(h)  Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(i)   Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision 

 

15

 

 

shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(j)   Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

 

16

 

 

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

 

	
            Dated:  March 4, 2005
 	
            MATRITECH, INC.
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
            By: 
 
	
             
 	
            Name:
 
	
             
 	
            Title:
 

                                          
                                    

 

17

 

 

 

NOTICE OF EXERCISE

 

	
            To:
 	
            Matritech, Inc.
 

 

(1)  The undersigned hereby elects to purchase ________ Warrant Shares of Matritech, Inc. pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

	
            (2)
 	
            Payment shall take the form of (check applicable box):
 

o in lawful money of the United States; or

o the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 3(d), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise provision set forth in subsection 3(d).

(3)  Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

	
            _______________________________
 

 

 

The Warrant Shares shall be delivered to the following:

 

	
            _______________________________
 

 

	
            _______________________________
 

 

	
            _______________________________
 

 

 (4)  Accredited Investor/Qualified Institutional Buyer.  The undersigned is either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933, as amended (the “Securities Act”) or (ii) a qualified institutional buyer as defined in Rule 144(A)(a) under the Securities Act. 

 

	
            [PURCHASER]
 

 

 

	
            By: ______________________________
 
	
             
	
            Name:
 	
             

	
             
	
            Title:
 	
             

				

 

	
            Dated:  ________________________
 

 

 

 

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

 

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

 

_______________________________________________________________.

 

 

_______________________________________________________________

 

	
            Dated:  ______________, _______
 

 

 

	
            Holder's Signature:
 	
            _____________________________
 

 

	
            Holder's Address:
 	
            _____________________________
 

 

	
            _____________________________
 

 

 

Signature Guaranteed:  ___________________________________________

 

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

LIBC/2280700.3EXHIBIT 10.1
                                                                    ------------

                                INDUSTRIAL LEASE

                           RIVERSIDE INDUSTRIAL PARK I

1.   LEASED PREMISES, BUILDING, PROPERTY, COMMON AREAS, AND TERM. This Lease
     Agreement is made and entered into by and between GREYSTONE PROPERTIES, LLC
     an OKLAHOMA Corporation ("Landlord") and GREYSTONE MANUFACTURING, LLC an
     OKLAHOMA Corporation ("Tenant"). The Landlord does hereby demise and lease
     unto the Tenant approximately 60,000 square feet of space which is the
     property known as RIVERSIDE INDUSTRIAL PARK, said space which is located at
     2600 SHORELINE DRIVE, BETTENDORF, IOWA (hereinafter referred to as the
     "Leased Premises"). The building in which the Leased Premises is situated
     (hereinafter referred to as the "Building") comprises a portion of the
     property that is legally described in the attached Exhibit A ("Property").
     In addition to the Building and the land upon which the Building is
     situated, the Property also includes parking areas, loading areas and
     roadways ("Common Areas"). The Term of this Lease shall be for a period of
     TEN (10) YEARS, commencing on JULY 1, 2004 OR UPON CLOSING OF THE SALE OF
     THE PROPERTY, excepting delays due to strikes, acts of God, failure in
     delivery of materials and events beyond Landlord's control, and ending 120
     MONTHS LATER, unless said Term shall be terminated sooner as hereinafter
     provided.

2.   BASE RENT AND SECURITY DEPOSIT.

     (a)  In consideration of said Lease, the Tenant, without prior notice or
          demand, agrees to pay to the Landlord on a monthly basis a Base Rent
          for said Leased Premises for the term of the Lease as follows:

                 FROM 11/01/04 TO 06/30/14 $25,000.00 PER MONTH

          In addition, Tenant shall also be responsible for payment of personal
          property taxes and Rent taxes, if any. For the purpose of this Lease,
          the term ("Rent") shall include all Base Rent and any Additional Rent
          owed by Tenant to Landlord as provided for herein. Said Rent shall be
          due and payable in advance on the first day of each month during the
          Term of this Lease at the office of the Landlord's Management Agent,
          or such other place as the Landlord from time to time, in writing, may
          designate. Rent not received on or before the tenth (10th) day of each
          month during the Term of this Lease shall be considered delinquent and
          subject to the Late Charges as enumerated in Paragraph 3 of this
          Lease. With the execution of this Lease, Tenant has deposited with the
          Landlord the sum of $25,000.00.

     (b)  Security Deposit is defined as monies pledged as security for the
          payment of Rent and other charges herein agreed to be paid, and for
          the faithful performance of all the terms, conditions, and covenants
          of this Lease. If at any time during the term of this Lease, Tenant
          shall be in default in performance of any provision of this

                                        1
<PAGE>

          Lease, and shall fail to remedy or cure said default after having
          received ten (10) days written Notice of same, then the Landlord may,
          at its option, apply monies held as partial or full satisfaction of
          said default or declare said Security Deposit to be forfeited. If
          Landlord applies all or a portion of Tenant's Security Deposit to cure
          said default, Tenant agrees to pay to Landlord within ten (10) days of
          said Notice an equal amount so that the Landlord has at all times a
          Security Deposit equal to the original amount herein agreed to.
          Tenant's failure to do so constitutes a default of this Lease. Within
          sixty (60) days after the Tenant's satisfactory completion of this
          Lease, Landlord shall refund the Tenant's Security Deposit in full and
          without interest.

     (c)  No dispute between the Landlord and the Tenant as to Landlord or
          Tenant obligations under this Lease shall excuse payment of Rent or
          the faithful performance of any other conditions of this Lease by
          either Party.

3.   LATE CHARGE. Tenant acknowledges that late payment to Landlord of Rent or
     other sums due hereunder will cause Landlord to incur costs not
     contemplated by this Lease. the exact amount of which would be extremely
     difficult and impractical to ascertain. Such costs include, but are not
     limited to, processing and accounting charges, and late charges that may be
     imposed on Landlord by the terms of any mortgage or trust deed covering the
     Property. Therefore, in the event Tenant should fail to pay any installment
     of Rent or any sum due hereunder after such amount is due, Tenant shall,
     upon demand, pay to Landlord as Additional Rent, a late charge equal to 10%
     of each such installment or other sum due and payable, or $50.00 per day
     said installment of Rent or sum due hereunder is past due, whichever is
     greater. Said late charge shall be assessed on the 11th day of each month.
     Tenant shall be assessed a $25.00 charge for each check that is returned
     due to insufficient funds in the Tenant's account.

4.   PROPERTY OPERATING EXPENSES.

     (a)  REAL PROPERTY TAXES AND PROPERTY INSURANCE PREMIUMS: Tenant agrees to
          pay to the Landlord as Additional Rent its pro rata share of the
          estimated real property taxes and property insurance premiums incurred
          during each calendar year. Said payment shall be made in advance to
          the Landlord, in monthly installments and due and payable on the first
          day of each month during the term of this Lease. As used in this
          paragraph, ("real property tax") shall mean any form of assessment
          (both general and special), levy, penalty, or tax (other than estate
          or inheritance tax) imposed by any authority having direct or indirect
          power to tax any legal or equitable interest of Landlord in the
          Property, including any tax on rent (other than income tax) in lieu
          of, or in addition to normal real property taxes or assessment.

     (b)  OPERATING COSTS: Tenant agrees to pay to the Landlord as Additional
          Rent its pro rata share of the maintenance, repairs and operating
          costs for the Property ("Operating Costs") incurred by Landlord during
          each calendar year. Said payment shall be made to the Landlord in
          advance, in monthly installments and

                                        2

<PAGE>

          due and payable on the first day of each month during the term of this
          Lease. Said Operating Costs shall include, but not be limited to, the
          maintenance, replacement, and repair of HVAC equipment, electrical
          fixtures and systems, the replacement of light fixtures and ballasts,
          plumbing fixtures and systems, ceiling tile replacement, building
          equipment maintenance and repairs, landscaping and grounds
          maintenance, maintenance and repairs to walks and parking areas
          (including sealcoating, striping, patching and overlay), electricity,
          gas, sewer, water, and any other utilities furnished to the Property,
          including any taxes thereon (see Paragraph 3(c) below), management
          services, roof repairs, exterior painting, pest control, and any other
          property maintenance expenses which may be required from time to time
          in maintaining the Property in a prudent manner. In the event Landlord
          makes an investment for improvements to the Property which has the
          effect of reducing operating costs, these expenditures will be
          amortized over the asset's useful life as determined by the Landlord
          and such amortization shall be included as an additional component of
          Operating Costs.

