Document:

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                           MEMORANDUM OF UNDERSTANDING

     The following represents an understanding regarding the terms of an
agreement ("Agreement") between RubyCat Technology ("RCT") and its subsidiaries,
and direct and indirect affiliates and the EnerTeck Chemical Corporation and its
subsidiaries, and direct and indirect affiliates ("EnerTeck"). (RCT and
EnerTeck, each a "Party", and collectively referred to herein as "Parties") for
the sale by RCT and purchase and marketing by EnerTeck of RCT's diesel fuel
additive products for the diesel fuel market (such products from RCT will
hereinafter be referred to as "EnerBurn"). Such marketing of RCT's diesel fuel
additive products will be supported by RCT with its associated application
services and technology. Also presented herein are the basic terms of agreement
for a purchase option for EnerTeck to acquire RCT's EnerBurn products and
related Technology as more fully discussed in Section 2, below.

     The Parties shall each give best effort to cause this endeavor to reach
fruition and will not engage in any activity or representation that would
circumvent, impede, conflict or compete with this Agreement.

RCT and EnerTeck agree as follows:

1.   SUPPLY AND MARKETING AGREEMENT The Parties agree that the term "mutual
     exclusivity" for the purposes of this agreement means that EnerTeck will
     collaborate with and purchase EnerBurn products and services exclusively
     from RCT and RCT will collaborate with and sell EnerBurn Diesel products
     and services exclusively to EnerTeck as outlined herein and neither party
     will have third party relationships that would compete with or impede the
     Agreement herein. This mutual exclusivity in Diesel fuel markets
     specifically excludes Diesel aftertreatment hardware and technology. The
     Parties agree to mutual exclusivity for developing substantial sales of
     RCT's EnerBurn products and application services in Diesel fuel markets as
     follows:

     (a)  EnerTeck and RCT are currently collaborating in the development of
          Diesel transportation and various industrial sales of EnerBurn in
          Diesel applications in the USA, South America, and Europe for highway,
          rail, marine, mining, power generation, and other related Diesel
          applications. Collaboration for marketing EnerBurn in other geographic
          regions is contemplated. The Parties herein agree to collaborate on a
          Global basis (excluding China) with mutual exclusivity to develop
          Diesel market sales and new markets for a period of eleven months from
          the effective date of this agreement and evergreen year to year
          thereafter so long as EnerTeck's purchases of EnerBurn from RCT have
          met the following minimums (as specified in the pre-existing Exclusive
          Market Segment Development Agreement) in the preceding year:

                  Year One ending December 31, 2003         180,000 Gallons
                  Year Two ending December 31, 2004         270,000 Gallons
                  Year Three ending December 31, 2005       400,000 Gallons
                  And Each Year thereafter                  500,000 Gallons

     (b)  In consideration of a payment of $100,000 by EnerTeck to RCT, the
          Parties agree to a temporary extension of, and expansion to, the scope
          of the Exclusive Market Segment Development Agreement already existing
          between the Parties for the Diesel fuel market which would expand the
          exclusive marketing rights granted to EnerTeck. The consideration is
          to be paid no later than February 3, 2003, and the term of which shall
          continue until the option of Section 2 below is exercised or December
          31, 2003, whichever occurs first.

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          Should EnerTeck's purchases of EnerBurn fail to meet the minimum
          volume requirements for any annual period, RCT will protect EnerTeck's
          relationship with its existing customers and distributors and will
          sell EnerBurn to EnerTeck for any and all of said customers but
          EnerTeck will forfeit Global exclusivity as described herein.

     (c)  The Parties reserve the right to review cost/price quarterly. If this
          review reveals that a price adjustment is necessary, the Parties will
          meet and negotiate a price adjustment to be agreed by the Parties.
          Parties agree to negotiate in good faith on all/any such negotiations.

This agreement does not replace, but only temporarily (through extension of the
option period expiring December 31, 2003) compliments the Exclusive Market
Segment Development Agreement between RCT and EnerTeck dated July 3, 2001 and
September 7, 2001. Additionally, this Agreement does not modify, alter or
supercede any prior confidentiality agreements between the Parties, and/or their
affiliates that relate to proprietary data, know-how and/or computer modeling
(the Technology); or proprietary customer and distributor information. Each
Party will use the same care and prudence with the other Party's confidential
information as it would reasonably expect the other Party to use with its own
confidential information.

2.   PURCHASE OPTION AGREEMENT

     (a)  The Parties agree to the granting of an option to EnerTeck to purchase
          from RCT the EnerBurn technology, which technology is specifically
          limited to the elements listed in Attachment I.

     RCT grants to EnerTeck a unilateral one-year option to purchase the
     technology, including the information specified in Attachment 1 relating to
     the use of the principal EnerBurn chemical in all Diesel fuel applications
     (excluding diesel aftertreatment). The option purchase price ranges as
     follows:

               If exercised in January, 2003 - $6,000,000
               If exercised in February, 2003 - $6,055,000
               If exercised in March, 2003 - $6,110,000
               If exercised in April, 2003 - $6,165,000
               If exercised in May, 2003 - $6,220,000
               If exercised in June, 2003- $6,275,000
               If exercised in July, 2003- $6,330,000
               If exercised in August, 2003 - $6,385,000
               If exercised in September, 2003 - $6,440,000
               If exercised in October, 2003 - $6,495,000
               If exercised in November, 2003 - $6,550,000
               If exercised in December, 2003 - $6,600,000

     (b)  This option expires on December 31, 2003 if not exercised by funds
          transfer by EnerTeck to RCT prior to that date. Payment will be made
          in full to RCT in readily available funds without deduction or set off
          at the time of closing on or prior to December 31, 2003.

The Parties agree, in good faith, to enter into a definitive purchase agreement
for the Technology as outlined in this Section 2. Subsequent to EnerTeck's
payment in full for RCT's Technology, i.e. the exercise of the aforementioned
option, EnerTeck shall expressly and permanently own all rights and royalties to
the Diesel fuel portion of RCT's Technology; and RCT, its subsidiaries,
shareholders, officers, and beneficiaries will protect the confidentiality of
the purchased Technology and will not engage in competition with EnerTeck or
transfer said Technology to an active or potential Diesel competitor of
EnerTeck. Furthermore, subsequent to EnerTeck's fulfillment of the purchase
option, RCT's President, will enter into an agreement with EnerTeck to provide
to EnerTeck consulting, data analysis and training, for a minimum period of two
years,

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the actual term and reimbursement rate for this agreement to be negotiated
between the Parties. The Parties will, in good faith, negotiate the terms of the
consulting agreement prior to executing the option to purchase RCT's Technology
unless mutually agreed otherwise.

The Parties recognize that EnerTeck is attempting to secure sufficient outside
funding to enable it to complete the acquisition of RCT's Technology for diesel
applications as provided for in Section 2 herein and that demonstrable EnerBurn
sales metrics must be met to secure said funds to exercise the option. In the
event that EnerTeck does not exercise the option referred to in Section 2,
above, for any reason whatsoever, this memorandum of understanding as it relates
to the Supply and Marketing Agreement (Section 1, above) reverts to the still
valid, binding and primary terms and conditions of the Exclusive Market Segment
Agreement dated July 3, 2001 and September 7, 2001, as simply extended by the
$100,000 fee payment.

         The laws of the State of Colorado shall govern this Agreement. The
effective date of this Agreement is February 1, 2003.

         In witness whereof, the Parties have caused this Agreement to be signed
by their duly authorized representatives:

                      For RubyCat Technology:

                      s/s                                         Date: 2-07-03
                      --------------------------------------------      -------
                      By: Jack Kracklauer
                      President, RubyCat Technology

                      For EnerTeck Chemical Corporation.

                      s/s                                         Date: 2-04-03
                      --------------------------------------------      -------
                      By: Dwaine Reese

                      Chairman Of The Board, EnerTeck Chemical Corporation, Inc.

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                                  ATTACHMENT 1

          The elements and components of the EnerBurn diesel technology covered
          by this eleven-month option are specifically limited to the following
          items.

RCT TECHNOLOGY

     1.   Formula for diesel EnerBurn.

     2.   The analytical protocols required to analyze Key Chemicals to qualify
          them for safe and effective use in Diesel engine applications.

     3.   Transfer exclusively to EnerTeck all (RCT will continue to own and use
          these protocols in non-diesel and diesel aftertreatment applications)
          rights to the proof of performance statistical analysis procedures for
          Diesel engine applications.

     4.   The rights to test documentation and test reports of performance of
          Enerburn in Diesel equipment.

     5.   Authorization to use RCT's EPA Diesel Fuel Product Registration to the
          full extent permitted by EPA regulations and policies. Any transfer
          short of out right sale of the permits will be exclusive to EnerTeck.

     6.   Transfer of all rights and responsibilities of the Exclusive Market
          Segment Development Agreement dated July 31, 2001 and September 7,
          2001.

     7.   Proprietary RCT Technology to produce the Key Chemicals in the
          EnerBurn Formulation for EnerTeck's use exclusively in formulating and
          marketing EnerBurn or EnerBurn related Products in diesel fuels
          markets. Any sale to third parties of Key Chemicals produced using
          RCT's Proprietary Technology will require the prior written consent of
          RCT.

RCT SUPPLY AGREEMENT

A guaranteed, full requirements supply contract for Proprietary Key Chemicals
from RCT to EnerTeck Corporation for uses in formulating and marketing Diesel
EnerBurn Products. The full requirement commitment for each Key Chemical from
RCT is contingent on EnerTeck purchasing, during a contract year, a minimum of
80% of Key Chemicals requirements from RCT for Diesel EnerBurn Products. RCT
will be given the option to meet any competitive offer for supply of a Key
Chemical to EnerTeck prior to EnerTeck purchasing the Key Chemical from another
source.

                                       4LEASE AGREEMENT

                               The Atrium Building

                              10701 Corporate Drive

                                 STAFFORD, TEXAS

                                     Lessor:

                     HSO CORPORATE DRIVE LIMITED PARTNERSHIP

                                     Lessee:

                             Enerteck Chemical Corp.

                             LEASE DATE: Feb 1, 2001
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                                TABLE OF CONTENTS

Section 1.  Premises.....................................................4
Section 2.  Term.........................................................4
Section 3.  Base Rental..................................................4
Section 4.  Adjustment to Base Rental....................................5
Section 5.  Lessee's Occupancy...........................................6
Section 6.  Services to be Furnished by Lessor...........................6
Section 7.  Keys, Locks and Access Cards.................................6
Section 8.  Signage and Lobby Directory..................................7
Section 9.  Relocation of Lessee.........................................7
Section 10.  Maintenance and Repairs by Lessor...........................7
Section 11.  Repairs by Lessee...........................................7
Section 12.  Care of the Premises........................................7
Section 13.  Parking.....................................................7
Section 14.  Lessor's Exclusive Covenant.................................7
Section 15.  Holding Over................................................8
Section 16.  Alterations, Additions, and Improvements....................8
Section 17.  Legal Use and Violations of Insurance Coverage..............8
Section 18.  Laws and Regulations; Building Rules........................8
Section 19.  Nuisance....................................................8
Section 20.  Entry by Lessor.............................................8
Section 21.  Assignment and Subletting...................................8
Section 22.  Transfer of Lessor..........................................9
Section 23.  Subordination to Mortgage...................................9
Section 24.  Mechanic's Lien.............................................9
Section 25.  Estoppel Certificate.......................................10
Section 26.  Events of Default..........................................10
Section 27:  Lessor's Right to Relet....................................12
Section 28.  Lien for Rent..............................................12
Section 29.  Attorney's Fees............................................13
Section 30.  No Implied Waiver..........................................13
Section 31.  Casualty Insurance.........................................13
Section 32.  Liability Insurance........................................13
Section 33.  Indemnity..................................................13
Section 34.  Rent Tax...................................................13
Section 35.  Waiver of Claims and Subrogation...........................14
Section 36.  Casualty Damage............................................14
Section 37.  Condemnation...............................................14
Section 38.  Notices and Cure...........................................14

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Section 39.  Personal Liability.........................................15
Section 40.  Notice.....................................................15
Section 41.  Surrender..................................................15
Section 42.  Captions...................................................15
Section 43.  Entirety and Amendments....................................15
Section 44.  Severability...............................................16
Section 45.  Binding Effect.............................................16
Section 46.  Number and Gender of Words.................................16
Section 47.  Recordation................................................16
Section 48.  Commissions................................................16
Section 49.  Confidentiality............................................16
Section 50.  Governing Law..............................................16
Section 51.  Force Majeure..............................................16
Section 52.  Relationship of Parties....................................16
Section 53.  Security Deposit...........................................16
Section 54.  Financial Information Of Lessee............................16
Section 55.  ADA........................................................17
Section 56.  Hazardous Materials........................................17
Section 57.  No Lessor Obligation to Provide Security...................17
Section 58.  Exhibits...................................................18

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                                 LEASE AGREEMENT

         THIS LEASE  AGREEMENT  (the  "Lease"),  made and  entered  into on this
1st___ day of February,  2001,  between HSO Corporate Drive Limited  Partnership
("Lessor"), and Enerteck Chemical Corp. ("Lessee").

                              W I T N E S S E T H:

Section 1.  Premises

                  Subject to and upon the terms and conditions  hereinafter  set
forth,  and each in  consideration of the covenants and obligations of the other
hereunder, Lessor does hereby lease and demise to Lessee, and Lessee does hereby
lease from Lessor, those certain premises (the "Premises") in the building known
as The Atrium Building,  10701 Corporate Drive (the  "Building")  constructed on
the real  property  situated in the City of Stafford,  Fort Bend County,  TEXAS,
more particularly  described on EXHIBIT A attached hereto and made a part hereof
for all purposes (the "Property").  The Premises shall mean that (those) certain
space(s) on the Second (2nd)  floor-(s) of the  Building  being  Suite-s 293 and
comprising 557 square feet of Net Rentable Area, as more specifically identified
in EXHIBIT B attached  hereto.  The term "Net Rentable Area" shall be defined as
1.17% of  multi-tenant  usable  area  whether  or not the  floors  are  actually
utilized  for  multiple  tenant  occupancy.  Usable  area shall be  computed  by
measuring to the inside finish of permanent  outer building  walls, or the glass
line if at least 50% of the outer  building wall is glass,  to the outer side of
corridors  and/or other  permanent  partitions,  and to the center of partitions
that separate the Premises from adjoining  usable areas.  No deduction  shall be
made for columns and  projections  necessary to the  Building.  The Net Rentable
Area in the Building shall mean 108,490 square feet.

Section 2.  Term

                  (a) Subject to and upon the terms and conditions set forth
herein, or in any Rider or exhibit hereto, this Lease shall Continue in force
for a term of Thirty Six Months (36/Mnths.) beginning on the 1st day of
February, 2001, ("Commencement Date") and ending on the 31st day of January,
2004, unless sooner terminated or extended to a later date under any other term
or provision hereof.

