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                                                                   Exhibit 10.42

                      STANDARD INDUSTRIAL LEASE AGREEMENT

11,427 Square Feet           Facility Address:    757 Kenrick, Suite 100
                                                  ----------------------
                                                  Houston, Texas 77060
                                                  --------------------

                                LEASE AGREEMENT

THIS LEASE AGREEMENT, ("Lease") made and entered into by and between HOUSTON
INDUSTRIAL ASSETS, L.P. hereinafter referred to as "Lessor", and Constant Power
Manufacturing, Inc., a Texas Corporation (Tax IDS #76-0281773, Charter
#01116391-00), hereinafter referred to as "Lessee";

                                  WITNESSETH:

     1.  PREMISES AND TERM. In consideration of the mutual obligations of Lessor
and Lessee set forth herein, Lessor leases to Lessee, and Lessee hereby takes
from Lessor the Premises situated within the County of Harris, State of Texas,
more particularly described in Paragraph 26A below and on EXHIBITS "A and B"
attached hereto and incorporated herein by reference (the "Premises"), together
with all rights, privileges, easements, appurtenances, and amenities belonging
to or in any way pertaining to the Premises, to have and to hold, subject to the
terms, covenants and conditions in this Lease. The term of this Lease shall
commence on the commencement date hereinafter set forth and shall end on the
last day of the month that is Sixty (60) months after the commencement date. If
this Lease is executed before the Premises become vacant or otherwise available
and ready for occupancy, or if any present lessee or occupant of the Premises
holds over, and Lessor cannot acquire possession of the Premises prior to the
date recited as the commencement date of this Lease, Lessor shall not be deemed
to be in default hereunder, and Lessee agrees to accept possession of the
Premises at such time as Lessor is able to tender the same, which date shall
thenceforth be deemed the "commencement date", and Lessor hereby waives payment
of rent covering any period prior to the tendering of possession to Lessee
hereunder.

     A.  EXISTING BUILDING. Lessee acknowledges that (i) it has inspected and
accepts the Premises "AS IS," "WHERE IS," and "WITH ALL FAULTS" (except any
latent defects), (ii) the buildings and improvements comprising the same are
suitable for the purpose for which the Premises are leased, (iii) the Premises
are in good and satisfactory condition, and (iv) the Premises shall be leased on
an "AS IS," "WHERE IS," and "WITH ALL FAULTS" (except any latent defects) basis,
and no representations as to the repair of the Premises, nor promises to alter,
remodel or improve the Premises have been made by Lessor except those expressly
set forth in Paragraph 26 and Exhibit "B" of this Lease. Unless mutually altered
in writing by Lessee and Lessor or pursuant to the provisions of Paragraph 1
hereinabove, or Paragraphs 1.B or 1.C, hereinbelow, the commencement date shall
be July 1, 2001. Upon request by Lessor, Lessee shall execute and deliver to
Lessor a Letter of Acceptance of delivery of the Premises. Notwithstanding,
Lessee's acceptance of the Premises shall be subject to the leasehold
improvements listed in Paragraph 26C and Exhibit "B" attached hereto and
incorporated herein by reference being substantially completed (as defined below
in Paragraph 1B),

     B.  BUILDING TO BE CONSTRUCTED OR SHELL SPACE.  If the Premises or a major
portion thereof is to be constructed, the commencement date shall be deemed to
be the date upon which the Premises and other improvements to be erected in
accordance with the plans and/or

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specifications described in Paragraph 26C and on Exhibit "B" attached hereto and
incorporated herein by reference (the "Plans") have been substantially
completed. As used herein, the term "substantially completed" shall mean, that
in the reasonable opinion of Lessor, such improvements have been completed in
accordance with the Plans and, the Premises are in good and satisfactory
condition, subject only to completion of minor punch list items. As soon as such
improvements have been substantially completed, Lessor shall notify Lessee in
writing that the commencement date has occurred. Within twenty (20) days
thereafter, Lessee shall submit to Lessor in writing a punch list of items
needing completion or correction. Lessor shall use reasonable efforts to
complete such items within thirty (30) days after the receipt of such notice. In
the event Lessee, its employees, agents or contractors cause construction of
such improvements to be delayed, the commencement date shall be deemed to be the
date that, in the opinion of the architect or space planner that prepared the
Plans, substantial completion would have occurred if such delays had not taken
place. The taking of possession by Lessee shall be deemed to conclusively
establish that the buildings and other improvements had been completed in
accordance with tile Plans, that the Premises are n good and satisfactory
condition as of when possession was taken, and that Lessee has accepted such
buildings and other improvements "AS IS," "WHERE IS," and "WITH ALL FAULTS"
(except any latent defects) without representation or warranty from Lessor. Upon
Lessor's request, Lessee shall execute and deliver to Lessor a Letter of
Acceptance of delivery of the Premises. Notwithstanding anything in the Lease to
the contrary, if the Plans are not attached to this Lease as Exhibit "B", Lessor
will deliver the Plans to Lessee which in Lessor's opinion are reasonably
necessary for the construction and space planning of the buildings or
improvements contemplated to be constructed on the Premises.

     C.  GENERAL CONDITIONS.  Lessor and Lessee further agree that Lessee's
obligations, privileges, covenants and agreements contained in this Lease shall
be operative and effective regardless of whether the Premises are ever occupied
by Lessee and whether or not this Lease is fully exhibited. If Lessee fails to
occupy the Premises for any reason after substantial completion of any building
or improvements constructed in accordance with the Plans, or if Lessee, whether
constructively or actively prevents or hinders Lessor from constructing the
improvements contemplated herein in accordance with the Plans, this Lease shall
be deemed to have commenced automatically and the "commencement date" shall be
deemed to be the date on which the improvements would have been completed in
Lessor's sole, but reasonable judgment, but for such hindrance or prevention by
Lessee.

     2.  BASE RENT, SECURITY DEPOSIT AND OPERATING EXPENSES.

     A.  Lessee agrees to pay to Lessor base rent ("Base Rent") for the
Premises, in advance, without demand, deduction or set off, at the rate of (see
Paragraph 26B) Dollars ($--) per month during the term hereof. One such monthly
installment, plus the other monthly charges set forth in Paragraph 2C below
shall be due and payable on the date hereof and a like monthly installment shall
be due and payable on or before the first day of each calendar month succeeding
the commencement date, except that all payments due hereunder for any fractional
calendar month shall be prorated.

     B.  In addition, Lessee agrees to deposit with Lessor on the date hereof,
the sum of Six Thousand Two Hundred Eighty Five and No/100 Dollars ($6,285.00)
which shall be held by Lessor, without obligation for interest, as security for
the performance of Lessee's obligations under this Lease, it being expressly
understood and agreed that this deposit is not an advance rental deposit or a
measure of Lessor's damages in case of Lessee's default. Upon each occurrence of
an event of default, Lessor may use all or part of the deposit to pay past due
rent or other payments due Lessor under this Lease, and the cost of any other
damage, injury, expense or liability caused by such event

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of default without prejudice to any other remedy provided herein or provided by
law. On demand, Lessee shall pay Lessor the amount that will restore the
security deposit to its original amount. The security deposit shall be deemed
the property of Lessor, but any remaining balance of such deposit shall be
returned by Lessor to Lessee thirty (30) days after Lessee's obligations under
this Lease have been fulfilled; provided, however, Lessor shall have the right
to retain and expend such remaining balance (a) to reimburse Lessor for any and
all rent or other sums due hereunder that have not been paid in full by Lessee
and/or (b) for cleaning and repairing the Premises if Lessee shall fail to
deliver same at the termination of this Lease in a neat and clean condition and
in as good a condition as existed at the date of possession of same by Lessee,
ordinary wear and tear only excepted. No interest shall be paid to Lessee on the
security deposit and Lessor shall not be required to hold the security deposit
in a separate or segregated account but rather may commingle the security
deposit with other monies held by or belonging to Lessor.

     C.  Lessee agrees to pay as additional rental its proportionate share (as
defined in Paragraph 24B below) of operating expenses which include (i) taxes
(hereinafter defined) payable by Lessor pursuant to Paragraph 3A below, (ii) the
cost of maintaining insurance covering the buildings and/or project of which the
Premises are a part, (iii) the cost of utilities payable pursuant to Paragraph 8
below, and the cost of any common area charges payable by Lessor in accordance
with Paragraph 4 below and (iv) any other charges which Lessor is entitled to
collect under the terms of this Lease. During each month of the term of this
Lease, on the same day that rent is due hereunder, Lessee shall escrow with
Lessor an amount equal to 1/12 of the estimated annual cost of its proportionate
share of such operating expenses. Lessee authorizes Lessor to use the funds
deposited with Lessor under this Paragraph 2C to pay such costs. The initial
monthly escrow payments are based upon the estimated amounts and shall be
increased or decreased annually to reflect the then current projected cost of
all such operating expenses. Lessor shall total all operating expenses annually,
and reconcile Lessee's actual proportionate share of such expenses against
Lessee's total escrow payments. If Lessee's total escrow payments are less than
Lessee's actual proportionate share of all such operating expenses, Lessee shall
pay the difference to Lessor within thirty (30) days after demand. If the total
escrow payments of Lessee are more than Lessee's actual proportionate share of
all such operating expenses, Lessor shall retain such excess and credit it
against Lessee's future Base Rent and/or liabilities for operating expenses.
Lessor shall use reasonable efforts to provide such services and to pay such
expenses in a cost  effective manner, which when practical, shall include
competitive bidding for maintenance, insurance and other costs and the
protesting of taxes.  The amount of the initial monthly Base Rent and the
initial monthly operating expenses escrow payments are as follows:

(1)  Initial Base Rent as set forth in Paragraph 2A   $4,247.00
(2)  Tax Escrow                                       $  800.00
(3)  Insurance Escrow                                 $  152.00
(4)  Common Area Escrow                               $  857.00
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     Total Initial Monthly Rental Payment             $6,056.00

     3.  TAXES.

     A.  Lessor agrees to pay all taxes, assessments and governmental charges of
any kind and nature (collectively referred to herein as "Taxes") that accrue
against the Premises, and/or the land and/or improvements of which the Premises
are a part and Lessee shall be liable for its proportionate share of the same.
If at any time during the term of this Lease, there shall be levied, assessed or
imposed on Lessor a capital levy or other tax directly on the rents received
there from and/or a

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franchise tax, assessment, levy or charge measured by or based, in whole or in
part, upon such rents from the Premises and/or the land and improvements of
which the Premises are a part, then all such taxes, assessments, levies or
charges, or the part thereof so measured or based, shall be deemed to be
included within the term "Taxes" for the purposes hereof. The Lessor shall have
the right to employ a tax consulting firm to attempt to assure a fair tax burden
on the building and/or project and grounds within the applicable taxing
jurisdiction. Lessee agrees to pay its proportionate share of the reasonable
cost of such consultant. In no event shall Lessee challenge, directly or
indirectly, by suit, intervention or otherwise, the amount of any such tax,
assessment, levy or charge.

     B.  Lessee shall be liable for all taxes levied or assessed against any
personal property or fixtures placed in the Premises. If any such taxes are
levied or assessed against Lessor or Lessor's property and (i) Lessor pays the
same or (ii) the assessed value of Lessor's property is increased by inclusion
of such personal property and fixtures and Lessor pays the increased taxes,
then, upon demand, Lessee shall pay to Lessor such taxes.

     4.  LESSOR'S REPAIRS AND MAINTENANCE.

     A.  Lessor shall maintain the roof, foundation and the structural soundness
of the exterior walls of the building and/or project of which the Premises are a
part in good repair, reasonable wear and tear excepted, and Lessee shall be
liable for its proportionate share of the cost of such maintenance or repair,
provided, however, Lessee shall promptly, upon demand, reimburse Lessor for any
damage to the same caused by Lessee's act, neglect, fault or omission. The term
"walls" as used herein shall not include windows, glass or plate glass, doors,
special storefronts or office entries. Lessee shall immediately give Lessor
written notice of defect or need for repairs, after which Lessor shall have
reasonable opportunity to repair the same or cure such defect as soon as
reasonably possible. Lessor's obligation to maintain the aforementioned items
shall be limited solely to the cost of such repairs or maintenance or the curing
of any defect in the same.

     B.  Lessor shall perform the paving maintenance, common area and landscape
replacement and maintenance, exterior painting, common water and sewage line
plumbing, and any other common maintenance items and Lessee shall be liable for
its proportionate share of the cost and expense of such repair, replacement, and
maintenance. In the event Lessee does not perform any obligation as outlined in
Paragraph 5 in a timely manner, Lessor reserves the right to perform such
obligations in which event Lessee shall promptly reimburse Lessor for the
entirety of the costs of such performance. Notwithstanding anything to the
contrary, if it is determined that the negligent acts of other Lessees in the
building and/or project of which the Premises are a part caused the need for
Lessor to repair the common water and/or sewage line plumbing, Lessee shall not
be liable for any portion of the costs for said repairs or remedies.

     C.  Lessor reserves the right to alter or modify the building and/or
project of which the Premises are a part and/or common areas associated
therewith, when such alterations or modifications are required by changes or
amendments to existing governmental laws, codes, ordinances, regulations, or any
other applicable authorities which become effective on or after the commencement
date of tills Lease, including, without limitation, the Americans with
Disabilities Act of 1990 (the "ADA") (collectively "Applicable Laws"), in which
event Lessee shall be liable for its proportionate share of such cost, provided,
however, Lessee shall not be required to pay any portion of the cost of such
alterations or modifications required by such Applicable Laws in effect prior to
the commencement date of this Lease. If such modification is a capital
modification for the general benefit of the project, and is required regardless
of Lessee's particular use of the Premises, then the cost shall be an operating
expense allocated over the useful life of such modification.

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Notwithstanding the foregoing, if such modification is predicated by Lessee's
particular use of the Premises or is principally for the benefit of Lessee (and
not other lessees of the building and/or project) the cost shall be borne
entirely by Lessee, and Lessee shall reimburse Lessor for same promptly upon
demand.

     D.  Lessee agrees to pay its proportionate share of the cost of (i)
maintenance and/or landscaping of any property that is a part of the building
and/or project of which the Premises are a part, (ii) maintenance and/or
landscaping of any property that is maintained or landscaped by any property
owner or community owner association to which the Premises are subject, (iii) a
reasonable property management fee, staff salary and benefits allocated to the
building and/or project of which the Premises are a part, and (iv) operating and
maintaining any property, facilities or services, including, but not limited to,
the cost of the monitoring, repair and maintenance of water systems or sewer
plants, and security systems and service, if any, provided for the common use or
benefit of Lessee and other lessees of the project or building of which the
Premises are a part.

All such expenses of Lessor for maintaining and operating the building and/or
project of which the Premises are a part, including, but not limited to, the
items set forth in Paragraphs 4A, 4B, 4C, and 4D, shall be included as
additional rental under the provisions of Paragraph 2C.  Lessor agrees that such
costs do not include the following:

(1)  Repairs or other work occasioned by (i) fire, windstorm. or other casualty
of the type which Lessor has insured or is required to insure pursuant to the
terms of this Lease to the extent of net insurance proceeds received by Lessor
with respect thereto, or (ii) tile exercise of the right of eminent domain;

(2)  Leasing commissions, attorney's fees, costs and disbursements and other
expenses incurred in connection with negotiations or disputes with other
lessees, other occupants or prospective lessees;

(3)  Expenses incurred in the building out, renovating, improving or decorating,
painting, or redecorating of any facility within tile project of which the
Premises are a part for other lessees or other occupants;

(4)  Costs incurred by Lessor for alterations which are considered capital
improvements and replacements under generally accepted accounting principles
consistently applied;

(5)  Depreciation and amortization;

(6)  Non-arm's length payments which exceed competitive costs for such services
rendered by persons or entities of similar skill, competence, and experience;

(7)  Payments of principal and/or interest on debt or amortization payments on
any mortgage or mortgages executed by Lessor covering the project of which the
Premises are a part (or any portion thereof);

(8)  All general administrative overhead expenses of Lessor for services not
specifically performed for the project of which the Premises are a part;

(9)  All items and services for which Lessee pays directly to third parties or
for which Lessee reimburses Lessor;

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(10) Advertising and promotional expenditures;

(11) Any fines or penalties incurred by Lessor due to violations by Lessor of
any governmental rule or authority;

(12) Wages, salaries or other compensation of any kind or nature paid to any
executive employees above the title of Building Manager, and;

(13) Income and/or franchise taxes of Lessor.

     E.  Lessee or Lessee's agent may audit in the office of Lessor's or
Lessor's agent Lessor's books relevant to the operating expenses upon reasonable
notice to Lessor; provided however, if no error is found in such audit, Lessee
agrees to pay all costs associated with or resulting from such audit, including
reimbursement to Lessor or Lessor's agents for time or costs incurred.

     5.  LESSEE'S REPAIRS AND MAINTENANCE.

     A.  Lessee, at its own cost and expense, shall (i) maintain all parts of
the Premises (except for those items for which Lessor is responsible under
Paragraph 4) in good condition, ordinary wear and tear excepted; (ii) promptly
make all necessary repairs and replacements, including, but not limited to,
windows, glass and plate glass, exterior doors, any special office entry,
interior walls and finish work, interior doors and floor covering, utility
connections, downspouts, gutters, heating and air conditioning systems, light
bulbs and ballasts, dock boards, truck doors, dock bumpers, paving, plumbing
work and fixtures, termite and pest extermination, regular removal of trash and
debris, dedicated sewer lines, and any damage due to vandalism or malicious
mischief; (iii) keep the parking areas, driveways, truck aprons, and grounds
surrounding the Premises in a clean and sanitary condition; and (iv) repair all
wind damage to glass except with respect to tornado or hurricane damage.

     B.  In the event the Premises constitute a portion of a multiple occupancy
building, Lessee and its employees, agents, customers, invitees, and/or
licensees shall have the right to use the parking areas, if any, as may be
designated by Lessor in writing, subject to such reasonable rules and
regulations as Lessor may from time to time prescribe and subject to rights of
ingress and egress of other lessees; provided, however, that Lessor covenants
that it shall not provide to other lessees or occupants of the building and/or
project of which the Premises area part any exclusive parking rights with
respect to the one row of parking spaces directly in front of the Premises.
Lessor shall not be responsible for enforcing Lessee's parking rights against
any third parties. Lessee shall, at its own cost and expense, keep its
employees, agents, customers, invitees, and/or licensees from parking on any
streets running through or contiguous to the building or project of which the
Premises are a part or any other areas as designated by Lessor. Lessee hereby
consents to the removal of any vehicle in violation of the foregoing designated
areas of parking as established by Lessor.  In the event Lessee is unable to
park a minimum of ten (10) standard vehicles directly in front of the Premises
or within a reasonable distance from the Premises, Lessee shall advise Lessor of
same in writing.  Upon receipt of such notice from Lessee, Lessor shall use
reasonable efforts to remedy the problem. If Lessor is unable to remedy the
problem within thirty (30) days of such written notice, then Lessor shall
provide ten (10) designated parking spaces for Lessee directly in front of the
Premises.

     C.  Lessee, at its own cost and expense, shall enter into a regularly
scheduled preventive maintenance/service contract acceptable to Lessor with a
maintenance contractor approved by

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Lessor for servicing all hot water, heating and air conditioning systems and
equipment within the Premises. The service contract must include all services
suggested by the equipment manufacturer in its operations/maintenance manual and
must become effective and a copy thereof delivered to Lessor within thirty (30)
days of the date Lessee takes possession of the Premises.

     D.  Lessee agrees that no washing of any type (other than reasonable
restroom or kitchen washing) will take place in the Premises, including the
truck apron and parking areas.

     E.  Any and all security of any kind for Lessee, Lessee's agents, employees
or invitees, the Premises, or any personal property thereon (including, without
limitation, any personal property of any Sublessee) shall be the sole
responsibility and obligation of Lessee, and shall be provided by Lessee at
Lessee's sole cost and expense. Lessee acknowledges and agrees that Lessor shall
have no obligation or liability whatsoever with respect to the same. Lessee
shall indemnify and hold Lessor harmless from and against any and all loss,
cost, damage or other liability arising directly or indirectly from security
measures or the absence thereof with respect to the Premises and the building or
the project of which the Premises are a part. Lessee may, at Lessee's sole cost
and expense, install alarm systems in the Premises provided such installation
complies with the provisions of Paragraph 6 hereof. Removal of such alarm
systems shall be Lessee's sole responsibility and, at Lessee's sole cost and
expense, shall be completed prior to lease termination, and all affected areas
of the Premises shall be repaired and/or restored in a good and workmanlike
manner to the condition that existed prior to such installation. Notwithstanding
the foregoing, Lessor may elect in Lessor's sole discretion to contract for
common security services, to whatever extent Lessor may deem appropriate, for
the building or the project of which the Premises are a part; provided, however
Lessee acknowledges and agrees that Lessor shall in no event be obligated to
provide any such services and the provision of such services shall not alter or
modify Lessee's indemnification of Lessor or the obligation of Lessee to provide
its own security as set forth herein. The cost of any security services
contracted for by Lessor shall be treated as an operating expense pursuant to
Paragraph 2C hereof.

     6.  ALTERATIONS.  Lessee shall not make any alterations, additions,
partitions or other improvements to the Premises without the prior written
consent of Lessor which consent shall not be unreasonably withheld or delayed.
Lessee, at its own cost and expense, may erect shelves, bins, machinery and
trade fixtures as it desires as well as alterations, additions, partitions, or
other improvements which have been specifically consented to in writing by
Lessor, provided that (a) such items do not alter the basic character of the
Premises or the building and/or improvements of which the Premises are a part,
(b) such items do not overload or damage tile same, (c) such items may be
removed without injury to the Premises, and (d) the construction, erection or
installation thereof complies with all applicable governmental laws, codes,
ordinances, regulations, or any other applicable authorities, including, without
limitation, the ADA; and with Lessor's details, specifications and other
requirements. Any architectural, engineering, construction management, permits,
inspections, or other cost or fee required to assure compliance with the
conditions set forth in this Paragraph 6 shall be paid by Lessee promptly upon
demand. All alterations, additions, partitions, or other improvements erected by
Lessee shall be and remain the property of Lessee during the term of this Lease;
provided, however, at the termination of this Lease, Lessor shall have the
option, exercisable in Lessor's sole discretion, to require Lessee either (i)
upon request to remove, at Lessee's sole cost and expense, all or part of any
alterations, additions, partitions, or other improvements, at which time Lessee
shall promptly restore the Premises to its original condition ordinary wear and
tear excepted (this option is available to Lessor only if Lessor notified Lessee
of same in writing at the time Lessor consented to such alterations), or (ii) to
keep in place the same, at which time such alterations, additions, improvements,
and partitions shall become the

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property of Lessor. All shelves, bins, machinery and trade fixtures installed by
Lessee shall be removed on or before the earlier to occur of the date of
termination of this Lease or vacating the Premises, at which time Lessee shall
restore the Premises to their original condition ordinary wear and tear
excepted. All alterations, installations, removals and restoration shall be
performed in a good and workmanlike manner so as not to damage or alter the
primary structure or structural qualities of the buildings and other
improvements situated on the Premises or of which the Premises are a part.