     (c)  PROPERTY OPERATING EXPENSES: Real Property Taxes, Property Insurance
          Premiums, and Operating Costs ("Property Operating Expenses")
          associated with the operation of the Property are currently estimated
          to be $1.20 PER SQUARE FOOT. The Tenant's pro-rata share of Property
          Operating Expenses is equal to $6,000.00, per month. Payment shall be
          made by Tenant to Landlord in monthly installments, and said
          installments shall be due and payable on the first day of each month
          during the term of this Lease. Said monthly payments will be in
          addition to Base Rent and reviewed annually by Landlord, and
          adjustments required to compensate for any overpayment or underpayment
          will be made at that time. Landlord's records relating to Property
          Operating Expenses for the preceding calendar year shall be made
          available for Tenant's inspection upon the Tenant's written request.

     (d)  UTILITIES: The Tenant shall pay all charges incurred for any utility
          services metered to the Leased Premises and shall cause all utility
          services provided to the Leased Premises to be placed in its name with
          the respective vendor for direct billing. Such utilities shall include
          but are not limited to: water, wastewater, storm water, sewer,
          electricity, gas, cable television and telecommunications ("Utility
          Services"). Tenant shall pay all such billings within ten (10) days of
          receipt thereof. The Tenant shall not, without the written consent of
          Landlord, connect with electric current, except through existing
          electrical outlets in the Leased Premises. If Tenant shall require
          water, gas, or electric current in excess of that normally supplied
          for use of the Leased Premises as general office/warehouse space,
          Tenant shall first obtain the written consent of the Landlord, which
          Landlord shall not unreasonably refuse to grant. Any additional
          expense in monitoring the water, gas, and electric current consumed
          will be paid for by the Tenant. Costs of any meters, and the
          installation, maintenance, and repair thereof, shall be paid for by
          the Tenant.

                                        3
<PAGE>

     (e)  MAINTENANCE & REPAIRS BY TENANT. Tenant agrees to be responsible for
          all repairs, replacements, and maintenance to the Leased Premises
          other than those specifically required to be performed by Landlord
          during the term of this Lease. In such cases, Tenant agrees to comply
          with all of the applicable government laws, ordinances, regulations,
          and any other requirements. Tenant shall promptly pay for the costs of
          all work performed and shall indemnify and hold harmless the Landlord
          against liens, costs, damages, or expenses incurred in connection
          therewith, including attorney's fees, incurred by the Landlord if
          Landlord shall be joined in any action or proceeding involving such
          work. Under no circumstances shall Tenant commence any such work until
          Landlord has been provided with evidence that the contractor is
          licensed to do the desired repairs in the state in which the Leased
          Premises is situated, that the contractor carries adequate worker's
          compensation as required by the laws of the State in which the Leased
          Premises is situated, and that the contractor carries public liability
          and builder's risk insurance in amounts deemed satisfactory by the
          Landlord. Tenant shall not be required to make structural repairs or
          alterations which may be required by governmental rules, orders, or
          regulations unless resulting from the business operations maintained
          by Tenant within the Leased Premises. In addition, Tenant shall not be
          responsible for the repair of any damage caused by the gross
          negligence of the Landlord, its employees, or agents. Landlord or
          Landlord's agents and representatives shall have the right to enter
          and inspect the Leased Premises at any time during reasonable business
          hours for the purpose of ascertaining the condition of the Leased
          Premises or to make such repairs, additions, or alterations as may be
          required to be made by the Tenant or the Landlord under the terms of
          this Lease. Tenant shall pay the Landlord a reasonable charge for any
          cleaning of the Leased Premises required because of the carelessness
          or indifference of Tenant, or because of the nature of Tenant's
          business, and for any special cleaning done at the request of Tenant.
          Any janitorial services to be provided to the Leased Premises shall be
          at the Tenant's sole option and expense.

     (f)  MAINTENANCE & REPAIRS BY LANDLORD: Landlord shall be responsible for
          implementing the maintenance and repairs associated with the operation
          and management of the Property, including but not limited to those
          items listed in Paragraph 3(b) herein. Landlord shall be responsible
          for the cost associated with the replacement of the roof (if it
          becomes necessary to do so) and the maintenance and repair of the
          foundation and the structural soundness of the exterior walls of the
          Building. Landlord shall commence to make all repairs required as per
          this Lease within a reasonable time period of receipt of said Notice
          from Tenant. Landlord's liability hereunder shall be limited to the
          cost of such repairs or corrections.

     (g)  LANDLORD DISCLAIMER: Tenant agrees that Landlord shall not be held
          liable for failure to supply to the Leased Premises any plumbing,
          heating, air conditioning service or Utility Services as herein
          defined unless such failure is due to gross negligence on the
          Landlord's part. Landlord reserves the right to

                                        4
<PAGE>

          temporarily discontinue such services due to accidents, repairs,
          alterations or improvements, strikes, lockouts, riots, acts of God, or
          any event in which Landlord is unable to furnish same.

5.   PRORATION. Whenever the term "pro-rata" or any other similar term or phrase
     appears in this Lease, it shall refer to the square footage of the Tenant's
     Leased Premises (as stated in Paragraph One of this Lease) as a percentage
     of the total square footage of the Building of which the Leased Premises is
     a part and all other buildings that may be situated upon the Property,
     Landlord and Tenant agree that the total rentable area of the building(s)
     situated upon the Property is equal to 60,000 square feet, resulting in the
     Leased Premises accounting for 100.00% of the total rentable area contained
     within the building(s). Said percentage shall be used in calculating
     Additional Rent, if any, owed by Tenant per the terms and provisions
     contained herein.

6.   TENANT DEFAULT / LANDLORD REMEDIES.

     (a)  The following events shall be deemed to be events of default by Tenant
          under this Lease:

          (1)  Tenant fails to pay any installment of the Rent or other charges
               hereby reserved and such failure continues for a period of five
               (5) days after receipt of written Notice;

          (2)  Tenant fails to comply with any term, provision, or covenant of
               the Lease other than the payment of Rent or other charges, and
               does not cure such failure within ten (10) days after receipt of
               written Notice, or as otherwise prescribed in this Lease;

          (3)  Tenant becomes insolvent, or makes a transfer in fraud of
               creditors, or makes an assignment for the benefit of creditors;

          (4)  Tenant files petition under any section or chapter of the
               National Bankruptcy Act, as amended, or under any similar law or
               statute of the United States or any state thereof; or Tenant is
               adjudged bankrupt or insolvent in proceedings filed against
               Tenant thereunder;

          (5)  A receiver or trustee is appointed for all or substantially all
               of the assets of Tenant;

          (6)  Tenant supplies false or misleading information to the Landlord
               or its agents or representatives in the form of personal or
               business data;

          (7)  Tenant fails to vacate any substantial portion of the Leased
               Premises as herein agreed;

                                        5
<PAGE>

          (8)  Tenant fails to comply with provisions or reporting requirements
               of either the Subordination Clause, the Attornment Clause, or the
               Estoppel Clause contained within this Lease and such failure to
               comply continues for a period of ten (10) days after receipt of
               written Notice;

          (9)  Tenant fails to discharge any lien that is placed against the
               Property, said lien being the result of the Tenant's actions,
               within five (5) days after such lien is filed against the
               Property.