                  (b) If for any reason the Premises are not ready for occupancy
by Lessee on the  commencement  date specified in Paragraph  2(a) above,  Lessor
shall not be liable or responsible  for any claims,  damages,  or liabilities in
connection therewith or by reason thereof, and this Lease and the obligations of
Lessee  shall  nonetheless  commence  and  continue  in full  force and  effect;
provided,  however,  if the Premises are not ready for  occupancy for any reason
other than  omission,  delay,  or default on the part of Lessee or anyone acting
under or for  Lessee,  the rent herein  provided  shall not  commence  until the
Premises  are ready for  occupancy  by  Lessee.  Such  abatement  of rent  shall
constitute  full  settlement  of all claims that  Lessee  might  otherwise  have
against Lessor by reason of the Premises not being ready for occupancy by Lessee
on the date of the  commencement  of the term  hereof.  Should  the term of this
Lease  commence on a date other than that  specified  in  Paragraph  2(a) above,
Lessee will,  at the request of Lessor,  execute an amendment to this Lease on a
form provided by Lessor specifying the beginning date of the term of this Lease.
In such event,  rental  under this Lease shall not  commence  until such revised
commencement  date, and the stated term of this Lease shall thereupon  commence,
and the  expiration  date  shall be  extended  so as to give  effect to the full
stated  term.  If work is required of the  Landlord  pursuant to EXHIBIT C , the
Premises  shall be deemed to be ready for occupancy on the first to occur of (i)
the date  that  there  is  delivered  to  Lessee a  certificate  of  substantial
completion  from  Lessor's  architect,  which  certificate  shall be binding and
conclusive  upon Lessee in the absence of bad faith and collusion on the part of
or between Lessor and Lessor's architect,  or (ii) upon the date on which Lessee
begins occupancy of the Premises.

Section 3.  Base Rental

                  (a) Lessee hereby agrees to pay to Lessor,  without  setoff or
deduction  whatsoever,  in  accordance  with the Schedule of Base Rent  attached
hereto as EXHIBIT D ("Base  Rental).  Lessee shall also pay, as additional  rent
[or Forecast Additional Rent ], all such other sums of money as shall become due
from and  payable  by  Lessee to Lessor  under  this  Lease  (Base  Rental,  any
adjustment  thereto  pursuant  to  Section 4 hereof,  and all such other sums of
money  due from and  payable  by Lessee  pursuant  to this  Lease are  sometimes
hereinafter  collectively  called  "rent"),  for the  nonpayment of which Lessor
shall be  entitled  to  exercise  all such  rights  and  remedies  as are herein
provided in the case of the  nonpayment of Base Rental.  The annual Base Rental,
together with any  adjustment or increase  thereto then in effect,  shall be due
and payable in advance in twelve (12) equal installments on the first 1st day of
each calendar  month during the term of this Lease,  and Lessee hereby agrees so
to pay such Base  Rental and any  adjustment  or  increase  thereto to Lessor at
Lessor's  address provided herein (or such other address as may be designated by
Lessor in writing from time to time) monthly, in advance, and without demand. If
the term of this Lease  commences on a day other than first (1st) day of a month
or terminates on a day other than the last day of a month, then the installments
of Base Rental and any  adjustments  thereto  for such month or months  shall be
prorated,  and the  installment  or  installments  so prorated  shall be paid in
advance.

                  (b) In the event any  installment  of the Base Rental,  or any
other  sums  which may  become  owing by Lessee to Lessor  under the  provisions
hereof are not received within Five (5) days after the due date thereof (without
in any way  implying  Lessor's  consent to such late  payment),  Lessee,  to the
extent  permitted by law, agrees to pay, in addition to said  installment of the
Base Rental or such other sums owed, a late payment  charge equal to ten percent
(10%) (Late Fee) of the  installment of the Base Rental or such other sums owed.
Notwithstanding the foregoing, the foregoing late charges shall not apply to any
sums which have been advanced by Lessor to or for the benefit of Lessee pursuant
to the provisions of this Lease,  it being  understood that such sums shall bear
interest,  which Lessee hereby agrees to pay to Lessor, at the lesser of fifteen
percent  (15%) per annum or the maximum rate of interest  permitted by law to be
charged Lessee for the use or forbearance of such money.

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Section 4.  Adjustment to Base Rental

                  (a)  For  purposes  of  ascertaining  the  adjustment  to Base
Rental, the following terms shall have the following meanings:

         (i) "Base Amount" (Base Year Expense Stop) shall mean the Basic Cost to
         operate the Building for the Calendar Year 2001 (Base Year );

         (ii)  "Basic  Costs"  shall mean all  Building  and  Complex  Operating
         Expenses determined as if the building is fully occupied;

         (iii)"Complex"   shall  mean  the   Building  and  any  other  land  or
         improvements,  including related parking  facilities,  now or hereafter
         operated, in whole or in part, in common with the Building;

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         (iv)  "Estimated  Basic  Costs" shall mean a good faith  projection  of
         Basic Costs for the forthcoming calendar year;

         (v)  "Lessee's  Share" shall mean the ratio  determined by dividing Net
         Rentable  Area in the  Premises by Net Rentable  Area in the  Building.
         Lessee is deemed to occupy 0.005% percent ("Proportionate Share) of the
         Net Rentable area of the Building;

         (vi)  "Operating   Expenses"  shall  mean  all  expenses,   costs,  and
         disbursements  (but not  replacement  of capital  investment  items nor
         specific costs  especially  billed to and paid by specific  tenants) of
         every kind and nature which Lessor shall pay or become obligated to pay
         because of or in  connection  with the  ownership  and operation of the
         Building and/or Complex, including, but not limited to, the following:

                  (A) Wages,  salaries, and fees of all personnel engaged in the
         operation, maintenance, leasing (but not to include third party leasing
         commissions),  or security of the Building and/or Complex and personnel
         who may provide traffic control relating to ingress and egress from the
         parking  areas  for  the  Building  to  adjacent  streets.  All  taxes,
         insurance,  and benefits relating to employees providing these services
         shall also be included;

                  (B) All  supplies  and  materials  used in the  operation  and
         maintenance of the Building and/or Complex;

                  (C) Costs of all  utilities for the Building  and/or  Complex,
         including  but not  limited  to, the cost of water and power,  heating,
         lighting, air conditioning, and ventilation;

                  (D)  Cost  of  all   maintenance,   janitorial,   and  service
         agreements for the Building  and/or Complex and the equipment  therein,
         including  but not limited to,  alarm  service,  window  cleaning,  and
         elevator maintenance;

                  (E) Cost of all  insurance  relating  to the  Building  and/or
         Complex,  including  but not  limited  to,  the  cost of  casualty  and
         liability  insurance and Lessor's  personal property used in connection
         therewith;

                  (F) All taxes,  assessments,  and other governmental  charges,
         whether federal,  state,  county, or municipal,  and whether they be by
         taxing  districts or  authorities  presently  taxing the Premises or by
         others,  subsequently  created or  otherwise,  and any other  taxes and
         assessments   attributable  to  the  Building  and/or  Complex  or  its
         operation.  Lessee  will  be  responsible  for  taxes  on its  personal
         property and on the value of leasehold  improvements to the extent that
         same exceeds standard Building allowances;

                  (G) Cost of labor and  materials  in  performing  repairs  and
         general  maintenance in connection  with the Building  and/or  Complex,
         including without limitation, Lessor's share of all maintenance for the
         access road to the Building and Lessor's  share of  maintenance  of the
         underground  storm drainage  system,  but excluding  capital repairs or
         replacement and general maintenance paid by proceeds of insurance or by
         Lessee or other third parties,  and alterations  attributable solely to
         tenants of the Building other than Lessee;

                  (H)  Amortization  of the  cost  of  installation  of  capital
         investment  items  which are  primarily  for the  purpose  of  reducing
         operating  costs of the Building  and/or  Complex  (e.g.  energy saving
         devices) or which may be required by governmental  authority.  All such
         costs  shall be  amortized  over  the  reasonable  life of the  capital
         investment  items by an additional  charge to be added to rent and paid
         by Lessee as additional rent, with the reasonable life and amortization
         schedule  being  determined  by Lessor  in  accordance  with  generally
         accepted  accounting  principles,  but in no event to extend beyond the
         reasonable life of the Building;

                  (I)  Lessor's   accounting,   auditing,   and  legal  expenses
         applicable to the Building and/or Complex;

                  (a) Such  Operating  Expenses shall be computed on the accrual
basis.  All Operating  Expenses shall be determined in accordance with generally
accepted accounting principles which shall be consistently applied.

                  (b) For each calendar year during the term of this Lease, Base
Rental shall be adjusted upward by the amount of Lessee's Share of the increase,
if any,  of Basic  Costs  over the Base  Amount.  Prior to  January  1, 2002 and
January 1st of each calendar  year during the term of this Lease,  or as soon as
practicable  thereafter,  Lessor shall provide Lessee with Estimated Basic Costs
for the  calendar  year ahead and  Lessee's  Share of the  increase of Estimated
Basic Costs over the Base Amount; thereafter,  Lessee's Share of the increase of
Estimated Basic Costs over the Base Amount shall be paid in twelve equal monthly
installments  together  with the monthly  installment  of rental due  hereunder.
However, for the first calendar year during which the Lease is in effect, if the
term of  this  Lease  commences  on a day  other  than  January  1, , as soon as
practicable  thereafter,  Lessor shall provide Lessee with Estimated Basic Costs
for that  calendar  year and Lessee's  Share of the  increase of such  Estimated
Basic  Costs over the Base  Amount.  Notwithstanding  anything  to the  contrary
contained in this Lease, if the Building is less than ninety-five  percent (95%)
occupied (on average) during any calendar year Operating  Expenses for that year
shall be  increased to an amount that Lessor in good faith  projects  would have
been  incurred by Lessor for  Operating  Expenses for that year had the Building
been ninety-five percent (95%) occupied during that year (as an average.  Lessee
shall pay in equal monthly installments together with the monthly installment of
rental due  hereunder  Lessee's  Share of the increase of Estimated  Basic Costs
over the Base  Amount  prorated  on the basis  which the number of days from the
commencement of the Lease to and including December 31 bears to 365.

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                  (c) By June 1,  2002  and by June  1st of each  calendar  year
thereafter  during the term of this Lease, or as soon thereafter as practicable,
Lessor  shall  furnish to Lessee a  statement  of Basic  Costs for the  previous
calendar  year. A lump sum payment  (which  payment shall be deemed a payment of
rent hereunder for all purposes) will be made from Lessee to Lessor,  or, as the
case may be, from Lessor to Lessee within thirty (30) days after the delivery of
such statement equal to the difference between Lessee's Share of the increase of
actual  Basic Costs over the Base Amount and  Lessee's  Share of the increase of
Estimated  Basic Costs over the Base Amount for the previous  calendar year. The
effect of this reconciliation payment is that Lessee will pay during the term of
this Lease its share of Basic Cost  increases  over the  original $ (Please  see
Section  4(a)(i),  above)  /square foot Base Amount and no more.  The failure of
Landlord  to  require  payment  of  Tenant's  Pro Rata  Share of any  Excess  or
Landlord's  failure to adjust  Additional  Rent for any calendar  year shall not
prejudice  Landlord's  right to receive such payment nor  constitute a waiver of
Landlord's  right to require such payment or adjustment  at any later date,  nor
shall any delay in  demanding  or  collecting  such  charges  be deemed a waiver
thereof.

                  (d) Lessor shall  maintain  records  concerning  Estimated and
Actual  Operating  Costs for twelve (12) months  following the period covered by
the statement or statements  furnished Lessee, after which Lessor may dispose of
such records.  Lessee may at its sole cost and expense  inspect  Lessors records
during Lessors normal business hours upon first furnishing Landlord fifteen (15)
days advance written notice.  Lessee shall, however be entitled to only one such
inspection  each calendar  year.  All of the  information  obtained  through the
Lessee's   audit  with  respect  to  financial   matters   (including,   without
limitations,  costs,  expenses,  income) and any other matters pertaining to the
Lessor and/or the building as well as any compromise,  settlement, or adjustment
reached  between Lessor and Lessee relative to the results of the audit shall be
held in strict confidence by the Lessee and its officers, agents, and employees;
and  Lessee  shall  cause  its  auditor  and any of its  officers,  agents,  and
employees to be similarly bound. As a condition  precedent to Lessee's  exercise
of its right to audit,  Lessee must deliver to Lessor a signed covenant from the
auditor  acknowledging  that  all of the  results  of such  audit as well as any
compromise, settlement, or adjustment reached between Lessor and Lessee shall be
held in strict  confidence and shall not be revealed in any manner to any person
except  upon the prior  written  consent of the  Lessor,  which  consent  may be
withheld in Lessor's sole discretion,  or if required pursuant to any litigation
between  Lessor and Lessee  materially  related to the facts  disclosed  by such
audit or if  required  by law.  Lessor  shall have all rights  allowed by law or
equity if Lessee, Its Officers,  agents, or employees and/or the auditor violate
the  terms  of this  provision,  including,  without  limitation,  the  right to
terminate  this Lease or the right to terminate  Lessee's  right to audit in the
future pursuant to this Clause. Lessee shall indemnify, defend upon request, and
hold Lessor harmless from and against all costs,  damage,  claims,  liabilities,
expenses,  losses,  court  costs,  and  attorney's  fees  suffered by or claimed
against  Lessor,  based in whole or in part upon the breach of this Paragraph by
Lessee  and/or its auditor;  and shall cause its auditor to be similarly  bound.
The  obligations  within the Paragraph  shall survive the  expiration or earlier
termination of the lease.

                  (e) If this Lease shall terminate on a day other than the last
day of a calendar  year, the amount of any adjustment  between  Estimated  Basic
Costs and actual  Basic Costs with  respect to the  calendar  year in which such
termination  occurs shall be prorated on the basis which the number of days from
the  commencement  of such calendar year to an including such  termination  date
bears to 365;  and any  amount  payable  by Lessor to Lessee or Lessee to Lessor
with respect to such  adjustment  shall be payable within thirty (30) days after
delivery by Lessor to Lessee of the statement of actual Basic Costs with respect
to such calendar year.

Section 5.  Lessee's Occupancy

                  Lessee  shall  occupy  the  Premises  and  conduct  its normal
business  operations  therefrom and the Premises  shall be used by Lessee solely
for  standard  office  purposes as offices for the  following  type of business:
Chemical Products and for no other purpose or use.

Section 6.  Services to be Furnished by Lessor

                  Lessor shall  furnish to Lessee while  occupying  the Premises
the following services:

                  (a) hot and cold water at those points of supply  provided for
general use of the tenants in the Building;

                  (b) heated and refrigerated air conditioning in season, during
normal business hours for the Building, 6:00 A.M. to 6:00 P.M. weekdays and 8:00
A.M.  to 1:00 P.M. on  Saturdays  (exclusive  of Sundays and State and  National
Holidays)  and at such  temperatures  and in such amounts as are  considered  by
Lessor to be standard.  Such service at times other than normal  business  hours
shall be optional on the part of Lessor;  provided  that upon  twenty-four  hour
advance notice. Such service will be provided to Lessee at Lessee's expense;

                  (c) elevator  service in common with other tenants for ingress
and egress to and from the Premises;

                  (d) janitorial service as may in the judgment of the Lessor be
reasonably required;

                  (e) electric  current for normal  office usage in the Premises
and electric  lighting service for all public areas and special service areas of
the  Building  in the  manner  and to the  extent  considered  by  Lessor  to be
standard; and

                  (f) access to the Premises at all times  through  keys, or any
other  devise used in lieu of keys,  to the front and rear doors of the Building
for Lessee or, if Lessee is a  corporation,  a reasonable  and limited number of
designated officers of Lessee.