     7.  SIGNS.  Any signage Lessee desires for the Premises shall be subject to
Lessor's specifications and/or written approval which approval shall not be
unreasonably withheld.  Lessee shall repair, paint, and/or replace the building
facial surface to which its signs are attached upon vacation of the Premises, or
the removal or alteration or its signage. Lessee shall not (i) make any changes
to the exterior of the Premises, (ii) install any exterior lights, decorations,
balloons, flags, pennants, banners or painting, or (iii) erect or install any
signs, windows or door lettering, placards, decorations or advertising media of
any type which can be viewed from the exterior of tile Premises, without
Lessor's prior written consent, which consent shall not be unreasonably
withheld.  All signs, decorations, advertising media, blinds, draperies and
other window treatment or bars or other security installations visible from
outside the Premises shall conform, at Lessee's expense, in all respects to the
criteria established by Lessor and any applicable governmental laws, ordinances,
regulations, or other requirements.

     8.  UTILITIES.  Lessor agrees to provide normal water, electricity, and
telephone service connections to the Premises upon the commencement date hereof,
which connections, regardless of location, shall hereafter be maintained by
Lessee.  Lessee shall pay for all water, gas, heat, light, power, telephone,
sewer, sprinkler charges and other utilities and services used on or at the
Premises, and any maintenance or inspection charges for utilities.  Lessor shall
have the right to cause any of said services to be separately metered to Lessee,
at Lessee's expense. Lessee shall pay its pro rata share, as reasonably
determined by Lessor, of all charges for jointly metered utilities which service
the building and/or project of which the Premises are a part.  Lessor shall not
be liable for any interruption or failure of utility service on the Premises.
Provided however, in the event of an interruption of utility service, Lessor
shall use reasonable efforts to facilitate restoration of said service.

In the event water is not separately metered to Lessee, Lessee agrees that it
will not use water for uses other than normal domestic restroom and kitchen
usage; and, Lessee does further agree to reimburse Lessor for the entire amount
of common water costs as additional rental if, in fact, Lessee uses water for
uses other than normal domestic restroom and kitchen uses without first
obtaining Lessor's written permission. Furthermore, Lessee agrees in such event
to install at its own expense, a submeter to determine Lessee's usage.  If
Lessor determines in its reasonable opinion that other lessees in the building
and/or project of which the Premises are a part are using the water provided by
Lessor for uses other than normal domestic restrooms or kitchen usage, Lessor
shall cause such lessee's use to be separately metered at such lessee's expense.

Lessee agrees it will not use sewer capacity for any use other than normal
domestic restroom and kitchen use. Lessee further agrees to notify Lessor of any
other sewer use ("excess sewer use") and also agrees to reimburse Lessor for the
costs and expenses related to Lessee's excess sewer use, which shall include,
but is expressly herein not limited to the cost of acquiring additional sewer
capacity to service Lessee's Lease.

     9.  INSURANCE.

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     A.  Lessor shall maintain insurance covering the buildings and/or project
situated on the Premises or of which the Premises are a part, except for those
items the repair and maintenance of which are Lessee's responsibility under
Paragraph 5, in an amount not less than eighty percent (80%) of the "replacement
cost" thereof insuring against the perils of Fire, Lightning, Extended Coverage,
Vandalism, and Malicious Mischief. The cost of such insurance shall be treated
as an operating expense pursuant to Paragraph 2C hereof.

     B.  Lessee, at its own expense, shall maintain, during the term of this
Lease, a policy or policies of worker's compensation and commercial general
liability insurance, including personal injury and property damage, with
contractual liability endorsement, in the amount of Five Hundred Thousand
Dollars ($500,000.00) for property damage and One Million Dollars
($1,000,000.00) per occurrence for personal injuries or deaths of persons
occurring in or about the Premises. Lessee, at its own expense, also shall
maintain during the term of this Lease, fire and extended coverage or all risk
insurance covering (i) the replacement cost of all alterations, additions,
partitions and improvements installed or placed on the Premises by Lessee or by
Lessor on behalf of Lessee, (ii) the replacement cost of all of Lessee's
personal property contained within the Premises, and (iii) business interruption
of Lessee. Said policies shall (i) name Lessor as an additional insured and
insure Lessor's contingent liability under this Lease (except for the worker's
compensation policy, which instead shall include waiver of subrogation
endorsement in favor of Lessor), (ii) be issued by an insurance company which is
reasonably acceptable to Lessor, (iii) provide that said insurance shall not be
canceled unless thirty (30) days prior written notice shall have been given to
Lessor, and (iv) provide primary coverage to Lessor when any policy issued to
Lessor provides duplicate or similar coverage, and in such circumstance Lessor's
coverage under Lessor's policy shall be deemed excess over and above the
coverage provided by Lessee's policy. Said policy or policies or certificates
thereof shall be delivered to Lessor by Lessee upon commencement of the term of
the Lease and upon each renewal of said insurance.

     C.  Lessee will not permit the Premises to be used for any purpose or in
any manner that would (i) void the insurance thereon, (ii) increase the
insurance risk or premium, or (iii) cause the disallowance of any sprinkler
credits, including without limitation, use of the Premises for the receipt,
storage or handling of any product, material or merchandise that is explosive or
highly flammable. If any increase in the cost of any insurance on the Premises
or the building and/or project of which the Premises are a part is caused by
Lessee's use of the Premises, or because Lessee vacates the Premises, then
Lessee shall promptly pay the amount of such increase to Lessor upon demand.

     D.  Anything in this Lease to the contrary notwithstanding, Lessor and
Lessee hereby waive and release each other of and from any and all rights of
recovery, claim, action or cause of action, against each other, their agents,
officers and employees, for any loss or damage that may occur to the Premises,
improvements to the building of which the Premises are a part, or personal
property (building contents) within the building and/or Premises covered or
required to be covered by the insurance to be provided under this Lease, for any
reason regardless of cause or origin. Said mutual waivers shall be in addition
to, and not in limitation or derogation of, any other waiver or release
contained in this Lease with respect to any loss or damage to property of the
parties hereto. Each party to this Lease agrees immediately after execution of
this Lease to give each insurance company, which has issued to it policies of
fire and extended coverage insurance, written notice of the terms of the mutual
waivers contained in this subparagraph, and if necessary, to have the insurance
policies properly endorsed.

                                       9
<PAGE>

     10. FIRE AND CASUALTY DAMAGE.

     A.  If the Premises or the building of which the Premises are a part should
be damaged or destroyed by fire or other peril, Lessee immediately shall give
written notice to Lessor. If the building situated upon the Premises or of which
the Premises are a part should be damaged or destroyed by any peril covered by
the insurance to be provided by Lessor under Paragraph 9A above, and, in
Lessor's estimation, rebuilding or repairs cannot be completed within one
hundred eighty (180) days after the date of such damage, this Lease shall
terminate and the Base Rent and additional rental shall be abated during the
unexpired portion of this Lease, effective upon the date of the occurrence of
such damage.

     B.  If the buildings situated upon the Premises or of which the Premises
are a part, should be damaged by any peril covered by the insurance to be
provided by Lessor under Paragraph 9A above, and in Lessor's estimation,
rebuilding or repairs can be substantially completed within one hundred eighty
(180) days after the date of such damage, this Lease shall not terminate, and
Lessor shall restore the Premises to substantially its previous condition,
except that Lessor shall not be required to rebuild, repair or replace any part
of the partitions, fixtures, additions and other improvements that may have been
constructed, erected or installed in, or about the Premises for the benefit of,
by or for Lessee. If such repairs and rebuilding have not been substantially
completed within one hundred eighty (180) days after the date of such damage,
Lessee, as Lessee's exclusive remedy, may terminate this Lease by delivering
written notice of termination to Lessor in which event the rights and
obligations hereunder shall cease and terminate. For purposes of this Paragraph
10B, if Lessor reasonably determines that the Premises are untenable or such
damage materially interferes with the use of the Premises for the purpose for
which it was leased to Lessee, in whole or in part, following such damage, the
Base Rent and additional rental payable hereunder during the period in which
Lessor reasonably determines that the Premises are untenable or Lessee's use is
so interfered with as mentioned above shall be reduced (i) according to the
square footage of such untenable/interfered area contained in the Premises, as
reasonably determined by Lessor, or (ii) to such extent as may be fair and
reasonable under the circumstances, as reasonably determined by Lessor and
Lessee.

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

     11. LIABILITY AND INDEMNIFICATION.  Except for any claims, rights of
recovery and causes of action that Lessee has released, Lessor shall hold Lessee
harmless and defend Lessee against any and all claims or liability for any
injury or damage (i) to any person in, on or about the Premises or any part
thereof and/or the building and/or project of which the Premises are a part,
when such injury or damage shall be caused by the act, neglect, fault of, or
omission of any duty with respect to the same by Lessor, its agents, servants or
employees, and (ii) all costs, counsel fees, expenses and liabilities incurred
in connection with any such claim or action or proceeding brought thereon.
Except for any claims, rights of recovery and causes of action that Lessor has
released, Lessee shall hold Lessor harmless from and defend Lessor against any
and all claims or liability for any injury or damage (i) to any person or
property whatsoever occurring in, on or about the Premises or any part thereof
and/or of the building and/or project of which the Premises are a part,
including without limitation elevators, stairways, passageways or hallways, the
use of

                                       10
<PAGE>

which Lessee may have in accordance with this Lease, when such injury or damage
shall be caused by the act, neglect, fault of, or omission of any duty with
respect to the same by Lessee, its agents, servants, employees, or invitees,
(ii) arising from the conduct of management of any work done by the Lessee in or
about the Premises, and (iii) all costs, counsel fees, expenses and liabilities
incurred in connection with any such claim or action or proceeding brought
thereon. The provisions of this Paragraph 11 shall survive the expiration or
termination of this Lease with respect to any claims or liability occurring
prior to such expiration or termination. Notwithstanding the foregoing or
anything to the contrary in this Lease, each party hereby agrees that in no
event shall the other party hereto be liable for any incidental or consequential
damages whatsoever, including without limitation, any damages as a result of any
interruption of such other party's business or any loss of income therefrom.

     12.  USE. The Premises shall be used only for the purpose of general
office use, receiving, storing, servicing, shipping and selling (other than
retail) products, materials and merchandise made and/or distributed by Lessee
and for such other lawful purposes as may be incidental thereto. Outside
storage, including without limitation, storage of trucks and other vehicles and
the washing thereof at any time is prohibited without Lessor's prior written
consent. Lessee shall, at its own cost and expense, obtain any and all licenses
and permits necessary for such use, shall at all times maintain the Premises in
a clean, healthful and safe condition and comply with all governmental laws,
codes, ordinances, regulations or any other applicable authorities with regard
to the use, condition or occupancy of the Premises including, without
limitation, the ADA. Lessee shall be responsible, at Lessee's sole cost and
expense, for the correction, prevention, and abatement of nuisances in or upon,
or connected with, the Premises. Lessee shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, noise, vibrations, or pest infestations to
emanate from the Premises, nor take any other action that would constitute a
nuisance or would disturb, unreasonably interfere with, or endanger Lessor or
any other lessees of the building or project of which the Premises are a part.
Lessee's use of the Premises shall at all times comply with the insurance
provisions in Paragraph 9C hereof.

     13.  INSPECTION.  Lessor and Lessor's agents and representatives shall have
the right to enter the Premises at any reasonable time during business hours
upon reasonable notice to Lessee, except in the case of emergency, to inspect
the Premises and to make such repairs as may be required or permitted pursuant
to this Lease. During the period that is six (6) months prior to the end of the
term hereof and at any time Lessee is in default, Lessor and Lessor's
representatives may enter the Premises during business hours upon reasonable
notice to Lessee, for the purpose of showing the Premises. Lessee shall neither
prevent, prohibit, nor in any way impair such showing of the Premises. In
addition, Lessor shall have the right to erect a suitable sign on or near the
Premises stating the Premises are available. Lessee shall notify Lessor in
writing at least thirty (30) days prior to vacating the Premises and shall
arrange to meet with Lessor for a joint inspection of the Premises prior to
vacating. If Lessee fails to give such notice or to arrange for such inspection,
then Lessor's inspection of the Premises shall be deemed correct for the purpose
of determining Lessee's responsibility for repairs and restoration of the
Premises.

     14.  ASSIGNMENT AND SUBLETTING.

     A.   Lessee shall not have the right to assign, sublet, transfer or
encumber this Lease, or any interest therein, directly or indirectly, by any
manner, including, without limitation, by merger, reorganization or other
transfer of the ownership interests in Lessee, without the prior written consent
of Lessor, which consent shall not be unreasonably withheld or delayed. Any
attempted assignment, subletting, transfer or encumbrance by Lessee in violation
of the terms and covenants of

                                       11
<PAGE>

this Paragraph shall be void. Any assignee, sublessee or transferee of Lessee's
interest in this Lease (all such assignees, sublessees and transferees being
hereinafter referred to as "Transferees"), by assuming Lessee's obligations
hereunder, shall assume liability to Lessor for all amounts paid to persons
other than Lessor by such transferees in contravention of this Paragraph. No
assignment, subletting, or other transfer, whether consented to by Lessor or
not, or permitted hereunder, shall relieve Lessee of its liability hereunder. If
an event of default occurs while the Premises or any part thereof are assigned
or sublet, then Lessor, in addition to any other remedies herein provided, or
provided by law, may collect directly from such Transferee all rents payable to
the Lessee and apply such rent against any sums due Lessor hereunder. No such
collection shall be construed to constitute a ilovation or a release of Lessee
from the further performance of Lessee's obligations hereunder.

     B.  If this Lease is assigned to any person or entity pursuant to the
provision of the Bankruptcy Code, 11 U.S.C. (S)101 et. seq., (the "Bankruptcy
Code"), any and all monies or other consideration payable or otherwise to be
delivered in connection with such assignment shall be paid or delivered to
Lessor, shall be and remain the exclusive property of Lessor and shall not
constitute property of Lessee or of the estate of Lessee within the meaning of
the Bankruptcy Code. Any and all monies or other considerations constituting
Lessor's property under the preceding sentence not paid or delivered to Lessor
shall be held in trust for the benefit of Lessor and be promptly paid or
delivered to Lessor.

     C.  Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed, without further act or deed,
to have assumed all of the obligations arising under this Lease on and after the
date of such assignment. Any such assignee shall upon demand execute and deliver
to Lessor an instrument confirming such assumption.

     15. CONDEMNATION.  If the whole or any substantial part as determined by
Lessor of the Premises should be taken for any public or quasi-public use under
governmental law, ordinance or regulation, or by right of eminent domain, or by
private purchase in lieu thereof and the taking prevents or materially
interferes with the use of the Premises for the purpose for which they were
leased to Lessee, this Lease shall terminate and the Base Rental and additional
rental shall be abated during the unexpired portion of this Lease, effective on
the date of such taking. If less than a substantial part, as determined by
Lessor, of the Premises is taken for any public or quasi-public use under any
governmental law, ordinance or regulation, or by right of eminent domain, or by
private purchase in lieu thereof, this Lease shall not terminate, but the Base
Rent and additional rental payable hereunder during the unexpired portion of
this Lease shall be reduced to such extent as may be fair and reasonable under
all of the circumstances. All compensation awarded in connection with or as a
result of any of the foregoing proceedings shall be the property of Lessor, and
Lessee hereby assigns any interest in any such award to Lessor; provided,
however, Lessor shall have no interest in any award made to Lessee for loss of
business or goodwill or for the taking of Lessee's fixtures and improvements, if
a separate award for such items is made to Lessee.

     16. HOLDING OVER.  At the termination of this Lease by its expiration or
otherwise, Lessee immediately shall deliver possession to Lessor with all
repairs and maintenance required herein to be performed by Lessee completed. If,
for any reason, Lessee retains possession of the Premises after the expiration
or termination of this Lease, unless the parties hereto otherwise agree in
writing, such possession shall be subject to termination by either Lessor or
Lessee at any time upon not less than ten (10) days advance written notice, and
all of the other terms and provisions of this Lease shall be applicable during
such period, except that Lessee shall pay Lessor from time to time, upon demand,
as rental for the period of such possession, an amount equal to one hundred
fifty percent (150%) the Base Rent in effect on the termination date, computed
on a daily basis for each

                                       12
<PAGE>

day of such period. No holding over by Lessee, whether with or without consent
of Lessor shall operate to extend this Lease except as otherwise expressly
provided. The preceding provisions of this Paragraph 16 shall not be construed
as consent for Lessee to retain possession of the Premises in the absence of
written consent thereto by Lessor.

     17. QUIET ENJOYMENT.  Lessor covenants that on or before the commencement
date, it will have good title to the Premises, free and clear of all liens and
encumbrances, excepting only the lien for current taxes not yet due, such
mortgage or mortgages as are permitted by the terms of this Lease, zoning
ordinances and other building and fire ordinances and governmental regulations
relating to the use of such property, and easements, restrictions and other
conditions of record. Lessor represents that it has the authority to enter into
this Lease and that so long as Lessee pays all amounts due hereunder and
performs all other covenants and agreements herein set forth, Lessee shall
peaceably and quietly have, hold and enjoy the Premises for the term hereof
without hindrance or molestation from Lessor, subject to the terms and
provisions of this Lease.

     18. EVENTS OF DEFAULT.  The following events (herein individually referred
to as "event of default") each shall be deemed to be events of nonperformance by
Lessee under this Lease:

     A.  Lessee shall fail to pay any installment of Base Rent or any additional
rental herein reserved when due, or any other payment or reimbursement to Lessor
required herein when due, and such failure shall continue for a period of five
(5) days after the date of written notice from Lessor to Lessee of such failure;
provided, however, that Lessor shall not be obligated to provide more than two
(2) such written notices during any twelve (12) consecutive month period of the
Lease term, and Lessee's failure to pay any third (3/rd/) or subsequent
installment of Base Rent or other payment required herein that is payable within
such twelve (12) consecutive month period within five (5) days after the due
date thereof shall constitute an Event of Default by Lessee.

     B.  Lessee or any guarantor of the Lessee's obligations hereunder shall (i)
become insolvent; (ii) admit in writing its inability to pay its debts; (iii)
make a general assignment for the benefit of creditors; (iv) commence any case,
proceeding or other action seeking to have an order for relief entered on its
behalf as a debtor or to adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or composition
of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors or seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or of any
substantial part of its property; or (v) take any action to authorize or in
contemplation of any of the actions set forth above in this Paragraph.

     C.  Any case, proceeding or other action against the Lessee or any
guarantor of the Lessee's obligations hereunder shall be commenced seeking (i)
to have an order for relief entered against it as a debtor or to adjudicate it
as bankrupt or insolvent; (ii) reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors; or
(iii) appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its property, and such case,
proceeding or other action (a) results in the entry of an order for relief
against it which it is not fully stayed within seven (7) business days after the
entry thereof or (b) shall remain undismissed for a period of forty-five (45)
days.

     D.  Lessee shall (i) vacate all or a substantial portion of the Premises or
(ii) fail to continuously operate its business at the Premises for the permitted
use set forth herein, whether or

                                       13
<PAGE>

not Lessee is in default of the rental payments due under this Lease, provided
however, that no vacating or abandonment or failure to open or continuously
operate its business at the Premises for the permitted use set forth herein
shall be considered a default so long as Lessee continues to pay rent and other
sums due under this Lease Agreement. After the expiration of one hundred twenty
(120) days from said vacating or abandonment or ceasing of operations, Lessor
may at any time thereafter elect to terminate this Lease and recapture the Lease
Premises.

     E.  Lessee shall fail to discharge any lien placed upon the Premises in
violation of Paragraph 21 hereof within twenty (20) days after any such lien or
encumbrance is filed against the Premises.

     F.  Lessee shall fail to comply with any term, provision or covenant of
this Lease (other than those listed in this Paragraph 18), and shall not cure
such failure within twenty (20) days after written notice thereof to Lessee.

     19. REMEDIES.

     A.  Upon each occurrence of an event of default, Lessor shall have the
option to pursue any one or more of the following remedies without any notice or
demand:

         1.  terminate this Lease; and/or
         2.  enter upon and take possession of the Premises with or without
terminating this Lease; and/or
         3.  alter all locks and other security devices at the Premises with or
without terminating this Lease, and pursue, at Lessor's option, one or more
remedies pursuant to this Lease, Lessee hereby specifically waiving any state or
federal law to the contrary; and in any such event Lessee immediately shall
surrender the Premises to Lessor, and if Lessee fails so to do, Lessor, without
waiving any other remedy it may have, may enter upon and take possession of the
Premises and expel or remove Lessee and any other person who may be occupying
such Premises or any part thereof, without being liable for prosecution or any
claim of damages therefore.

     B.  If Lessor terminates this Lease, at Lessor's option, Lessee shall be
liable for and shall pay to Lessor, the sum of all rental and other payments
owed to Lessor hereunder accrued to the date of such termination, plus, as
liquidated damages, an amount equal to the present value (using the current
"prime" interest rate of a national banking institution of Lessor's choosing, or
should such financial institution no longer exist, a comparable financial
institution) of (1) the total rental and other payments owed hereunder for the
remaining portion of the Lease term calculated as if such term expired on the
date set forth in Paragraph 1, less (2) the then fair market rental of the
Premises for such period, which because of the difficulty of ascertaining such
value, Lessor and Lessee stipulate and agree, shall in no event be deemed to
exceed seventy-five percent (75%) of the total rental amount (including Base
Rental and any and all amounts due as additional rental) set forth in Paragraph
2 above.