     (b)  Upon the occurrence of any such events of default, Landlord shall
          have, in addition to normal remedies provided by law, the option to
          pursue any one or more of the following remedies without having to
          provide to the Tenant any notice or demand whatsoever. In addition,
          the Landlord shall not be liable for any damages incurred by the
          Tenant due to the Landlord's actions whether such damages were caused
          by the gross negligence of the Landlord or otherwise:

          (1)  Terminate this Lease, in which event Tenant shall immediately
               surrender the Leased Premises to Landlord. If the Tenant fails to
               surrender the leased Premises to the Landlord, then Landlord,
               without prejudice to any other remedy which it may have for
               possession or arrearage in Rent, may take possession of the
               Leased Premises and expel or remove the Tenant or any other
               person or entity occupying the Leased Premises or any part
               thereof. Tenant agrees to pay the Landlord on demand the amount
               of all loss and damage that the Landlord may suffer by reason of
               such termination, whether through liability to relet the Leased
               Premises on satisfactory terms or otherwise, including damages
               the Landlord may incur due to special sums expended for fixing up
               the Leased Premises;

          (2)  Enter the Leased Premises without terminating the Lease and
               perform the Tenant's obligations per the terms of this Lease. The
               Tenant agrees to reimburse the Landlord on demand for all
               expenses incurred by the Landlord in performing the Tenant's
               obligations under this Lease, including the amount of Rent due
               and payable by the Tenant per the terms of this Lease;

          (3)  Relet the Leased Premises or any part or parts thereof, either in
               the name of the Landlord or as an agent for the Tenant, for a
               term or terms which may, at the Landlord's option, be less than
               or exceed the period of the remainder of the Lease term hereof or
               which otherwise would have constituted the balance of the Lease
               term. The Landlord shall receive the rents for such reletting and
               shall apply the same as follows: first, to the payment of any
               indebtedness other than rent due hereunder from Tenant to
               Landlord; second, to the payment of such expenses as Landlord may
               have incurred in connection with reentering, ejecting, removing,
               dispossessing, reletting, altering, repairing, redecorating,
               sub-dividing, or otherwise preparing the Leased Premises for
               reletting, including brokerage and

                                        6
<PAGE>

               reasonable attorney's fees; and third, to the fulfillment of the
               terms, covenants and conditions of this Lease to be performed by
               the Tenant hereunder. The Tenant hereby agrees to waive all
               claims to any surplus rents, if any. The Tenant shall be and
               hereby agrees to be liable for and to pay to the Landlord any
               deficiency arising between the rents, additional rents and other
               charges due and payable per this Lease and the net rentals
               received by the Landlord due to the reletting the Leased
               Premises. The deficiency shall be for each month of the period
               which otherwise would have constituted the balance of the Lease
               term. The Tenant hereby agrees to pay such deficiency to the
               Landlord in monthly installments on the rent day specified in
               this Lease. Any suit or proceeding brought to collect the
               deficiency for any month, either during the Lease term or after
               any termination thereof, shall not prejudice or preclude in any
               way the rights of the Landlord to collect the deficiency for any
               subsequent month by similar suit or proceeding. The Landlord
               shall in no event be liable in any way whatsoever for the failure
               to relet the Leased Premises or, in the event of such reletting,
               for failure to collect the rents due and payable thereunder. The
               Landlord is hereby authorized and empowered to make such repairs,
               alterations, declarations, subdivisions, or other preparations
               for the reletting of the Leased Premises as the Landlord shall
               deem necessary without in any way releasing the Tenant from any
               liability under this Lease. No such re-entry or taking possession
               of the Leased Premises by the Landlord shall be construed as an
               election on the Landlord's part to terminate this Lease and the
               Tenant hereby specifically waives any law, statue, rule, decree
               or judgment of any court to the contrary.

     (c)  Pursuit of any of the foregoing remedies shall not preclude pursuit of
          any of the other remedies herein provided or any other remedies
          provided by law, nor shall pursuit of any remedy herein provided
          constitute a forfeiture or waiver of any Rent due to Landlord
          hereunder or of any damages accruing to Landlord by reason of the
          violation of any of the terms, provisions, and covenants herein
          contained. No waiver by the Landlord of any violation or breach of any
          terms, provisions or covenants herein contained shall be deemed or
          construed to constitute a waiver of any other violation or breach.
          Upon an event of default by the Tenant, forbearance by the Landlord to
          enforce one or more of the remedies herein provided shall not be
          deemed or construed to constitute a waiver of such default.

     (d)  The Tenant acknowledges and agrees that should it become necessary for
          the Landlord to serve a notice for the demand for the payment of Rent
          or a notice for possession of the Leased Premises ("Notice") in
          accordance with applicable state statutes, the Notice shall not
          terminate the Tenant's obligations to pay future Rents and this Lease,
          at the sole option of the Landlord, may continue in full force and
          effect;

                                        7
<PAGE>

     (e)  The laws of the state in which the Property is located shall govern
          this Lease and any interpretations or constructions thereof. Further,
          the place of performance and transaction of business shall be deemed
          to be in the county of SCOTT, state of IOWA, and in the event of any
          litigation, the exclusive venue and place of jurisdiction shall be as
          heretofore prescribed.

7.   LANDLORD'S LIEN AND UNIFORM COMMERCIAL CODE. As security for payment of
     Rent, damages, and all other payments to be made by Tenant as required
     herein, Tenant hereby grants to Landlord a lien upon all goods, wares,
     equipment, fixtures, and furniture of Tenant now or subsequently located
     upon the Leased Premises or Property. If Tenant abandons or vacates any
     portion of the Property, or is in default of the payment of any Rent,
     damage, or other payments as required herein, Landlord may enter upon the
     Leased Premises, by force if necessary, and take possession of all or part
     of the aforesaid items. Landlord may sell all or part of the aforesaid
     items at a public or private sale, in one or successive sales, with or
     without Notice, to the highest bidder for cash. In addition, Landlord may,
     on behalf of Tenant, sell and convey all or part of aforesaid items to the
     bidder, and deliver to the bidder all of the Tenant's title and interest in
     said items. The proceeds of the sale shall be applied by the Landlord
     toward the cost of the sale and then toward the payment of all sums then
     due by Tenant to Landlord under the terms of this Lease. The statutory lien
     for Rent is not hereby waived, the express contractual lien herein granted
     being in addition and supplementary thereto, to the extent, if any, this
     Lease grants Landlord or recognizes in Landlord any lien or lien rights
     greater than provided by the laws of the state in which the Property is
     located. At Landlord's option, this Lease may be intended as a security
     agreement within the meaning of the Uniform Commercial Code. Landlord, in
     addition to the rights prescribed in this Lease, shall have all the rights,
     titles, liens, and interests in and to Tenant's property now or hereafter
     located upon the Leased Premises which are granted a secured party, as that
     term is defined under the Uniform Commercial Code, to secure the payment to
     Landlord of the various amounts provided for in this Lease and in
     compliance with same.

8.   COSTS AND ATTORNEY'S FEES. If it becomes necessary for either the Landlord
     or Tenant to employ an attorney due to the default or breach of a provision
     of this Lease, to gain possession of the Leased Premises, or to further
     protect its interest as granted per the terms and provisions herein
     contained, the non-prevailing party shall pay, in addition to its own costs
     and expenses, a reasonable attorney's fee and all costs and expenses
     expended or incurred by the prevailing party in connection with such
     default or action.

9.   ALTERATIONS TO THE LEASED PREMISES, BUILDING, PROPERTY AND COMMON AREAS.

     (a)  To Leased Premises. Tenant shall not make any alterations, additions,
          or improvements to the Leased Premises without the prior written
          consent of Landlord, which shall not be unreasonably withheld or
          delayed. Tenant may, at its own cost and expense, make such minor
          alterations such as shelves, bins, and trade fixtures as it may deem
          advisable, without altering the basic character of the Property or
          Leased Premises, provided it is accomplished in a good, workmanlike

                                        8
<PAGE>

          manner. In such cases, Tenant agrees to comply with all of the
          applicable governmental laws, ordinances, regulations, and any other
          requirements including, but not limited to, the application for
          building permits, request for inspections, etc. Tenant shall promptly
          pay for the costs of all work performed and shall indemnify and hold
          harmless the Landlord against liens, costs, damages, or expenses
          incurred in connection therewith, including attorney's fees, incurred
          by the Landlord if Landlord shall be joined in any action or
          proceeding involving such work. Under no circumstances shall Tenant
          commence any such work until Landlord has been provided with evidence
          that the contractor is licensed to do the desired repairs in the state
          in which the Leased Premises is situated, that the contractor carries
          adequate worker's compensation as required by the laws of the state in
          which the Leased Premises is situated, that the contractor is
          adequately bonded and that the contractor carries public liability and
          builder's risk insurance in amounts deemed satisfactory by the
          Landlord.