                  Failure by Lessor to any extent to  furnish,  or any  stoppage
of, these  defined  services,  and  resulting  from causes beyond the control of
Lessor or from any other cause,  shall not render  Lessor  liable in any respect
for damages to either  person or  property,  nor be  construed as an eviction of
Lessee,  nor work an abatement of rent, nor relieve  Lessee from  fulfillment of
any covenant or agreement hereof.  Should any equipment or machinery break down,
or for any  cause  cease to  function  properly,  Lessor  shall  use  reasonable
diligence to repair the same promptly.  Lessee shall have no claim for rebate of
rent or damages on account of any interruptions in service occasioned thereby or
resulting therefrom.

Section 7.  Keys, Locks and Access Cards

                  Lessor  shall  furnish  Lessee  One (1) key and One (1) access
card per designated  employee.  Additional keys will be furnished at a charge by
Lessor  on  receipt  of  an  order  signed  by  Lessee  or  Lessee's  authorized
representative.  All such keys shall  remain the  property of Lessor.  Any lost,
stolen or damaged cards and keys will be replaced at Lessors then current charge
per card or key. No additional

                                       7
<PAGE>

locks  shall be  allowed  on any door of the Leased  Premises  without  Lessor's
written permission, and Lessee shall not make or permit to be made any duplicate
keys, except those furnished by Lessor.  Upon termination of this Lease,  Lessee
shall surrender to Lessor all keys to the Leased Premises and give to Lessor the
explanation of the combination of all locks for safes, safe cabinets,  and vault
doors, if any, in the Leased Premises.

Section 8.  Signage and Lobby Directory

                  (a) Lessor shall  provide and install a Lessee  identification
sign on the entry door to the Lease Premises.  All letters and numerals shall be
in the  standard  graphics  that are used  throughout  the  Building.  Only such
standard  graphics  may be used in any public area or openings to public  areas.
The cost of any changes to such suite sign will be charged to Lessee.

                  (b)  Lessee  shall  not place  signs or any other  item on the
Premises   which  may  be  visible   from  outside  the  Building  or  make  any
modifications to the identification sign referenced in (a) above,  without first
obtaining the written consent of Lessor in each such instance.

                  (c) Lessor  agrees to identify  Lessee on the Lobby  Directory
Board.  The cost of any changes  requested by Lessee to such  directory  will be
charged to Lessee.

Section 9.  Relocation of Lessee

                  Lessor  reserves  the right,  at its option,  to transfer  and
remove Lessee from the Premises to any other  available space in the Building of
substantially  equal size, and area, and equivalent Base Rental per square foot.
Lessor  shall  bear the  expense of said  removal as well as the  expense of any
renovations or alterations necessary to make the new space substantially conform
in layout and appointment with the original Premises.

Section 10.  Maintenance and Repairs by Lessor

                  Unless otherwise  stipulated herein,  Lessor shall be required
to  maintain  and repair only the  structural  portions  of the  Building,  both
exterior and interior, including the heating,  ventilating, and air conditioning
systems and equipment,  the plumbing and electrical  systems and equipment,  the
public foyers and lobbies, the corridors,  parking areas, elevators,  stairwells
and  restrooms and all other areas serving more than one tenant of the Building;
provided,  however,  that  interior  partitioning  walls,  carpeting  and  other
portions of the Premises which might otherwise be considered  building  standard
items shall not be the obligations of Lessor.  Such building  standard items and
any other leasehold  improvements of Lessee will, at Lessee's  written  request,
and upon Lessor's written approval, be maintained by Lessor at Lessee's expense,
at a cost or charge  equal to all costs  incurred  in such  maintenance  plus an
additional  15%  charge to cover  overhead,  which  costs and  charges  shall be
payable by Lessee to Lessor  promptly  upon being billed  therefor.  In no event
will Lessor be required  to make any  repairs to the  aforementioned  structural
portions  of  the  Building,  if  such  repairs  are  occasioned  by an  act  of
negligence,  or misconduct  by the Lessee,  its agents,  employees,  subtenants,
licensees or concessionaires.

Section 11.  Repairs by Lessee

                  Lessee covenants and agrees with Lessor,  at Lessee's own cost
and  expense,  to repair or replace any damage or injury  done to the  Premises,
Building,  or any part thereof, or to the Complex,  caused by Lessee or Lessee's
agents,  employees,  invitees,  or visitors,  and such repairs shall restore the
Premises,  Building  or  Complex,  as the case may be,  to the same or as good a
condition  as it was prior to such  injury or damage,  and shall be  effected in
compliance  with all  building  and fire  codes  and other  applicable  laws and
regulations;  provided,  however,  if  Lessee  fails  to make  such  repairs  or
replacements  promptly,  Lessor  may,  at  its  option,  make  such  repairs  or
replacements,  and Lessee shall repay the cost thereof,  plus an additional  15%
charge to cover overhead, to Lessor on demand.

Section 12.  Care of the Premises

                  Lessee  covenants  and agrees with Lessor to take good care of
the Premises and Building,  and the fixtures and  appurtenances  therein and, at
Lessee's expense,  to make all nonstructural  repairs thereto as and when needed
to preserve them in good order and condition  except for ordinary wear and tear.
Lessee  shall not  commit or allow  any waste or damage to be  committed  on any
portion of the Premises,  and at the termination of this Lease, by lapse of time
or otherwise,  shall deliver up the Premises to Lessor in as good a condition as
at the date of the  commencement  of the term of this Lease,  ordinary  wear and
tear excepted,  and upon any  termination  of this Lease,  Lessor shall have the
right to re-enter and resume possession of the Premises.

Section 13.  Parking

                  Lessee  shall  have  the  non-exclusive  use of  the  Building
surface  parking lot for its  customers,  invitees,  and  visitors  automobiles,
subject to rules and  regulations for the use thereof as prescribed from time to
time by Lessor. During the initial Term of this Lease, Lessee shall be permitted
to use Two (2) unreserved vehicle parking spaces in the Buildings surface lot at
no charge allowing the parking of Two (2)  automobiles by Lessee.  Lessee agrees
to provide and continually update the name and make, model, color and automobile
license  numbers  of  each  employee  vehicle  parked  in the  Building  parking
facility.  Lessee agrees to cooperate  with any parking  identification  program
including  compelling its employees to display a "parking sticker in a prominent
location  as  designated  by Lessor.  Lessor  shall have sole  control  over the
parking of all vehicles (including but not limited to cars, trucks, recreational
vehicles,  trailers, bicycles and motorcycles) and shall designate parking areas
and building  service areas. A copy of the current parking rules and regulations
is attached to this lease as EXHIBIT E. Lessee agrees to provide and continually
update the name and  automobile  license  numbers of each  employee  who will be
parking in the Buildings Garage.

Section 14.  Lessor"s Exclusive Covenant.

                   Upon  payment  by Lessee of the  rents  provided  for in this
Lease,  and upon the observance and performance of all the covenants,  terms and
conditions on Lessees part to be observed and performed,  Lessee shall,  subject
to the terms and provisions of this Lease,  peaceably and quietly hold and enjoy
the Leased  Premises for the term hereby  demised,  only,  however,  against (i)
interference  therewith  by the  affirmative  acts of Lessor,  its  employees or
agents,  and (ii)  interference  therewith by any person who may claim  superior
title

                                       8
<PAGE>

to the Leased  Premises by, through or under Lessor,  but not otherwise.  Lessor
shall under no  circumstances  be held responsible for restriction or disruption
of access to the Building from public  streets  caused by  construction  work or
other actions taken by or on behalf of governmental authorities,  or for actions
taken by other  tenants  (their  employees,  agents,  visitors,  contractors  or
invitees),  or any other cause not entirely within Lessors direct  control,  and
same shall not constitute a constructive  eviction of Lessee or give rise to any
right or remedy of Lessee against Lessor of any nature or kind. This covenant of
quiet  enjoyment  is in lieu of any  covenant  of quiet  enjoyment  provided  or
implied by law,  and Lessee  expressly  waives any such other  covenant of quiet
enjoyment to the extent broader than the covenant contained in this Section 14.

Section 15.  Holding Over

                  In the event of holding  over by Lessee  without  the  written
consent of Lessor,  after the expiration or other  termination of this Lease and
without execution of a new Lease,  Lessee shall,  throughout the entire holdover
period,  pay rent  equal to 150% of the Base  Rental,  as  adjusted  herein  and
additional  rent  which  would have been  applicable  had the term of this Lease
continued  through the period of such holding over by Lessee. No holding over by
Lessee  after the  expiration  of the term of this Lease shall be  construed  to
extend  the term of this  Lease;  and in the event of any  unauthorized  holding
over,  Lessee shall indemnify Lessor against all claims for damages by any other
Lessee or  prospective  Lessee to whom Lessor may have leased all or any part of
the Premises effective before or after the expiration of the term of this Lease,
resulting  from delay by Lessee in  delivering  possession of all or any part of
the  Premises.  Any  holding  over with the  written  consent  of  Lessor  shall
thereafter  constitute  a  lease  from  month-to-month,   under  the  terms  and
provisions   of  this  Lease  to  the  extent   applicable  to  a  tenancy  from
month-to-month.  Any holding over without  Lessors prior  written  consent shall
constitute  Lessee  a  tenant-at-sufferance  of  Lessor,  subject  to  immediate
eviction.

Section 16.  Alterations, Additions, and Improvements

                  Lessee  covenants  and  agrees  with  Lessor not to permit the
Premises to be used for any  purpose  other than that stated in Section 5 hereof
or make or allow to be made any  alterations or physical  additions in or to the
Premises  without  first  obtaining  the written  consent of Lessor in each such
instance.  All  alterations,  structural or non  structural,  must have Lessor's
consent which consent may be withheld in Lessor's sole discretion.  Lessee shall
be  responsible  for any lien filed  against the  Premises or any portion of the
Building for work  claimed to have been done for, or  materials  claimed to have
been furnished to Lessee. Any and all such alterations,  physical additions,  or
improvements,  when made to the Premises by Lessee, shall be at Lessee's expense
and shall at once  become the  property  of Lessor and shall be  surrendered  to
Lessor  upon  termination  of this  Lease by lapse of time or  otherwise  unless
Lessor  requests their removal,  in which event Lessee shall remove the same and
restore the Premises to their original condition at Lessee's expense;  provided,
however, this clause shall not apply to the movable fixtures,  office equipment,
and other  personal  property  owned by Lessee.  All  construction  work done by
Lessee within the Premises shall be performed in a good and workmanlike  manner,
in compliance with all governmental requirements, and in such manner as to cause
a minimum of  interference  with other  construction  in  progress  and with the
transaction  of business in the area adjacent to the Premises.  Lessee agrees to
indemnify Lessor and hold Lessor harmless against any loss,  liability or damage
resulting from such work, and Lessee shall, if requested by Lessor, furnish bond
or other security  satisfactory  to Lessor  against any such loss,  liability or
damage.

Section 17.  Legal Use and Violations of Insurance Coverage

                  Lessee  covenants and agrees with Lessor not to occupy or use,
or permit any portion of the  Premises to be occupied or used,  for any business
or purpose which is unlawful,  disreputable,  or deemed to be extra-hazardous on
account of fire, or permit anything to be done which would in any way invalidate
or increase the rate of fire, liability,  or any other insurance coverage on the
Building and/or its contents. All property kept, stored or maintained within the
Premises by Lessee shall be at Lessee's sole risk.

Section 18.  Laws and Regulations; Building Rules

                  Lessee  covenants  and agrees  with  Lessor to comply with all
laws, ordinances,  rules, and regulations of any state, federal,  municipal,  or
other government or governmental agency having jurisdiction of the Premises that
relate to the use, condition,  or occupancy of the Premises.  Lessee will comply
with the rules of the  Building  adopted and altered by Lessor from time to time
for the safety,  care, and  cleanliness of the Premises and Building and for the
preservation of good order therein,  all changes to which will be sent by Lessor
to Lessee in writing and shall be thereafter carried out and observed by Lessee.
Lessor shall not be responsible to Lessee for the  non-performance  by any other
Lessee or occupant of the  Building  of any said rules and  regulations.  In the
event of a conflict or  inconsistency  between the  provisions of this Lease and
any such rules, the provisions of this Lease shall control. See EXHIBIT F.

Section 19.  Nuisance

                  Lessee  covenants  and  agrees  with  Lessor  to  conduct  its
business and control its agents, employees, invites, and visitors in such manner
as not to create any nuisance,  or interfere  with,  annoy, or disturb any other
tenant or Lessor in its operation of the Building.

Section 20.  Entry by Lessor

                  Lessee  covenants  and agrees with Lessor to permit  Lessor or
its agents or representatives to enter into and upon any part of the Premises at
all  reasonable  hours (and in emergencies at all times) to inspect the same, or
to  show  the  Premises  to  prospective  purchasers,  lessees,  mortgagees,  or
insurers, to clean or make repairs, alterations, or additions thereto, as Lessor
may deem  necessary  or  desirable,  and  Lessee  shall not be  entitled  to any
abatement or reduction of rent by reason thereof.

Section 21.  Assignment and Subletting

                  (a) Lessee  shall not,  without the prior  written  consent of
Lessor,  (i) assign or in any manner transfer Lessee's interest in this Lease or
any estate or interest  therein,  or (ii) permit any  assignment  or transfer of
this Lease or any estate or  interest  therein by  operation  of law,  merger or
consolidation,  or (iii) sublet the Premises or any part thereof,  or (iv) grant
any  license,  concession,  or other  right of  occupancy  of any portion of the
Premises.  Consent by Lessor to one or more  assignments or subletting shall not
operate as a waiver of  Lessor's  rights as to any  subsequent  assignments  and
subletting.  Notwithstanding any approved assignment or subletting, Lessee shall
at all times  remain  fully  responsible  and liable for the payment of the rent
herein specified and for compliance with all of Lessee's other obligations under
this Lease and in the event of any  assignment,  by  operation  of law,  merger,
consolidation  or otherwise,  any assignee shall assume and agree to perform

                                       9
<PAGE>

all  obligations  of Lessee  hereunder.  If an event of default,  as hereinafter
defined,  should occur while the Premises or any part thereof are then  assigned
or sublet, Lessor, in addition to any other remedies herein provided or provided
by law, may at its option,  collect directly from such assignee or sublessee all
rents becoming due to Lessee under such  assignment or sublease,  and apply such
rent  against  any sums due to Lessor by Lessee  hereunder,  and  Lessee  hereby
authorizes  and directs any such  assignee or sublessee to make such payments of
rent directly to Lessor upon receipt of notice from Lessor. No direct collection
by Lessor from any such assignee or sublessee shall be construed to constitute a
novation or a release of Lessee from the further  performance of its obligations
hereunder.  Receipt by Lessor of rent from any assignee,  sublessee, or occupant
or the Premises  shall not be deemed a waiver of the covenant  contained in this
Lease against assignment and subletting or a release of Lessee under this Lease.
Lessee shall not mortgage,  pledge,  or otherwise  encumber its interest in this
Lease or in the  Premises.  Any  attempted  assignment  or sublease by Lessee in
violation of the terms and  covenants of this  paragraph  shall be void,  or (v)
cause,  allow or permit to occur any  transfer or  assignment  of the  ownership
interest in the entity  comprising  the Lessee,  if the  transfer or  assignment
would either (i) in the  aggregate  with other  transfers of ownership  interest
which have taken place since the  execution  of this Lease,  result in more than
twenty percent (20%) of the ownership  interests in the entity comprising Lessee
to have been transferred  outside the original ownership group since the date of
execution of this Lease,  or (ii)  resulted in the transfer of any interest as a
general  partner in a general or limited  partnership  or as a joint venturer in
any joint venture;  provided,  however, that if the entity that comprises Lessee
"goes public (in a securities  offering  registered under applicable  securities
laws) during the term of this lease,  the same will not be deemed an  assignment
in violation of this Section,  nor shall any transfer or sale of publicly traded
stock  of any  publicly  traded  entity  comprising  Lessee  ever be  deemed  an
impermissible assignment hereunder.