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

                                       14
<PAGE>

     D.  Upon an event of default, in addition to any sum provided to be paid
herein, Lessee also shall be liable for and shall pay to Lessor (i) brokers'
fees incurred by Lessor in connection with reletting the whole or any part of
the Premises; (ii) the costs of removing and storing Lessee's or other
occupant's property; (iii) the costs of repairing, altering, remodeling or
otherwise putting the Premises into rentable condition; and (iv) all reasonable
expenses incurred by Lessor in enforcing or defending Lessor's rights and/or
remedies. If either party hereto institutes any action or proceeding to enforce
any provision hereof by reason of any alleged breach of any provision of this
Lease, the prevailing party shall be entitled to receive from the losing party
all reasonable attorneys' fees and all court costs in connection with such
proceeding.

     E.  In the event Lessee fails to make any payment due hereunder when
payment is due, to help defray the additional cost to Lessor for collecting
and/or processing such late payments, Lessee shall pay to Lessor on demand a
late charge in an amount equal to five percent (5%) of such installment; and the
failure to pay such late charge within ten (10) days after demand therefore
shall be an additional event of default hereunder. The provision for such late
charge shall be in addition to all of Lessor's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Lessor's remedies in any manner.

     F.  Exercise by Lessor of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises by Lessor, whether by agreement or by operation of law, it being
understood that such surrender can be effected only by the written of Lessor and
Lessee. Lessee and Lessor further agree that forbearance by Lessor to enforce
its rights pursuant to the Lease at law or in equity, shall not be a waiver of
Lessor's right to enforce one or more of its rights in connection with any
subsequent default.

     G.  If Lessor fails to perform any of its obligations hereunder within
thirty (30) days after written notice from Lessee specifying such failure,
Lessee's exclusive remedy shall be an action for damages. Unless and until
Lessor fails to cure any default after such notice, Lessee shall not have any
remedy or cause of action by reason thereof. All obligations of Lessor hereunder
will be construed as covenants, not conditions; and all such obligations will be
binding upon Lessor only during the period of its possession of the Premises and
not thereafter. The term "Lessor" shall mean only the owner, for the time being,
of tile Premises, and in the event of the transfer by such owner of its interest
in the Premises, such owner shall thereupon be released and discharged from all
covenants and obligations of the Lessor thereafter accruing, but such covenants
and obligations shall be binding during the Lease term upon each new owner for
the duration of such owner's ownership. Notwithstanding any other provision
hereof, Lessor shall not have any personal liability hereunder. In the event of
any breach or default by Lessor in any term or provision of this Lease, Lessee
agrees to look solely to tile equity or interest then owned by Lessor in the
Premises or the building and/or project of which the Premises are a part;
however, in no event, shall any deficiency judgment or any money judgment of any
kind be sought or obtained against any Lessor.

     H.  If Lessor repossesses the Premises pursuant to the authority herein
granted, then Lessor shall have the right to (i) keep in place and use or (ii)
remove and store all of the furniture, fixtures and equipment at the Premises,
including that which is owned by or leased to Lessee at all times prior to any
foreclosure thereon by Lessor or repossession thereof by any lessor thereof or
third party having a lien thereon. Lessor also shall have the right to
relinquish possession of all or any portion of such furniture, fixtures,
equipment and other property to any person ("Claimant") will presents to Lessor
a copy of any instrument represented by Claimant to have been executed by Lessee
(or any predecessor of Lessee) granting Claimant the right under various
circumstances to

                                       15
<PAGE>

take possession of such furniture, fixtures, equipment or other property,
without the necessity on the part of Lessor to inquire into the authenticity or
legality of said instrument. The rights of Lessor herein stated shall be in
addition to any and all other rights that Lessor has or may hereafter have at
law or in equity; and Lessee stipulates and agrees that the rights herein
granted Lessor are commercially reasonable.

     I.  Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as rent, shall constitute rent.

     J.  This is a contract under which applicable law excuses Lessor from
accepting performance from (or rendering performance to) any person or entity
other than Lessee.

     20. MORTGAGES.  Lessee accepts this Lease subject and subordinate to any
mortgages and/or deeds of trust now or at any time hereafter constituting a lien
or charge upon the Premises or the improvements situated thereon or the building
and/or project of which the Premises are a part; provided, however, that if the
mortgagee, trustee, or holder of any such mortgage or deed of trust elects to
have Lessee's interest in this Lease superior to any such instrument, then by
notice to Lessee from such mortgagee, trustee or holder, this Lease shall be
deemed superior to such lien, whether this Lease was executed before or after
said mortgage or deed of trust. Lessee, at any time hereafter on demand, shall
execute any instruments, releases or other documents that may be required by any
mortgagee for the purpose of subjecting and subordinating this Lease to the lien
of any such mortgage.

     21. MECHANIC'S LIENS. Lessee has no authority, express or implied, to
create or place any lien or encumbrance of any kind or nature whatsoever upon,
or in any manner to bind the interest of Lessor or Lessee in the Premises or to
charge the rentals payable hereunder for any claim in favor of any person
dealing with Lessee, including those who may furnish materials or perform labor
for any construction or repairs. Lessee covenants and agrees that it will pay or
cause to be paid all sums legally due and payable by it on account of any labor
performed or materials furnished in connection with any work performed on the
Premises and that it will save and hold Lessor harmless from any and all loss,
cost or expense based on or arising out of asserted claims or liens against the
leasehold estate or against the right, title and interest of the Lessor in the
Premises or under the terms of this Lease. Lessee agrees to give Lessor
immediate written notice of the placing of any lien or encumbrance against the
Premises.

     22. Intentionally Omitted.

Lessor agrees to delete Paragraph 22, Lessor's Lien, but reserves any statutory
lien for rent in Lessor's favor as well as all remedies provided by law and all
rights and remedies under the Uniform Commercial Code as in effect in the State
of Texas; and Lessor will not unreasonably withhold approval of individual
requests for subordination and shall respond within thirty (30) days to such
requests.

     23. HAZARDOUS MATERIALS. The term "Substances," as used in this Lease,
shall mean petroleum or petroleum products, radioactive materials (including,
but not limited to, naturally occurring radioactive materials ("NORM") and NORM
contaminated equipment or materials), polychlorinated biphenyls ("PCBs")
(including, but not limited to, equipment or materials containing PCBs),
pollutants, contaminants, toxic or hazardous substances or wastes, hazardous
materials, or any other substances, the use, storage, handling, disposal,
transportation or removal of which is

                                       16
<PAGE>

regulated, restricted, prohibited or penalized by any "Environmental Law," which
term shall mean any federal, state or local law, ordinance, order, code, rule,
regulation, or statute of a governmental or quasi-governmental authority
relating to pollution or protection of health or the environment and shall
specifically include, but not be limited to, any "hazardous substance" as that
term is defined under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 and any amendments or successors in function thereto.
Lessee hereby agrees that (i) no activity will be conducted on the Premises that
will generate, produce or use any Substance, except for such activities that are
part of the ordinary course for Lessee's business activities provided said
activities (a) are conducted in accordance with all Environmental Laws and (b)
have been expressly approved by Lessor in advance in a separate writing which
approval Lessor may grant or withhold in its sole discretion ("Permitted
Activities"); (ii) the Premises will not be used in any manner for the storage
of any Substances except for the temporary storage of such materials that are
generated, produced or used in the course of the Permitted Activities, provided
such Substances are properly stored in a manner and location and for a duration
meeting all Environmental Laws; (iii) no portion of the Premises will be used as
a disposal facility of any kind, including, but not limited to, any landfill,
dump, pit, pond or lagoon; (iv) Lessee will not install any underground or
aboveground tank of any type; (v) Lessee will not allow any surface or
subsurface conditions to exist or come into existence arising out of Lessee's or
its consultants', contractors', employees', agents', or invitees' operations or
activities that constitute, or with the passage of time, may constitute a
violation of Environmental Laws or a public or private nuisance or trespass;
(vi) Lessee will not permit any Substances to be brought onto, or released,
emitted, or discharged onto, the Premises, except in accordance with the terms
and conditions hereof, and if so brought or found located thereon, Lessee shall
immediately remove and properly dispose of same, and shall diligently undertake
all cleanup procedures required under Environmental Laws or otherwise necessary
to restore the Premises to its original condition; and (vii) Lessee shall in all
regards comply with Environmental Laws including, without limitation, obtaining
any required permits, submitting any required registrations, filings or notices
or reports, meeting any necessary financial responsibility requirements, paying
all required fees, maintaining any required records, and performing any required
monitoring, testing, or remediation. Without limiting the generality of the
foregoing, (a) Lessee, as generator, shall execute, and maintain records of, any
waste manifests required in connection with the transportation or disposal of
hazardous or other regulated wastes arising from the activities of Lessee or its
contractors or consultants on the Premises; and (b) Lessee shall make available
for inspection and copying by Lessor, during Lessee's normal business hours,
copies of waste manifests and any material safety data sheets required to be
maintained with respect to Substances used or stored on the Premises. Lessor or
Lessor's representative shall have the right, but not the obligation, to enter
the Premises for, among other purposes, the purposes of inspecting the storage,
use and disposal of any Substances and to review compliance with all
Environmental Laws. Should it be determined, in Lessor's sole opinion, that any
Substances are being improperly stored, used, or disposed of, then Lessee shall
immediately take such corrective action as required by applicable Environmental
Laws. Lessee will provide Lessor written notification of the release or disposal
of any Substance either within the Premises or outside of Lessee's Premises, or
the release or disposal of any Substance by Lessee on any properties adjacent
thereto. Lessee will also provide Lessor written notice of any pending or
threatened investigations, regulatory proceedings, enforcement actions,
litigation or other proceedings concerning the breach or purported breach of any
Environmental Laws. If at any time during or after the term of the Lease, the
Premises is found to be contaminated by Substances or subject to said
conditions, arising from or as a result of Lessee's negligence (whether in whole
or in part) or the use of the Premises or any Substances by Lessee or any of
Lessee's agents, employees, assigns or sublessees, Lessee shall diligently
institute proper and thorough cleanup procedures in accordance with
Environmental Laws at Lessee's sole cost, and Lessee agrees to indemnify and
hold Lessor harmless from all claims, demands, actions, liabilities, costs,
expenses, damages, fines,

                                       17
<PAGE>

reimbursement, restitution, response costs, cleanup costs, and obligations
(including investigative responses and attorney's fees) of any nature. The
foregoing indemnification and the responsibilities of Lessee shall apply to
Lessee regardless of whether they arise from the Permitted Activities or from
any Substances, the use of which Lessor approved, and shall survive the
termination or expiration of this Lease. Lessor shall be under no obligation to
expend any sums or to seek reimbursement to enforce the indemnification
obligations of Lessee hereunder.

Lessee acknowledges and agrees that to the extent Lessor has agreed not to
unreasonably withhold its consent to any proposed assignment, subletting or
transfer of Lessee's interest in this Lease, it shall not be unreasonable for
Lessor to withhold such consent if (i) the anticipated use of the Premises by
the proposed Transferee involves tile generation, storage, use, treatment, or
disposal of Substances different in identity or materially different in quantity
from Lessee's existing activities; (ii) the proposed Transferee has been
required by any prior lessor, lender, or governmental authority to make remedial
action in connection with Substances contaminating a property, if the
contamination resulted from such Transferee's actions or use of the property in
question; or (iii) the proposed Transferee is subject to an enforcement order
issued by any governmental authority in connection with the use, disposal, or
storage of a Substance.

     24. MISCELLANEOUS.

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

     B.  Except where otherwise expressly defined, Lessee's "proportionate
share", as used in this Lease, shall mean a fraction, the numerator of which is
the area contained in the Premises as shown on Page 1 of this Lease and the
denominator of which is the area contained in the building of which the Premises
are a part (each such area being measured in square feet). Such areas shall be
calculated according to the roof dimensions of the particular area.

     C.  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 heirs, executors, personal representatives, legal
representatives, successors and assigns, except as otherwise herein expressly
provided. Lessor shall have the right to transfer and assign, in whole or in
part, its rights and obligations in the building and property that are the
subject of this Lease. Each party agrees to furnish to tile other, promptly upon
demand, a corporate resolution, proof of due authorization by partners, or other
appropriate documentation evidencing the due authorization of such party to
enter into this Lease.

     D.  Lessor shall not be held responsible for delays in the performance of
its obligations hereunder when caused by Lessee, material shortages, acts of
God, labor disputes or other matters outside of Lessor's control.

     E.  Lessee agrees, from time to time, within five (5) days after request of
Lessor, to deliver to Lessor, or Lessor's designee, (i) a Certificate of
Occupancy and (ii) an estoppel certificate stating that this Lease is in full
force and effect, the date to which rent has been paid, the unexpired term of
this Lease and such other factual matters pertaining to this Lease as may be
requested by Lessor. It is understood and agreed that Lessee's obligation to
furnish such Certificate of Occupancy

                                       18
<PAGE>

and estoppel certificate in a timely fashion is a material inducement for
Lessor's execution of this Lease.

     F.  This Lease constitutes the entire understanding and agreement of the
Lessor and Lessee with respect to the subject matter of this Lease, and contains
all of the covenants and agreements of Lessor and Lessee with respect thereto.
Lessor and Lessee each acknowledge that no representations, inducements,
promises or agreements, oral or written, have been made by Lessor or Lessee, or
anyone acting on behalf of Lessor or Lessee, which are not contained herein, and
any prior agreements, promises, negotiations, or representations not expressly
set forth in this Lease are of no force or effect. This Lease may not be
altered, changed or amended except by an instrument in writing signed by both
parties hereto.

     G.  All obligations of Lessee hereunder not fully performed as of the
expiration or earlier termination of the term of this Lease shall survive the
expiration or earlier termination of the term hereof, including without
limitation, all payment obligations with respect to Base Rent and operating
expenses and all obligations concerning the condition and repair of tile
Premises. Upon the expiration or earlier termination of the term hereof, and
prior to Lessee vacating tile Premises, Lessee shall restore the Premises to
good condition and repair, reasonable wear and tear excluded. Prior to Lessee
vacating the Premises, Lessee shall make all repairs as specified in Paragraph 5
hereof, including but not limited to any repairs necessary so that the heating
and air conditioning systems are in good working order reasonable wear and tear
excluded.  Upon expiration or earlier termination hereof the Premises shall be
delivered to Lessor in broom clean condition. If any and all repairs or
restoration required of Lessee hereunder are not completed by the expiration or
earlier termination hereof, Lessor may cause the same to be completed and the
costs shall be paid by Lessee (including a ten percent (10%) service charge for
arranging for and coordinating such work).

Lessee shall also, prior to vacating the Premises, pay to Lessor the amount, as
estimated by Lessor, of Lessee's obligation hereunder for all operating expenses
including, without limitation, taxes, insurance premiums and common area charges
for the year in which tile Lease expires or terminates. All such amounts shall
be used and held by Lessor for payment of such obligations of Lessee hereunder,
with Lessee being liable for any additional costs therefore upon demand by
Lessor, or with any excess to be returned to Lessee after all such obligations
have been determined and satisfied as the case may be. In lieu of waiting until
the close of the calendar year in order to determine any excess additional
rentals for operating expenses as set forth in Paragraph 2C, Lessor has the
option to charge Lessee for Lessee's proportionate share of the additional
rentals based upon tile previous year's operating expenses plus ten percent
(10%). Any security deposit held by Lessor may, at Lessor's option, be credited
against the amount payable by Lessee under this Paragraph 24G or otherwise
handled in accordance with Paragraph 2B hereof.

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

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

                                       19
<PAGE>

     J.  Lessee represents and warrants that it has dealt with no broker, agent
or other person in connection with this transaction or that no broker agent or
other person brought about this transaction, other than Mr. John C. Stavinoha of
InSite Realty Partners, L.P. and William D. Swanson and Drew Lewis with NAI
Partners Commercial, L.L.C. and Lessee agrees to indemnify and hold Lessor
harmless from and against any claims by any other broker agent or other person
claiming a commission or other form of compensation by virtue of having dealt
with Lessee with regard to this leasing transaction.

     K.  If and when included within the term "Lessor", 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 a notice
specifying some individual at some specific address for the receipt of notices
and payments to Lessor. If and when included within the term "Lessee", 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 a notice
specifying some individual at some specific address within tile continental
United States for the receipt of notices and payments to Lessee. All parties
included within the terms "Lessor" and "Lessee" respectively, shall be bound by
notices given in accordance with the provisions of Paragraph 25 hereof to the
same effect as if each had received such notice.

     L.  LESSOR AND LESSEE EXPRESSLY AGREE THAT THERE ARE AND SHALL BE NO
IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR ANY OTHER KIND ARISING OUT OF THIS LEASE AGREEMENT AND THAT ALL
EXPRESS OR IMPLIED WARRANTIES IN CONNECTION THEREWITH ARE EXPRESSLY DISCLAIMED.

     M.  This Lease Agreement shall be construed under the laws of the State of
Texas.

     N.  Time is of the essence; and all due dates, time schedules, and
conditions precedent to exercising a right shall be strictly adhered to without
delay except where otherwise expressly provided.

     O.  Because the Premises are on the open market and are presently being
shown, this Lease shall be treated as an offer subject to non-acceptance by
Lessor, and shall not be valid or binding unless and until accepted by Lessor in
writing and a fully executed copy delivered to both parties hereto.
Notwithstanding the foregoing, Lessee agrees to tender to Lessor an initial sum
with executed originals of this Lease Agreement. Lessor shall for a period of
ten (10) days after receipt of such executed Lease and tendered sum have the
ability but not the obligation to review and return an executed original of the
Lease Agreement to Lessee. If Lessor shall notify Lessee of its acceptance or
return an executed original Lease Agreement to the Lessee during, such time
period, then this Lease Agreement shall be binding upon both parties. Upon such
occasion, Lessor may retain such sums so deposited by Lessee and apply such sums
to amounts due and owing under the terms of the Lease Agreement. Lessee agrees
that its offer to lease the Premises will be irrevocably left open for a period
of ten (10) days after Lessor's receipt of this Lease executed by Lessee.

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

     (a) All rent and other payments required to be made by Lessee to Lessor
hereunder shall

                                       20
<PAGE>

be payable to Lessor at the address for Lessor set forth below or at such other
address as Lessor may specify from time to time by written notice delivered in
accordance herewith. Lessee's obligation to pay rent and any other amounts to
Lessor under the terms of this Lease shall not be deemed satisfied until such
rent and other amounts have been actually received by Lessor. In addition to
Base Rental due hereunder, all sums of money and all payments due Lessor
hereunder shall be deemed to be additional rental owed to Lessor.

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

     (c)  Any written notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered whether actually received or not, five
(5) business days after deposited in the United States Mail, postage prepaid,
Certified or Registered Mail, addressed to the parties hereto at the respective
addresses set out below, or at such other address as they have therefore
specified by written notice delivered in accordance herewith.

     26.  ADDITIONAL PROVISIONS.  The provisions contained in the Addendum
attached hereto shall become a part hereof as if fully set forth herein, shall
supplement, modify and be in addition to the terms and conditions contained in
the body of this Lease, and shall control in the event of a conflict with such
terms and provisions.

                                       21
<PAGE>

EXECUTED BY LESSOR, THIS 30/TH/ DAY OF May, 2001.
                         ------        ---

                                    HOUSTON INDUSTRIAL ASSETS, L.P.
                                    -------------------------------

Attest/Witness                      By: /s/ Kris A. Van Norman
                                        ----------------------

                                    Title: Agent
                                           -----

                                    Address:

                                    c/o InSite Realty Partners, L.P.
                                    1502 Augusta, Suite 100
                                    Houston, TX 77057
                                    "Lessor and Secured Party"

EXECUTED BY LESSEE, this 30/th/ day of May, 2001.
                         ------        ---

                                    CONSTANT POWER MANUFACTURING,
                                    ----------------------------
                                    INC.
                                    ----

                                    By: /s/ William A. Coskey
                                       ----------------------
Attest/Witness
                                    Title: President
                                          ----------

/s/ Frank Ivester
-----------------
Title: General Manager              Address:
       ---------------

                                    757 Kenrick, Suite 100
                                    Houston, TX 77060
                                    "Lessee and Debtor"

                                       22
<PAGE>

                                LEASE ADDENDUM

26A.  Premises.  For purposes of this Lease, the rentable square footage of the
Premises is approximately 11,427 square feet of office and warehouse space
located in a building deemed to be approximately 45,357 square feet situated on
a tract of land containing 2.2039 acres of land in the William Sevey Survey,
Abstract 699, and being the same land called Exhibit "C" recorded under Clerks
File No. G-078586 of the said County Real Property Records and being out of
Unrestricted Reserve "B", Greenbriar North, Subdivision, Section 2, recorded in
Volume 225, Page 62, of the said County Maps Records. The Premises is known by
the following street address: 757 Kenrick, Suite 100 Houston, TX 77060. Such
Premises is outlined on Exhibit "A" attached hereto and incorporated herein.

26B.  Monthly Base Rental Payments.

      Months    0 1-12  @   $4,247.00
      Months     13-24  @   $4,304.00
      Months     25-36  @   $4,362.00
      Months     37-48  @   $4,419.00
      Months     49-60  @   $4,476.00

26C.  Lessee Improvements.  Lessee agrees to lease tile Premises on an
"as is" basis with the exception that the Lessor will provide the following
improvements:

      .  Deliver the electrical, lighting, mechanical, plumbing, and
HVAC systems in good working order.
      .  Warranty - Lessor agrees that it shall be responsible for all
maintenance and repairs to the electrical, lighting, mechanical, plumbing, and
HVAC systems for a period of ninety (90) days from the commencement date of this
Lease.
      .  Install a concrete loading ramp (Lessor will commence the construction
of this ramp upon full execution of this Lease).
      .  Lessor will transfer ownership of the racks, work desks, furniture,
and misc. items presently located in the facility to Lessee at no cost to
Lessee. This transfer will be on an "as-is" basis without any warranty of any
kind (items may or may not be in working order).

All other improvements to the Premises will be at the sole cost and expense of
the Lessee.