          Upon Lease termination, Tenant shall remove all alterations,
          additions, improvements, shelves, bins, equipment, and trade fixtures
          and partitions erected by Tenant and restore the Leased Premises to
          its original condition, wear and tear excepted, if so desired by
          Landlord; otherwise, such improvements shall become a part of the
          Leased Premises and shall be delivered to the Landlord along with the
          Leased Premises upon Lease termination. Any such removals and
          restorations shall be accomplished in a workmanlike manner so as not
          to damage the primary structure or structural qualities of the Leased
          Premises, the Property, the Common Areas or any other improvements
          situated on the Property.

     (b)  To Building, Common Areas and Property. Landlord reserves the right to
          change from time to time the dimensions and location of the Common
          Areas, as well as the dimensions, identity, and type of any building
          situated on the Property, including constructing a new building(s) on
          and/or removing an existing building(s) from the Property. Landlord
          shall also be permitted to make changes to the Building, unless doing
          so would reasonably interfere with the Tenant's use of the Leased
          Premises, in which case the Landlord must first reach agreement with
          the Tenant about those changes that are to be made to the Building
          prior to commencing work on any such changes to the Building. Landlord
          also reserves the right to dedicate portions of the Common Areas for
          streets, parks, utilities, and other public purposes as well as to
          utilize portions thereof for other such uses as the Landlord may from
          time to time deem profitable or desirable, provided that in doing so
          does not unreasonably interfere with the Tenant's use thereof. The
          Common Areas shall be subject to rules and regulations as Landlord
          deems reasonable and appropriate. Landlord reserves the right to
          designate specific areas in which vehicles owned by the Tenant, its
          employees, sublessee(s), concessionaires, and licensees shall be
          parked. Upon Landlord's request, the Tenant agrees to furnish to
          Landlord a complete list of the license numbers of all vehicles
          operated by the Tenant. The Landlord reserves the right to temporarily
          close any part of the Common Areas for such periods of time as may be
          necessary to prevent the public from obtaining prescriptive rights
          thereto or to make repairs

                                        9
<PAGE>

          or alterations. The Tenant shall not take any action that would
          interfere with the rights of the Landlord or of any other tenants of
          the Property, including their respective employees, agents,
          contractors, vendors or invitees.

10.  SIGNS, WINDOW COVERINGS. No sign, placard, picture, advertisement, name,
     notice, lettering, door sign, window covering, awning, or other projection
     ("Signage") visible from the exterior of the Leased Premises shall be
     exhibited, inscribed, painted, or otherwise displayed by the Tenant on any
     part of the inside or outside of the Leased Premises, including all windows
     and doors which comprise a portion of the Leased Premises, or on any
     building(s) situated upon the Property without first obtaining the consent
     of the Landlord. If the Landlord shall have given said consent, whether
     before or after the execution of this Lease, said consent shall in no way
     operate as a waiver or release of any of the provisions of this Lease and
     shall be deemed to relate only to that particular Signage consented to by
     the Landlord and shall not be construed as dispensing with the necessity of
     obtaining the specified written consent of the Landlord with respect to any
     other such Signage. Tenant shall remove all Signage at the termination of
     this Lease. Signage installation and removal shall be made in such a manner
     as to avoid injury, defacement, or overloading the Building and any other
     improvements thereto. Drawings for all Tenant identification Signage shall
     be approved by Landlord before the manufacture and installation thereof.
     The cost and installation of all Signage shall be at the sole expense of
     the Tenant.

11.  MECHANIC'S LIENS. Tenant agrees that it will not permit any mechanic's
     liens to attach to the Property.

12.  CHARACTER OF OCCUPANCY. The Leased Premises shall be used exclusively for
     MANUFACTURING, WAREHOUSE AND OFFICE USE. Tenant shall at its own cost and
     expense obtain any and all licenses and permits necessary for such use.
     Tenant shall comply with all governmental laws, ordinances, and regulations
     applicable to the use of the Leased Premises. The Tenant, at its own cost
     and expense, shall comply with all laws, rules, and regulations applicable
     to the peculiar nature of the Tenant's use of the Leased Premises. The
     Tenant's obligation to comply with laws, rules, and regulations applicable
     to the peculiar nature of the Leased Premises shall include the obligation
     to locate furniture and fixtures in accordance with the Americans With
     Disabilities Act (A.D.A.) and the rules and regulations adopted thereunder.
     The Tenant shall promptly comply with all Landlord or governmental orders
     and directives for the correction, prevention, and abatement of nuisances
     in or upon, or connected with the Leased Premises, all at Tenant's sole
     expense. Tenant agrees to pay, on demand, costs for any damage or repairs
     to the Leased Premises or Property caused by the misuse of same by the
     Tenant, its agents, or employees. Tenant shall not permit the Leased
     Premises to be used in any way which would, in the opinion of the Landlord,
     be extra hazardous or which would in any way increase the insurance
     premiums upon the Property or cause the cancellation of any insurance
     policy covering the Leased Premises or the Property, nor shall Tenant sell
     or permit to be kept, used, or sold in or about the Leased Premises any
     articles which may be prohibited by a standard form policy of fire or other
     hazard insurance. If Tenant's use of the Leased Premises results in any
     increase in premiums for

                                       10
<PAGE>

     insurance, Tenant will promptly reimburse Landlord for the cost of such
     increase. Tenant's acts which might result in insurance premium increases
     include, without limiting the generality of the foregoing, such things as
     storing or using flammable substances, stocking materials too close to the
     ceiling or sprinklers, failure to maintain adequate aisles, or failure to
     impose or enforce smoking rules. Any conduct of Tenant which causes an
     increase in fire or other hazard insurance premiums, or which is in
     violation of recommendations by Landlord's insurance carrier, or failure by
     Tenant to promptly take any corrective action recommended by Landlord's
     insurance carrier shall be a material default under this Lease and Landlord
     shall be entitled to all of the remedies in Paragraph Six of this Lease.

     Tenant shall not use the Leased Premises or permit anything to be done in
     or about the Leased Premises which will in any way conflict with any law,
     statute, zoning restriction, ordinance or governmental rule or regulation
     or requirement of duly constituted public authorities now in force or which
     may hereafter be enacted or promulgated. Tenant shall, at its sole cost and
     expense, promptly comply with all applicable laws, statutes, ordinances,
     and governmental rules, regulations, or requirements now in force or which
     may hereafter be in force, and with the requirements of any board of fire
     underwriters or other similar body now or hereafter constituted relating to
     or affecting the condition, use or occupancy of the Leased Premises. The
     judgment of any court of competent jurisdiction or the admission of Tenant
     in any action against Tenant, whether Landlord be a party thereto or not,
     that Tenant has violated any law, statute, ordinance or governmental rule,
     regulation or requirement, shall be conclusive of that fact as between
     Landlord and Tenant.