                  (b)  In  the  event  Lessee  desires  Lessor's  consent  to an
assignment  of the Lease or subletting of all or a part of the Premises and as a
condition  to the  granting of such  consent,  Lessee  shall submit to Lessor in
writing  the  name  of  the  proposed   assignee  or  sublessee,   the  proposed
commencement date of such assignment or subletting,  the nature and character of
the  business  of  the  proposed   assignee  or  sublessee  and  such  financial
information  as shall be  reasonably  necessary  for  Lessor  to  determine  the
credit-worthiness of such proposed assignee or sublessee.  Lessor shall have the
option in its sole and absolute  discretion (to be exercised  within thirty (30)
days from submission of Lessee's written  request),  (i) to refuse to consent to
Lessee's  assignment  or  subleasing of such space and to continue this Lease in
full  force and effect as to the entire  Premises;  or (ii) to permit  Lessee to
assign or sublet such space;  subject,  however,  to provision  satisfactory  to
Lessor for payment to Lessor of any  consideration  to be paid by such  proposed
assignee or sublessee in connection with such assignment or subletting in excess
of Base Rental otherwise payable by Lessee and for payment to Lessor of any lump
sum payment in connection with such assignment or subletting; or (iii) terminate
this Lease as to the  portion  of the  Premises  requested  to be sublet (or the
entire  Premises in the case of a request  for  permission  to assign),  thereby
releasing  Tenant from any further  obligations  with respect to the  terminated
space  from and  after  the  effective  date of the  termination,  and lease the
portion of the  Premises so  recaptured  by Lessor to any party  Lessor  desires
(including any proposed assignee or sublessee  identified in Lessees request for
consent).  If Lessor  should fail to notify Lessee in writing of its election as
described  above  within such thirty (30) day period,  Lessor shall be deemed to
have elected option (i) above.

                  (c)  Lessor's  acceptance  of  any  name  for  listing  on the
Building  Directory  (-ies)  will not be  deemed,  nor will it  substitute  for,
Lessor's  consent,  as required by this Lease, to any sublease,  assignment,  or
other occupancy of the demised premises.

Section 22.  Transfer of Lessor

                  Lessor shall have the right to transfer  and assign,  in whole
or in part,  all its rights and  obligations  hereunder  and in the Building and
property referred to herein, and provided Lessor's transferee assumes the duties
and  obligations  of Lessor arising from and after the date of any such transfer
or assignment,  upon such transfer or assignment,  Lessor shall be released from
any  further  obligations  hereunder,  and Lessee  agrees to look solely to such
successor in interest of Lessor for the performance of such obligations.

Section 23.  Subordination to Mortgage

                  This Lease shall be subject and subordinate to any mortgage or
deed of trust which may hereafter  encumber the  Building,  and to all renewals,
modifications,  consolidations,  replacements,  and  extensions  thereof,  which
contain (or which are included in a separate agreement) provisions to the effect
that if there should be a foreclosure or sale under power under such mortgage or
deed of trust, Lessee shall not be made a party defendant thereto.  Lessor shall
be liable to Lessee  only for  Lessees  actual,  direct,  but not  consequential
damages for any breach by Lessor or its obligations hereunder. This clause shall
be self-operative and no further instrument of subordination need be required by
any mortgagee. In confirmation of such subordination,  however, Lessee shall, at
Lessor's request, execute promptly any certificate or instrument evidencing such
subordination  that Lessor may request.  Lessee hereby  constitutes and appoints
Lessor  the  Lessee's  attorney-in-fact  to  execute  any  such  certificate  or
instrument for and on behalf of Lessee.  In the event of the  enforcement by the
trustee  or the  beneficiary  under  any such  mortgage  or deed of trust of the
remedies provided for by law or by such mortgage or deed of trust,  Lessee will,
upon  request of any person or party  succeeding  to the interest of Lessor as a
result of such enforcement, automatically become the Lessee of such successor in
interest  without  change  in the  terms  or  other  provisions  of this  Lease;
provided, however, that such successor in interest shall not be bound by (a) any
payment  of rent or  additional  rent for more  than one (1)  month in  advance,
except prepayment in the nature of security for the performance by Lessee of its
obligations under this Lease, or (b) any amendment or modification of this Lease
made  without the written  consent of such trustee or such  beneficiary  or such
successor in interest. Upon request by such successor in interest,  Lessee shall
execute and deliver an  instrument  or  instruments  confirming  the  attornment
provided for herein.

Section 24.  Mechanic's Lien

                  Lessee  will not  permit  any  mechanic's  lien or liens to be
placed upon the Premises or improvements thereon or the Building during the term
hereof caused by or resulting from any work performed,  materials furnished,  or
obligation  incurred by or at the  request of Lessee,  and nothing in this Lease
contained shall be deemed or construed in any way as constituting the consent or
request of  Lessor,  express or  implied,  by  inference  or  otherwise,  to any
contractor,  subcontractor,  laborer,  or materialman for the performance of any
labor  or the  furnishings  of  any  materials  for  any  specific  improvement,
alteration,  or repair of or to the Premises, or any part thereof, nor as giving
Lessee any right, power, or authority to contract for or permit the rendering of
any  services or the  furnishing  of any  materials  that would give rise to the
filing of any  mechanic's  or other liens  against the interest of Lessor in the
Premises.  In the case of the  filing of any lien on the  interest  of Lessor or
Lessee in the  Premises,  Lessee shall cause the same to be discharged of record
within  ten (10) days  after  the  filing of same  either by paying  the  amount
claimed to be due or by procuring the discharge of such lien by deposit in court
or bonding.  If Lessee shall fail to discharge such  mechanic's lien within such
period,  then,  in addition to any other right or remedy of Lessor,  Lessor may,
but shall not be

                                       10
<PAGE>

obligated to, discharge the same, either by paying the amount claimed to be due,
or by procuring the  discharge of such lien by deposit in court or bonding.  Any
amount paid by Lessor for any of the aforesaid purposes, or for the satisfaction
of any other lien,  not caused or claimed to be caused by Lessor,  with interest
thereon at the rate of eighteen  percent  (18%) per annum or the highest  lawful
rate, whichever is the lesser, from the date of payment, shall be paid by Lessee
to Lessor demand.

Section 25.  Estoppel Certificate

                  Lessee will, at any time and from time to time,  upon not less
than ten (10) days' prior request by Lessor, execute,  acknowledge,  and deliver
to Lessor a statement in writing executed by Lessee certifying that Lessee is in
possession  of the  Premises  under the terms of this Lease,  that this Lease is
unmodified and in full effect (or, if there have been  modifications,  that this
Lease is in full effect as modified, and setting forth such modifications),  and
the  dates to which  the rent has been  paid,  and  either  stating  that to the
knowledge of Lessee no default exists hereunder, or specifying each such default
of which Lessee may have knowledge,  and such other matters as may be reasonably
requested by Lessor;  it being intended that any such statement by Lessee may be
relied upon by any prospective purchaser or mortgagee of the Building.

Section 26.  Events of Default

                  (a) Each of the following occurrences, or acts or omissions of
Lessee,  shall  constitute  an event of  default  by  Lessee  under  this  Lease
(hereinafter called an "event of default):

         (i)  Failure  or  refusal  by Lessee to make the  timely  and  punctual
         payment of any rent or other sums payable  under this Lease when and as
         the same shall  become due and  payable,  and the  continuance  of such
         non-payment  for  Lessee's   receipt  of  Lessor's  written  notice  of
         non-receipt.

         (ii)  Abandonment  or  vacating of all or any  material  portion of the
         Premises, or Lessees failure to occupy the Premises within fifteen (15)
         days after the Commencement Date; or

         (iii) The filing or execution or occurrence of a petition in bankruptcy
         or other insolvency  proceeding by or against and not discharged within
         thirty (30) days Lessee; or petition or answer seeking relief under any
         provision of the U.S.  Bankruptcy  Code;  or an  assignment of all or a
         material  portion of Lessees  assets for the benefit of creditors or in
         composition; or a petition or other proceeding by or against Lessee for
         the  appointment  of a trustee,  receiver or liquidator of Lessee or of
         Lessees property; or a proceeding by any governmental authority for the
         dissolution or liquidation of Lessee; or

         (iv) Any assignment or sublease by Lessee (whether or not legal,  valid
         or  enforceable  and whether or not rendered void by the terms hereof),
         or the  occupation  or use of the Premises (or any portion  thereof) by
         persons  other than  Lessee in a manner that would be  equivalent  to a
         sublease or assignment  under  applicable law,  unless  consented to by
         Lessor pursuant to the provisions of Section 21 hereof; or

         (v)  Lessee  uses  the  Premises  or any part in  violation  of the use
         restrictions  hereof and either (i) such use  continues for a period of
         ten (10) days after written notice of such violation is given by Lessor
         to  Lessee,  or (ii)  without  notice or demand  if such  violation  is
         repeated or chronic  (i.e.,  occurs after three (3) prior  instances in
         which Lessor has given Lessee written notice of prior violations of the
         use clause  hereof,  whether or not cured on those prior  occasions and
         whether  or  not  the  current   violation  is  similar  to  the  prior
         violations); or

         (vi)  Lessee  fails  to  remove  or bond  around  any  materialmans  or
         mechanics lien within thirty (30) days from the date of its filing; or

         (vii) Lessee makes a  modification,  alteration or  improvement  to the
         Premises  (excluding  painting,  changes  in  wall-coverings  or  other
         strictly cosmetic changes,  to the extent not visible from the interior
         of the Building common area) without  Lessor"s prior written consent as
         required herein; or

         (viii)  Chronic or repeated  violation of Rules and  Regulations of the
         Building or other  provisions of this lease which, by their nature,  do
         not continue from day to day (i.e.,  any further such violation  occurs
         after  repeated  prior  violations  and  written  notices of such prior
         violations  from  Lessor to  Lessee at least  three  times  during  any
         twelve-month period); or

         (ix)Lessee  records this Lease or any memorandum or notation thereof in
         violation of the provisions of Section 47 hereof:

         or

         (x) Lessee (A) allows  Hazardous  Substances on the Premises ((that are
         not released into or on the Premises or the Building or Property))  but
         which are not  allowed  by the terms of this  lease and such  materials
         either (i) are not removed from the Premises within ten (10) days after
         receipt  of written  notice or demand by Lessor on Lessee,  or (ii) are
         allowed on the Premises after repeated previous  occasions (two or more
         occasions  in any given  12-month  period) on which  Lessor gave Lessee
         written  notice to remove the same (whether or not they were removed on
         the prior occasions),  or (B) allows or causes any release of Hazardous
         Substances  in or upon the  Premises or the  building  or Property  (or
         adjacent property) in violation of this Lease and such contamination is
         not  cleaned  up  to  the   satisfaction  of  Lessor  and  governmental
         authorities with jurisdiction within fifteen (15) days after receipt of
         written notice from Lessor to Lessee; or

         (xi) Lessee  violates any requirement of applicable law that is Lessees
         responsibility to comply with under this Lease to the extent that, as a
         result  thereof,  Lessor or its property  management  agent can be held
         liable for any fine,  penalty or  assessment,  or be the subject to any
         enforcement action  interfering with the operation of the Building,  by
         or of any governmental  authority or agency,  or to the extent that any
         mortgages lienholder is entitled to accelerate the indebtedness secured
         by the Building or Property,  and such  violation is not fully remedied
         and cured by Lessee  within  ten (10) days  after  receipt  of  written
         notice thereof is given to Lessee by Lessor (if such consequences exist
         and  notice is given by Lessor to Lessee  under  this  paragraph  (xi),
         rather than paragraph (xii) immediately  below,  Lessor will specify in
         its notice to Lessee  that  notice is being given under this clause and
         shall  specify  the  reason  that the  default by Lessee is of a nature
         covered by this paragraph); or

                                       11
<PAGE>

         (xii) Failure by Lessee in the  performance  or compliance  with any of
         the agreements,  terms, covenants or conditions provided in this Lease,
         other than those referred to in Section  26(a)(i)  through (xi),  above
         (unless Lessor expressly elects to proceed under this paragraph), for a
         period of fifteen (15) days after receipt of written notice from Lessor
         to Lessee specifying the items in default;  provided,  however, that if
         the cure of such default  cannot  reasonably  be cured by Lessee within
         such fifteen (15)-day period despite diligent commencement and diligent
         and  continuous  prosecution  of such cure  after  receipt of notice of
         default from Lessor,  Lessee shall have such additional time to cure as
         would be reasonably  necessary in the exercise of prompt,  diligent and
         continuous  efforts to cure the  default in  question,  but in no event
         beyond  thirty  (30)  days  from the date  Lessor  gave  notice of such
         default; or

         (xiii)  Default by Lessee  under any other lease made by Lessee (or any
         party related to or affiliated  with Lessee) for any other space in the
         Building,  or any other contractual agreement between Lessor and Lessee
         of any nature or kin,  after Lessor has given  Lessee a written  notice
         that such event of default  constitutes  a default  hereunder  and such
         default under such other lease remains uncured for an additional period
         of ten (10) days following such notice.

                  (b)  This  lease  is  subject  to the  limitation  that if and
         whenever any event of default  shall  occur,  Lessor may, at its option
         and without any prior verbal or written  notice to Lessee,  in addition
         to all other  rights  and  remedies  of Lessor  hereunder  or by law or
         equity,  continue this Lease in full force and effect and/or do any one
         or more of the following:

                           (i) Terminate this Lease by express written notice of
         such  election  by  Lessor  to  Lessee,  in which  event  Lessee  shall
         immediately surrender possession of the Premises to Lessor;

                           (ii) Enter upon and take  possession  of the Premises
         and expel or remove Lessee and any other  occupant  therefrom,  with or
         without having terminated the Lease; and/or

                           (iii) Alter locks and other  security  devices at the
         Premises  and  terminate   Lessees  access  to  the  Building  and  (if
         applicable) the Building garage.

                  (c)  Exercise  by Lessor of any one or more  remedies  granted
         under Section 26(b) or otherwise available shall not be deemed to be an
         acceptance by Lessor or surrender of the Premises by Lessee,  either by
         agreement or by the written agreement of Lessor and Lessee.

                  (d)      In the event Lessor  elects to terminate the Lease by
                           reason of an event of default,  then  notwithstanding
                           such  termination,  Lessee  shall be  liable  for and
                           shall  pay to  Lessor  the sum of all rent and  other
                           indebtedness accrued to the date of such termination,
                           and all  expenses  incurred  by Lessor as provided in
                           Section 26(g),  plus, as damages,  an amount equal to
                           the present value  (discounted  at the rate of 6% per
                           annum) of the Base Monthly  Rental and Lessees  share
                           of any Operating Expenses that Lessee would otherwise
                           have been required to pay hereunder for the remaining
                           portion  of the  Lease  term  (had such term not been
                           terminated  by Lessor prior to the  original  date of
                           expiration  stated  herein),  less  the  fair  market
                           rental  value  of  the  Premises  for  the  remaining
                           portion  of the Lease  term,  discounted  to  present
                           value at the rate of 6% per annum.