26D.  HVAC Maintenance/Service Contract Requirements.  The HVAC
maintenance/service contract must become effective within thirty (30) days of
the date of the commencement of this lease and must be performed on at least a
quarterly basis. The following items must be included in your maintenance
contract:

1.    Adjust belt tension;
2.    Lubricate all moving parts, as necessary;
3.    Inspect and adjust all temperature and safety controls;
4.    Check refrigeration system for leaks and operation;
5.    Check refrigeration system for moisture;
6.    Inspect compressor oil level and crank heaters;
7.    Check head pressure, suction pressure and oil pressure;
8.    Inspect air filters and replace when necessary; (minimum of once
      per month)
9.    Check space conditions;

                                       23
<PAGE>

10.  Check condensate drains and drain pans and clean, if necessary;
11.  Inspect and adjust all valves;
12.  Check and adjust dampers;
13.  Run machine through complete cycle;
14.  Clean evaporative and condensing coils;
15.  Check and repair all sheet metal duct, duct board, and flexible duct;
16.  Inspect and replace if necessary all belts;
17.  Inspect and repair if necessary unit housing;
18.  Check thermostat operation;
19.  Inspect and repair as necessary the heating elements; and
20.  Any and all other items as recommended by the manufacturer of the unit(s).

26E. Compliance with Laws, Rules and Regulations. Lessee, at Lessee's sole cost
and expense, shall comply with all laws, ordinances, orders, rules and
regulations now in effect or enacted subsequent to the date hereof of state,
federal, municipal or other agencies or bodies having jurisdiction over Lessee
or the use, condition and occupancy of the Leased Premises. Lessee shall also
comply with the rules and regulations of the Building and/or project adopted by
Lessor which are set forth on Exhibit "C" attached hereto and incorporated by
reference. Lessor is entitled, at all times, to change and amend the rules and
regulations in any reasonable manner as Lessor deems advisable for the safety,
care, cleanliness, preservation of good order and operation or use of the
Building and/or project or the Leased Premises. All such changes and amendments
to the rules and regulations of the Building and/or project must be in writing
and sent to Lessee at the Leased Premises and must thereafter be carried out and
observed by Lessee.

26F. 100-YEAR FLOOD PLAIN NOTICE.  Lessee agrees to execute the special flood
hazard area notice set forth in "Exhibit D" attached hereto and incorporated by
reference.

26G. Renewal Option. Lessor hereby grants to Lessee the right and option to
renew and extend the term of this Lease for thirty-six (36) months (the "Renewal
Period"). In the event Lessee elects to exercise the option described herein,
all terms and conditions of this Lease shall continue in full force and effect,
except that (i) terms, covenants and condition that are expressly or by their
nature inapplicable to the Renewal Period, including, without limitation, this
Renewal Option shall not apply, and (ii) the monthly rent shall be adjusted in
the following manner:

The monthly rent to be paid during the Renewal Period shall be at the then
current prevailing market rate. This market rental shall be based upon the then
prevailing rental rates for properties of equivalent quality, size, utility, and
location, with the length of the lease term, lease structure (gross, net, etc.),
amount of leasehold improvements to be provided and credit standing of the
lessee to be taken into account.

Notice of Lessee's intention to exercise the option must be given to Lessor in
writing not less than four (4) months nor more than six (6) months prior to the
expiration of the primary or immediately preceding term of this Lease, and
Lessee must not be in default under, nor shall there be any event or condition
which with the passage of time could constitute a default under this Lease at
either the time that this option must be exercised or the commencement of the
Renewal Period; otherwise, this Renewal Option shall be null and void and of no
further force or effect. Lessee's failure to give notice of exercise of the
Renewal Option shall be deemed a waiver of such option and such option will then
be of no further force or effects.

Lessee shall promptly execute and deliver an amendment of the Lease in form and
substance

                                       24
<PAGE>

satisfactory to Lessor to evidence the exercise of this Renewal Option and the
effect thereof.

In the event the Premises are sublet or assigned, this renewal option will be
null and void and of no further effect.

26H. Common Area Charge Maximum Contribution. Lessee's contribution for common
area charges, as referenced in Paragraphs 2(C)(iii) and 4 above, shall be
limited to the following maximum amounts, based on a 8% per year escalating cap:

     2001:    $  857.00  x  1.08  =   $926.00/month
     2002:    $  926.00  x  1.08  =   $1,000.00/month
     2003:    $1,000.00  x  1.08  =   $1,080.00/month
     2004:    $1,080.00  x  1.08  =   $1,166.00/month
     2005:    $1,166.00  x  1.08  =   $1,259.00/month
     2006:    $1,259.00  x  1.08  =   $1,360.00/month

No maximums shall apply to Lessee's contribution for (i) the cost of utilities;
(ii) the cost of insurance; or (iii) any taxes, assessments or governmental
charges; however, Lessee shall only be responsible for its proportionate share
of each year's actual costs.

26I. CANCELLATION OPTION.  Provided no default shall then exist under the Lease
and no condition shall then exist which with the passage of time or giving of
notice, or both, would constitute a default under the Lease, Lessee shall have
the right at any time on or before the end of the thirtieth (30th) month of the
Lease term to send Lessor written notice (the "Termination Notice") that Lessee
has elected to terminate this Lease effective on the end of the thirty-sixth
(36th) month of the Lease term.  If Lessee elects to terminate this Lease
pursuant to the immediately preceding sentence, the effectiveness of such
termination shall be conditioned upon Lessee paying to Lessor Seventeen Thousand
Thirty Six and No/100 Dollars ($17,036.00) [the amount of all unamortized costs
incurred by Lessor in connection with this lease reduced by amortizing the same
amount monthly at a rate of ten percent (10%) contemporaneously with Lessee's
delivery of the Termination Notice to Lessor.  Lessor and Lessee shall be
relieved of all obligations accruing under this lease after the effective date
of such termination but not any obligations accruing under the Lease prior to
the effective date of such termination.  Lessee's exercise of this cancellation
option shall be irrevocable upon delivery of the notice thereof to Lessor, and
Lessee shall be obligated to surrender possession of the Premises to Lessor on
or before the Cancellation Date in accordance with the terms of the Lease.

Further, provided no default shall then exist under the Lease and no condition
shall then exist which with the passage of time or giving of notice, or both,
would constitute a default under the Lease, Lessee shall have the right at any
time on or before the end of the forty-second (42nd ) month of the Lease term to
send Lessor written notice (the "Termination Notice") that Lessee has elected to
terminate this Lease effective on the end of the forty-eighth (48th) month of
the Lease term. If Lessee elects to terminate this Lease pursuant to the
immediately preceding sentence, the effectiveness of such termination shall be
conditioned upon Lessee paying to Lessor Nine Thousand Eight and No/100 Dollars
($9,008.00) [the amount of all unamortized costs incurred by lessor in
connection with this Lease reduced by amortizing the same amount monthly at a
rate of ten percent (10%)] contemporaneously with Lessee's delivery of the
Termination Notice to Lessor.  Lessor and Lessee shall be relieved of all
obligations accruing under this Lease after the effective date of such
termination but not any obligations accruing under the Lease prior to the
effective date of such termination.  Lessee's exercise of this cancellation
option shall be irrevocable upon delivery of the

                                       25
<PAGE>

notice thereof to Lessor, and Lessee shall be obligated to surrender possession
of the Premises to Lessor on or before the Cancellation Date in accordance with
the terms of the Lease.

26J. Lease Contingency.  The consummation of this lease is contingent upon
Lessor's early termination of the lease with the lessee (Seagate Technology)
presently occupying Suite 100 which must occur no later than the date prior to
the commencement of this lease.  Notwithstanding anything to the contrary, if
said Seagate Technology termination does not occur within ten (10) days after
Lessor's receipt of this Lease executed by Lessee, Lessee shall have the option,
at Lessee's sole discretion to terminate this Lease and receive a full refund
from the Lessor of any rentals or deposits paid, and both Lessee and Lessor
shall have no obligations or liabilities under the terms of this Lease.

26K. City of Houston Certificate of Occupancy.

(i)  Lessor shall be responsible for costs of up to Two Thousand Five Hundred
and No/100 Dollars ($2,500.00) to complete any work to the Premises required by
the City of Houston to satisfy compliance issues connected with the City of
Houston Inspection Report or to obtain the Certificate of Occupancy that relates
to the existing condition of the Premises as of the date of Lessee's acceptance
of the Premises. Lessee shall be responsible for costs t complete such work that
exceed Two Thousand Five Hundred and No/100 Dollars ($2,500.00) up to a maximum
of Twenty Thousand and No/100 Dollars ($20,000.00). If the cost to complete such
work exceeds Twenty Thousand and No/100 Dollars ($20,000.00) and provided no
default shall then exist under the Lease and no condition shall then exist which
with the passage of time or giving of notice, or both, would constitute a
default under the Lease, Lessee shall have the right, upon ninety (90) days
written notice to Lessor, to terminate this Lease. If the costs to complete such
work exceeds Twenty Thousand and No/100 Dollars ($20,000.00), Lessor shall
likewise have the right, upon ninety (90) days written notice to Lessee, to
terminate this Lease. Within forty-five (45) days after either the Lessor's or
Lessee's receipt of such termination notice, the other party shall have the
right to agree in writing to pay for such costs that exceed Twenty Thousand and
No/100 Dollars ($20,000.00). This receipt of this agreement shall serve to
cancel the effect of the termination notice and both parties shall continue to
be responsible for its obligations under this Lease through the expiration date.
The right to send notice to the other party to terminate this Lease in
accordance with this Paragraph 26K(i) shall expire at the end of twelve (12)
months from Lessee's acceptance of the Premises.

(ii) Lessee shall be responsible for the 1) the cost of the City of Houston
Certificate of Occupancy application fee, and 2) the costs for any work to the
Premises required by the City of Houston to satisfy compliance issues connected
with the City of Houston Inspection Report or to obtain the Certificate of
Occupancy that is specific to Lessee's occupancy or use of the Premises as
permitted by the Lease, or modifications or alterations of the Premises
performe3d by or contracted for b y Lessee. The right to terminate this Lease in
accordance with this Paragraph 26K(i) does not apply to the work required City
of Houston to satisfy compliance issues connected with the City of Houston
Inspection Report or to obtain the Certificate of Occupancy that is specific to
Lessee's occupancy or use of the Premises as permitted by the Lease, or
modifications or alterations of the Premises performed by or contracted for by
Lessee.

26L. In exchange for Lessor not requiring a guaranty for this Lease from it
parent company, Industrial Data Systems Corporation, Lessee agrees that it will
not in any way circumvent the responsibilities of Lessee under this lease (i.e.
transfer assets of Lessee to Industrial Data Corporation or any affiliated
companies of Lessee).

                                       26
<PAGE>

                                  EXHIBIT "A"

                              HEDGECROFT SQUARE 08
                                  757 KENRICK

                                       27
<PAGE>

[FLOOR PLAN]

                                       28
<PAGE>

                                  EXHIBIT "B"

                              HEDGECROFT SQUARE 08
                             757 Kenrick, Suite 100
                        11,427 sf. Total / 2,828 Office

                                       29
<PAGE>

[FLOOR PLAN]

                                       30
<PAGE>

                                  EXHIBIT "C"

PROJECT RULES AND REGULATIONS

1.   Lessor agrees to rekey the lock(s) to Lessee's space and furnish Lessee
with eight (8) entry keys without charge. Lessor shall not be responsible for
Lessee's keys nor shall Lessor keep a key at Lessor's office for Lessee's space.

2.   No Lessee shall at any time occupy any part of the Premises, Building of
which the Premises are a part and/or the Project as sleeping or lodging
quarters.

3.   Lessor will not be responsible for lost or stolen personal property,
equipment, money or jewelry from Lessee's area or public rooms regardless of
whether or not such loss occurred when the area is locked against entry.

4.   No birds, fowl, or animals shall be brought into or kept in or about the
Premises, Building of which the Premises are a part and/or the Project.

5.   The water closets and other water fixtures shall not be used for any
purpose other than those for which they were constructed, and any damage
resulting to them from misuse, or the defacing or injury of any part of the
Premises, Building of which the Premises are a part and/or the Project shall be
borne by the person who shall occasion it. No person shall waste water by
interfering with the faucets or otherwise.

6.   No person shall disturb the occupants of the Building and/or the Project by
the use of any musical instruments, the making of unseemly noises, causing
objectionable odors, or any unreasonable use.

7.   For purposes of good housekeeping, safety and cleanliness of the area
outside the Premises and of the common areas, Lessee must keep all refuse and
debris in containers. If Lessee fails in this respect, Lessor may give written
notification to Lessee to clean up such refuse and debris. If Lessee does not
remedy the situation within forty-eight (48) hours from receipt of such
notification, Lessor retains the right to clean up the area and bill the Lessee
for such work.

8.   No item, including, but not limited to, vehicles, trailers, temporary
structures, supplies or equipment, shall be stored outside the Premises within
the Project without the express permission of the Lessor, except as otherwise
provided for in this Lease.

9.   Lessee shall not block or obstruct the driveway or place rubbish, trash,
litter or material of any similar nature in such area. Lessee shall place
approved trash receptacles only in designated areas.

10.  Lessee may not operate any recreational vehicles around the Project.

11.  Lessee may not repair any vehicle outside the Premises.

12.  Lessee may not leave any vehicle outside the Premises over seventy-two (72)
hours that has a flat tire or is inoperative for any reason.

                                       31
<PAGE>

13.  Pest Control / Extermination in the Premises is a Lessee expense.

14.  No washing of any type (other than a reasonable rest-room or kitchen
washing) will take place in the Premises including the truck apron and parking
areas.

15.  Lessee will furnish and maintain an adequate number of fire extinguishers
in good operating condition as may be reasonably required by Lessor and will
also comply with such safety recommendations and loss prevention and loss
reduction recommendations as Lessor or Lessor's insurance carriers (or both)
may, from time to time request.

16.  Lessee shall not authorize anyone to walk upon, inspect, install anything
upon, or repair the roof of the project.

17.  Lessee and its employees, agents and invitees shall park their vehicles
only in those parking areas designated by Lessor. If Lessee or its employees,
agents or invitees park their vehicles in areas other than the designated
parking areas or leave any vehicle in a state of disrepair, Lessor, after giving
written notice to Lessee of such violation, shall have the right to remove such
vehicles at Lessee's expense.

18.  Lessor reserves the right to make such other and further reasonable rules
and regulations as in its judgment may from time to time be needed, for the
safety, care and cleanliness of the project, and for the reservation of good
order therein.

                                       32
<PAGE>

                                  EXHIBIT "D"

Notice to Seller/Lessor-Buyer/Lessee
RE:  NATIONAL FLOOD INSURANCE PROGRAM
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Date:  May 18,2001

To:    Constant Power Manufacturing. Inc.
       ---------------------------------

Re:    757 Kenrick. Suite 100, Houston, Texas 77060
       --------------------------------------------

The above property has been identified as being located in a Special Flood
Hazard Area (100-year flood plain). Federal law requires that, as a condition of
obtaining federally related financing on most properties located in "flood
zones", banks, savings and loan associations, and some insurance lenders require
flood insurance to be carried where the property, real or personal, is security
for the loan.

This requirement is mandated by the National Flood Insurance Act of 1968 and the
Flood Disaster Protection Act of 1973. The purpose of the program is to provide
flood insurance to property owners at a reasonable cost. Cities or counties
participating in the National Flood Insurance Program may have adopted building
or zoning restrictions, or other measures, as part of their participation in the
program. You should contact the city or county in which the property is located
to determine any such restrictions.

The extent of coverage available to your area and the cost of this coverage may
vary, and for further information, you should consult your lender or your
insurance carrier.

NO REPRESENTATION OR RECOMMENDATION IS MADE BY Houston Industrial Assets, L.P.,
OR ITS AGENTS OR EMPLOYEES, AS TO THE LEGAL EFFECT, INTERPRETATION, OR ECONOMIC
CONSEQUENCES OF THE NATIONAL FLOOD INSURANCE PROGRAM AND RELATED LEGISLATION.
THESE ARE QUESTIONS THAT YOU SHOULD ADDRESS TO YOUR LENDER OR YOUR INSURANCE
CARRIER.

Receipt of a copy of this notice is hereby acknowledged.

Constant Power Manufacturing, Inc.
---------------------------------

By: //William A. Coskey//
   ----------------------

Title: President

Date: May 30, 2001

                                       33<PAGE>

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

                               CREDIT AGREEMENT

                                    BETWEEN

                                DRIL-QUIP, INC.

                                      AND

                              GUARANTY BANK, FSB

                                 May 18, 2001

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

                 REVOLVING LINE OF CREDIT OF UP TO $50,000,000

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

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

                                 TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                         Page
ARTICLE I    DEFINITIONS AND INTERPRETATION
<C>          <S>                                                                         <C>
             1.1   Terms Defined Above.......................................              1
             1.2   Additional Defined Terms..................................              1
             1.3   Undefined Financial Accounting Terms......................             12
             1.4   References................................................             12
             1.5   Articles and Sections.....................................             12
             1.6   Number and Gender.........................................             12
             1.7   Incorporation of Exhibits.................................             12

ARTICLE II   TERMS OF FACILITY
             2.1   Revolving Line of Credit..................................             12
             2.2   Use of Loan Proceeds......................................             13
             2.3   Interest                                                               13
             2.4   Repayment of Loans and Interest...........................             13
             2.5   Outstanding Amounts.......................................             14
             2.6   Time, Place, and Method of Payments.......................             14
             2.7   Voluntary Prepayments and Conversions of Loans............             14
             2.8   Commitment Fee............................................             14
             2.9   Facility Fee..............................................             15
             2.10  General Provisions Relating to Interest...................             15
             2.11  Yield Protection..........................................             16
             2.12  Limitation on Types of Loans..............................             17
             2.13  Illegality                                                             18
             2.14  Regulatory Change.........................................             18
             2.15  Limitations on Interest Periods...........................             18

ARTICLE III  CONDITIONS
             3.1   Receipt of Loan Documents and Other Items.................             19
             3.2   Each Loan.................................................             20

ARTICLE IV   REPRESENTATIONS AND WARRANTIES
             4.1   Due Authorization.........................................             21
             4.2   Corporate Existence.......................................             21
             4.3   Valid and Binding Obligations.............................             21
             4.4   Title to Assets...........................................             21
             4.5   Scope and Accuracy of Financial Statements................             21
             4.6   No Material Misstatements.................................             22
             4.7   Liabilities, Litigation, and Restrictions.................             22
             4.8   Authorizations; Consents..................................             22
             4.9   Compliance with Laws......................................             22
             4.10  ERISA.....................................................             22

</TABLE>
                                      -i-
<PAGE>

<TABLE>
<CAPTION>

<C>          <S>                                                                         <C>
            4.11   Environmental Laws........................................             23
            4.12   Compliance with Federal Reserve Regulations...............             23
            4.13   Investment Company Act Compliance.........................             23
            4.14   Public Utility Holding Company Act Compliance.............             23
            4.15   Proper Filing of Tax Returns; Payment of Taxes Due........             23
            4.16   Casualties or Taking of Property..........................             24
            4.17   Locations of Borrower.....................................             24
            4.18   Subsidiaries..............................................             24

ARTICLE V AFFIRMATIVE COVENANTS
             5.1   Maintenance and Access to Records.........................             24
             5.2   Quarterly Financial Statements; Compliance Certificates...             24
             5.3   Annual Financial Statements...............................             24
             5.4   Notices of Certain Events.................................             24
             5.5   Additional Information....................................             26
             5.6   Compliance with Laws......................................             26
             5.7   Payment of Assessments and Charges........................             26
             5.8   Maintenance of Corporate Existence and Good Standing......             26
             5.9   Payment of Notes; Performance of Obligations..............             26
             5.10  Further Assurances........................................             26
             5.11  Initial Fees and Expenses of Counsel to Lender............             26
             5.12  Subsequent Fees and Expenses of Lender....................             27
             5.13  Maintenance of Insurance..................................             27
             5.14  INDEMNIFICATION...........................................             27

ARTICLE VI NEGATIVE COVENANTS
             6.1   Indebtedness..............................................             28
             6.2   Liens                                                                  28
             6.3   Changes in Corporate Structure............................             28
             6.4   Dividends and Distributions...............................             28
             6.5   ERISA Compliance..........................................             28
             6.6   Transactions with Subsidiaries............................             28
             6.7   Tangible Net Worth........................................             28
             6.8   Funded Debt to EBITDA.....................................             29
             6.9   EBIT to Interest Expense..................................             29

ARTICLE VII EVENTS OF DEFAULT
             7.1   Enumeration of Events of Default..........................             29
             7.2   Remedies                                                               31

ARTICLE VIII MISCELLANEOUS
             8.1   Transfers; Participations.................................             32
             8.2   Survival of Representations, Warranties, and Covenants....             32
             8.3   Notices and Other Communications..........................             32
             8.4   Parties in Interest.......................................             33
             8.5   Rights of Third Parties...................................             33

</TABLE>

                                     -ii-
<PAGE>

<TABLE>
<CAPTION>

<C>          <S>                                                                         <C>

             8.6   Renewals; Extensions......................................             33
             8.7   No Waiver; Rights Cumulative..............................             33
             8.8   Survival Upon Unenforceability............................             33
             8.9   Amendments; Waivers.......................................             34
             8.10  Controlling Agreement.....................................             34
             8.11  GOVERNING LAW.............................................             34
             8.12  JURISDICTION AND VENUE....................................             34
             8.13  ENTIRE AGREEMENT..........................................             34
             8.14  Counterparts..............................................             34
             8.15  Confidentiality...........................................             34

</TABLE>

                                     -iii-
<PAGE>

LIST OF EXHIBITS

Exhibit I     -    Form of Note
Exhibit II    -    Form of Borrowing Request
Exhibit III   -    Form of Compliance Certificate
Exhibit IV    -    Disclosures

                                     -iv-
<PAGE>

                               CREDIT AGREEMENT

          THIS CREDIT AGREEMENT is made and entered into this 18th day of May,
2001, by and between DRIL-QUIP, INC., a Delaware corporation (the "Borrower"),
and GUARANTY BANK, FSB, a federal savings bank (the "Lender").

                             W I T N E S S E T H:

          In consideration of the mutual covenants and agreements herein
contained, the Borrower and the Lender hereby agree as follows:

                                   ARTICLE I

                        DEFINITIONS AND INTERPRETATION

          I.1  Terms Defined Above  .  As used in this Credit Agreement, the
terms "Borrower" and "Lender" shall have the meaning assigned to them
hereinabove.