     This Paragraph applies particularly and specifically, without limiting the
     generality thereof, to any act that is in violation of that body of law
     generally referred to as The Hazardous Substances Law. At the time this
     Lease is made, such body of law includes, but is not limited to, the Atomic
     Energy Act, the Clean Air Act, the Comprehensive Environmental Response
     Compensation and Liability Act of 1980 (known as "Superfund"), the Clean
     Water Act, the Federal Insecticide, Fungicide and Rodenticide Act, the
     Occupational Safety and Health Act, the Resource Conservation and Recovery
     Act of 1976 (Amended), the Solid Waste Disposal Act, the Toxic Substances
     Control Act, and the Used Oil Recycling Act. Tenant will indemnify Landlord
     against all cost, expense, or loss, including attorney's fees, which
     Landlord may sustain as a result of Tenant's violation of its obligations
     under this Paragraph. Any violation by Tenant of its duties contained
     herein shall be a material default under this Lease that will entitle
     Landlord to all of its remedies under this Lease. All obligations of Tenant
     shall survive termination of this Lease.

13.  POSSESSION.

     (a)  If Landlord cannot deliver possession of the Leased Premises to the
          Tenant upon the commencement of the term hereof, this Lease shall not
          be void or voidable, nor shall Landlord be liable to Tenant for any
          loss or damage resulting therefrom. The term of the Lease shall be
          amended to commence on the date when Landlord

                                       11
<PAGE>

          can deliver possession of the Leased Premises to the Tenant and the
          expiration date shall be extended accordingly. If permission is given
          to Tenant to occupy the Lease Premises prior to the commencement date
          of the Lease, such occupancy shall be subject to all provisions of
          this Lease and the Rent shall be prorated to the date of the Tenant's
          occupancy of the Leased Premises. If the term hereof commences on the
          date later than said commencement date pursuant to the provisions set
          forth above, Landlord and Tenant agree to execute and acknowledge a
          written statement setting forth the actual commencement date and
          termination date of this Lease. This Lease shall be in full force and
          effect even though either Landlord or Tenant may fail or refuse to
          execute such Statement.

     (b)  The taking of possession of the Leased Premises by the Tenant shall be
          conclusive evidence that said Leased Premises was in good and
          satisfactory condition when possession of same was taken.

14.  LEASE ASSIGNMENT OR SUBLETTING.

     (a)  Landlord's Consent Required. Tenant shall not have the right to
          assign, sell, encumber, pledge, sublease, or otherwise transfer all or
          any part of Tenant's leasehold estate herein (any of the preceding
          constituting a "Transfer"), or permit the Leased Premises to be
          occupied by anyone other than the Tenant or its employees, or to
          sublet the Leased Premises or any portion thereof without first
          obtaining prior written consent of Landlord. Consent by Landlord to
          one or more Transfers shall not be deemed to be a consent to any
          subsequent Transfer. The Tenant shall not change the ownership of the
          business in order to avoid this provision, and will, at the request of
          the Landlord, provide whatever documentation is necessary to establish
          that the Tenant is in compliance with this provision.

     (b)  Tenant's Request For Landlord Consent. If Tenant desires at any time
          during the term of this Lease to Transfer its interest, or any portion
          thereof, it shall first notify Landlord of its desire to do so and
          shall submit to the Landlord in writing the name and address of the
          proposed assignee, the nature of the proposed assignee's work or
          business to be conducted at the Leased Premises, the proposed
          sublease, assignment, and other Transfer documentation, all in
          reasonable detail as Landlord may request, along with a non-refundable
          processing fee equal to the greater of one thousand five hundred
          dollars ($1,500.00) or one-half (1/2) of the then monthly Base Rent.
          In addition, Tenant agrees to reimburse Landlord for all legal fees
          and other expenses associated with any proposed Transfer.

     (c)  Landlord's Rights. At any time within thirty (30) days after Landlord
          is in receipt of the above-referenced items, Landlord may by written
          notice to Tenant elect to consent to the Transfer of the Lease upon
          the terms and to the assignee as proposed, refuse to give its consent
          to the proposed Transfer, terminate this Lease and enter directly into
          a new lease with the proposed assignee, or terminate this Lease
          effective as of the date such proposed Transfer would have become

                                       12
<PAGE>

          effective. If the Landlord allows Tenant to Transfer its Lease or to
          sublet the Leased Premises, then in the event of default as herein
          defined, Landlord may collect all Rent and other sums due hereunder
          directly from such assignee or subtenant and apply said Rent against
          any sums due the Landlord by the Tenant hereunder. Tenant or any other
          assignor or sublessor may not collect Rent in excess of the existing
          Lease rates and any such sums received by the Tenant or other assignor
          or sublessor must be immediately paid to the Landlord. The Landlord
          shall also have the right to assign any of its rights under this
          Lease.

     (d)  No Release of Liability. No Transfer, even with the consent of
          Landlord, shall relieve Tenant of its obligations to pay Rent and to
          perform all other obligations to be performed by Tenant under this
          Lease. The acceptance by Landlord of any payment due hereunder from
          any other person shall not be deemed to be a waiver by Landlord of any
          provision of this Lease or to be a consent to any Transfer.

15.  INSURANCE, LIABILITY, INDEMNITY AND WAIVER OF SUBROGATION.

     (a)  Insurance and Liability. Tenant shall throughout the Lease Term, at
          its sole cost and expense, provide and keep in force with responsible
          insurance companies satisfactory to Landlord and to any mortgagee
          under a mortgage constituting a lien upon the Property, public
          liability and property damage insurance. The liability limits of all
          said insurance shall be a minimum of $2,000,000 Bodily Injury,
          $1,000,000 Property Damage, or a combined single limit of $2,000,000
          protecting Landlord and any such mortgagee, as well as Tenant, against
          liability to any employees or servants of Tenant or to any other
          person whomsoever arising out of or in connection with Tenant's use of
          the Leased Premises or Property or the condition of the Leased
          Premises. Tenant shall furnish Landlord a Certificate of Insurance
          prior to the commencement of this Lease naming Landlord as an
          additional insured. Tenant shall also furnish Landlord's Management
          Agent a Certificate of Insurance prior to the commencement of this
          Lease naming Landlord's Management Agent as an additional insured.
          Landlord, at its sole option, may procure and maintain at times during
          the term of this Lease a policy or policies of insurance covering loss
          or damage to the Property (exclusive of Tenant's trade fixtures,
          equipment, and personal property), providing protection against those
          perils as Landlord deems appropriate.

     (b)  Indemnity.

          (1)  Tenant hereby agrees to defend, pay, indemnify, and save free and
               harmless Landlord, from and against any and all claims, demands,
               fines, suits, actions, proceedings, orders, decrees, and
               judgments of any kind or nature by or in favor of anyone
               whomsoever and from and against any and all costs and expenses,
               including reasonable attorney's fees, resulting from or in
               connection with loss of life, bodily or personal injury or
               property damage arising, directly or indirectly, out of or from
               or on account of any occurrence in, upon at or from the Leased
               Premises or occasioned wholly or

                                       13
<PAGE>

               in part through the use and occupancy of the Leased Premises or
               any improvements therein or appurtenances thereto, or by any act
               or omission or negligence of Tenant, or any subtenant,
               concessionaire, or licensee of Tenant or their respective
               employees, agents, or contractors in, upon, at or from the Leased
               Premises, or its appurtenances.

          (2)  Tenant and all those claiming by, through or under Tenant shall
               store their property in and shall occupy and use the Leased
               Premises and any improvements therein and appurtenances thereto,
               solely at their own risk and hereby release Landlord to the full
               extent permitted by law, from all claims of every kind, including
               loss of life, personal, or bodily injury, damage to merchandise,
               equipment, fixtures, or other property, or damage to business or
               for business interruption, arising, directly or indirectly, out
               of or from or on account of such occupancy and use or resulting
               from any present or future condition, state of repair thereof.

          (3)  Landlord shall not be responsible or liable for damages at any
               time to Tenant, or those claiming by, through or under Tenant,
               for any loss of life, bodily, or personal injury, or damage to
               property or business, or for business interruption that may be
               occasioned by or through the acts, omissions or negligence of any
               other person.