                  (e) In the event that Lessor  elects to repossess the Premises
         without  terminating the Lease,  Lessee shall, at Lessors election,  be
         liable for and shall pay to Lessor,  either of the  following:  (a) All
         rent and other  indebtedness  accrued to the date of such repossession,
         plus rent  required to be paid by Lessee to Lessor during the remainder
         of the Lease term until the date of expiration of the term as stated in
         Section 2(a) of the Basic Lease Provisions,  diminished by any net sums
         thereafter  received by Lessor  through  reletting the Premises  during
         such period (after deducting expenses incurred by Lessor as provided in
         Section 26(g), it being  expressly  agreed that re-entry by Lessor will
         not affect the  obligations  of Lessee  for the  unexpired  term of the
         Lease;  in no event shall  Lessee be entitled to any excess of the rent
         obtained  by  reletting  over and above the rent herein  reserved;  and
         actions to collect  amounts due by Lessee as  provided in this  Section
         26(e)  may be  brought  from  time to time,  on one or more  occasions,
         without the necessity of Lessors waiting until  expiration of the Lease
         term; or (b) The sum of all rent and other indebtedness  accrued to the
         date of such  termination,  and all  expenses  incurred  by  Lessor  as
         provided  in  Section  26(g),  and,  without  prior  notice to  Lessee,
         accelerate  and declare  immediately  due and payable the present value
         (discounted  at the rate of 6% per annum of all Base Monthly Rental and
         Operating  Expenses that Lessee would  otherwise  have been required to
         pay  hereunder  for the  remaining  portion of the Lease term (had such
         term not been  terminated  by  Lessor  prior  to the  original  date of
         expiration  stated  herein);  provided,  however,  that Lessee shall be
         entitled  to a credit  against  such  accelerated  rentals in an amount
         equal to the fair market rental value of the Premises for the remaining
         portion of the Lease term discounted to present value at the rate of 6%
         per annum.

                  (f) For purposes of Sections 26(d) and 26(e),  above, the fair
         market  rental  value of the  Premises  shall be the amount of net rent
         (meaning the gross basic rental after  deductions  of  concessions  and
         expenses to the extent not  duplicated in Lessors  claims under Section
         26(g),  below) that it is that Lessor could  reasonably  be expected to
         recover from  reletting of the  Premises,  taking into  account,  among
         other  market  factors  (i) likely  periods of vacancy  based on market
         conditions,  including  periods of vacancy for  marketing the space and
         construction of tenant finish or modifications, (ii) a reduction of the
         basic rent by an amount of any  increase  that would be required in the
         Base Year Expense Stop upon  reletting,  and (iii) a reduction in basic
         rent for the amount of any other  concessions  that Lessor would likely
         be required to grant a tenant in connection with reletting.

                  (g) If an event of default  occurs,  Lessee shall, in addition
         to all amounts due under Section 26(d) and/or Section 26(e),  be liable
         for and shall pay to Lessor (to the extent  that any such amount is not
         also  deducted  from  gross  rent  for  purposes  of  determining   the
         appropriate  fair market rental value offset under  Sections  26(d) and
         26(e),  at  Lessors  address  as  shown  in Item 2 of the  Basic  Lease
         Provisions in addition to any sum provided to be paid elsewhere in this
         Section 26, any and all of the following described amounts:

                           (i)  Actual  brokers  fees  payable  to Lessor or any
         affiliates of Lessor or any outside broker  incurred in connection with
         reletting the whole or any part of the Premises;

                           (ii) The cost  incurred  by Lessor  in good  faith in
         removing and storing Lessees or other occupants property;

                           (iii) The cost  incurred  by Lessor in good  faith in
         repairing,  altering, remodeling or otherwise putting the Premises into
         a condition acceptable to the new tenant or tenants; and

                                       12
<PAGE>

                           (iv) All  expenses  incurred  by Lessor in  enforcing
         Lessors remedies,  including,  but not limited to, reasonable attorneys
         fees.  Past due rental  amounts,  including,  but not  limited to, Base
         Rental, Operating Expenses, indemnity obligations, all late charges and
         other  past-due  payments  shall  bear  interest  at the  maximum  rate
         permitted (as to loans  governed  thereby) by Article  5069-1.04 of the
         Texas Revised Civil statutes, as amended, from the due date until paid.

                  (h) In the event that  Lessor is  entitled to change the locks
         at the Premises  pursuant to any of the  foregoing  provisions,  Lessee
         agrees  that  entry may be gained  for that  purpose  through  use of a
         duplicate or master key or any other peaceable means,  that same may be
         conducted  out of the  presence of Lessee if Lessor so elects,  that no
         notice  shall be  required to be posed by the Lessor on any door to the
         Premises (or  elsewhere)  disclosing  the reason for such action or any
         other information,  and that Lessor shall not be obligated to provide a
         key to the changed lock to Lessee unless Lessee shall have first:

                  (i) brought  current  all  payments  due to Lessor  under this
         Lease;

                  (ii)  fully   cured  and   remedied   to  Lessors   reasonable
         satisfaction all other defaults of Lessee under this Lease (but if such
         defaults are  intentional  or not reasonably  subject to cure,  such as
         assignment  or  subletting  in  violation of this Lease or vacating the
         Premises,  then Lessor shall not be obligated to provide the new key to
         Lessee under any circumstances); and

                  (iii)  given   Lessor   security  and   assurance   reasonably
         satisfactory  to Lessor that Lessee  intends to and is able to meet and
         employ with its future  obligations under this Lease, both monetary and
         non-monetary;

         provided,   however,  that  if  Lessor  has  theretofore  formally  and
         permanently  repossessed the Premises pursuant to Section 26(e) hereof,
         or has  terminated  this Lease  pursuant to Section 26(d) hereof,  then
         Lessor shall be under no obligation to provide a key to the new lock(s)
         to Lessee  regardless  of  Lessees  payment of  past-due  rent or other
         past-due  amounts,  damages,  or any other  payments  or amounts of any
         nature or kind whatsoever, or Lessees subsequent cure or purported cure
         of any other default.

         Lessor will, upon written request by Lessee, at Lessors convenience and
         upon   Lessees   execution   and   delivery   of   such   waivers   and
         indemnifications as Lessor may reasonably require relating to liability
         associated with such entry or removal of property (provided that Lessee
         shall not be required to waive or indemnify  Lessor or its  contractors
         from their respective intentional torts), at Lessors option either (i),
         escort Lessee or its specifically authorized employees or agents to the
         Premises  to  retrieve  personal  belongings  and  effects  of  Lessees
         employees  and  Lessees  business  records  and  files (as  opposed  to
         property which is an asset of Lessee or any Guarantor), and property of
         Lessee  that  is  not  subject  to the  landlords  liens  and  security
         interests  described in Section 28, below, or (ii) obtain from Lessee a
         list of such  property  described in (i),  above,  and arrange for such
         items to be removed from the  Premises and made  available to Lessee at
         such place and at such time in or about the premises of the Building as
         Lessor may designate;  provided,  however, that if Lessor elects option
         (ii),  then Lessee  shall be required to deliver to Lessor such waivers
         and indemnifications as Lessor may require in connection with liability
         associated  with the removal and  delivery of such  property  (provided
         that Lessee shall not be required to waive or  indemnify  Lessor or its
         contractors from their respective  intentional  torts), and pay in cash
         in advance to Lessor (a) the estimated  costs that Lessor will incur in
         removing such  property from the Premises and making same  available to
         Lessee at the  stipulated  location,  and (b) all moving and/or storage
         charges  theretofore  incurred by Lessor with respect to such property.
         The  provisions  of this  Section  26(h) are  intended to override  and
         supersede  any  conflicting  provisions  of  the  Texas  Property  Code
         (including, without limitation, Section 93.002 thereof, as in effect on
         January 1, 1997, and any amendments or successor statutes thereto), and
         of any other law, to the maximum extent permitted by applicable law.

Section 27:  Lessor's Right to Relet

                  (a)  In  the  event  of  termination  or  repossession  of the
         Premises  following  an event of  default,  Lessor  shall  not have any
         obligation  to relet or attempt to relet the  Premises,  or any portion
         thereof,  or to collect rental after  reletting;  but Lessor shall have
         the option to relet or attempt to relet; and in the event of reletting,
         Lessor  may relet  the whole or any  portion  of the  Premises  for any
         period, to any tenant, for any rental, and for any use and purpose.

                  (b) If an event of default  should  occur  under  this  Lease,
         Lessor, without being under any obligation to do so and without thereby
         waiving such  default,  may make any payment that Lessee failed to make
         giving rise to such event of default and/or perform the other defaulted
         obligation of Lessee, for the account of Lessee (and enter the Premises
         for such  purpose),  and  thereupon  Lessee shall be obligated  to, and
         hereby  agrees to, pay Lessor,  upon  demand,  all costs,  expenses and
         disbursements  (including,  but not  limited to,  reasonable  attorneys
         fees) incurred by Lessor in good faith in taking such remedial action.

Section 28.  Lien for Rent

                  In  consideration  of the mutual  benefits  arising under this
Lease,  Lessee  and any  Guarantor  herein  grant to Lessor a lien and  security
interest on Lessee's (or any Guarantor's)  furniture,  equipment,  machinery and
furnishings  now or hereafter  placed in or upon the Premises and such  property
shall be and remain  subject to such lien and  security  interest  of Lessor for
payment  of all rent and other  sums  agreed to be paid by  Lessee  herein.  The
provisions of this paragraph  relating to such lien and security  interest shall
constitute a security agreement under the Uniform Commercial Code so that Lessor
shall have and may enforce a security  interest on such  property of Lessee (and
any  Guarantor).  Lessee  (and any  Guarantor)  agrees to execute as debtor such
financing  statement or  statements  as Lessor may now or  hereafter  reasonably
request in order that such  security  interest  or  interests  may be  perfected
pursuant to the Uniform  Commercial Code. Lessor may at its election at any time
file a copy of this Lease as a financing  statement.  Lessor,  as secured party,
shall be entitled  to all of the rights and  remedies  afforded a secured  party
under  the  Uniform  Commercial  Code  in  addition  to  and  cumulative  of the
landlord's liens and rights provided by law or by the other terms and provisions
of this Lease.

                  Upon the  occurrence of an event of default by Lessee,  Lessor
may, in addition to any other remedies provided herein,  enter upon the Premises
and take possession of any and all goods, wares, equipment, fixtures, furniture,
improvements  and other  personal  property of Lessee  situated on the Premises,
without  liability  for trespass or  conversion,  and sell the same at public or
private sale,  with or without  having such  property at the sale,  after giving
Lessee reasonable notice of the time and place of any public sale or of the time
after  which any  private  sale is to be made,  at which  sale the Lessor or its
assigns may  purchase  unless  otherwise  prohibited  by law.  Unless  otherwise
provided by law,  and without  intending  to exclude any other  manner of giving
Lessee reasonable  notice,  the requirement of reasonable notice shall be met if
such notice is given in the manner  prescribed  in this Lease at least seven (7)
days before the time of sale.  Any sale made  pursuant to the  provision of this
paragraph  shall be deemed to have been a public sale conducted in  commercially
reasonable manner if held in the above-described  premises or where the property
is located after the time, place and method of sale and a general description of
the  types of  property  to be sold have been  advertised  in a daily  newspaper
published  in the  county  in  which  the  property  is  located,  for  five (5)
consecutive  days

                                       13
<PAGE>

before the date of the sale.  The proceeds from any such  disposition,  less any
and all expenses connected with the taking of possession, holding and selling of
the property (including reasonable attorney's fees and legal expenses), shall be
applied as a credit against the  indebtedness  secured by the security  interest
granted in this  paragraph.  Any surplus shall be paid to Lessee or as otherwise
required by law; the Lessee shall pay any deficiencies  forthwith.  Upon request
by Lessor,  Lessee agrees to execute and deliver to Lessor a financing statement
in  form  sufficient  to  perfect  the  security   interest  of  Lessor  in  the
aforementioned  property and proceeds thereof under the provision of the Uniform
Commercial  Code (or  corresponding  state  statute or statutes) in force in the
state in which the  property is located,  as well as any other state the laws of
which Lessor may at any time consider to be applicable.

Section 29.  Attorney's Fees

                  In the  event  either  party  hereto  institutes  any legal or
equitable  proceeding against the other party hereto, the prevailing party shall
be entitled to recover its reasonable attorney's fees.

Section 30.  No Implied Waiver

                  The  failure  of Lessor to insist at any time upon the  strict
performance  of any  covenant or  agreement  or to exercise  any option,  right,
power, or remedy contained in this Lease shall not be construed as a waiver or a
relinquishment  thereof  for  the  future.  The  waiver  of or  redress  for any
violation of any term, covenant, agreement, or condition contained in this Lease
shall not prevent a subsequent  act, which would have  originally  constituted a
violation,  from  having all the force and effect of an original  violation.  No
express  waiver shall affect any condition  other than the one specified in such
waiver and that only for that one time and in the manner specifically  stated. A
receipt by Lessor of any rent with  knowledge  of the breach of any  covenant or
agreement  contained  in this Lease shall not be deemed a waiver of such breach,
and no waiver by Lessor of any  provision  of this Lease shall be deemed to have
been made unless expressed in writing and signed by Lessor. No payment by Lessee
or receipt by Lessor of a lesser amount than the monthly installment of rent due
under  this Lease  shall be deemed to be other  than on account of the  earliest
rent due hereunder,  nor shall any  endorsement or statement on any check or any
letter  accompanying  any check or  payment  as rent be  deemed  an  accord  and
satisfaction,  and Lessor may accept such check or payment without  prejudice to
Lessor's right to recover the balance of such rent or pursue any other remedy in
this Lease provided.

Section 31.  Casualty Insurance

                  Lessor shall maintain fire and extended coverage  insurance on
the  Building.  Such  insurance  shall be maintained  with an insurance  company
authorized  to do  business  in Texas,  in amounts  desired by Lessor and at the
expense  of Lessor  (as a part of the Basic  Costs),  and  payments  for  losses
thereunder shall be made solely to Lessor.

                  Lessee  shall  maintain  at  its  expense  fire  and  extended
coverage  insurance on all of its personal property,  including  removable trade
fixtures,  located in the Premises and on all additions and improvements made by
Lessee and not required to be insured by Lessor above.

Section 32.  Liability Insurance

                  Lessor  shall,  at its expense (as a part of the Basic Costs),
maintain a policy or policies of comprehensive  general liability insurance with
the premiums thereon fully paid on or before the due date, issued by and binding
upon some solvent insurance company.

                  Lessee  shall,  at Lessees  expense,  obtain and keep in force
during  the  term of this  Lease,  a  policy  of  commercial  general  liability
insurance in the minimum  amount of  $1,000,000  combined  aggregate  limits per
occurrence  for  bodily  injury  and  property  damage,   including  contractual
liability  coverage,  insuring  Lessee against any liability  arising out of the
use, occupancy and/or maintenance of the Premises and/or the Common Areas of the
Building or  grounds,  or arising  out of this  Lease,  and naming  Lessor as an
additional  insured thereon under the form of endorsement  providing Lessor with
the most coverage available as additional  insured.  The limit of such insurance
shall not and does not limit the  liability of Lessee under this Lease.  If such
policy is a blanket  policy  covering  operations  of Lessee at other  locations
and/or  for  other  operations,  it shall  contain a "per  location  endorsement
sufficient to ensure that the full amount of the above-required  coverage limits
are available  separately with respect to Lessees  operations with the Building.
Insurance  required of Lessee under this Section 32 and Section 31, above, shall
be obtained through  companies  acceptable to Lessor and licensed to do business
in the State of Texas.  Throughout  the term of this  Lease,  Lessee  shall also
maintain  in force a policy  or  policies  of  business  interruption  insurance
sufficient to cover the total interruption of Lessees business operations at and
from the Premises for a period of twelve (12) months,  and covering at least the
causes of fire, lightning,  windstorm,  the elements and other events that would
be covered by a fire and  extended  coverage  property  loss  policy  ("casualty
events).