          I.2  Additional Defined Terms  .  As used in this Credit Agreement,
each of the following terms shall have the meaning assigned thereto in this
Section:

          "Additional Costs" shall mean costs which the Lender determines are
     attributable to its obligation to make or its making or maintaining any
     LIBO Rate Loan, or any reduction in any amount receivable by the Lender in
     respect of any such obligation or any LIBO Rate Loan, resulting from any
     Regulatory Change which (a) changes the basis of taxation of any amounts
     payable to the Lender under this Agreement or the Note in respect of any
     LIBO Rate Loan (other than taxes imposed on the overall net income of the
     Lender), (b) imposes or modifies any reserve, special deposit, minimum
     capital, capital rates, or similar requirements relating to any extensions
     of credit or other assets of, or any deposits with or other liabilities of,
     the Lender (including LIBO Rate Loans and Dollar deposits in the London
     interbank market in connection with LIBO Rate Loans), or any commitments of
     the Lender hereunder, (c) increases the Assessment Rate, or (d) imposes any
     other condition affecting this Agreement or any of such extensions of
     credit, liabilities, or commitments.

          "Adjusted LIBO Rate" shall mean, for any LIBO Rate Loan, an interest
     rate per annum determined by the Lender to be equal to the sum of the LIBO
     Rate for such Loan plus the Applicable Margin, but in no event exceeding
     the Highest Lawful Rate.

          "Affiliate" shall mean any Person directly or indirectly controlling,
     or under common control with, the Borrower and includes any Subsidiary of
     the Borrower and
<PAGE>

     any "affiliate" of the Borrower within the meaning of Reg. (S)240.12b-2 of
     the Securities Exchange Act of 1934, as amended, with "control," as used in
     this definition, meaning possession, directly or indirectly, of the power
     to direct or cause the direction of management, policies or action through
     ownership of voting securities, contract, voting trust, or membership in
     management or in the group appointing or electing management or otherwise
     through formal or informal arrangements or business relationships.

          "Agreement" shall mean this Credit Agreement, as it may be amended,
     supplemented, or restated from time to time.

          "Applicable Lending Office" shall mean, for each type of Loan, the
     lending office of the Lender (or an affiliate of the Lender) designated for
     such type of Loan on the signature pages hereof or such other office of the
     Lender (or an affiliate of the Lender) as the Lender may from time to time
     specify to the Borrower as the office by which Loans of such type are to be
     made and maintained.

          "Applicable Margin" shall mean as to each LIBO Rate Loan, one and
     three-fourths percent (1-3/4%).

          "Assessment Rate" shall mean, for any Interest Period, the average
     rate charged by the Federal Deposit Insurance Corporation (or any successor
     thereto) to the Lender for deposit insurance for Dollar time deposits with
     the Lender at the Principal Office during such Interest Period, as
     determined by the Lender.

          "Available Commitment" shall mean, at any time, an amount equal to the
     remainder, if any, of (a) $50,000,000 minus (b) the Loan Balance at such
     time.

          "Base Rate" shall mean, at any time, at the option of the Borrower,
     the rate of interest per annum reported in the "Money Rates" column in The
     Wall Street Journal as the prime rate then in effect or Lender's base rate
     then in effect. In the event The Wall Street Journal ceases publication or
     ceases to publish the prime rate, the Lender shall select a comparable
     publication and provide notice thereof to the Borrower.

          "Borrowing Request" shall mean each written request, in substantially
     the form attached hereto as Exhibit II, by the Borrower to the Lender for a
     borrowing, conversion, or prepayment pursuant to Sections 2.1 or 2.7, each
     of which shall:

               (a) be signed by a Responsible Officer of the Borrower;

               (b) when requesting a borrowing, be accompanied by a Compliance
          Certificate;

               (c) specify the amount and type of Loan requested, and, as
          applicable, the Loan to be converted or prepaid and the date of the

                                       2
<PAGE>

          borrowing, conversion, or prepayment (which shall be a Business Day);

               (d) when requesting a Floating Rate Loan, be delivered to the
          Lender no later than 10:00 a.m., Central Standard or Daylight Savings
          Time, as the case may be, on the Business Day of the requested
          borrowing, conversion, or prepayment;

               (e) when requesting a LIBO Rate Loan, be delivered to the Lender
          no later than 10:00 a.m., Central Standard or Daylight Savings Time,
          as the case may be, two Business Days preceding the requested
          borrowing, conversion, or prepayment and designate the Interest Period
          requested with respect to such Loan.

          "Business Day" shall mean (a) for all purposes other than as covered
     by clause (b) of this definition, a day other than a Saturday, Sunday,
     legal holiday for commercial banks under the laws of the State of Texas, or
     any other day when banking is suspended in the State of Texas, and (b) with
     respect to all requests, notices, and determinations in connection with,
     and payments of principal and interest on, LIBO Rate Loans, a day which is
     a Business Day described in clause (a) of this definition and which is a
     day for trading by and between banks for Dollar deposits in the London
     interbank market.

          "Capitalization" shall mean Tangible Net Worth plus Funded Debt.

          "Closing Date" shall mean the effective date of this Agreement.

          "Code" shall mean the United States Internal Revenue Code of 1986, as
     amended from time to time.

          "Commitment" shall mean the obligation of the Lender, subject to
     applicable provisions of this Agreement, to make Loans to or for the
     benefit of the Borrower pursuant to Section 2.1.

          "Commitment Fee" shall mean each fee payable to the Lender by the
     Borrower pursuant to Section 2.8.

          "Commitment Period" shall mean the period from and including the
     Closing Date to but not including the Commitment Termination Date.

          "Commitment Termination Date" shall mean the date which is three years
     following the Closing Date.

          "Commonly Controlled Entity" shall mean any Person which is under
     common control with the Borrower within the meaning of Section 4001 of
     ERISA.

                                       3
<PAGE>

          "Compliance Certificate" shall mean each certificate, substantially in
     the form attached hereto as Exhibit III, executed by a Responsible Officer
     of the Borrower and furnished to the Lender from time to time in accordance
     with Sections 5.2 and 5.3.

          "Contingent Obligation" shall mean, as to any Person, any obligation
     of such Person guaranteeing or in effect guaranteeing any Indebtedness,
     leases, dividends, or other obligations of any other Person (for purposes
     of this definition, a "primary obligation") in any manner, whether directly
     or indirectly, including, without limitation, any obligation of such
     Person, regardless of whether such obligation is contingent, (a) to
     purchase any primary obligation or any Property constituting direct or
     indirect security therefor, (b) to advance or supply funds (i) for the
     purchase or payment of any primary obligation, or (ii) to maintain working
     or equity capital of any other Person in respect of any primary obligation,
     or otherwise to maintain the net worth or solvency of any other Person, (c)
     to purchase Property, securities or services primarily for the purpose of
     assuring the owner of any primary obligation of the ability of the Person
     primarily liable for such primary obligation to make payment thereof, or
     (d) otherwise to assure or hold harmless the owner of any such primary
     obligation against loss in respect thereof, with the amount of any
     Contingent Obligation being deemed to be equal to the stated or
     determinable amount of the primary obligation in respect of which such
     Contingent Obligation is made or, if not stated or determinable, the
     maximum reasonably anticipated liability in respect thereof as determined
     by such Person in good faith.

          "Current Assets" shall mean all assets which would, in accordance with
     GAAP, be included as current assets on a balance sheet of the Borrower as
     of the date of calculation.

          "Current Liabilities" shall mean all liabilities which would, in
     accordance with GAAP, be included as current liabilities on a balance sheet
     of the Borrower as of the date of calculation, but excluding current
     maturities in respect of the Obligations, both principal and interest.

          "Default" shall mean any event or occurrence which with the lapse of
     time or the giving of notice or both would become an Event of Default.

          "Default Rate" shall mean a per annum interest rate equal to the Base
     Rate plus five percent (5%), but in no event exceeding the Highest Lawful
     Rate.

          "Dollars" and "$" shall mean dollars in lawful currency of the United
     States of America.

          "EBIT" shall mean, for any period, Net Income for such period, plus
     Interest Expense and federal and state income taxes.

                                       4
<PAGE>

          "EBITDA" shall mean, for any period, EBIT, plus depreciation,
     amortization, and other non-cash expenses for such period deducted in the
     determination of Net Income for such period.

          "Environmental Complaint" shall mean any written or oral complaint,
     order, directive, claim, citation, notice of environmental report or
     investigation, or other notice by any Governmental Authority with respect
     to (a) air emissions, (b) spills, releases, or discharges to soils, any
     improvements located thereon, surface water, groundwater, or the sewer,
     septic, waste treatment, storage, or disposal systems servicing any
     Property of the Borrower, (c) solid or liquid waste disposal, (d) the use,
     generation, storage, transportation, or disposal of any Hazardous
     Substance, or (e) other environmental, health, or safety matters affecting
     any Property of the Borrower or the business conducted thereon.

          "Environmental Laws" shall mean (a) the following federal laws as they
     may be cited, referenced, and amended from time to time:  the Clean Air
     Act, the Clean Water Act, the Safe Drinking Water Act, the Comprehensive
     Environmental Response, Compensation and Liability Act, the Endangered
     Species Act, the Resource Conservation and Recovery Act, the Occupational
     Safety and Health Act, the Hazardous Materials Transportation Act, the
     Superfund Amendments and Reauthorization Act, and the Toxic Substances
     Control Act; (b) any and all equivalent environmental statutes of any state
     in which Property of the Borrower is situated, as they may be cited,
     referenced and amended from time to time; (c) any rules or regulations
     promulgated under or adopted pursuant to the above federal and state laws;
     and (d) any other equivalent federal, state, or local statute or any
     requirement, rule, regulation, code, ordinance, or order adopted pursuant
     thereto, including, without limitation, those relating to the generation,
     transportation, treatment, storage, recycling, disposal, handling, or
     release of Hazardous Substances.

          "ERISA" shall mean the Employee Retirement Income Security Act of
     1974, as amended from time to time, and the regulations thereunder and
     interpretations thereof.

          "Event of Default" shall mean any of the events specified in Section
     7.1.

          "Facility Fee" shall mean the fee payable to the Lender by the
     Borrower pursuant to Section 2.9.

          "Final Maturity" shall mean the date which is three years following
     the Closing Date.

          "Financial Statements" shall mean statements of the financial
     condition of the Borrower as at the point in time and for the period
     indicated and consisting of those financial statements required to be filed
     periodically with the SEC under the 1934 Securities Exchange Act.

                                       5
<PAGE>

          "Floating Rate" shall mean an interest rate per annum equal to the
     Base Rate from time to time in effect, but in no event exceeding the
     Highest Lawful Rate.

          "Floating Rate Loan" shall mean any Loan and any portion of the Loan
     Balance which the Borrower has requested, in the initial Borrowing Request
     for such Loan or a subsequent Borrowing Request for such portion of the
     Loan Balance, bearing interest at the Floating Rate, or which pursuant to
     the terms hereof is otherwise required to bear interest at the Floating
     Rate.

          "Funded Debt" shall mean the total outstanding Indebtedness of the
     Borrower for borrowed money.

          "GAAP" shall mean generally accepted accounting principles established
     by the Financial Accounting Standards Board or the American Institute of
     Certified Public Accountants and in effect in the United States from time
     to time.

          "Governmental Authority" shall mean any nation, country, commonwealth,
     territory, government, state, county, parish, municipality, or other
     political subdivision and any entity exercising executive, legislative,
     judicial, regulatory, or administrative functions of or pertaining to
     government.

          "Hazardous Substances" shall mean flammables, explosives, radioactive
     materials, hazardous wastes, asbestos, or any material containing asbestos,
     polychlorinated biphenyls (PCBs), toxic substances or related materials,
     petroleum, petroleum products, associated oil or natural gas exploration,
     production, and development wastes, or any substances defined as "hazardous
     substances," "hazardous materials," "hazardous wastes," or "toxic
     substances" under the Comprehensive Environmental Response, Compensation
     and Liability Act, as amended, the Superfund Amendments and Reauthorization
     Act, as amended, the Hazardous Materials Transportation Act, as amended,
     the Resource Conservation and Recovery Act, as amended, the Toxic
     Substances Control Act, as amended, or any other law or regulation now or
     hereafter enacted or promulgated by any Governmental Authority.

          "Highest Lawful Rate" shall mean the maximum non-usurious interest
     rate, if any (or, if the context so requires, an amount calculated at such
     rate), that at any time or from time to time may be contracted for, taken,
     reserved, charged, or received under applicable laws of the State of Texas
     or the United States of America, whichever authorizes the greater rate, as
     such laws are presently in effect or, to the extent allowed by applicable
     law, as such laws may hereafter be in effect and which allow a higher
     maximum non-usurious interest rate than such laws now allow.

          "Indebtedness" shall mean, as to any Person, without duplication, (a)
     all liabilities (excluding reserves for deferred income taxes, deferred
     compensation liabilities, and other deferred liabilities and credits) which
     in accordance with GAAP would be included in determining total liabilities
     as shown on the liability side of a

                                       6
<PAGE>

     balance sheet, (b) all obligations of such Person evidenced by bonds,
     debentures, promissory notes, or similar evidences of indebtedness, (c) all
     other indebtedness of such Person for borrowed money, and (d) all
     obligations of others, to the extent any such obligation is secured by a
     Lien on the assets of such Person (whether or not such Person has assumed
     or become liable for the obligation secured by such Lien).

          "Insolvency Proceeding" shall mean application (whether voluntary or
     instituted by another Person) for or the consent to the appointment of a
     receiver, trustee, conservator, custodian, or liquidator of any Person or
     of all or a substantial part of the Property of such Person, or the filing
     of a petition (whether voluntary or instituted by another Person)
     commencing a case under Title 11 of the United States Code, seeking
     liquidation, reorganization, or rearrangement or taking advantage of any
     bankruptcy, insolvency, debtor's relief, or other similar law of the United
     States, the State of Texas, or any other jurisdiction.

          "Insolvent" or "Insolvency" shall mean, with respect to any
     Multiemployer Plan, that such Plan is insolvent within the meaning of such
     term as used in Section 4245 of ERISA.

          "Interest Expense" shall mean for any period, the total interest
     expense of the Borrower for such period determined in accordance with GAAP.

          "Interest Period" shall mean, subject to the limitations set forth in
     Section 2.15, with respect to any LIBO Rate Loan, a period commencing on
     the date such Loan is made or converted from a Loan of another type
     pursuant to this Agreement or the last day of the next preceding Interest
     Period with respect to such Loan and ending on the numerically
     corresponding day in the calendar month that is one, two, three, six, nine
     or twelve months thereafter, as the Borrower may request in the Borrowing
     Request for such Loan.

          "Investment" in any Person shall mean any stock, bond, note, or other
     evidence of Indebtedness, or any other security (other than current trade
     and customer accounts) of, investment or partnership interest in or loan
     to, such Person.

          "LIBO Rate" shall mean, with respect to any Interest Period for any
     LIBO Rate Loan, the lesser of (a) the rate per annum equal to the average
     of the offered quotations appearing on Telerate Page 3750 (or if such
     Telerate Page shall not be available, any successor or similar service
     selected by the Lender and the Borrower) as of approximately 10:00 a.m.,
     Central Standard or Daylight Savings Time, as the case may be, on the day
     two Business Days prior to the first day of such Interest Period for Dollar
     deposits in an amount comparable to the principal amount of such LIBO Rate
     Loan and having a term comparable to the Interest Period for such LIBO Rate
     Loan, or (b) the Highest Lawful Rate.  If neither such Telerate Page 3750
     nor any successor or similar service is available, the term "LIBO Rate"
     shall mean, with respect to any Interest Period for any LIBO Rate Loan, the
     lesser of (a) the rate per annum quoted by the Lender at approximately
     10:00 a.m., London time (or as soon

                                       7
<PAGE>

     thereafter as practicable) two Business Days prior to the first day of the
     Interest Period for such LIBO Rate Loan for the offering by the Lender to
     leading banks in the London interbank market of Dollar deposits in an
     amount comparable to the principal amount of such LIBO Rate Loan and having
     a term comparable to the Interest Period for such LIBO Rate Loan, or (b)
     the Highest Lawful Rate.

          "LIBO Rate Loan" shall mean any Loan and any portion of the Loan
     Balance which the Borrower has requested, in the initial Borrowing Request
     for such Loan or a subsequent Borrowing Request for such portion of the
     Loan Balance, bearing interest at the Adjusted LIBO Rate and which is
     permitted by the terms hereof to bear interest at the Adjusted LIBO Rate.

          "Lien" shall mean any interest in Property securing an obligation owed
     to, or a claim by, a Person other than the owner of such Property, whether
     such interest is based on common law, statute, or contract, and including,
     but not limited to, the lien or security interest arising from a mortgage,
     ship mortgage, encumbrance, pledge, security agreement, conditional sale or
     trust receipt, or a lease, consignment, or bailment for security purposes
     (other than true leases or true consignments), liens of mechanics,
     materialmen, and artisans, maritime liens and reservations, exceptions,
     encroachments, easements, rights of way, covenants, conditions,
     restrictions, leases, and other title exceptions and encumbrances affecting
     Property which secure an obligation owed to, or a claim by, a Person other
     than the owner of such Property (for the purpose of this Agreement, the
     Borrower shall be deemed to be the owner of any Property which it has
     acquired or holds subject to a conditional sale agreement, financing lease,
     or other arrangement pursuant to which title to the Property has been
     retained by or vested in some other Person for security purposes), and the
     filing or recording of any financing statement or other security instrument
     in any public office.

          "Limitation Period" shall mean any period while any amount remains
     owing on the Note and interest on such amount, calculated at the applicable
     interest rate, plus any fees or other sums payable under any Loan Document
     and deemed to be interest under applicable law, would exceed the amount of
     interest which would accrue at the Highest Lawful Rate.

          "Loan" shall mean any loan made by the Lender to or for the benefit of
     the Borrower pursuant to this Agreement.

          "Loan Balance" shall mean, at any time, the outstanding principal
     balance of the Note at such time.

          "Loan Documents" shall mean this Agreement, the Note, and all other
     documents and instruments now or hereafter delivered pursuant to the terms
     of or in connection with this Agreement, the Note, and all renewals and
     extensions of, amendments and supplements to, and restatements of, any or
     all of the foregoing from time to time in effect.

                                       8
<PAGE>

          "Material Adverse Effect" shall mean any material adverse effect on
     the business, operations, properties, or condition (financial or
     otherwise), of the Borrower.

          "Multiemployer Plan" shall mean a Plan which is a multiemployer plan
     as defined in Section 4001(a)(3) of ERISA.

          "Net Income" shall mean, for any period, the net income of the
     Borrower for such period, determined in accordance with GAAP.

          "Note" shall mean the promissory note of the Borrower, in the form
     attached hereto as Exhibit I, together with all renewals, extensions for
     any period, increases, and rearrangements thereof.

          "Obligations" shall mean, without duplication, (a) all Indebtedness
     evidenced by the Note, (b) the obligation of the Borrower for the payment
     of Commitment Fees, and Facility Fees, and (c) all other obligations and
     liabilities of the Borrower to the Lender, now existing or hereafter
     incurred, under, arising out of or in connection with any Loan Document,
     and to the extent that any of the foregoing includes or refers to the
     payment of amounts deemed or constituting interest, only so much thereof as
     shall have accrued, been earned and which remains unpaid at each relevant
     time of determination.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation established
     pursuant to Subtitle A of Title IV of ERISA or any entity succeeding to any
     or all of its functions under ERISA.

          "Permitted Indebtedness" shall mean (a) the loans of Dril-Quip
     (Europe), Ltd. from Bank of Scotland (or any renewal or replacement thereof
     from Bank of Scotland or another institutional lender) with a maximum
     principal amount that does not exceed $6,000,000, (b) any loan to Dril-Quip
     Asia Pacific P.T.E., Ltd. with a maximum principal amount that does not
     exceed $6,000,000 and with a maturity of no less than seven years, (c)
     guaranties by the Borrower of the Dril-Quip Asia Pacific P.T.E., Ltd. loan
     described in (b) above, and (d) Indebtedness of the Borrower and its
     Subsidiaries for general purposes, (other than the items of Indebtedness
     referenced in (a), (b) and (c) above), including guaranties, in an
     aggregate amount not to exceed $5,000,000.  If any loan is denominated in a
     currency other than U.S. Dollars, then the determination of the maximum
     principal amount of such loan for purposes of this definition will be made
     on the date such loan is closed using the applicable currency exchange
     ratio on such date.

          "Permitted Liens" shall mean (a) Liens for taxes, assessments, or
     other governmental charges or levies not yet due or which (if foreclosure,
     distraint, sale, or other similar proceedings shall not have been
     initiated) are being contested in good faith by appropriate proceedings,
     and such reserve as may be required by GAAP shall

                                       9
<PAGE>

     have been made therefor, (b) Liens in connection with workers'
     compensation, unemployment insurance or other social security (other than
     Liens created by Section 4068 of ERISA), old-age pension, or public
     liability obligations which are not yet due or which are being contested in
     good faith by appropriate proceedings, if such reserve as may be required
     by GAAP shall have been made therefor, (c) Liens in favor of vendors,
     carriers, warehousemen, repairmen, mechanics, workmen, materialmen,
     construction, or similar Liens arising by operation of law in the ordinary
     course of business in respect of obligations which are not yet due or which
     are being contested in good faith by appropriate proceedings, if such
     reserve as may be required by GAAP shall have been made therefor, (d) Liens
     securing any Permitted Indebtedness and (e) any security interest, pledge
     or lien created in favor of a surety company in connection with the
     issuance of a surety bond in an amount not to exceed $5,000,000 at any time
     in the ordinary course of Borrower's business.

          "Person" shall mean an individual, corporation, partnership, trust,
     unincorporated organization, government, any agency or political
     subdivision of any government, or any other form of entity.

          "Plan" shall mean, at any time, any employee benefit plan which is
     covered by ERISA and in respect of which the Borrower, or any Commonly
     Controlled Entity is (or, if such plan were terminated at such time, would
     under Section 4069 of ERISA be deemed to be) an "employer" as defined in
     Section 3(5) of ERISA.

          "Principal Office" shall mean the principal office of the Lender in
     Houston, Texas, presently located at 333 Clay Street, Suite 4400, Houston,
     Texas 77002.

          "Prohibited Transaction" shall have the meaning assigned to such term
     in Section 4975 of the Code.

          "Property" shall mean any interest in any kind of property or asset,
     whether real, personal or mixed, tangible or intangible.

          "Regulation D" shall mean Regulation D of the Board of Governors of
     the Federal Reserve System, as the same may be amended or supplemented from
     time to time.