          (4)  Landlord shall not be responsible or liable for damages at any
               time for defects, latent or otherwise, in any building(s), in any
               improvements within the Leased Premises or in any of the
               equipment, machinery, utilities, appliances or apparatus therein.
               Landlord shall not be responsible or liable for damages at any
               time, for loss of life, or injury or damage to any person or any
               property or business of Tenant, or those claiming by, through or
               under Tenant, caused by or resulting from the bursting, breaking,
               leaking, running, seeping, overflowing or backing up of water,
               steam, gas, sewage, snow or ice in any part of the Leased
               Premises or Property or which is caused by, or resulting from,
               acts of nature or the elements, or resulting from any defect or
               negligence in the occupancy, construction, operation or use of
               the Leased Premises or any of the equipment, fixtures, machinery,
               appliances, or apparatus therein.

     (c)  Waiver of Subrogation. In the event that any portion of the Property
          or any portion of the Leased Premises is damaged or destroyed by fire,
          explosion or other casualty, and to the extent that any such loss is
          covered by insurance in force and recovery is made for such loss,
          whether or not such damage or destruction is caused, or claimed to be
          caused, by the negligence or misconduct of Landlord or Tenant, or any
          of their respective officers, employees, agents, contractors or
          invitees, Landlord and Tenant hereby mutually release each other from
          liability and waive all right of recovery against each other for any
          loss from perils insured against under their respective fire insurance
          policies (including extended coverage). Both Landlord and Tenant shall
          cause its insurance company

                                       14
<PAGE>

          to waive all right of recovery by way of subrogation against the other
          party in connection with any such damage. In addition, during or after
          Tenant's occupancy of the Leased Premises, Landlord and Tenant shall
          indemnify and hold each other harmless from any claim made by way of
          subrogation by either the Landlord's or Tenant's fire and extended
          coverage insurance carrier(s).

16.  DAMAGE OR DESTRUCTION.

     (a)  In the event improvements to the Leased Premises or the Property are
          damaged by any casualty which is insured, then Landlord may either
          repair such damage as soon as is reasonably possible at Landlord's
          expense, in which event this Lease shall continue in full force and
          effect, or give written Notice to the Tenant within thirty (30) days
          after the date of such occurrence of the Landlord's intention to
          cancel and terminate this Lease. If the Leased Premises is totally
          destroyed during the term of this Lease from any cause whether or not
          covered by the insurance required herein, including any destruction
          required by any authorized public authority, this Lease may
          automatically terminate, at the option of the Landlord, as of the date
          of such total destruction.

     (b)  If the Leased Premises is partially destroyed or damaged and Landlord
          makes repairs pursuant to this Lease, the Rent payable hereunder for
          the period during which such damage and repair continues shall be
          abated in proportion to the extent which Tenant's use of the Leased
          Premises is impaired. Except for abatement of Rent, if any, Tenant
          shall have no claim against Landlord for any damage suffered by reason
          of such damage, destruction, repair, or restoration.

17.  EMINENT DOMAIN. If the Property shall be taken by right of eminent domain,
     in whole or substantially in part, for public purposes, then this Lease, at
     the option of the Landlord, shall forthwith cease and terminate, and the
     current Rent shall be properly apportioned to the date of such taking. In
     such event, Landlord shall receive the entire award for the lands and
     improvements so taken, and Tenant shall make no claim against Landlord for
     compensation in connection with said taking.

18.  SUBORDINATION. This Lease, and all of the rights of Tenant hereunder, are
     and shall be subject and subordinate to any sale and/or lien of any
     mortgage now or hereafter placed on the Property or any part thereof, and
     to any and all renewals, modifications, consolidations, replacements,
     extensions, or substitutions of said sale and/or mortgage. Tenant agrees to
     execute any documents required to effectuate such subordination or to make
     this Lease subordinate to the lien of any mortgage, deed of trust, or
     ground lease, as the case may be.

19.  ATTORNMENT. If a successor landlord under the sale or the holder of the
     mortgage shall succeed to the rights of the Landlord under this Lease,
     whether through possession or foreclosure action or delivery of a new lease
     or deed, then Tenant, upon the request of such successor landlord, shall
     attorn to and recognize such successor landlord as Tenant's Landlord under
     this Lease, and shall promptly execute and deliver any instrument that

                                       15
<PAGE>

     such successor landlord may request to further evidence such attornment.
     Tenant hereby irrevocably appoints Landlord or the successor landlord as
     attorney-in-fact of Tenant to execute and deliver such instrument on behalf
     of Tenant, should Tenant refuse or fail to do so promptly after request.
     Upon such attornment, this Lease shall continue in full force and effect as
     if it were a direct lease between the successor landlord and Tenant, upon
     all of the terms, conditions, and covenants as set forth herein.

20.  ESTOPPEL CERTIFICATES. The Tenant shall be obligated to duly execute and
     deliver to the Landlord within seven (7) days after receipt of written
     notice an Estoppel Certificate that certifies the following information:

     (a)  that the attached Lease, together with all amendments, modifications,
          extensions and renewals thereof, comprise a complete copy of the
          entire Lease Agreement, and that the Lease is presently in full force
          and effect and has not been otherwise modified or amended, that there
          are no oral agreements existing as to the terms of the Lease or the
          use or occupancy of the Leased Premises, that the Lease contains all
          of the understandings and agreements between the Tenant and Landlord
          and their predecessors, if any;

     (b)  the Lease is correctly identified by the date as stated therein;

     (c)  the commencement date and the expiration date of the Lease

     (d)  the Tenant does or does not have the right to renew the Lease

     (e)  the Tenant does or does not have the right to terminate the Lease;

     (f)  the amount of the monthly Base Rent (not including any percentage rent
          or expense pass through) presently payable under the Lease and the
          date through which such Base Rent has been paid;

     (g)  the amount of the security deposit the Tenant deposited with the
          Landlord, if any;

     (h)  that the Landlord is not in default of any terms or conditions of the
          Lease, the Landlord has observed and performed all of its obligations
          and has fulfilled all of its warranties and representations, if any,
          with respect to the Lease and that the Tenant is not asserting any
          offsets, counterclaims or defenses against the Landlord;

     (i)  that the Tenant is not in default of any terms or conditions of the
          Lease;

     (j)  that the Tenant is in possession of Leased Premises and that the
          Leased Premises is in conformity with that stated in the Lease;

     (k)  the Tenant does or does not have an option or a first right of refusal
          (FRR) to purchase the Property in which the Leased Premises is
          situated.

                                       16
<PAGE>

     (1)  the guarantor of the Lease, if any.

     (m)  the square footage of the Leased Premises, the total square footage of
          the Property and the Tenant's pro-rata share of the Property;

     (n)  that the statements contained therein are made for the purpose of
          verifying the current status of the Tenant's Leasehold interest in
          Leased Premises and may be relied upon by the Landlord and any
          successor(s) and/or assignee(s).

          At the Landlord's option, the Tenant's failure to deliver such written
          instrument within the allotted time period shall constitute a material
          breach of this Lease or shall be conclusive upon the Tenant that: 1)
          this Lease is in full force and effect, without modification except as
          may be represented by Landlord; 2) there are no uncured defaults
          pertaining to Landlord's performance of this Lease; and 3) that the
          Tenant has not paid in advance more than one (1) month's Base Rent.

21.  HOLDING OVER. Should Tenant, or any of its successors-in-interest, hold
     over the Leased Premises, or any part thereof, after the expiration of the
     term of this Lease, unless otherwise agreed to in writing by Landlord, such
     holding over shall constitute and be construed as tenancy from
     month-to-month only, at a Base Rent equal to 150% of the monthly Base Rent
     paid during the last month of the Term prior to the holdover.