Within  five (5) days of the earlier to occur of the  commencement  date of this
Lease or the date Lessee  takes  occupancy of any part of the  Premises,  Lessee
shall furnish Lessor with a certificate or certificates  of insurance  issued by
Lessees insurer(s),  addressed to Lessor, evidencing that the insurance required
by this Lease to be  maintained by Lessee is in full force for at least one year
and complies with the requirements hereof, and, if Lessor so requests, a copy of
the policy.  The certificate and the policy, as the case may be, must state that
no modification or cancellation of the coverage may be effected without at least
thirty (30) days prior written notice to Lessor. If Lessee shall fail to procure
and maintain such  insurance,  Lessor may, but shall not be required to, procure
and maintain such  insurance at Lessee"s sole expense which amount shall be paid
by Lessee to Lessor upon demand as additional rent hereunder.

Section 33.  Indemnity

                  Neither Lessor,  nor Lessor's agents,  servants,  or employees
shall  be  liable  to  Lessee,  or  to  Lessee's  agents,  servants,  employees,
customers,  or invitees, for any damage to person or property caused by any act,
omission,  or neglect of Lessee, its agents,  servants or employees,  and Lessee
agrees to indemnify and hold Lessor and Lessor's agents, servants, and employees
harmless from all liability and claims for any such damage.  Lessee shall not be
liable to Lessor,  or to Lessor's agents,  servants,  employees,  customers,  or
invitees,  for any damage to person or property caused by any act, omission,  or
neglect of Lessor,  its agents,  servants,  or  employees,  and Lessor agrees to
indemnify  and hold  Lessee  harmless  from all  liability  and  claims for such
damage.

Section 34.  Rent Tax

                                       14
<PAGE>

                  If applicable in the  jurisdiction  where the Leased  Premises
are situated, Lessee shall pay and be liable for all rental, sales and use taxes
or other similar taxes, if any, levied or imposed by any city, state,  county or
other governmental body having authority, such payments to be in addition to all
other  payments  required to be paid to Lessor by Lessee under the terms of this
Lease. Any such payment shall be paid concurrently with the payment of the rent,
additional rent,  operating expenses or other charge upon which the tax is based
as set forth above.

Section 35.  Waiver of Claims and Subrogation

                   Notwithstanding  anything  in  this  Lease  to the  contrary,
Lessor and Lessee  each  hereby  waives any and all rights of  recovery,  claim,
action or cause of action,  against  the other,  its agents  (including  Lessors
property manager), officers and employees, for any loss or damage that may occur
to  the  Premises,  or  any  improvements  thereto,  or  the  Building,  or  any
improvements  thereto, or any personal property of such party in the Premises or
the  Building,  or on the  grounds  of the  Property,  by  reason  of fire,  the
elements,  or any other  cause  which is or was  required  to have been  insured
against  under the terms of  Sections 31 and 32 hereof,  regardless  of cause or
origin,  including negligence of the other party hereto, its agents, officers or
employees (but excluding willful acts of misconduct), and each covenants that no
insurer of any such loss shall hold any right of subrogation  against such other
party. In respect to Lessors waiver,  such waiver shall be effective only to the
extent of insurance proceeds received or receivable pursuant to any such policy.
To the extent of any excess  loss or any  deductible  amount,  recovery  against
Lessee is not hereby  waived and  released.  Lessee also  waives,  releases  and
relinquishes any and all recoveries, claims, actions, causes of action or rights
of recovery against Lessor,  its property manager,  and their respective agents,
employees,  officers and affiliates,  for any loss or damage to Lessees business
(including  loss of profit  or  revenue)  arising  from  casualty  events to the
Premises or any property of Lessee on the Property to the extent of the required
coverage of Lessees business interruption insurance, whether or not arising from
the  negligence of Lessor or such other  released  parties,  and Lessee  further
covenants  and warrants to Lessor that no  insurance  company  issuing  Lessee a
policy of business  interruption  insurance shall have any rights of subrogation
against  Lessor by reason of any  payment  of any such  claim  made  thereon  by
Lessee.

Section 36.  Casualty Damage

                  If the Premises or any part  thereof  shall be damaged by fire
or other casualty, Lessee shall give prompt written notice thereof to Lessor. In
case the Building shall be damaged by fire or other  casualty,  but shall not be
rendered  untenantable  in whole or in part,  Lessor shall, at its sole expense,
cause such damage to be repaired with reasonable  diligence to substantially the
same  condition  in  which it was  immediately  prior  to the  happening  of the
casualty,  and the Base Rental hereunder shall not be abated;  however,  in case
the  Building  shall be so damaged by fire or other  casualty  that  substantial
alteration or reconstruction of the Building shall, in Lessor's sole opinion, be
required  (whether or not the  Premises  shall have been damaged by such fire or
other casualty), or in the event any mortgagee under a mortgage or deed of trust
covering the Building  should require that the insurance  proceeds  payable as a
result  of said fire or other  casualty  be used to retire  the  mortgage  debt,
Lessor may, at its option,  terminate  this Lease and the term and estate hereby
granted by  notifying  Lessee in writing of such  termination  within sixty (60)
days after the date of such  damage.  If Lessor does not thus elect to terminate
this Lease,  Lessor shall within  seventy-five  (75) days after the date of such
damage  commence to repair and  restore  the  Building  and shall  proceed  with
reasonable  diligence to restore the  Building  (except that Lessor shall not be
responsible for delays outside its control) to substantially  the same condition
in which it was immediately prior to the happening of the casualty,  except that
Lessor shall not be required to rebuild, repair, or replace any part of Lessee's
fixtures,  equipment or other  personal  property  removable by Lessee under the
provisions of this Lease, and Lessor shall not in any event be required to spend
for such work an amount in excess of the insurance proceeds actually received by
Lessor as a result of the fire or other casualty. Lessor shall not be liable for
any  inconvenience  or  annoyance  to Lessee or injury to the business of Lessee
resulting  in any way from  such  damage or the  repair  thereof,  except  that,
subject to the provisions of the next sentence, Lessor shall allow Lessee a fair
diminution  of rent  during  the time and to the  extent  the  Premises,  or any
portion thereof,  are unfit for occupancy.  If the Premises or any other portion
of the Building be damaged by fire or other casualty resulting from the fault or
negligence of Lessee or any of Lessee's agents,  employees, or invites, the rent
hereunder shall not be diminished  during the repair of such damage,  and Lessee
shall be liable to Lessor for the cost and expense of the repair and restoration
of the  Building  caused  thereby  to the  extent  such cost and  expense is not
covered by insurance proceeds. Any insurance,  which may be carried by Lessor or
Lessee  against loss or damage to the Building or to the Premises,  shall be for
the sole  benefit  of the  party  carrying  such  insurance  and  under its sole
control.

Section 37.  Condemnation

                  If the whole or substantially the whole of the Premises should
be taken  for any  public  or  quasi-public  use  under  any  governmental  law,
ordinance,  or regulation,  or by right of eminent domain,  or should be sold to
the  condemning  authority  in lieu  of  condemnation,  then  this  Lease  shall
terminate as of the date when  physical  possession  of the Premises is taken by
the condemning  authority.  If less than the whole or substantially the whole of
the Complex,  Building or the Premises is thus taken or sold, Lessor (whether or
not the  Premises  are  affected  thereby)  may  terminate  this Lease by giving
written  notice  thereof  to Lessee  within  sixty  (60) days after the right of
election accrues,  in which event this Lease shall terminate as of the date when
physical  possession  of such  portion of the Complex or Building or Premises is
taken by the condemning authority.  If upon any such taking or sale of less than
the whole or substantially  the whole of the Complex or Building or the Premises
this Lease  shall not be thus  terminated,  the Base Rental  payable  thereunder
shall be  diminished by an amount  representing  that part of the Base Rental as
shall properly,  in Lessor's reasonable judgment, be allocable to the portion of
the Premises  which was so taken or sold or affected,  if any, and Lessor shall,
at Lessor's sole expense,  restore and reconstruct the Complex,  Building or the
Premises,  as the case may be, to  substantially  their former  condition to the
extent that the same, in Lessor's judgment, may be feasible; Lessor shall not in
any event be  required  to spend for such work an amount in excess of the amount
received by Lessor as  compensation  awarded upon a taking of any part or all of
the Complex,  Building or the Premises,  and Lessee shall not be entitled to and
expressly waives all claim to any such compensation.

Section 38.  Notices and Cure

                  In the event of any act or omission by Lessor which would give
Lessee the right to damages from Lessor or the right to terminate  this Lease by
reason of the  constructive  or actual eviction from all or part of the Premises
or  otherwise,  Lessee shall not sue for such damages or exercise any such right
to terminate until it shall have given written notice of such act or omission to
Lessor and to the holder(s) of any indebtedness or other obligations  secured by
any  mortgage or deed of trust  affecting  the  Premises  (to the extent  Lessor
provides Lessee with appropriate  notice addresses for any such persons),  and a
reasonable  period of time (but in not event  fewer than 30 days) for  remedying
such act or omission  shall have  elapsed  following  the giving of such notice,
during which time Lessor and such  holder(s) or either of them,  their agents or
employees,  shall be entitled to enter upon the Premises and do therein whatever
may be  necessary  to remedy such act or  omission.  During the period after the
giving of such notice and during the remedying of such act or omission, the Base
Rental  payable by Lessee for such  period as  provided  in this Lease  shall be
abated and apportioned only to the extent that any part of the Premises shall be
untenantable.

                                       15
<PAGE>

Section 39.  Personal Liability

                  The  liability  of Lessor to Lessee for any  default by Lessor
under the terms of this Lease shall be limited to the  interest of Lessor in the
Building and the land on which the Building is  situated,  and Lessee  agrees to
look  solely to  Lessor's  interest  in the  Building  and the land on which the
Building is situated  for the recovery of any  judgment  from  Lessor,  it being
expressly understood and agreed that Lessor shall never be personally liable for
any judgement or deficiency, whether or not the claim in question arose from the
negligence  of Lessor or any party for whose actions  Lessor is legally  liable.
This clause shall not be deemed to limit or deny any remedies,  which Lessee may
have in the event of a default  hereunder,  which do not  involve  the  personal
liability of Lessor. Lessor and Lessors agents and employees shall not be liable
to Lessee for any injury to person or damage to property  caused by the Premises
becoming out of repair or by defect or failure of any structural  element of the
Premises  or of any  equipment,  pipes or  wiring,  or broken  glass,  or by the
backing up of drains,  or by gas,  water,  steam,  electricity  or oil  leaking,
escaping  or flowing  into the  Premises  (except  where due to Lessors  willful
failure to make repairs required to be made hereunder, after the expiration of a
reasonable  time after written  notice to Lessor of the need for such  repairs).
Lessor shall not be held responsible in any way on account of any  construction,
repair or reconstruction (including widening) of any private or public roadways,
walkways or utility lines.

Section 40.  Notice

                  Any  notice,   communication,   request,   reply,   or  advice
(hereinafter  severally and collectively called "notice") in this Lease provided
for or  permitted  to be given,  made,  or accepted by either party to the other
must be in writing,  and may, unless otherwise in this Lease expressly provided,
be given or be served by depositing the same in the United States mail, postpaid
and  certified and  addressed to the party to be notified,  with return  receipt
requested,  or by delivering the same in person to any officer of such party, or
by prepaid telegram,  when  appropriate,  addressed to the party to be notified.
Notice deposited in the mail in the manner hereinabove described shall be deemed
given and received  for all purposes  hereof,  unless  otherwise  stated in this
Lease,  from and after the expiration of three (3) days after it is so deposited
or upon actual receipt at the addressees effective notice address,  whichever is
earlier (actual receipt being deemed the date of first attempted delivery if the
first attempted  delivery is not  successful).  Notice given in any other manner
shall be effective only if and when received by the party to be notified.

For purposes of notice,  the  addresses of the parties  shall,  until changed as
herein provided, be as follows:

         For Lessor:                Mr. Patrick J. O'Connell
                                    HSO CORPORATE DRIVE LIMITED PARTNERSHIP
                                    9307 W. Sam Houston Parkway, S., Suite 200
                                    Houston, Texas  77099

         With a Copy to:            Rita Blevins
                                    Exchange Realty Partners
                                    10701 Corporate Drive, Suite #207
                                    Stafford, Texas  77477

         For Lessee                 Dwaine Reese
                                    Enerteck Chemical Corp.
                                    10701 Corporate Drive, #293

                                    Stafford, Texas  77477

The   parties   hereto   and   their   respective   heirs,   successors,   legal
representatives,  and assigns  shall have the right from time to time and at any
time to change  their  respective  addresses  and each  shall  have the right to
specify as its address any other  address by at least  fifteen (15) days written
notice to the other party delivered in compliance with this Paragraph 40.

Section 41.  Surrender

                  On the last day of the term of this Lease, or upon the earlier
termination  of this Lease,  Lessee shall  peaceably  surrender  the Premises to
Lessor in good order, repair, and condition at least equal to the condition when
delivered to Lessee,  excepting  only  reasonable  wear and tear  resulting from
normal  use,  and  damage by fire or other  casualty  covered  by the  insurance
carried by Lessor.  All movable fixtures,  office equipment,  and other personal
property of Lessee shall remain the property of Lessee,  and upon the expiration
date or earlier  termination  of this Lease may be removed  from the Premises by
Lessee,  subject,  however, to Lessor's lien for rent; provided,  however,  that
Lessee shall  repair and restore in a good and  workmanlike  manner  (reasonable
wear and tear  excepted),  any damage to the Premises or the Building  caused by
such removal. Any of such movable fixtures,  office equipment and other personal
property not so removed by Lessee at or prior to the expiration  date or earlier
termination  of this Lease  shall  become  the  property  of  Lessor.  All other
property as a part of the Premises  attached or affixed to the floor,  wall,  or
ceiling of the Premises (including  wall-to-wall  carpeting,  paneling, or other
wall  covering)  are the  property  of  Lessor  and  shall  remain  upon  and be
surrendered with the Premises as a part thereof at the termination of this Lease
by lapse of time or otherwise,  Lessee hereby  waiving all rights to any payment
or compensation therefor.

                  Notwithstanding  anything  herein  to the  contrary,  Lessee's
surrender of the Premises shall in no way affect Lessee's obligation to pay rent
to the date of  expiration  of this  Lease,  whether  or not the  amount of such
obligation  has been  ascertained  either as of the date Lessee  surrenders  the
Premises or as of the date of expiration of this Lease.

Section 42.  Captions

                  The  captions of each  Section of this Lease are  inserted and
included  solely for  convenience  and shall  never be  considered  or given any
effect in construing this Lease, or any provisions hereof, or in connection with
the duties,  obligations, or liabilities of the respective parties hereto, or in
ascertaining intent, if any question of intent exists.