          "Regulatory Change" shall mean the passage, adoption, institution, or
     amendment of any federal, state, local, or foreign Requirement of Law
     (including, without limitation, Regulation D), or any interpretation,
     directive, or request (whether or not having the force of law) of any
     Governmental Authority or monetary authority charged with the enforcement,
     interpretation, or administration thereof, occurring after the Closing Date
     and applying to a class of banks including the Lender or its Applicable
     Lending Office.

          "Release of Hazardous Substances" shall mean any emission, spill,
     release, disposal, or discharge, except in accordance with a valid permit,
     license, certificate,

                                       10
<PAGE>

     or approval of the relevant Governmental Authority, of any Hazardous
     Substance into or upon (a) the air, (b) soils or any improvements located
     thereon, (c) surface water or groundwater, or (d) the sewer or septic
     system, or the waste treatment, storage, or disposal system servicing any
     Property of the Borrower.

          "Reorganization" shall mean, with respect to any Multiemployer Plan,
     that such Plan is in reorganization within the meaning of such term in
     Section 4241 of ERISA.

          "Reportable Event" shall mean any of the events set forth in Section
     4043(b) of ERISA, other than those events as to which the thirty-day notice
     period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
     Reg. (S)2615.

          "Requirement of Law" shall mean, as to any Person, the certificate or
     articles of incorporation and by-laws or other organizational or governing
     documents of such Person, and any applicable law, treaty, ordinance, order,
     judgment, rule, decree, regulation, or determination of an arbitrator,
     court, or other Governmental Authority, including, without limitation,
     rules, regulations, orders, and requirements for permits, licenses,
     registrations, approvals, or authorizations, in each case as such now exist
     or may be hereafter amended and are applicable to or binding upon such
     Person or any of its Property or to which such Person or any of its
     Property is subject.

          "Responsible Officer" shall mean, as to any Person (other than
     Borrower), its President, Chief Executive Officer or any Vice President
     and, as to Borrower, any of its Co-Chairmen, any of its Co-Chief Executive
     Officers or its Chief Financial Officer.

          "Senior Management" shall mean the three Co-Chairmen: J. Mike Walker,
     Gary D. Smith and Larry E. Reimert.

          "Single Employer Plan" shall mean any Plan which is covered by Title
     IV of ERISA, but which is not a Multiemployer Plan.

          "Subsidiary" shall mean, as to any Person, a corporation of which
     shares of stock having ordinary voting power (other than stock having such
     power only by reason of the happening of a contingency) to elect a majority
     of the board of directors or other managers of such corporation are at the
     time owned, or the management of which is otherwise controlled, directly or
     indirectly through one or more intermediaries, or both, by such Person.

          "Superfund Site" shall mean those sites listed on the Environmental
     Protection Agency National Priority List and eligible for remedial action
     or any comparable state registries or list in any state of the United
     States.

          "Tangible Net Worth" shall mean (a) total assets, as would be
     reflected on a balance sheet of the Borrower prepared in accordance with
     GAAP, minus (b) total

                                       11
<PAGE>

     liabilities, as would be reflected on a balance sheet of the Borrower
     prepared in accordance with GAAP.

          "Transferee" shall mean any Person to which the Lender has sold,
     assigned, transferred, or granted a participation in any of the Obligations
     and any Person acquiring, by purchase, assignment, transfer, or
     participation, from any such purchaser, assignee, transferee, or
     participant, any part of such Obligations.

          "UCC" shall mean the Uniform Commercial Code as from time to time in
     effect in the State of Texas.

          I.3  Undefined Financial Accounting Terms.  Undefined financial
accounting terms used in this Agreement shall be defined according to GAAP at
the time in effect.

          I.4  References.  References in this Agreement to Exhibit, Article,
or Section numbers shall be to Exhibits, Articles, or Sections of this
Agreement, unless expressly stated to the contrary.  References in this
Agreement to "hereby," "herein," "hereinafter," "hereinabove," "hereinbelow,"
"hereof," "hereunder" and words of similar import shall be to this Agreement in
its entirety and not only to the particular Exhibit, Article, or Section in
which such reference appears.

          I.5  Articles and Sections.  This Agreement, for convenience only,
has been divided into Articles and Sections; and it is understood that the
rights and other legal relations of the parties hereto shall be determined from
this instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.

          I.6  Number and Gender.  Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular.  Definitions
of terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated.  Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative.

          I.7  Incorporation of Exhibits.  The Exhibits attached to this
Agreement are incorporated herein and shall be considered a part of this
Agreement for all purposes.

                                  ARTICLE II

                               TERMS OF FACILITY

          II.1  Revolving Line of Credit.  (a) Upon the terms and conditions
(including, without limitation, the right of the Lender to decline to make any
Loan so long as any Default or Event of Default exists) and relying on the
representations and warranties contained in this Agreement, the Lender agrees,
during the Commitment Period, to make Loans, in immediately

                                       12
<PAGE>

available funds at the Applicable Lending Office or the Principal Office, to or
for the benefit of the Borrower, from time to time on any Business Day
designated by the Borrower following receipt by the Lender of a Borrowing
Request; provided, however, no Loan shall exceed the then existing Available
Commitment.

          (b) Subject to the terms of this Agreement, during the Commitment
Period, the Borrower may borrow, repay, and reborrow and convert Loans of one
type or with one Interest Period into Loans of another type or with a different
Interest Period.  Each borrowing, conversion, and prepayment of principal of
Loans shall be in an amount at least equal to $100,000.  Each borrowing,
prepayment, or conversion of or into a Loan of a different type or, in the case
of a LIBO Rate Loan, having a different Interest Period, shall be deemed a
separate borrowing, conversion, and prepayment for purposes of the foregoing,
one for each type of Loan or Interest Period.  Anything in this Agreement to the
contrary notwithstanding, the aggregate principal amount of LIBO Rate Loans
having the same Interest Period shall be at least equal to $100,000; and if any
LIBO Rate Loan would otherwise be in a lesser principal amount for any period,
such Loan shall be a Floating Rate Loan during such period.

          (c) The Loans shall be made and maintained at the Applicable Lending
Office or the Principal Office and shall be evidenced by the Note.

          II.2  Use of Loan Proceeds.   Proceeds of all Loans shall be used
solely to refinance existing bank debt, for capital expenditures, for general
corporate purposes and for working capital needs.

          II.3  Interest.  Subject to the terms of this Agreement (including,
without limitation, Section 2.10), interest on the Loans shall accrue and be
payable at a rate per annum equal to the Floating Rate for each Floating Rate
Loan and the Adjusted LIBO Rate for each LIBO Rate Loan.  Interest on all
Floating Rate Loans shall be computed on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed (including the first day but
excluding the last day) during the period for which payable.  Interest on all
LIBO Rate Loans shall be computed on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed (including the first day but excluding
the last day) during the period for which payable.  Notwithstanding the
foregoing, interest on past-due principal and, to the extent permitted by
applicable law, past-due interest, shall accrue at the Default Rate, computed on
the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day) during the period
for which payable, and shall be payable upon demand by the Lender at any time as
to all or any portion of such interest.  In the event that the Borrower fails to
select the duration of any Interest Period for any LIBO Rate Loan within the
time period and otherwise as provided herein, such Loan (if outstanding as a
LIBO Rate Loan) will be automatically converted into a Floating Rate Loan on the
last day of the then current Interest Period for such Loan or (if outstanding as
a Floating Rate Loan) will remain as, or (if not then outstanding) will be made
as, a Floating Rate Loan.  Interest provided for herein shall be calculated on
unpaid sums actually advanced and outstanding pursuant to the terms of this
Agreement and only for the period from the date or dates of such advances until
repayment.

          II.4  Repayment of Loans and Interest.  Accrued and unpaid interest
on each outstanding Floating Rate Loan shall be due and payable quarterly
commencing on the first day of

                                       13
<PAGE>

July, 2001, and continuing on the first day of each third calendar month
thereafter while any Floating Rate Loan remains outstanding, the payment in each
instance to be the amount of interest which has accrued and remains unpaid in
respect of the relevant Loan. Accrued and unpaid interest on each outstanding
LIBO Rate Loan shall be due and payable on the last day of the Interest Period
for such LIBO Rate Loan and, in the case of any Interest Period in excess of
three months, on the day of the third calendar month following the commencement
of such Interest Period corresponding to the day of the calendar month on which
such Interest Period commenced, the payment in each instance to be the amount of
interest which has accrued and remains unpaid in respect of the relevant Loan.
The Loan Balance, together with all accrued and unpaid interest thereon, shall
be due and payable at Final Maturity. At the time of making each payment
hereunder or under the Note, the Borrower shall specify to the Lender the Loans
or other amounts payable by the Borrower hereunder to which such payment is to
be applied. In the event the Borrower fails to so specify, or if an Event of
Default has occurred or is continuing, the Lender may apply such payment as it
may elect in its sole discretion.

          II.5  Outstanding Amounts.  The outstanding principal balance of the
Note reflected by the notations by the Lender on its records or ledger sheets
affixed to the Note shall be deemed rebuttably presumptive evidence of the
principal amount owing on the Note.  The liability for payment of principal and
interest evidenced by the Note shall be limited to principal amounts actually
advanced and outstanding pursuant to this Agreement and interest on such amounts
calculated in accordance with this Agreement.

          II.6  Time, Place, and Method of Payments.  All payments required
pursuant to this Agreement or the Note shall be made in lawful money of the
United States of America and in immediately available funds, shall be deemed
received by the Lender on the next Business Day following receipt if such
receipt is after 2:00 p.m., Central Standard or Daylight Savings Time, as the
case may be, on any Business Day, and shall be made at the Principal Office.
Except as provided to the contrary herein, if the due date of any payment
hereunder or under the Note would otherwise fall on a day which is not a
Business Day, such date shall be extended to the next succeeding Business Day,
and interest shall be payable for any principal so extended for the period of
such extension.

          II.7  Voluntary Prepayments and Conversions of Loans.  Subject to
applicable provisions of this Agreement, the Borrower shall have the right at
any time or from time to time to prepay Loans and to convert Loans of one type
or with one Interest Period into Loans of another type or with a different
Interest Period; provided, however, that (a) the Borrower shall give the Lender
notice of each such prepayment or conversion of all or any portion of a LIBO
Rate Loan no less than  two Business Days prior to prepayment or conversion, (b)
any LIBO Rate Loan may be prepaid or converted only on the last day of an
Interest Period for such Loan, (c) the Borrower shall pay all accrued and unpaid
interest on the amounts prepaid or converted, and (d) no such prepayment or
conversion shall serve to postpone the repayment when due of any Obligation.

          II.8  Commitment Fee.  In addition to interest on the Note as
provided herein and all other fees payable hereunder and to compensate the
Lender for maintaining funds available, the Borrower shall pay to the Lender, in
immediately available funds, on the first day of July, 2001, and on the first
day of each third calendar month thereafter during the Commitment Period, a fee
in the

                                       14
<PAGE>

amount of 0.375% per annum, calculated on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed (including the first day but
excluding the last day), on the average daily amount of the Available Commitment
during the preceding quarterly period.

          II.9  Facility Fee.  In addition to interest on the Note as provided
herein and all other fees payable hereunder and to compensate the Lender for the
costs of the extension of credit hereunder, the Borrower shall pay to the Lender
on the Closing Date, in immediately available funds, a facility fee in the
amount of $25,000.

          II.10  General Provisions Relating to Interest.  (a) It is the
intention of the parties hereto to comply strictly with the usury laws of the
State of Texas and the United States of America.  In this connection, there
shall never be collected, charged, or received on the sums advanced hereunder
interest in excess of that which would accrue at the Highest Lawful Rate.  For
purposes of Chapter 10 of Subtitle 1 of Title 79, Texas Revised Civil Statutes,
the Borrower agrees that the Highest Lawful Rate shall be the "weekly ceiling"
as defined in such Section, provided that the Lender may also rely, to the
extent permitted by applicable laws of the State of Texas or the United States
of America, on alternative maximum rates of interest under other laws of the
State of Texas or the United States of America applicable to the Lender, if
greater.

          (b) Notwithstanding anything herein or in the Note to the contrary,
during any Limitation Period, the interest rate to be charged on amounts
evidenced by the Note shall be the Highest Lawful Rate, and the obligation, if
any, of the Borrower for the payment of fees or other charges deemed to be
interest under applicable law shall be suspended.  During any period or periods
of time following a Limitation Period, to the extent permitted by applicable
laws of the State of Texas or the United States of America, the interest rate to
be charged hereunder shall remain at the Highest Lawful Rate until such time as
there has been paid to the Lender (i) the amount of interest in excess of that
accruing at the Highest Lawful Rate that the Lender would have received during
the Limitation Period had the interest rate remained at the otherwise applicable
rate, and (ii) all interest and fees otherwise payable to the Lender but for the
effect of such Limitation Period.

          (c) If, under any circumstances, the aggregate amounts paid on the
Note or under this Agreement or any other Loan Document include amounts which by
law are deemed interest and which would exceed the amount permitted if the
Highest Lawful Rate were in effect, the Borrower stipulates that such payment
and collection will have been and will be deemed to have been, to the extent
permitted by applicable laws of the State of Texas or the United States of
America, the result of mathematical error on the part of the Borrower and the
Lender; and the Lender shall promptly refund the amount of such excess (to the
extent only of such interest payments in excess of that which would have accrued
and been payable on the basis of the Highest Lawful Rate) upon discovery of such
error by the Lender or notice thereof from the Borrower.  In the event that the
maturity of any Obligation is accelerated, by reason of an election by the
Lender or otherwise, or in the event of any required or permitted prepayment,
then the consideration constituting interest under applicable laws may never
exceed the Highest Lawful Rate; and excess amounts paid which by law are deemed
interest, if any, shall be credited by the Lender on the principal amount of the
Obligations, or if the principal amount of the Obligations shall have been paid
in full, refunded to the Borrower.

                                       15
<PAGE>

          (d) All sums paid, or agreed to be paid, to the Lender for the use,
forbearance and detention of the proceeds of any advance hereunder shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term hereof until paid in full so that the actual
rate of interest is uniform but does not exceed the Highest Lawful Rate
throughout the full term hereof.

          II.11  Yield Protection.  (a) Without limiting the effect of the
other provisions of this Section (but without duplication), the Borrower shall
pay to the Lender from time to time such amounts as the Lender may reasonably
determine are necessary to compensate it for any Additional Costs incurred by
the Lender.

          (b) Without limiting the effect of the other provisions of this
Section (but without duplication), the Borrower shall pay to the Lender from
time to time on request such amounts as the Lender may determine are necessary
to compensate the Lender for any costs attributable to the maintenance by the
Lender (or any Applicable Lending Office), pursuant to any Regulatory Change, of
capital in respect of the Commitment, such compensation to include, without
limitation, an amount equal to any reduction of the rate of return on assets or
equity of the Lender (or any Applicable Lending Office) to a level below that
which the Lender (or any Applicable Lending Office) could have achieved but for
such Regulatory Change.

          (c) Without limiting the effect of the other provisions of this
Section (but without duplication), the Borrower shall pay to the Lender such
amounts as shall be sufficient in the reasonable opinion of the Lender to
compensate it for any loss, cost, or expense incurred by and as a result of:

                 (i) any payment, prepayment, or conversion by the Borrower of a
          LIBO Rate Loan on a date other than the last day of an Interest Period
          for such Loan; or

                 (ii) any failure by the Borrower to borrow a LIBO Rate Loan
          from the Lender on the date for such borrowing specified in the
          relevant Borrowing Request;

such compensation to include, without limitation, with respect to any LIBO Rate
Loan, an amount equal to the excess, if any, of (A) the amount of interest which
would have accrued on the principal amount so paid, prepaid, converted, or not
borrowed for the period from the date of such payment, prepayment, conversion,
or failure to borrow to the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, the Interest Period for such
Loan which would have commenced on the date of such failure to borrow) at the
applicable rate of interest for such Loan provided for herein over (B) the
interest component (as reasonably determined by the Lender) of the amount (as
reasonably determined by the Lender) the Lender would have bid in the London
interbank market for Dollar deposits of amounts comparable to such principal
amount and maturities comparable to such period.

          (d) Determinations by the Lender for purposes of this Section of the
effect of any Regulatory Change on capital maintained, its costs or rate of
return, maintaining Loans, its

                                       16
<PAGE>

obligation to make Loans, or on amounts receivable by it in respect of Loans or
such obligations, and the additional amounts required to compensate the Lender
under this Section shall be conclusive, absent manifest error, provided that
such determinations are made on a reasonable basis. The Lender shall furnish the
Borrower with a certificate setting forth in reasonable detail the basis and
amount of increased costs incurred or reduced amounts receivable as a result of
any such event, and the statements set forth therein shall be conclusive, absent
manifest error. The Lender shall (i) notify the Borrower, as promptly as
practicable after the Lender obtains knowledge of any Additional Costs or other
sums payable pursuant to this Section and determines to request compensation
therefor, of any event occurring after the Closing Date which will entitle the
Lender to compensation pursuant to this Section; provided that the Borrower
shall not be obligated for the payment of any Additional Costs or other sums
payable pursuant to this Section to the extent such Additional Costs or other
sums accrued prior to the expiration of the Interest Period then in effect for
each LIBO Rate Loan; and (ii) designate a different Applicable Lending Office
for the Loans of the Lender affected by such event if such designation will
avoid the need for or reduce the amount of such compensation and will not, in
the sole opinion of the Lender, be disadvantageous to the Lender. If the Lender
requests compensation from the Borrower under this Section, the Borrower may, by
notice to the Lender, require that the Loans by the Lender of the type with
respect to which such compensation is requested be converted into Floating Rate
Loans in accordance with Section 2.7. Any compensation requested by the Lender
pursuant to this Section shall be due and payable to the Lender within five days
of delivery of any such notice by the Lender to the Borrower.

          (e) The Lender agrees that it shall not request, and the Borrower
shall not be obligated to pay, any Additional Costs or other sums payable
pursuant to this Section unless similar additional costs and other sums payable
are also generally assessed by the Lender against other customers of the Lender
similarly situated where such customers are subject to documents providing for
such assessment.

          II.12  Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, no more than eight separate Loans shall be outstanding at any
one time, with, for purposes of this Section, all Floating Rate Loans
constituting one Loan and all LIBO Rate Loans for the same Interest Period
constituting one Loan. Anything herein to the contrary notwithstanding, if, on
or prior to the determination of any interest rate for any LIBO Rate Loan for
any Interest Period therefor:

          (a) the Lender determines (which determination shall be conclusive)
     that quotations of interest rates for the deposits referred to in the
     definition of "LIBO Rate" in Section 1.2 are not being provided in the
     relevant amounts or for the relevant maturities for purposes of determining
     the rate of interest for such Loan as provided in this Agreement; or

          (b) the Lender determines (which determination shall be conclusive)
     that the rates of interest referred to in the definition of "LIBO Rate" in
     Section 1.2 upon the basis of which the rate of interest for such Loan for
     such Interest Period is to be determined do not accurately reflect the cost
     to the Lender of making or maintaining such Loan for such Interest Period,

                                       17
<PAGE>

then the Lender shall give the Borrower prompt notice thereof; and so long as
such condition remains in effect, the Lender shall be under no obligation to
make LIBO Rate Loans or to convert Loans of any other type into LIBO Rate Loans,
and the Borrower shall, on the last day of the then current Interest Period for
each outstanding LIBO Rate Loan, either prepay such LIBO Rate Loan or convert
such Loan into another type of Loan in accordance with Section 2.7.  Before
giving such notice pursuant to this Section, the Lender will designate a
different available Applicable Lending Office for LIBO Rate Loans or take such
other action as the Borrower may request if such designation or action will
avoid the need to suspend the obligation of the Lender to make LIBO Rate Loans
hereunder and will not, in the opinion of the Lender, be disadvantageous to the
Lender.  Notwithstanding the foregoing provisions, Lender agrees that it shall
not exercise its right pursuant to the foregoing provisions to suspend its
obligations to make LIBO Rate Loans hereunder unless Lender has suspended its
obligations to make the same type of loans with all other customers who are
subject to documents providing for a similar right in favor of Lender.

          II.13  Illegality.  Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for the Lender or its
Applicable Lending Office to (a) honor its obligation to make any type of LIBO
Rate Loans hereunder, or (b) maintain any type of LIBO Rate Loans hereunder,
then the Lender shall promptly notify the Borrower thereof; and the obligation
of the Lender hereunder to make such type of LIBO Rate Loans and to convert
other types of Loans into LIBO Rate Loans of such type shall be suspended until
such time as the Lender may again make and maintain LIBO Rate Loans of such
type, and the outstanding LIBO Rate Loans of such type shall be converted into
Floating Rate Loans in accordance with Section 2.7.  Before giving such notice
pursuant to this Section, the Lender will designate a different available
Applicable Lending Office for LIBO Rate Loans or take such other action as the
Borrower may request if such designation or action will avoid the need to
suspend the obligation of the Lender to make LIBO Rate Loans and will not, in
the opinion of the Lender, be disadvantageous to the Lender.

          II.14  Regulatory Change.  In the event that by reason of any
Regulatory Change, the Lender (a) incurs Additional Costs based on or measured
by the excess above a specified level of the amount of a category of deposits or
other liabilities of the Lender which includes deposits by reference to which
the interest rate on any LIBO Rate Loan is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
which includes any LIBO Rate Loan, or (b) becomes subject to restrictions on the
amount of such a category of liabilities or assets which it may hold, then, at
the election of the Lender with notice to the Borrower, the obligation of the
Lender to make such LIBO Rate Loans and to convert Floating Rate Loans into such
LIBO Rate Loans shall be suspended until such time as such Regulatory Change
ceases to be in effect, and all such outstanding LIBO Rate Loans shall be
converted into Floating Rate Loans in accordance with Section 2.7.
Notwithstanding the foregoing provisions, Lender agrees that it shall not
exercise its right pursuant to the foregoing provisions to suspend its
obligations to make LIBO Rate Loans hereunder unless Lender has suspended its
obligations to make the same type of loans with all other customers who are
subject to documents providing for a similar right in favor of Lender.

          II.15  Limitations on Interest Periods.  Each Interest Period
selected by the Borrower (a) which commences on the last Business Day of a
calendar month (or, with respect to any LIBO Rate Loan, any day for which there
is no numerically corresponding day in the appropriate

                                       18
<PAGE>

subsequent calendar month) shall end on the last Business Day of the appropriate
subsequent calendar month, (b) which would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next succeeding calendar month, on the next
preceding Business Day), (c) which would otherwise commence before and end after
Final Maturity shall end on Final Maturity, and (d) shall have a duration of not
less than one month, as to any LIBO Rate Loan, and, if any Interest Period would
otherwise be a shorter period, the relevant Loan shall be a Floating Rate Loan
during such period.