22.  QUIET ENJOYMENT. Landlord warrants that it has full right to execute and to
     perform this Lease and to grant the estate leases, and, that Tenant, upon
     payment of the required Rent and performing the terms, conditions,
     covenants, and agreements contained in this Lease, shall peaceably and
     quietly have, hold, and enjoy the Leased Premises during the full term of
     this Lease as well as any extension or renewal thereof. However, Tenant
     accepts this Lease subject and subordinate to any underlying lease,
     mortgage, deed of trust, or other lien presently existing upon the
     Property. Landlord hereby is irrevocably vested with full power and
     authority to subordinate Tenant's interest under this Lease to any
     underlying lease, mortgage, deed of trust, or other lien hereafter placed
     on the Property, and Tenant agrees upon demand to execute additional
     instruments subordinating this Lease as Landlord may require. If the
     Landlord's interest under this Lease shall be transferred by reason of
     foreclosure or other proceedings for enforcement of any lien, deed of
     trust, or mortgage on the Property, Tenant shall be bound to the transferee
     (sometimes called "Purchaser") under the terms, covenants, and conditions
     of this Lease for the balance of the term remaining, and any extensions or
     renewals thereof, with the same force and effect as if the Purchaser were
     the Landlord under this Lease. Tenant agrees to attorn to the Purchaser, as
     its Landlord, the attornment to be effective and self-operative without the
     execution of any further instruments upon the Purchase succeeding to the
     interest of the Landlord under this Lease. The respective rights and
     obligations of Tenant and the Purchaser upon the attornment, to the extent
     of the then remaining balance of the term of this Lease, and any extensions
     and renewals thereof, shall be the same as those herein contained.

                                       17
<PAGE>

23.  SEVERABILITY CLAUSE. If any clause or provision of this Lease is illegal,
     invalid, or unenforceable under present or future laws effective during the
     term of this Lease, it is the intention of Landlord and Tenant that the
     remainder of this Lease shall not be affected thereby. The caption of each
     paragraph hereof is added as matter of convenience only and shall be
     considered to be of no effect in the construction of any provision or
     provisions of this Lease.

24.  SURRENDER OF POSSESSION. The Tenant agrees to deliver, upon the surrender
     to the Landlord, possession of the Leased Premises, along with all keys
     thereto, at the expiration or termination of this Lease, by lapse of time
     or otherwise, in as good repair as when the Tenant obtained the same at the
     commencement of said term, normal wear and tear excepted, and except damage
     by the elements (occurring without the fault of the Tenant or other persons
     permitted by the Tenant to occupy or enter the Leased Premises or any part
     thereof), or by act of God, or by insurrection, riot, invasion, or of
     military or usurped power.

25.  REMOVAL OF TENANT'S PROPERTY. If the Tenant shall fail to remove all
     effects from said Leased Premises or Property upon the abandonment thereof,
     or upon the termination of this Lease for any cause whatsoever, the
     Landlord, at its option, may remove the same in any manner that it shall
     choose, and store the said effects without liability to the Tenant for loss
     thereof. Tenant agrees to pay Landlord on demand for any and all expenses
     incurred in such removal, including court costs, attorney's fees, and
     storage charges on such effects. If Landlord is forced to sell any of the
     same at public or private sale to collect any amounts due under this Lease
     from Tenant, or simply to dispose of Tenant's effects, the Landlord agrees
     to render any surplus to Tenant after deducting all costs and expenses
     associated with such sale.

26.  CONSENT NOT UNREASONABLY WITHHELD. Unless otherwise provided, whenever
     consent or approval of Landlord or Tenant is required under the terms of
     this Lease, such consent shall not be unreasonably withheld or delayed.
     Tenant's sole remedy, if Landlord unreasonably withholds or delays consent
     or approval, shall be an action for specific performance and the Landlord
     shall not be liable for damages.

27.  TENANT FINANCIAL STATEMENTS. Tenant shall furnish to Landlord, upon
     Landlord's request but not more than once per any given calendar year
     (except in the event of a sale of the Property, in which case upon the
     Landlord's request, the Tenant shall furnish to Landlord copies of the
     Tenant's most current Financial Statements), copies of various financial
     reports, including but not limited to, a Statement of Income and Expense, a
     Statement of Financial Position, a Statement of Cash Flows, a Statement of
     Change in Financial Position, a copy of the Tenant's Federal Income Tax
     Return and a report enumerating any important information not contained in
     any of the financial statements ("Tenant Financial Statements").

28.  ENTIRE AGREEMENT. Tenant acknowledges and agrees it has not relied upon any
     agreements, conditions, representations, statements, or warranties except
     those expressed and contained herein. Tenant acknowledges and agrees that
     no amendment or

                                       18
<PAGE>

     modification of this Lease shall be valid or binding unless expressed in
     writing and executed by the Landlord and Tenant in the same manner as the
     execution of this Lease.

29.  IMPLIED ACCEPTANCE/SURRENDER.

     (a)  No act or thing done by Landlord or Landlord's agents during the Term
          hereof or any extension thereof, shall be deemed an acceptance or a
          surrender of the Leased Premises, and no agreement to accept such
          surrender shall be valid unless in writing and signed by Landlord or
          its designated representative.

     (b)  The delivery of keys to any employee of the Landlord, or of Landlord's
          agents, shall not operate as a termination of this Lease or a
          surrender of the Leased Premises. No partial payment of Rent by Tenant
          shall be deemed to be other than a payment on account, nor shall any
          endorsement or statement on any check or any letter accompanying any
          check or payment as Rent be deemed an accord and satisfaction.
          Landlord may accept any such payment of Rent without prejudice to
          Landlord's right to recover the balance of any Rent due or pursue any
          other remedy available to Landlord.

30.  FORCE MAJEURE. In the event Landlord or Tenant shall be delayed, hindered,
     or prevented from the performance of any act required herein by reason of
     strikes, lockouts, labor troubles, inability to procure materials, failure
     of power, restrictive governmental laws or regulations, riots,
     insurrection, war, or any other reason of a like nature ("Event") that is
     not the fault of the Party delayed in performing the work or doing the acts
     required under the terms of this Lease, then said performance of any such
     act shall be excused for the period of time the Event takes place. The
     period for the performance of any such act shall be extended for a period
     of time equivalent to the time period of the Event. The provisions of this
     section shall not operate to excuse Tenant from prompt payment of the Base
     Rent and any other Rent required by the terms of this Lease.

31.  SUCCESSORS. The terms, provisions, covenants, and conditions contained in
     this Lease shall apply to, inure to the benefit of, and be binding upon the
     parties, hereto and upon their respective successors in interest and legal
     representatives except as otherwise herein expressly provided.

32.  GENDER. Words of any gender used in this Lease shall be held and construed
     to include any other gender, and words in the singular number shall be held
     to include the plural, unless the context otherwise requires.

33.  CORPORATE AUTHORITY. If Tenant is a corporation, Tenant warrants that it
     has legal authority to operate and is authorized to do business in the
     state in which the Property is situated. Tenant also warrants that the
     person or persons executing this Lease on behalf of Tenant has authority to
     do so and to fully obligate Tenant to all terms and provisions of this
     Lease. Tenant shall, upon request from Landlord, furnish Landlord with a
     certified copy of resolutions of the Board of Directors authorizing this
     Lease and

                                       19
<PAGE>

     granting authority to execute it to the person or persons who have executed
     it on Tenant's behalf.

34.  NOTICES.

     (a)  Each provision of this Lease or of any applicable governmental laws,
          ordinances, regulation, or other requirements with reference to the
          sending, mailing, or delivery of any payment of Rent by Tenant to
          Landlord or vice-versa, shall be deemed to be complied with if and
          when the following steps are taken:

          (1)  All Rent and other payments required to be made by Tenant to
               Landlord hereunder shall be payable to Landlord's Management
               Agent at the address hereinbelow set forth or at such other
               address as Landlord may specify from time to time by written
               notice delivered in accordance herewith.

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

     (b)  All Notices required or permitted under this Lease shall be in writing
          and shall be deemed to be properly served if sent by personal
          delivery, special delivery, overnight delivery, certified mail, or by
          facsimile transmission. Notices to the Tenant may be sent to either of
          the addresses delineated herein. Notices to the Landlord shall be to
          the address as specified below. The effective date of any Notice shall
          be the date on the shipping invoice for all personal deliveries,
          special deliveries, or overnight deliveries, the date of the postmark
          stamped on the envelope by the U.S. Postal Service, or the date a
          facsimile transmission is sent. The parties hereto shall not refuse to
          accept delivery of said Notices.