Section 43.  Entirety and Amendments

                                       16
<PAGE>

                  This Lease  embodies the entire  contract  between the parties
hereto  relative to the subject  matter hereof.  No  variations,  modifications,
changes,  or amendments  herein or hereof shall be binding upon any party hereto
unless in writing,  executed by a duly  authorized  officer or a duly authorized
agent of the  particular  party.  All  exhibits  referred  to in this  Lease and
attached hereto are incorporated herein for all purposes.

Section 44.  Severability

                  If any term or  provision  of this Lease,  or the  application
thereof to any  person or  circumstance,  shall,  to any  extent,  be invalid or
unenforceable,  the remainder of this Lease,  or the application of such term or
provision  to persons or  circumstances  other than those as to which it is held
invalid  or  unenforceable,  shall not be  affected  thereby,  and each term and
provision  of this  Lease  shall be valid and  enforced  to the  fullest  extent
permitted by law.

Section 45.  Binding Effect

                  Subject  to Section  21,  all  covenants  and  obligations  as
contained  within  this Lease shall  bind,  extend,  and inure to the benefit of
Lessor,  its  successors  and assigns,  and shall be binding  upon  Lessee,  its
permitted successors and assigns.

Section 46.  Number and Gender of Words

                  All  personal  pronouns  used in this Lease shall  include the
other gender,  whether used in the masculine,  feminine,  or neutral gender, and
the  singular  shall  include  the  plural  whenever  and  as  often  as  may be
appropriate.

Section 47.  Recordation

                  Lessee agrees not to record this Lease, but Lessee agrees,  on
request  of  Lessor,  to  execute  a short  form  lease in form  recordable  and
complying with applicable  Texas laws. In no event shall such document set forth
the rental or other  charges  payable by Lessee  under this Lease;  and any such
document shall  expressly  state that it is executed  pursuant to the provisions
contained in this Lease and is not intended to vary the terms and  conditions of
this Lease.  Lessee  shall not,  under any  circumstances  (unless  requested by
Lessor in writing),  record this Lease or any memorandum,  affidavit or notation
referencing  this Lease in the Real  Property  Records  of the county  where the
Property is located.

Section 48.  Commissions

                  Lessee agrees that it has been  represented  solely by no real
estate  brokerage firm or broker and, Lessee agrees to indemnify  Lessor against
any claim with respect to a leasing  commission  or brokerage fee claimed by any
other real estate  brokerage firm or broker for the execution  and/or renewal or
any expansions of or under this Lease.

Section 49.   Confidentiality

                  Lessee  agrees  to hold  this  Lease  confidential  and not to
reveal the terms and  conditions  of the Lease to any other  party  without  the
prior written permission of Lessor.

Section 50.  Governing Law

                  This  Lease and the  rights  and  obligations  of the  parties
hereto shall be interpreted, construed, and enforced in accordance with the laws
of the State of Texas.

Section 51.  Force Majeure

                  Whenever a period of time is herein  prescribed for the taking
of any action by Lessor,  Lessor  shall not be liable or  responsible  for,  and
there shall be excluded from the  computation of such period of time, any delays
due to  strikes,  riots,  acts of God,  shortages  of labor or  materials,  war,
governmental laws, regulations or restrictions,  or any act, omission, delay, or
neglect of Lessee or any of  Lessee's  employees  or agents,  or any other cause
whatsoever beyond the control of Lessor. Furthermore,  the foregoing shall in no
manner release,  relieve or affect the  independent  obligation of Lessee to pay
rent hereunder.

Section 52.  Relationship of Parties

                  Nothing contained herein shall create any relationship between
the  parties  hereto  other  than  that  of  landlord  and  tenant,  and  it  is
acknowledged  and  agreed  that  Lessor  does not in any way or for any  purpose
intend,  nor shall this  Lease be  construed,  to create as  between  Lessor and
Lessee the  relation  of partner,  joint  venture or member of a joint or common
enterprise with Lessee.

Section 53.  Security Deposit

                  At the time of execution of this lease, and in addition to the
$812.29  tendered  herewith for the first  month's Base Rent  hereunder,  Lessee
shall deposit with Lessor  $812.29 in the form of cash to secure  performance of
Lessee's  obligations  under this lease  during the initial  term and renewal or
extension  periods,  bringing  Lessee's  total Security  Deposit to $812.29.  If
Lessee  fails to pay rent or other sums when due,  the  security  deposit may at
Lessor's  option be applied to such unpaid amounts.  If the security  deposit is
drawn against in whole or in part,  Lessee shall restore the security deposit to
its original amount  immediately  upon written  request by Lessor.  The security
deposit (or an  accounting  thereof)  shall be returned to Lessee  within thirty
(30) days  after  surrender  of the  leased  premises  by  Lessee,  less  lawful
deductions for damages and other sums due under this lease.

Section 54.  Financial Information Of Lessee

                                       17
<PAGE>

                  Lessee shall at any time and from time to time during the term
of this Lease, within fifteen (15) days of written request by Lessor, deliver to
Lessor  such  financial  information  concerning  Lessee  and  Lessees  business
operations  (and the Guarantor of this Lease, if the Lease be guaranteed) as may
be reasonably  requested by Lessor.  If Lessee fails to provide such information
promptly, then, without limiting any other remedy which Lessor may have for such
failure,  Lessor may  thereupon  terminate  this Lease on not less than ten (10)
days written notice.

Section 55.  ADA

                  Lessor   covenants  and  agrees  that  all  new   alterations,
improvements and additions to the Premises constructed by Lessor pursuant to the
terms and provisions of this Lease shall be  constructed in accordance  with the
Americans with  Disabilities  Act (the "Act"),  such that all such  alterations,
improvements  and  additions  to the Premises  constructed  by Lessor will be in
compliance  with the Act as of the date on which Lessee takes  possession of the
Premises.  Lessee  covenants and agrees that all  alterations,  improvements and
additions to the Premises  constructed by Lessee,  whether prior to or after the
date Lessee takes possession of the Premises, shall be constructed in accordance
with the Act. In the event that,  subsequent to the date Lessee takes possession
of the Premises, Lessee requests Lessor to perform any alterations, improvements
and  additions to the  Premises,  whether by virtue of  expansion,  extension or
otherwise,  Lessee agrees to and shall be  responsible  for all cost and expense
incurred  in  connection  with  any  alterations,   improvements  and  additions
necessary to ensure  compliance with the Act. It is the intent of this paragraph
that any additional  alterations,  improvements or additions required by the Act
with  regard to the  Premises  after the date  Lessee  takes  possession  of the
Premises,  whether  resulting from amendments to the Act or otherwise,  shall be
the sole  responsibility  of  Lessee.  Lessee  covenants  and agrees to and does
hereby indemnify, defend and hold Lessor harmless from and against all liability
(including, without limitation, attorneys' fees and court costs) that Lessor may
actually  sustain by reason of  Lessee's  breach of its  obligations  under this
paragraph.  In the event that Lessee fails to comply with its obligations  under
this paragraph for a period of ten (10) days after written notice from Lessor to
Lessee specifying the action required to be taken,  Lessor shall have the right,
but not the  obligation,  to enter into the  Premises and perform such action on
behalf of  Lessee.  In such  event,  Lessor  shall not be liable  for and Lessee
hereby  waives any and all claims  against  Lessor  arising out of any damage or
injury to the Premises or any property situated therein and Lessor shall have no
liability to Lessee for any property  situated  therein and lessor shall have no
liability to Lessee for any interruption of Lessee's operations  conducted in or
about  the  Premises.  Any and all  costs  and  expenses  incurred  by Lessor in
performing  such  action on behalf of Lessee  shall be  reimbursed  by Lessee to
Lessor  upon  demand and the  failure  to do so shall,  at the option of Lessor,
constitute an event of default under this Lease.

Section 56.  Hazardous Materials

                  Lessee  shall not cause or permit any  Hazardous  Material (as
hereinafter  defined) to be brought upon,  kept or used in or about the Premises
by Lessee,  its agents,  employees,  contractors or invitees,  without the prior
written consent of Lessor,  which consent may be granted or withheld in Lessor's
sole  discretion.  For the  purpose of this  Lease  "Hazardous  Material"  shall
include oil, flammable  explosives,  asbestos,  urea  formaldehyde,  radioactive
materials  or  waste,  or other  hazardous,  toxic,  contaminated  or  polluting
materials,  substances or wastes, including, without limitations, any "hazardous
substances,"  "hazardous  wastes," hazardous  materials" or toxic substances" as
such terms are defined in the  Resource  Conservation  and  Recovery Act and the
Comprehensive Environmental Response, Compensation and Liability Act, and in any
other law,  ordinance,  rule,  regulation or order promulgated by the federal or
state government,  or any other governmental entity having jurisdiction over the
Complex or the parties to this Lease.  If Lessee  breaches the  obligations  set
forth  in this  paragraph,  or if the  presence  of  Hazardous  Material  in the
Premises or at the  Complex,  or if  contamination  of the Complex by  Hazardous
Material  otherwise  occurs  for which  Lessee is  legally  liable to Lessor for
damage resulting therefrom, then Lessee shall indemnify,  defend and hold Lessor
harmless from any and all claims, judgments,  damages,  penalties, fines, costs,
liabilities or losses, including, without limitation, diminution in value of the
Office Building Project,  damages for the loss or restriction on use of rentable
or useable space in or of any amenity of the Office  Building  Project,  damages
arising from any adverse impact on leasing space in the Office Building Project,
sums paid in settlement of claims, and any attorneys' fees,  consultant fees and
expert  fees which  arise  during or after the term of this Lease as a result of
such  contamination.  This  indemnification  of Lessor by Lessee  shall  survive
expiration or termination of this Lease and includes, without limitation,  costs
incurred in connection with any investigation of site conditions or any cleanup,
remedial,  removal or restoration work required by any federal,  state, or local
governmental  agency or  political  subdivision  because of  Hazardous  Material
present in, on or under the Premises.  Without  limiting the  foregoing,  if the
presence of any Hazardous  Material caused or permitted by Lessee results in any
contamination  of the Complex,  Lessee shall  promptly take all actions,  at its
sole expense,  as are necessary to return the Complex to the condition  existing
prior to the introduction of any such Hazardous Material; provided that Lessor's
approval of such actions shall first be obtained,  which  approval  shall not be
unreasonably  withheld so long as such actions  would not  potentially  have any
material adverse long-term or short-term effects on the Complex.

Section 57.  No Lessor Obligation to Provide Security

         (a) NEITHER  LESSOR NOR ITS  PROPERTY  MANAGEMENT  AGENT SHALL HAVE ANY
LIABILITY  TO  LESSEE  OR  ANY  THIRD  PARTY  WHOMSOEVER,   INCLUDING,   WITHOUT
LIMITATION, LESSEE'S EMPLOYEES, OFFICERS, AGENTS, REPRESENTATIVES,  CONTRACTORS,
CUSTOMERS,  INVITEES  OR  LICENSEES,  FOR  DAMAGE,  INJURY OR LOSS TO PERSONS OR
PROPERTY  RESULTING  FROM CRIMINAL  ACTIVITY  OCCURRING  UPON THE PREMISES,  THE
BUILDING,  THE PROPERTY, OR ADJACENT THERETO,  WHETHER SUCH CRIMINAL ACTIVITY IS
BY OTHER TENANTS, THEIR EMPLOYEES, AGENTS, OFFICERS, REPRESENTATIVES, CUSTOMERS,
INVITEES,  LICENSEES,  CONTRACTORS  OR  OTHERS,  OR  IS  BY  ANY  THIRD  PARTIES
WHOMSOEVER  Lessee shall fully insure  itself,  as it may deem  appropriate,  to
protect  itself  from  claims for any such  possible  injury,  loss or damage to
persons or property resulting from criminal activity,  including claims asserted
by  its  employees,  agents,  officers,  representatives,  customers,  invitees,
licensees  and  contractors.  LESSEE SHALL  INDEMNIFY,  DEFEND AND HOLD HARMLESS
LESSOR AND ITS PROPERTY MANAGEMENT AGENT FROM AND AGAINST ANY CLAIMS FOR DAMAGE,
LOSS OR INJURY TO PERSONS OR PROPERTY  ASSERTED BY LESSEE'S  EMPLOYEES,  AGENTS,
OFFICERS,   REPRESENTATIVES,   CUSTOMERS,  INVITEES,  LICENSEES  OR  CONTRACTORS
RESULTING FROM ANY SUCH CRIMINAL ACTIVITY,  WHETHER BASED ON ALLEDGED NEGLIGENCE
OF LESSOR OR OTHERWISE.

         (b)  Subject to Lessor's  prior  written  approval,  which shall not be
unreasonably  withheld,  Lessee may at its cost take whatever precautions may be
necessary  in the  Premises and in the common areas of the Building and Property
to  protect  its  employees,  officers,

                                       18
<PAGE>

agents, representatives,  customers, visitors, contractors,  suppliers, invitees
and licensees  from criminal  activity when on the Property and in the Building,
or in the vicinity  thereof,  but nothing herein shall be deemed or construed as
an undertaking or obligation enforceable against Lessee by any such third party.
Lessee shall be  responsible  for informing  itself as to the risk of crime from
time to time on and in the vicinity of the Property and Lessee shall not rely on
Lessor  to  obtain,   monitor  or  disseminate  such  crime   information.   Any
dissemination  of crime  information by Lessor or its management  agent shall be
without obligation or liability on the part of Lessor or its management agent to
do so in the future,  and  neither  Lessor nor its  management  agent shall have
liability  or  responsibility  for the  accuracy  or  completeness  of any  such
information as the parties  understand  and  acknowledge  that such  information
shall be from sources the  reliability  of which  Landlord does not undertake to
verify or investigate.  Lessee  acknowledges  that it is in an equal position to
Lessor in terms of its ability to investigate or obtain further  verification of
the facts  surrounding  any  particular  crime  reported by Lessor or  otherwise
coming to the attention of Lessee.  Lessee  agrees to at all times  comply,  and
cause its employees, agents, contractors, invitees and licensees to comply, with
all security  regulations from time to time in effect in the Building and on the
Property,  but Lessor does not undertake any  obligation to promulgate  security
regulations  nor does Lessor  warrant or  represent  that any existing or future
security  regulations  will be  effective to deter,  reduce or prevent  criminal
activity.

Section 58.  Exhibits

                  The  following  numbered  Exhibits  are  attached  hereto  and
incorporated herein and made a part of this Lease for all purposes:

                  Exhibit A - Building Legal Description
                  Exhibit B - Floor Plan of the Premises.
                  Exhibit C - Tenant Improvements and Specifications
                  Exhibit D - Base Rental Schedule
                  Exhibit E - Parking Rules and Regulations
                  Exhibit F - Building Rules and Regulations
                  Exhibit H - Corporate Resolution
                  Exhibit I - Renewal Option
                  Exhibit J - Special Provisions

EXECUTED in multiple counterparts, each which shall have the force and effect of
an original, on this 1st day of _February, 2001

          LESSOR:          HSO CORPORATE DRIVE LIMITED PARTNERSHIP
                           BY ITS SOLE GENERAL PARTNER HSO OFFICE HOLDINGS, LLC
                  By:      Patrick J. O'Connell
                           ----------------------------------------------------
                           S/s
                           ----------------------------------------------------
                  Title:
                           Manager

                  Date:    February 1, 2001
                           ----------------------------------------------------

          LESSEE: ENERTECK CHEMICAL CORP.