                                  ARTICLE III

                                  CONDITIONS

          The obligations of the Lender to enter into this Agreement and to make
Loans are subject to the satisfaction of the following conditions precedent:

          III.1  Receipt of Loan Documents and Other Items.  The Lender shall
have no obligation under this Agreement unless and until all matters incident to
the consummation of the transactions contemplated herein, and the Lender shall
have received, reviewed, and approved the following documents and other items,
appropriately executed when necessary and, where applicable, acknowledged by one
or more authorized officers of the Borrower, all in form and substance
satisfactory to the Lender and dated, where applicable, of even date herewith or
a date prior thereto and acceptable to the Lender:

          (a) multiple counterparts of this Agreement as requested by the
     Lender;

          (b) the Note;

          (c) copies of the Articles of Incorporation or Certificate of
     Incorporation and all amendments thereto and the bylaws and all amendments
     thereto of the Borrower, accompanied by a certificate issued by the
     secretary or an assistant secretary of the Borrower, to the effect that
     each such copy is correct and complete;

          (d) certificates of incumbency and signatures of all officers of the
     Borrower who are authorized to execute Loan Documents on behalf of the
     Borrower such entities, each such certificate being executed by the
     secretary or an assistant secretary of the Borrower;

          (e) copies of corporate resolutions approving the Loan Documents and
     authorizing the transactions contemplated herein and therein, duly adopted
     by the board of directors of the Borrower, accompanied by certificates of
     the secretary or an assistant secretary of the Borrower, to the effect that
     such copies are true and correct copies of resolutions duly adopted at a
     meeting or by unanimous consent of the board of directors of the Borrower,
     and that such resolutions constitute all the resolutions adopted with
     respect to such transactions, have not been amended,

                                       19
<PAGE>

     modified, or revoked in any respect, and are in full force and effect as of
     the date of such certificate;

          (f) audited Financial Statements of the Borrower as of December 31,
     2000;

          (g) certificates dated as of a recent date from the Secretary of State
     or other appropriate Governmental Authority evidencing the existence or
     qualification and good standing of the Borrower in its jurisdiction of
     incorporation and in any other jurisdictions where it does business; and

          (h) such other agreements, documents, instruments, opinions,
     certificates, waivers, consents, and evidence as the Lender may reasonably
     request.

          III.2  Each Loan.  In addition to the conditions precedent stated
elsewhere herein, the Lender shall not be obligated to make any Loan unless:

          (a) the Borrower shall have delivered to the Lender a Borrowing
     Request at least the requisite time prior to the requested date for the
     relevant Loan, and each statement or certification made in such Borrowing
     Request shall be true and correct in all material respects on the requested
     date for such Loan;

          (b) no Event of Default or Default shall exist or will occur as a
     result of the making of the requested Loan;

          (c) if requested by the Lender, the Borrower shall have delivered
     evidence reasonably satisfactory to the Lender substantiating any of the
     matters contained in this Agreement which are necessary to enable the
     Borrower to qualify for such Loan;

          (d) the Lender shall have received, reviewed, and approved such
     additional documents and items as described in Section 3.1 as may be
     requested by the Lender with respect to such Loan;

          (e) each of the representations and warranties contained in this
     Agreement shall be true and correct in all material respects and shall be
     deemed to be repeated by the Borrower as if made on the requested date for
     such Loan (except that the representation in the last sentence of Section
     4.5 shall not be deemed to have been repeated upon the requested date for
     such Loan).

          (f) neither the consummation of the transactions contemplated hereby
     nor the making of such Loan shall contravene, violate, or conflict with any
     Requirement of Law;

          (g) the Lender shall have received the payment of all Facility Fees
     and other fees payable to the Lender hereunder and reimbursement from the
     Borrower, or special legal counsel for the Lender shall have received
     payment from the Borrower, for (i) all reasonable fees and expenses of
     counsel to the Lender for which the

                                       20
<PAGE>

     Borrower is responsible pursuant to applicable provisions of this Agreement
     and for which invoices have been presented as of or prior to the date of
     the relevant Loan, and (ii) estimated fees charged by filing officers and
     other public officials incurred or to be incurred in connection with the
     filing and recordation of any Security Instruments, for which invoices have
     been presented as of or prior to the date of the requested Loan; and

          (h) all matters incident to the consummation of the transactions
     hereby contemplated shall be satisfactory to the Lender.

                                  ARTICLE IV

                        REPRESENTATIONS AND WARRANTIES

          To induce the Lender to enter into this Agreement and to make the
Loans, the Borrower represents and warrants to the Lender (which representations
and warranties shall survive the delivery of the Note) that:

          IV.1  Due Authorization.  The execution and delivery by the Borrower
of this Agreement and the borrowings hereunder, the execution and delivery by
the Borrower of the Note, the repayment of the Note and interest and fees
provided for in the Note and this Agreement, and the performance of all
obligations of the Borrower under the Loan Documents are within the power of the
Borrower, have been duly authorized by all necessary corporate action by the
Borrower, and do not and will not (a) require the consent of any Governmental
Authority, (b) contravene or conflict with any Requirement of Law, (c)
contravene or conflict with any indenture, instrument, or other agreement to
which the Borrower is a party or by which any Property of the Borrower may be
presently bound or encumbered, or (d) result in or require the creation or
imposition of any Lien in, upon or of any Property of the Borrower under any
such indenture, instrument, or other agreement, other than the Loan Documents.

          IV.2  Corporate Existence.  The Borrower is a corporation duly
organized, legally existing, and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and is in good
standing in all jurisdictions wherein the ownership of Property or the operation
of its business necessitates same, other than those jurisdictions wherein the
failure to so qualify will not have a Material Adverse Effect.

          IV.3  Valid and Binding Obligations.  All Loan Documents, when duly
executed and delivered by the Borrower, will be the legal, valid, and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms.

          IV.4  Title to Assets.  The Borrower has good and indefeasible title
to all of its Properties, free and clear of all Liens except Permitted Liens.

          IV.5  Scope and Accuracy of Financial Statements.  The Financial
Statements of the Borrower as of December 31, 2000, present fairly the financial
position and results of operations

                                       21
<PAGE>

and cash flows of the Borrower in accordance with GAAP as at the relevant point
in time or for the period indicated, as applicable. No event or circumstance has
occurred since December 31, 2000, which could reasonably be expected to have a
Material Adverse Effect.

          IV.6  No Material Misstatements. No information, exhibit, statement,
or report furnished to the Lender by or at the direction of the Borrower in
connection with this Agreement contains any material misstatement of fact or
omits to state a material fact or any fact necessary to make the statements
contained therein not misleading as of the date made or deemed made.

          IV.7  Liabilities, Litigation, and Restrictions.  Other than as
listed under the heading "Liabilities" on Exhibit IV attached hereto, the
Borrower has no liabilities, direct, or contingent, which may materially and
adversely affect its business or operations.  Except as set forth under the
heading "Litigation" on Exhibit IV hereto, no litigation or other action of any
nature affecting the Borrower is pending before any Governmental Authority or,
to the best knowledge of the Borrower, threatened against or affecting the
Borrower which might reasonably be expected to result in any impairment of its
ownership of its Property or have a Material Adverse Effect.  To the best
knowledge of the Borrower, after due inquiry, no unusual or unduly burdensome
restriction, restraint or hazard exists by contract, Requirement of Law, or
otherwise relative to the business or operations of the Borrower other than such
as relate generally to Persons engaged in business activities similar to those
conducted by the Borrower.

          IV.8  Authorizations; Consents.  Except as expressly contemplated by
this Agreement, no authorization, consent, approval, exemption, franchise,
permit, or license of, or filing with, any Governmental Authority or any other
Person is required to authorize or is otherwise required in connection with the
valid execution and delivery by the Borrower of the Loan Documents or any
instrument contemplated hereby, the repayment by the Borrower of the Note and
interest and fees provided in the Note and this Agreement, or the performance by
the Borrower of the Obligations.

          IV.9  Compliance with Laws.  The Borrower and its Property are in
compliance with all applicable Requirements of Law, including, without
limitation, Environmental Laws, and ERISA, except to the extent non-compliance
with any such Requirements of Law could not reasonably be expected to have a
Material Adverse Effect.

          IV.10  ERISA.   No Reportable Event has occurred with respect to any
Single Employer Plan, and each Single Employer Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code.  To the best knowledge of the Borrower, (a) no Reportable
Event has occurred with respect to any Multiemployer Plan, and (b) each
Multiemployer Plan has complied with and been administered in all material
respects with applicable provisions of ERISA and the Code.  The present value of
all benefits vested under each Single Employer Plan maintained by the Borrower
or any Commonly Controlled Entity (based on the assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such vested benefits.  Neither
the Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan for which there is any withdrawal
liability.  As of the most recent valuation date applicable to any Multiemployer
Plan, neither the Borrower nor any Commonly

                                       22
<PAGE>

Controlled Entity would become subject to any liability under ERISA if the
Borrower or such Commonly Controlled Entity were to withdraw completely from
such Multiemployer Plan. Neither the Borrower nor any Commonly Controlled Entity
has received notice that any Multiemployer Plan is Insolvent or in
Reorganization. To the best knowledge of the Borrower, no such Insolvency or
Reorganization is reasonably likely to occur. Based upon GAAP existing as of the
date of this Agreement and current factual circumstances, the Borrower has no
reason to believe that the annual cost during the term of this Agreement to the
Borrower and all Commonly Controlled Entities for post-retirement benefits to be
provided to the current and former employees of the Borrower and all Commonly
Controlled Entities under Plans which are welfare benefit plans (as defined in
Section 3(1) of ERISA) will, in the aggregate, have a Material Adverse Effect.

          IV.11  Environmental Laws.  To the best knowledge and belief of the
Borrower, except as would not have a Material Adverse Effect, or as described on
Exhibit IV under the heading "Environmental Matters:"

          (a) no Property of the Borrower is currently on or has ever been on
     any federal or state list of Superfund Sites;

          (b) no Hazardous Substances have been generated, transported, and/or
     disposed of by the Borrower at a site which was, at the time of such
     generation, transportation, and/or disposal, or has since become, a
     Superfund Site;

          (c) except in accordance with applicable Requirements of Law or the
     terms of a valid permit, license, certificate, or approval of the relevant
     Governmental Authority, no Release of Hazardous Substances by the Borrower
     or from, affecting, or related to any Property of the Borrower or adjacent
     to any Property of the Borrower has occurred; and

          (d) no Environmental Complaint has been received by the Borrower.

          IV.12  Compliance with Federal Reserve Regulations.  No transaction
contemplated by the Loan Documents is in violation of any regulations
promulgated by the Board of Governors of the Federal Reserve System, including,
without limitation, Regulations G, T, U, or X.

          IV.13  Investment Company Act Compliance.  The Borrower is not, nor
is the Borrower directly or indirectly controlled by or acting on behalf of any
Person which is, an "investment company" or an "affiliated person" of an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

          IV.14  Public Utility Holding Company Act Compliance.  The Borrower
is not a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

          IV.15  Proper Filing of Tax Returns; Payment of Taxes Due.  The
Borrower has duly and properly filed its United States income tax return and all
other tax returns which are required to

                                       23
<PAGE>

be filed and has paid all taxes due except such as are being contested in good
faith and as to which adequate provisions and disclosures have been made. The
respective charges and reserves on the books of the Borrower with respect to
taxes and other governmental charges are adequate.

          IV.16  Casualties or Taking of Property.  Except as disclosed on
Exhibit IV under the heading "Casualties," since December 31, 2000, neither the
business nor any Property of the Borrower has been materially adversely affected
as a result of any fire, explosion, earthquake, flood, drought, windstorm,
accident, strike or other labor disturbance, embargo, requisition or taking of
Property, or cancellation of contracts, permits, or concessions by any
Governmental Authority, riot, activities of armed forces, or acts of God.

          IV.17  Locations of Borrower.  The principal place of business and
chief executive office of the Borrower is located at the address of the Borrower
set forth in Section 8.3 or at such other location as the Borrower may have, by
proper written notice hereunder, advised the Lender, provided that such other
location is within a state in which appropriate financing statements from the
Borrower in favor of the Lender have been filed.

          IV.18  Subsidiaries.  The Borrower has no Subsidiaries except those
described on Exhibit IV under the heading "Subsidiaries".

                                 ARTICLE V
                                 ---------

                                 AFFIRMATIVE COVENANTS
                                 ---------------------

          So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrower shall:

          V.1  Maintenance and Access to Records  .  Keep adequate records, in
accordance with GAAP, of all its transactions so that at any time, and from time
to time, its true and complete financial condition may be readily determined,
and promptly following the reasonable request of the Lender, make such records
available for inspection by the Lender and, at the expense of the Borrower,
allow the Lender to make and take away copies thereof.

          V.2  Quarterly Financial Statements; Compliance Certificates  .
Deliver to the Lender, (a) on or before the 45th day after the close of each of
the first three quarterly periods of each fiscal year of the Borrower, a copy of
the Form 10-Q filed with the SEC under the Securities Exchange Act of 1934 with
respect to such quarterly period, and (b) on or before the 45th day after the
close of each fiscal quarter, with the exception of the last fiscal quarter, a
Compliance Certificate.

          V.3  Annual Financial Statements.  Deliver to the Lender, on or
before the 90th day after the close of each fiscal year of the Borrower, a copy
of the Form 10-K filed with the SEC under the Securities Exchange Act of 1934
with respect to such fiscal year and a Compliance Certificate.

                                       24
<PAGE>

          V.4  Notices of Certain Events.  Deliver to the Lender, immediately
upon having knowledge of the occurrence of any of the following events or
circumstances, a written statement with respect thereto, signed by a Responsible
Officer of the Borrower and setting forth the relevant event or circumstance and
the steps being taken by the Borrower with respect to such event or
circumstance:

          (a) any Default or Event of Default;

          (b) any default or event of default under any contractual obligation
     of the Borrower, or any litigation, investigation, or proceeding between
     the Borrower and any Governmental Authority which, in either case, if not
     cured or if adversely determined, as the case may be, could reasonably be
     expected to have a Material Adverse Effect;

          (c) any litigation or proceeding involving the Borrower as a defendant
     or in which any Property of the Borrower is subject to a claim and in which
     the amount involved is $1,000,000 or more and which is not covered by
     insurance or in which injunctive or similar relief is sought;

          (d) the receipt by the Borrower of any Environmental Complaint;

          (e) any actual, proposed, or threatened testing or other investigation
     by any Governmental Authority or other Person concerning the environmental
     condition of, or relating to, any Property of the Borrower following any
     allegation of a violation of any Requirement of Law;

          (f) any Release of Hazardous Substances by the Borrower or from,
     affecting, or related to any Property of the Borrower except in accordance
     with applicable Requirements of Law or the terms of a valid permit,
     license, certificate, or approval of the relevant Governmental Authority,
     or the violation of any Environmental Law, or the revocation, suspension,
     or forfeiture of or failure to renew, any permit, license, registration,
     approval, or authorization which could reasonably be expected to have a
     Material Adverse Effect;

          (g) any change in the Senior Management of the Borrower;

          (h) any Reportable Event or imminently expected Reportable Event with
     respect to any Plan; any withdrawal from, or the termination,
     Reorganization or Insolvency of, any Multiemployer Plan; the institution of
     proceedings or the taking of any other action by the PBGC, the Borrower, or
     any Commonly Controlled Entity or Multiemployer Plan with respect to the
     withdrawal from, or the termination, Reorganization or Insolvency of, any
     Single Employer Plan or Multiemployer Plan; or any Prohibited Transaction
     in connection with any Plan or any trust created thereunder and the action
     being taken by the Internal Revenue Service with respect thereto, which, in
     each case, could reasonably be expected to have a Material Adverse Effect;
     and

                                       25
<PAGE>

          (i) any other event or condition which could reasonably be expected to
     have a Material Adverse Effect.

          V.5  Additional Information.  Furnish to the Lender, promptly upon
the request of the Lender, such additional financial or other information
concerning the assets, liabilities, operations, and transactions of the Borrower
as the Lender may from time to time request.

          V.6  Compliance with Laws.  Except to the extent the failure to
comply or cause compliance would not have a Material Adverse Effect, comply with
all applicable Requirements of Law, including, without limitation, (a)
Environmental Laws, and (b) all permits, licenses, registrations, approvals, and
authorizations (i) related to any natural or environmental resource or media
located on, above, within, in the vicinity of, related to or affected by any
Property of the Borrower, (ii) required for the performance of the operations of
the Borrower, or (iii) applicable to the use, generation, handling, storage,
treatment, transport, or disposal of any Hazardous Substances; and cause all
employees, crew members, agents, contractors, subcontractors, and future lessees
(pursuant to appropriate lease provisions) of the Borrower, while such Persons
are acting within the scope of their relationship with the Borrower, to comply
with all such Requirements of Law as may be necessary or appropriate to enable
the Borrower to so comply.

          V.7 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against the Property of the Borrower, except any of the foregoing
being contested in good faith and as to which adequate reserve in accordance
with GAAP has been established or unless failure to pay would not have a
Material Adverse Effect.

          V.8  Maintenance of Corporate Existence and Good Standing.  Maintain
its corporate existence or qualification and good standing in its jurisdictions
of incorporation and in all jurisdictions wherein the Property now owned or
hereafter acquired or business now or hereafter conducted necessitates same,
unless the failure to do so would not have a Material Adverse Effect.

          V.9  Payment of Notes; Performance of Obligations.  Pay the Note
according to the reading, tenor, and effect thereof, as modified hereby, and do
and perform every act and discharge all of its other Obligations.

          V.10  Further Assurances.  Promptly cure any defects in the
execution and delivery of any of the Loan Documents and all agreements
contemplated thereby, and execute, acknowledge, and deliver such other
assurances and instruments as shall, in the opinion of the Lender, be necessary
to fulfill the terms of the Loan Documents.

          V.11  Initial Fees and Expenses of Counsel to Lender.  Upon request
by the Lender, promptly reimburse the Lender for all reasonable fees and
expenses of Jackson Walker L.L.P., special counsel to the Lender, in connection
with the preparation of this Agreement and all documentation contemplated
hereby, the satisfaction of the conditions precedent set forth herein, and the
consummation of the transactions contemplated in this Agreement.

                                       26
<PAGE>

          V.12  Subsequent Fees and Expenses of Lender.  Upon request by the
Lender, promptly reimburse the Lender (to the fullest extent permitted by law)
for all amounts reasonably expended, advanced, or incurred by or on behalf of
the Lender to satisfy any obligation of the Borrower under any of the Loan
Documents; to collect the Obligations; to ratify, amend, restate, or prepare
additional Loan Documents, as the case may be; which amounts shall be deemed
compensatory in nature and liquidated as to amount upon notice to the Borrower
by the Lender and which amounts shall include, but not be limited to (a) all
court costs, (b) reasonable attorneys' fees, (c) reasonable fees and expenses of
auditors and accountants incurred to protect the interests of the Lender, (d)
fees and expenses incurred in connection with the participation by the Lender as
a member of the creditors' committee in a case commenced under any Insolvency
Proceeding, (e) fees and expenses incurred in connection with lifting the
automatic stay prescribed in (S)362 Title 11 of the United States Code, and (f)
fees and expenses incurred in connection with any action pursuant to (S)1129
Title 11 of the United States Code all reasonably incurred by the Lender in
connection with the collection of any sums due under the Loan Documents,
together with interest at the per annum interest rate equal to the Floating
Rate, calculated on a basis of a calendar year of 365 or 366 days, as the case
may be,, counting the actual number of days elapsed, on each such amount from
the date of notification that the same was expended, advanced, or incurred by
the Lender until the date it is repaid to the Lender, with the obligations under
this Section surviving the non-assumption of this Agreement in a case commenced
under any Insolvency Proceeding and being binding upon the Borrower and/or a
trustee, receiver, custodian, or liquidator of the Borrower appointed in any
such case.

          V.13  Maintenance of Insurance.  Maintain insurance with respect to
its Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Lender and, upon any renewal of any such insurance and at
other times upon request by the Lender, furnish to the Lender evidence,
satisfactory to the Lender, of the maintenance of such insurance.

          V.14  INDEMNIFICATION.  INDEMNIFY AND HOLD THE LENDER AND ITS
SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT, AND
AFFILIATES AND EACH TRUSTEE FOR THE BENEFIT OF THE LENDER UNDER ANY SECURITY
INSTRUMENT HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES,
LIABILITIES, FINES, PENALTIES, CHARGES, ADMINISTRATIVE AND JUDICIAL PROCEEDINGS
AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS, REQUIREMENTS AND ENFORCEMENT ACTIONS OF
ANY KIND, AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES), ARISING DIRECTLY
OR INDIRECTLY, IN WHOLE OR IN PART, FROM THE PERFORMANCE AND ENFORCEMENT OF THIS
LOAN DOCUMENT, OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR RELATED TO
THIS LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY; WITH THE FOREGOING
INDEMNITY SURVIVING SATISFACTION OF ALL OBLIGATIONS AND THE TERMINATION OF THIS
AGREEMENT.

                                       27
<PAGE>

                                  ARTICLE VI

                              NEGATIVE COVENANTS

          So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrower will not:

          VI.1  Indebtedness.  Create, incur, assume, or suffer to exist any
Indebtedness, whether by way of loan or otherwise; provided, however, the
foregoing restriction shall not apply to (a) the Obligations, (b) unsecured
accounts payable incurred in the ordinary course of business, which are not
unpaid in excess of 180 days beyond invoice date or are being contested in good
faith and as to which such reserve as is required by GAAP has been made, and (c)
Permitted Indebtedness.

          VI.2  Liens.  Create, incur, assume, or suffer to exist any Lien on
any of its Property, whether now owned or hereafter acquired; provided, however,
the foregoing restrictions shall not apply to Permitted Liens.

          VI.3  Changes in Corporate Structure.  Enter into any transaction of
consolidation, merger, or amalgamation in which Borrower is not the surviving
entity; liquidate, wind up, or dissolve (or suffer any liquidation or
dissolution).

          VI.4  Dividends and Distributions.   Declare, pay, or make, whether
in cash or Property of the Borrower, any dividend or distribution on, or
purchase, redeem, or otherwise acquire for value, any share of any class of its
capital stock  at any time that a Default or Event of Default exists; provided,
however, the foregoing restriction shall not apply to dividends paid in capital
stock of the Borrower.