          As of the effective date of this Lease, the Landlord's address, the
          Landlord's Leasing Agent's address, the Landlord's Management Agent's
          address, and the Tenant's address are as follows:

          LANDLORD'S MAILING ADDRESS:             LANDLORD'S PHYSICAL ADDRESS:

          1613 E. 15th
          Tulsa, OK
          74120

          LANDLORD'S LEASING AGENT:
          Ruhl & Ruhl Commercial Company
          c/o Mr. Robert M. Young, SIOR
          5111 Utica Ridge Road
          Davenport, Iowa 52807

                                       20
<PAGE>

          TENANT'S MAILING ADDRESS:               TENANT'S PHYSICAL ADDRESS:
          Greystone Manufacturing                 Greystone Manufacturing
          28439 Great River Road                  2601 Shoreline Drive
          Princeton, IA 52768                     Bettendorf, IA 52722
          Attn: JoAnn Hamilton

     (c)  If and when included within the term "Landlord" as used in this
          instrument, there is more than one person, firm, or corporation, all
          shall jointly arrange among themselves for their joint execution of
          such a Notice specifying some individual at some specific address for
          the receipt of Notices and payments of Rent to Landlord; if and when,
          included within the term "Tenant" as used in this instrument, there is
          more than one person, firm or corporation, all shall jointly arrange
          among themselves for their joint execution of such a Notice specifying
          some individual at some specific address within the continental United
          States for receipt of Notices and payments to Tenant. All Parties
          included within the terms "Landlord" and "Tenant", respectively, shall
          be bound by Notices given in accordance with the provisions of this
          paragraph to the same effect as if each had received such Notice.

35.  AMENDMENT, ADDENDUM, MODIFICATION. Any Amendments, Addenda, Exhibits,
     Modifications, and/or other Supplements, which are attached hereto and made
     a part hereof shall be binding upon the Parties hereto. If any provision of
     said Addenda shall conflict in any manner with other provisions of this
     Lease, the provisions contained in the Addenda shall prevail. Landlord and
     Tenant hereby acknowledge and agree that Exhibits A, B, C AND D are
     attached hereto and made part of this Lease.

36.  DRAFTING. This Lease shall not be construed as being prepared by one party
     to the exclusion of the other party.

37.  PROPERTY RULES AND REGULATIONS. The Tenant hereby agrees to abide by the
     following rules and regulations:

     (a)  no animal or motorcycle shall be allowed within the Leased Premises or
          on the Property at any time;

     (b)  activities such as canvassing, soliciting and peddling by non-tenants
          of the Property shall not be allowed to occur on the Property at any
          time;

     (c)  no radio or television antenna, loudspeaker, or other device shall be
          allowed to be installed on the roof or any of the exterior walls of
          the Property in which the Leased Premises is a part without the prior
          written consent of the Landlord; no television, radio, recorder, or
          electrical device shall be played in such a manner as to cause a
          nuisance;

                                       21
<PAGE>

     (d)  smoking shall not be allowed in the Leased Premises that in any way
          shall cause irritation or discomfort to any other Tenants of the
          Building; the Landlord reserves the right to declare and designate the
          Leased Premises as a "non-smoking area" if any complaint is not
          addressed and remedied within three (3) days after Notice is given to
          the Tenant.;

     (e)  the Landlord shall be allowed to place a "For Rent" sign upon the
          Property throughout the one hundred eighty (180) day period of time
          prior to the termination of the Lease; in addition, the Landlord shall
          be allowed, upon reasonable notice, to show the Leased Premises to a
          prospective third party tenant;

     (f)  the Landlord, at any reasonable hour of the day, shall be allowed to
          enter into, upon, or go through and view and inspect the Leased
          Premises;

     (g)  the Tenant shall keep all windows and doors in the Leased Premises
          clean and free from unauthorized signage;

     (h)  the Tenant shall not utilize any illegal or unethical method of
          business operation;

     (i)  the Tenant shall not use or permit to be used any apparatus for sound
          reproduction or the transmission of any musical instrument in such a
          manner that the sounds so produced, reproduced or otherwise
          transmitted shall be unreasonably audible beyond the interior of the
          Leased Premises;

     (j)  the Tenant shall not cause or permit any objectionable odors to be
          emanated or unreasonably dispelled from the Leased Premises;

     (k)  the Tenant shall not load, unload or permit the loading or unloading
          of furniture, equipment, supplies, inventories, or any other property
          outside the areas so designated; in addition, the Tenant shall comply
          with the Landlord's reasonable rules for delivery and shipping of
          products, materials and supplies;

     (l)  the Tenant shall not store or stack any furniture, fixtures,
          equipment, supplies, inventories, or any other personal or business
          property outside the Leased Premises or in any other manner clutter
          the Common Areas; in addition, the Tenant shall use its best efforts
          to prevent the parking or storage of trucks, trailers or other
          vehicles or equipment engaged in such loading or unloading as
          referenced herein;

     (m)  the Tenant shall not solicit business or distribute handbills or other
          advertising matter anywhere on the Property;

     (n)  the Tenant shall maintain the Leased Premises at a temperature
          sufficient to prevent the freezing of water lines and any fixtures
          situated therein.

                                       22
<PAGE>

38.  LEASE MEMORANDUM/RECORDATION. At Landlord's sole option, Landlord and
     Tenant shall execute a Lease Memorandum. Said Memorandum shall be in
     recordable form and contain those Lease provisions as specified by
     Landlord. Said Memorandum shall be recorded solely at Landlord's option and
     expense.

39.  CONFIDENTIALITY. All terms, covenants, conditions and provisions of this
     Lease shall remain strictly confidential and shall not be disclosed to any
     third party (other than the brokers or advisors representing the Landlord
     and Tenant in the Lease negotiations) unless disclosure of such information
     is required pursuant to a local, state or federal statute and the third
     party requiring the disclosure of such information has the proper authority
     under such statute to obtain such information.

40.  AGENCY RELATIONSHIPS. None.

41.  SPECIAL PROVISIONS. None

IN WITNESS WHEREOF, this Lease is executed to be effective as of the date and
year specified in Paragraph 1.

LANDLORD:                           GREYSTONE PROPERTIES, LLC

                                    /s/ Warren Kruger
                                    Warren Kruger, Managing Member

                                    Date: November 1, 2004

TENANT:                             GREYSTONE MANUFACTURING, LLC

                                    /s/ Robert H. Nelson
                                    ---------------------------------
                                    (signature)

                                    Robert H. Nelson
                                    ---------------------------------
                                    By (print or type name)

                                    CFO
                                    ---------------------------------
                                    Title (print or type name)

                                    Date:  November 1, 2004

                                       23
<PAGE>

                                    State of Oklahoma                        )
                                    ) ss
County of Tulsa                     )

This instrument was acknowledged before me on this ____ day of ___________,
_____, by ________________________________________________ as _________________.

                                                    __________________________
                                                    Notary Public

My Commission Expires:

________________________________

================================================================================

State of                )
         ---------------
                        ) ss
County of               )
          --------------

This instrument was acknowledged before me on this ____ day of ___________,
_____, by ________________________ as ________________________ of
________________________, a _______________ Corporation.

                                                    __________________________
                                                    Notary Public

My Commission Expires:

________________________________

                                       24
<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

Lot 2, Riverside Development Park, 3rd Addition to the City of Bettendorf, Scott
County, Iowa

                                       25
<PAGE>

                                    EXHIBIT B

                                   FLOOR PLAN

                                       26
<PAGE>

                                    EXHIBIT C

                                 LEASE GUARANTY

                                    EXHIBIT D

                               TENANT IMPROVEMENTS

LANDLORD SHALL PROVIDE GENERAL OFFICE AREA INCLUDING RESTROOMS FOR TENANT USE AT
LANDLORDS SOLE EXPENSE.

                                       27

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