          VI.5  ERISA Compliance.  Permit any Plan maintained by it or any
Commonly Controlled Entity to (a) engage in any Prohibited Transaction, (b)
incur any "accumulated funding deficiency," as such term is defined in Section
302 of ERISA, or (c) terminate in a manner which could result in the imposition
of a Lien on any Property of the Borrower pursuant to Section 4068 of ERISA; or
assume an obligation to contribute to any Multiemployer Plan; or acquire any
Person or the assets of any Person which has now or has had at any time an
obligation to contribute to any Multiemployer Plan.

          VI.6  Transactions with Subsidiaries.  Directly or indirectly, enter
into any material transaction (including the sale, lease, or exchange of
Property or the rendering of service) with any of its Subsidiaries, other than
upon fair and reasonable terms no less favorable than could be obtained in an
arm's length transaction with a Person which was not a Subsidiary.

          VI.7  Tangible Net Worth.  Permit Tangible Net Worth as of the close
of any fiscal quarter to be less than $145,000,000 for all periods beginning
with the March 31, 2001 Financial Statements, plus 75% of positive Net Income
beginning July 1, 2001.

          VI.8  Funded Debt to EBITDA.  Permit the ratio of Funded Debt to
EBITDA, at the close of any fiscal quarter, beginning with the March 31, 2001
Financial Statements, for the previous four quarters to be more than the
Permitted Ratio (herein defined).  This ratio shall be

                                       28
<PAGE>

calculated on a rolling four quarter basis. As used herein, the term "Permitted
Ratio" shall mean (i) 3.00 to 1.00 for each quarter ending on March 31, 2002 or
before and (ii) 2.75 to 1.00 for each quarter ending June 30, 2002 or later.

          VI.9 EBIT to Interest Expense. Permit the ratio of EBIT to Interest
Expense, at the close of any fiscal quarter, beginning with the March 31, 2001
Financial Statements for the previous four quarters to be less than 2.50 to
1.00. This ratio shall be calculated on a rolling four quarter basis.

                                  ARTICLE VII

                               EVENTS OF DEFAULT

          VII.1  Enumeration of Events of Default.  Any of the following
events shall constitute an Event of Default:

          (a) default shall be made in the payment when due of any installment
     of principal or interest under this Agreement or the Note or in the payment
     when due of any fee or other sum payable under any Loan Document and such
     default as to interest or fees only shall have continued for three days
     after notice has been given by Lender to Borrower;

          (b) default shall be made by the Borrower in the due observance or
     performance of any of its obligations under the Loan Documents, and such
     default shall continue for 30 days after notice thereof to the Borrower by
     the Lender;

          (c) any representation or warranty made by the Borrower in any of the
     Loan Documents proves to have been untrue in any material respect or any
     representation, statement (including Financial Statements), certificate, or
     data furnished or made to the Lender in connection herewith proves to have
     been untrue in any material respect as of the date the facts therein set
     forth were stated or certified;

          (d) default shall be made by the Borrower (as principal or guarantor
     or other surety) in the payment or performance of any bond, debenture,
     note, or other Indebtedness or under any credit agreement, loan agreement,
     indenture, promissory note, or similar agreement or instrument executed in
     connection with any of the foregoing, and such default shall remain
     unremedied for in excess of the period of grace, if any, with respect
     thereto;

          (e) the Borrower shall (i) apply for or consent to the appointment of
     a receiver, trustee, or liquidator of it or all or a substantial part of
     its assets, (ii) file a voluntary petition commencing an Insolvency
     Proceeding, (iii) make a general assignment for the benefit of creditors,
     (iv) be unable, or admit in writing its inability, to pay its debts
     generally as they become due, or (v) file an answer

                                       29
<PAGE>

     admitting the material allegations of a petition filed against it in any
     Insolvency Proceeding;

          (f) an order, judgment, or decree shall be entered against the
     Borrower by any court of competent jurisdiction or by any other duly
     authorized authority, on the petition of a creditor or otherwise, granting
     relief in any Insolvency Proceeding or approving a petition seeking
     reorganization or an arrangement of its debts or appointing a receiver,
     trustee, conservator, custodian, or liquidator of it or all or any
     substantial part of its assets, and such order, judgment, or decree shall
     not be dismissed or stayed within 30 days;

          (g) the levy against any significant portion of the Property of the
     Borrower, or any execution, garnishment, attachment, sequestration, or
     other writ or similar proceeding which is not permanently dismissed or
     discharged within 30 days after the levy;

          (h) a final and non-appealable order, judgment, or decree shall be
     entered against the Borrower for money damages and/or Indebtedness due in
     an amount in excess of $100,000, and such order, judgment, or decree shall
     not be paid, dismissed or stayed within 30 days;

          (i) any charges are filed or any other action or proceeding is
     instituted by any Governmental Authority against the Borrower under the
     Racketeering Influence and Corrupt Organizations Statute (18 U.S.C. (S)1961
     et seq.), the result of which could be the forfeiture or transfer of any
     material Property of the Borrower subject to a Lien in favor of the Lender
     without (i) satisfaction or provision for satisfaction of such Lien, or
     (ii) such forfeiture or transfer of such Property being expressly made
     subject to such Lien;

          (j) the Borrower shall have (i) concealed, removed, or diverted, or
     permitted to be concealed, removed, or diverted, any part of its Property,
     with intent to hinder, delay, or defraud its creditors or any of them, (ii)
     made or suffered a transfer of any of its Property which may be fraudulent
     under any bankruptcy, fraudulent conveyance, or similar law, (iii) made any
     transfer of its Property to or for the benefit of a creditor at a time when
     other creditors similarly situated have not been paid, or (iv) shall have
     suffered or permitted, while insolvent, any creditor to obtain a Lien upon
     any of its Property through legal proceedings or distraint which is not
     vacated within 30 days from the date thereof;

          (k) any Person shall engage in any "prohibited transaction" (as
     defined in Section 406 of ERISA or Section 4975 of the Code) involving any
     Plan which could reasonably be expected to have a Material Adverse Effect;
     any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
     whether or not waived, shall exist with respect to any Plan for which an
     excise tax is due or would be due in the absence of a waiver; a Reportable
     Event shall occur with respect to, or proceedings shall commence to have a
     trustee appointed, or a trustee shall be

                                       30
<PAGE>

     appointed, to administer or to terminate, any Single Employer Plan, which
     Reportable Event or commencement of proceedings or appointment of a trustee
     is, in the reasonable opinion of the Lender, likely to result in the
     termination of such Plan for purposes of Title IV of ERISA; any Single
     Employer Plan shall terminate for purposes of Title IV of ERISA; the
     Borrower or any Commonly Controlled Entity shall incur, or in the
     reasonable opinion of the Lender, be likely to incur any liability in
     connection with a withdrawal from, or the Insolvency or Reorganization of,
     a Multiemployer Plan; or any other event or condition shall occur or exist
     with respect to a Plan and the result of such events or conditions referred
     to in this Section 7.1 could subject the Borrower or any Commonly
     Controlled Entity to any tax (other than an excise tax under Section 4980
     of the Code), penalty or other liabilities which taken in the aggregate
     would have a Material Adverse Effect and any such circumstance shall exist
     for in excess of 30 days; or

          (l) any change in two-thirds (2/3) of the Senior Management without
     the prior written consent of the Lender and if Lender does not consent, the
     Borrower shall have 180 days from written notice by the Lender of its lack
     of consent to elect new Senior Management acceptable to the Lender.

          VII.2  Remedies.  (a  Upon the occurrence of an Event of Default
specified in Sections 7.1(f) or 7.1(g), immediately and without notice, (i) all
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrower; (ii) the Commitment
shall immediately cease and terminate unless and until reinstated by the Lender
in writing; and (iii) the Lender is hereby authorized at any time and from time
to time, without notice to the Borrower (any such notice being expressly waived
by the Borrower), to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) held by the Lender and any and all other
indebtedness at any time owing by the Lender to or for the credit or account of
the Borrower against any and all of the Obligations although such Obligations
may be unmatured.

          (b  Upon the occurrence of any Event of Default other than those
specified in Sections 7.1(f) or 7.1(g), (i) the Lender may, by notice to the
Borrower, declare all Obligations immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrower; (ii) the Commitment
shall immediately cease and terminate unless and until reinstated by the Lender
in writing; and (iii) the Lender is hereby authorized at any time and from time
to time, without notice to the Borrower (any such notice being expressly waived
by the Borrower), to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) held by the Lender and any and all other
indebtedness at any time owing by the Lender to or for the credit or account of
the Borrower against any and all of the Obligations although such Obligations
may be unmatured.

                                       31
<PAGE>

          (c  Upon the occurrence of any Event of Default, the Lender may, in
addition to the foregoing in this Section, exercise any or all of its rights and
remedies provided by law or pursuant to the Loan Documents.

                                 ARTICLE VIII

                                 MISCELLANEOUS

          VIII.1  Transfers; Participations.  The Lender may , at any time,
sell, transfer, assign, or grant participations of up to 40% of the Obligations
to a bank or banks mutually agreeable to Lender and Borrower.

          VIII.2  Survival of Representations, Warranties, and Covenants.  All
representations and warranties of the Borrower and all covenants and agreements
herein made shall survive the execution and delivery of the Note and shall
remain in force and effect so long as any Obligation is outstanding or any
Commitment exists.

          VIII.3  Notices and Other Communications.  Except as to oral notices
expressly authorized herein, which oral notices shall be confirmed in writing,
all notices, requests, and communications hereunder shall be in writing
(including by telecopy).  Unless otherwise expressly provided herein, any such
notice, request, demand, or other communication shall be deemed to have been
duly given or made when delivered by hand, or, in the case of delivery by mail,
when deposited in the mail, certified mail, return receipt requested, postage
prepaid, or, in the case of telecopy notice, when receipt thereof is
acknowledged orally or by written confirmation report, addressed as follows:

          (a   if to the Lender, to:

               Guaranty Bank, FSB
               333 Clay Street, Suite 4400
               Houston, Texas  77002
               Attention:  A.R. Gralla, Jr.
               Telecopy:  (713) 759-1780

          (b   if to the Borrower, to:

               Dril-Quip, Inc.
               13550 Hempstead Highway
               Houston, Texas 77040
               Attention: J. Mike Walker
               Telecopy: (713) 939-5329

                                       32
<PAGE>

          (c   with a copy to:

               Dril-Quip, Inc.
               13550 Hempstead Highway
               Houston, Texas 77040
               Attention: Jerry Brooks
               Telecopy: (713) 690-6303

          Any party may, by proper written notice hereunder to the others,
change the individuals or addresses to which such notices to it shall thereafter
be sent.

          VIII.4  Parties in Interest.  Subject to applicable restrictions
contained herein, all covenants and agreements herein contained by or on behalf
of the Borrower or the Lender shall be binding upon and inure to the benefit of
the Borrower or the Lender, as the case may be, and their respective legal
representatives, successors, and assigns.

          VIII.5  Rights of Third Parties.  All provisions herein are imposed
solely and exclusively for the benefit of the Lender and the Borrower.  No other
Person shall have any right, benefit, priority, or interest hereunder or as a
result hereof or have standing to require satisfaction of provisions hereof in
accordance with their terms, and any or all of such provisions may be freely
waived in whole or in part by the Lender at any time if in its sole discretion
it deems it advisable to do so.

          VIII.6  Renewals; Extensions.  All provisions of this Agreement
relating to the Note shall apply with equal force and effect to each promissory
note hereafter executed which in whole or in part represents a renewal or
extension of any part of the Indebtedness of the Borrower under this Agreement,
the Note, or any other Loan Document.

          VIII.7  No Waiver; Rights Cumulative.  No course of dealing on the
part of the Lender, its officers or employees, nor any failure or delay by the
Lender with respect to exercising any of its rights under any Loan Document
shall operate as a waiver thereof.  The rights of the Lender under the Loan
Documents shall be cumulative and the exercise or partial exercise of any such
right shall not preclude the exercise of any other right.  The making of any
Loan shall not constitute a waiver of any of the covenants, warranties, or
conditions of the Borrower contained herein.  In the event the Borrower is
unable to satisfy any such covenant, warranty, or condition, the making of any
Loan shall not have the effect of precluding the Lender from thereafter
declaring such inability to be an Event of Default as hereinabove provided.

          VIII.8  Survival Upon Unenforceability.  In the event any one or
more of the provisions contained in any of the Loan Documents or in any other
instrument referred to herein or executed in connection with the Obligations
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision of any Loan Document or of any other instrument referred to
herein or executed in connection with such Obligations.

                                       33
<PAGE>

          VIII.9  Amendments; Waivers.  Neither this Agreement nor any
provision hereof may be amended, waived, discharged, or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the amendment, waiver, discharge, or termination is sought.

          VIII.10  Controlling Agreement.  In the event of a conflict between
the provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control.

          VIII.11  GOVERNING LAW.  THIS AGREEMENT AND THE NOTE SHALL BE DEEMED
TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES
THEREOF RELATING TO CONFLICTS OF LAW; PROVIDED, HOWEVER, THAT CHAPTER 345 OF THE
TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND
REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY.

          VIII.12  JURISDICTION AND VENUE.  ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED
TO, OR FROM THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE
SOLE DISCRETION AND ELECTION OF THE LENDER, IN COURTS HAVING SITUS IN HOUSTON,
HARRIS COUNTY, TEXAS.  THE BORROWER HEREBY SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON, HARRIS COUNTY, TEXAS, AND
HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR
VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE LENDER IN ACCORDANCE WITH THIS
SECTION.

          VIII.13  ENTIRE AGREEMENT.  THIS AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND
SHALL SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN
OR ORAL, RELATING TO THE SUBJECT HEREOF.  FURTHERMORE, IN THIS REGARD, THIS
AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE
FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.

          VIII.14  Counterparts.  For the convenience of the parties, this
Agreement may be executed in multiple counterparts, each of which for all
purposes shall be deemed to be an original, and all such counterparts shall
together constitute but one and the same Agreement.

          VIII.15  Confidentiality.  Lender agrees to keep confidential any
information furnished or made available to it by Borrower pursuant to this
Agreement; provided that nothing herein shall

                                       34
<PAGE>

prevent Lender from disclosing such information (a) to any affiliate of Lender,
or any officer, director, employee, agent, or advisor of Lender or affiliate of
any Lender, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
law, rule, or regulations, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to Lender other than as a result of a disclosure by Lender prohibited by this
Agreement, (g) to the extent required by any subpoena or other judicial process
in connection with any litigation to which Lender or any of its affiliates may
be a party, and (h) to the extent necessary in connection with the exercise of
any remedy under this Agreement or any other Loan Document. Lender shall impose
upon each and every recipient of any information disclosed by Lender pursuant to
clauses (a) or (b) above the obligation of confidentiality that is contained in
this Section 8.15 such that any subsequent disclosure by any such recipient that
is not otherwise permitted by the provisions hereof shall be deemed to be a
violation of the provisions of this Section 8.15 by Lender.

          IN WITNESS WHEREOF, this Agreement is deemed executed effective as of
the date first above written.

                                BORROWER:

                                DRIL-QUIP, INC.

                                By: /s/ J. MIKE WALKER
                                    ___________________________
                                    J. Mike Walker
                                    Co-Chairman

                                LENDER:

                                GUARANTY BANK, FSB

                                By: /s/ ARTHUR R. GRALLA, JR.
                                    ___________________________
                                    Arthur R. Gralla, Jr.
                                    Senior Vice President

                                       35
<PAGE>

                                   EXHIBIT I

                                 FORM OF NOTE

                                PROMISSORY NOTE

$50,000,000                     Houston, Texas                      May 18, 2001

          FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("Maker")
promises to pay to the order of GUARANTY BANK, FSB ("Payee"), at its banking
quarters in Houston, Harris County, Texas,  the sum of FIFTY MILLION DOLLARS
($50,000,000), or so much thereof as may be advanced against this Note pursuant
to the Credit Agreement dated of even date herewith by and between Maker and
Payee (as amended, restated, or supplemented from time to time, the "Credit
Agreement"), together with interest at the rates and calculated as provided in
the Credit Agreement.

          Reference is hereby made to the Credit Agreement for matters governed
thereby, including, without limitation, certain events which will entitle the
holder hereof to accelerate the maturity of all amounts due hereunder.
Capitalized terms used but not defined in this Note shall have the meanings
assigned to such terms in the Credit Agreement.

          This Note is issued pursuant to, is the "Note" under, and is payable
as provided in the Credit Agreement.  Subject to compliance with applicable
provisions of the Credit Agreement, Maker may at any time pay the full amount or
any part of this Note without the payment of any premium or fee, but such
payment shall not, until this Note is fully paid and satisfied, excuse the
payment as it becomes due of any payment on this Note provided for in the Credit
Agreement.

          THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE OF
TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW;
PROVIDED, HOWEVER, THAT CHAPTER 345 OF THE TEXAS FINANCE CODE (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL
NOT APPLY TO THIS NOTE.

                                DRIL-QUIP, INC.

                                By: ___________________________
                                    J. Mike Walker
                                    Co-Chairman

                                      I-i
<PAGE>

                                  EXHIBIT II

                           FORM OF BORROWING REQUEST

Guaranty Bank, FSB
333 Clay Street, Suite 4400
Houston, Texas  77002
Attention: A.R. Gralla, Jr.

     Re:  Credit Agreement dated as of May 18, 2001, by and between GUARANTY
          BANK, FSB and DRIL-QUIP, INC. (as amended, restated, or supplemented
          from time to time, the "Credit Agreement")

Ladies and Gentlemen:

          Pursuant to the Credit Agreement, the Borrower hereby makes the
requests indicated below:

     1.   Loans

     (a)  Amount of new Loan: $________________

     (b)  Requested funding date: ___________, 19___

     (c)  $________________ of such Loan is to be a Floating Rate Loan;

          $________________ of such Loan is to be a LIBO Rate Loan.

     (d)  Requested Interest Period for LIBO Rate Loan: ____ months.

     2.   Continuation or conversion of LIBO Rate Loan maturing on __________:

     (a)  Amount to be continued as a LIBO Rate Loan is $____________________,
          with an Interest Period of ____ months;

     (b)  Amount to be converted to a Floating Rate Loan is $________________;
          and

     3.   Conversion of Floating Rate Loan:

     (a)  Requested conversion date: __________, 19____.

     (b)  Amount to be converted to a LIBO Rate Loan is $________, with an
          Interest Period of _____ months.

                                     II-i
<PAGE>

          The undersigned certifies that he[she] is the __________ of the
Borrower, has obtained all consents necessary, and as such he[she] is authorized
to execute this request on behalf of the Borrower.  The undersigned further
certifies, represents, and warrants on behalf of the Borrower that the Borrower
is entitled to receive the requested borrowing, continuation, or conversion
under the terms and conditions of the Credit Agreement.

          Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.

                                Very truly yours,

                                DRIL-QUIP, INC.

                                By: ___________________________
                                    Jerry Brooks
                                    Chief Financial Officer

                                     II-ii
<PAGE>

                                  EXHIBIT III

                        FORM OF COMPLIANCE CERTIFICATE

                             ______________, 19__

Guaranty Bank, FSB
333 Clay Street, Suite 4400
Houston, Texas  77002
Attention:  A. R. Gralla, Jr.

     Re:  Credit Agreement dated as of May 18, 2001, by and between GUARANTY
          BANK, FSB and DRIL-QUIP, INC. (as amended, restated, or supplemented
          from time to time, the "Credit Agreement")

Ladies and Gentlemen:

          Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as a Responsible Officer of the Borrower, hereby certifies to you
the following information as true and correct as of the date hereof or for the
period indicated, as the case may be:

     1.  To the best of the knowledge of the undersigned, no Default or Event of
     Default exists as of the date hereof or has occurred since the date of our
     previous certification to you, if any.

     1.  To the best of the knowledge of the undersigned, the following Defaults
     or Events of Default exist as of the date hereof or have occurred since the
     date of our previous certification to you, if any, and the actions set
     forth below are being taken to remedy such circumstances:

     2.  The compliance of the Borrower with the financial covenants of the
     Credit Agreement, as of the close of business on ____________________, is
     evidenced by the following:

     (a)  Section 6.7: Tangible Net Worth. Permit Tangible Net Worth as of the
          close of any fiscal quarter to be less than $145,000,000 for all
          periods beginning with the March 31, 2001 Financial Statements, plus
          75% of positive Net Income beginning July 1, 2001.

                                    Actual

                                 ______ to 1.0

     (b)  Section 6.8: Funded Debt to EBITDA.  Permit the ratio of Funded Debt
          to EBITDA, at the close of any fiscal quarter, beginning with the
          March 31, 2001 Financial Statements, for the previous four quarters to
          be more than the Permitted Ratio (herein

                                     III-i
<PAGE>

          defined). This ratio shall be calculated on a rolling four quarter
          basis. As used herein, the term "Permitted Ratio" shall mean (i) 3.00
          to 1.00 for each quarter ending on March 31, 2002 or before and (ii)
          2.75 to 1.00 for each quarter ending June 30, 2002 or later.

                                    Actual

                                 ______ to 1.0

     (c)  Section 6.9: EBIT to Interest Expense.  Permit the ratio of EBIT to
          Interest Expense, at the close of any fiscal quarter, beginning with
          the March 31, 2001 Financial Statements for the previous four quarters
          to be less than 2.50 to 1.00.  This ratio shall be calculated on a
          rolling four quarter basis.

                                    Actual

                                 ______ to 1.0

          Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.

                                Very truly yours,

                                DRIL-QUIP, INC.

                                By: ___________________________
                                    Jerry Brooks
                                    Chief Financial Officer

                                    III-ii
<PAGE>

                                  EXHIBIT IV

                                  DISCLOSURES

Section 4.7                     Liabilities

                                None

                                Litigation

                                None

Section 4.11                    Environmental Matters

                                None

Section 4.16                    Casualties

                                None

Section 4.18                    Subsidiaries

                                Dril-Quip (Europe), Limited
                                Dril-Quip Asia Pacific P.T.E., Ltd.
                                DQ Holding PTY, Ltd.
                                Dril-Quip do Brasil, Ltda.
                                Dril-Quip France SARL
                                Dril-Quip (Nigeria) Ltd.
                                Dril-Quip (Angola) Lda.

                                     IV-i

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