                  By:      Dwaine Reese
                           ----------------------------------------------------

                           S/s

                  Title:   President
                           ----------------------------------------------------

                  Date:    January 29, 2001
                           ----------------------------------------------------

SUBMISSION OF THIS  INSTRUMENT  FOR  EXAMINATION OR SIGNATURE BY LESSEE DOES NOT
CONSTITUTE A RESERVATION OF OR AN OPTION FOR LEASE, AND IT IS NOT EFFECTIVE AS A
LEASE OR OTHERWISE UNTIL EXECUTION AND DELIVERY BY BOTH LESSOR AND LESSEE.

                                       19
<PAGE>

                                    EXHIBIT A

                                    Page One

                           BUILDING LEGAL DESCRIPTION

BEING, A THREE STORY ATRIUM OFFICE BUILDING  LOCATED AT 10701 CORPORATE DRIVE IN
STAFFORD,  TEXAS. IT IS LEGALLY DESCRIBED AS 5.2361 BEING UNRESTRICTED RESERVE D
CORPORATE  BUSINESS PARK, OUT OF  UNRESTRICTED  RESERVE F OF CORPORATE  BUSINESS
PARK AND OUT OF  UNRESTRICTED  RESERVE E OF THE REPLAT OF EXECUTIVE  PARK.  SAID
TRACT ALSO BEING IN THE H.J. DEWITT SURVEY, ABSTRACT 162, CITY OF STAFFORD, FORT
BEND  COUNTY,  TEXAS,  AND  BEING IN THE W, M.  STAFFORD,  1 """  LEAGUE  GRANT,
ABSTRACT 89, SUGAR LAND, FORT BEND COUNTY, TEXAS

                                       20
<PAGE>

                                    EXHIBIT B

                           FLOOR PLAN OF THE PREMISES

                                       21
<PAGE>

                                    EXHIBIT C

                     TENANT IMPROVEMENTS AND SPECIFICATIONS

         Lessee  Improvements  and  Specifications:  Landlord  shall  tender and
Tenant shall accept  possession of the Lease  Premises in an "AS-IS"  condition,
with all, and without any warranty,  express,  implied, or statutory  (including
implied warranties of habitability,  suitability,  condition,  and fitness for a
particular  purpose) with the exception of the Tenant Improvements listed on the
attached  Exhibit "B" to be performed and  completed in a workmanlike  manner at
the sole expense of the Landlord up to a $2.00psf Tenant Improvement  Allowance.
All other tenant  improvements not shown or specified per Exhibit "B" will be at
the  sole  cost  to  Lessee,  and  paid  upon  demand  to the  Landlord.  Tenant
Improvements are as follows:

1) Replace existing carpet in entire space with Building Standard Carpet.
2) Paint all existing walls with new building standard paint.
3) Add new  door  name to  front  door and  directory  strip  on front  and back
entrance
4) Rekey  front  door lock  only.  All  inside  private  locks are a cost to the
tenant.

                                       22
<PAGE>

                                    EXHIBIT D

                               BASE RENT SCHEDULE

To Lease Agreement for: Enerteck Chemical Corp.

Rentable Square Footage (RSF):  557

Commencement Date:  February 1, 2001
                    ------------------------------------

                                    SCHEDULE

<TABLE>
<CAPTION>
                                                 Annual Base               Monthly Rent               Annual Base
                         Time Period             Rental Rate                                         Rental Amount
            ------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                          <C>                   <C>                  <C>
            1-36MNTHS.                   02/01/01  TO  01/31/04       $      17.50          $   812.29             $ 9,747.49
            ------------------------------------------------------------------------------------------------------------------

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

            ------------------------------------------------------------------------------------------------------------------
                                                                                                                  $ 29,242.48
            ------------------------------------------------------------------------------------------------------------------
</TABLE>

            TOTAL OF BASE  RENTAL PAYMENTS UNDER LEASE AGREEMENT:

                                       23
<PAGE>

                                    EXHIBIT E

                          PARKING RULES AND REGULATIONS

         It is the desire of Lessor to maintain  and operate the parking  garage
and parking  areas in an orderly  manner.  The following  rules and  regulations
apply to all  tenants  in the  Building  and their  agents,  employees,  family,
licensees, invitees, visitors, and contractors unless otherwise stated.

         Lessor  reserves  the right to rescind  these  rules,  make  reasonable
changes,  or make other reasonable  rules and regulations for the safety,  care,
and   cleanliness   of  the  parking  garage  and  parking  areas  and  for  the
preservations of good order.

         1. Traffic Signs.  All persons parking in the parking garage or parking
areas shall  observe  posted signs and  markings  regarding  speed,  stop signs,
traffic lanes, reserved parking, no parking,  stripes separating parking spaces,
etc.

         2. Control Devices. Lessor reserves the right to install or utilize any
reasonable  system  of entry and exit  control  devices,  Lessee  identification
cards, or vehicle  identification cards or stickers;  and all persons parking in
the garage or parking  areas  shall  comply  with such  system.  Lessor may make
reasonable  charges for  replacement  of control  device cards or other  parking
identification cards, which are lost or damaged.

         3.  Tenant  Guest  Parking.  Lessor  reserves  the right to utilize any
reasonable  system by which building  Lessee may pay for parking of their guests
or customers.

         4. Trash.  All persons  parking in the parking  garage or parking areas
shall  refrain from throwing  trash,  ashtray  contents,  or other debris on the
garage floor or parking areas.

         5. Flat  Tires.  All  vehicle  owners  and all  persons  parking in the
parking garage or parking areas shall be responsible for promptly repairing flat
tires or other  conditions  of the  vehicle  which  cause  unsightliness  in the
reasonable judgement of Lessor.

         6. Removal of Unauthorized Vehicles. If vehicles are blocking driveways
or  passageways  or parked in violation of these rules and  regulations or state
statutes, Lessor may exercise vehicle removal remedies under Article 6701g-1 and
6701g-2 of the Texas Civil Codes upon compliance with statutory notice.

         7. Security.  Lessor shall use reasonable  diligence in the maintenance
of existing lighting in the parking garage or parking areas. Lessor shall not be
responsible for additional  lighting or further security measures in the parking
garage or other parking areas.

         8. Timely Payment of Parking Rent.  Lessee shall be entitled to monthly
parking  rights in the parking  garage  pursuant to Section 13 of the Lease and,
only upon timely payment of the then current monthly parking rent.

         9. Designated  Parking. In the event Lessee is expressly granted rights
and/or  privileges in and to specific  parking  areas or  facilities  under this
Lease, the following shall apply:  Lessee and Lessees employees and/or permitted
subtenants  shall park their cars only in those  portions of the Parking  Garage
and areas  that are from time to time  designated  for that  purpose  by Lessor.
Lessor shall have the right from time to time to relocate  parking  areas within
the Property for use by Lessee. Lessee shall furnish in writing the make, model,
color and state  automobile  license number  (automobile  license  numbers to be
submitted on a yearly basis) assigned to Lessees cars within five (5) days after
taking  possession of the Premises and shall thereafter notify Lessor in writing
of any  changes  within two (2) days.  In the event  Lessee,  or its  employees,
agents  and/or  licensees  fail  to park  their  cars in the  parking  areas  so
designated  from  time to time by  Lessor,  then any  requirements  in the Lease
regarding prior notice to Lessee or the expiration of any grace period, or both,
shall not apply and Lessor at its option shall (a) have the  immediate  right to
charge Lessee, or its permitted  subtenants Ten Dollars ($10.00) per car per day
parked in any areas other than that so designated (which charges shall be deemed
Additional  Rental  hereunder  and  subject  to all of the  provisions  relating
thereto),  and/or (b) tow such  vehicle  away each at Lessees  cost and expense.
Parking  areas shall be used only for parking  vehicles no longer than full size
passenger  automobiles or " ton pick up trucks,  herein called  "PERMITTED  SIZE
VEHICLES." Vehicles other than Permitted Size Vehicles are herein referred to as
"OVERSIZED VEHICLES." The maintenance,  washing,  waxing or cleaning of vehicles
in the parking  structure  or  elsewhere  in the  Property is  prohibited.  Such
parking use as is herein  provided is intended  merely as a license  only and no
bailment is intended or shall be created hereby.

                                       24
<PAGE>

                                    EXHIBIT F

                                PAGE ONE OF FOUR

                         BUILDING RULES AND REGULATIONS

         The following rules and  regulations,  hereby  accepted by Lessee,  are
prescribed by Lessor and shall be  consistently  applied to all tenants in order
to provide and  maintain,  to the best of Lessors  ability,  orderly,  clean and
desirable  Leased  Premises  and Property  for the tenants of the  Building,  to
protect tenants, so far as reasonably  possible,  and to regulate conduct in and
use  of  the  Property  and  Leased  Premises  in  such  manner  as to  minimize
interference  by others in the proper use of the Leased  Premises by Lessee.  In
the following rules and  regulations,  all references to Lessee include not only
Lessee,  but also  Lessees  officers,  agents,  servants,  employees,  invitees,
licensees,   visitors,   contractors,   permitted  assignees,  and/or  permitted
subleases.  Lessor has reserved the right to amend and supplement these Building
Rules and  Regulations  as it may from time to time deem  necessary or desirable
for  appropriate  operation and safety of the Property and its occupants.  These
Rules  shall not,  however,  be  modified  or  supplemented  in any way so as to
impair, in any material respect,  the beneficial use and enjoyment of the Leased
Premises by Lessee for the uses permitted under this Lease.  Lessor reserves the
right to waive any of these rules or regulations  as to any  particular  Lessee,
and any  such  waiver  shall  not  constitute  a  waiver  of any  other  rule or
regulation or any subsequent application thereof to such Lessee.

1.       Lessee  shall not block or obstruct  any of the  sidewalks,  corridors,
         entries,   passages,   doors,  elevators,   elevator  doors,  hallways,
         stairways or other similar areas of the Property,  and shall not place,
         empty,  or throw away any rubbish,  litter,  trash,  or material of any
         nature  into such  areas,  and shall not use or permit such areas to be
         used at any time  except for normal  ingress  and egress of tenants and
         Lessor to and from the Property and the Leased Premises.

2.       The movement by Lessee of furniture, equipment,  merchandise,  freight,
         and other  items  and  materials  within,  into,  or out of the  Leased
         Premises or the Property  shall be restricted to after 6:00 p.m. and to
         the day, time, method and route of movement as prescribed in writing by
         Lessor upon prior written request from Lessee,  and Lessee shall assume
         all liability and risk to persons and  property,  the Leased  Premises,
         and Property in such movement.  Lessee must notify Lessor in writing at
         least one (1) full  business  day in  advance of the  movement  of said
         property so that Lessor may designate and prepare any elevator for such
         transportation  or  notify  Lessee  that  such  movement  will  not  be
         permitted  under the Lease.  Safes and other heavy  equipment  shall be
         moved into,  out of and within the Leased  Premises  only with  Lessors
         prior  written  consent  and only to  places  designated  by  Lessor in
         writing.  Lessee shall protect all common area flooring during any such
         moves.  Lessees moving company must be a licensed  commercial mover and
         must be  pre-approved  by the  Lessor  in  writing  and must  provide a
         certificate  of liability  insurance from a solvent  insurance  company
         licensed  to do  business  in Texas.  If a move  requires  after  hours
         supervision by the Lessor,  the Lessee will be charged a reasonable fee
         to be set by  Lessor.  All  hand  carts  used in the  Building  must be
         equipped with rubber tires and rubber side guards.

3.       Lessor  will  not be  responsible  for or  liable  for  lost or  stolen
         property, equipment, money, or any other item or article taken from the
         Leased  Premises  or  Property,  including  but not  limited to parking
         areas, regardless of how or when the loss or theft occurs.

4.       Lessee shall not install or operate any refrigerating,  heating, or air
         conditioning  apparatus  in the Leased  Premises and shall not carry on
         any  mechanical   operation  into  the  Leased  Premises  or  Property.
         Flammable,  explosive or other hazardous  fluids or materials shall not
         be brought into the Property or the Leased  Premises  without the prior
         written permission of Lessor.

5.       Lessee shall not use the  Property or the Leased  Premises for housing,
         lodging,  or sleeping  purposes,  or for the  cooking,  preparation  or
         distribution of food. If Tenant's approved plans and specifications for
         its Lessee  Finish Out include a kitchen or coffee bar,  Lessee may use
         such designated  areas only for microwave oven preparation of food, hot
         plates to heat food and simple meal  preparation  for the  enjoyment of
         Lessee,  its employees and guests,  but nothing  contained  herein will
         authorize Lessee to prepare food for resale or for profit or to operate
         a cafeteria,  snack bar,  restaurant or other public or private  eating
         facility.

6.       Lessee shall not bring into the Property or the Leased Premises or keep
         on, in or about the  Leased  Premises  any bird or animal  (other  than
         animals  trained to assist and which are assisting  persons with visual
         impairment).  Lessee shall not bring into the Property or keep on or in
         the Leased Premises any bicycle,  boat, trailer, or commercial delivery
         or transport  vehicle or any other  vehicle  without the prior  written
         consent of Lessor.

                                       25
<PAGE>

                                    EXHIBIT F

                                PAGE TWO OF FOUR

                         BUILDING RULES AND REGULATIONS

7.       Except as expressly  permitted in the Lease,  Lessee shall not make any
         alterations or improvements  to the Leased  Premises  without the prior
         written consent of Lessor.  All alterations  and  improvements  and the
         methods  of  installing   and   constructing   such   alterations   and
         improvements   must  be  approved   in  writing  by  Lessor   prior  to
         commencement of installation or construction. Lessee shall not paint or
         decorate  in the Leased  Premises,  and shall not mark,  paint,  or cut
         into,  drive nails,  or screw into or in any way deface any part of the
         Leased  Premises or Property  without the prior written  consent of the
         Lessor.  If  Lessee  desires  signal,  communication,  alarm,  or other
         utility  service  connection  installed or changed,  such work shall be
         done at expense of Lessee (including an administration fee equal to 15%
         of the total cost of such work),  only with the prior written  approval
         of  the  Lessor  and  only  under  the  direction  of the  Lessor.  All
         contractors  and  technicians  performing  work for  Lessee  within the
         Leased  Premises and the Property must be approved in writing by Lessor
         prior to the commencement of any such work.

8.       For purposes of this Lease, Building Holidays are as follows:

                                  New Years Day
                                 Presidents Day

                                   Good Friday
                                  Memorial Day

                                Independence Day
                                    Labor Day

                    Thanksgiving Day and the following Friday
                                  Christmas Day

         If a Building Holiday falls on a Sunday, the Building will close on the
         preceding  Saturday at 1:00 PM and remain  closed  until the  following
         Tuesday  morning.  When Christmas falls on Saturday,  the building will
         close on the preceding Friday and not reopen until the following Monday
         morning.

9.       No furniture,  equipment,  or similar  articles  shall be moved into or
         from the Property without a removal permit from the Building  Manager's
         office  authorizing same, and after a permit is issued,  movement shall
         be at the sole risk and responsibility of Lessee and shall otherwise be
         in accordance with Rule 2 above.

10.      Lessee shall, before leaving the Leased Premises unattended,  close and
         lock all outside doors and shut off all utilities; damage and any extra
         expense resulting from failure to do so shall be paid by Lessee.

11.      Lessee  shall give  Lessor  prompt  notice of all  accidents  involving
         heating and air conditioning equipment, plumbing, electrical facilities
         or  any  part  or  appurtenance  of  the  Premises,  including  without
         limitation   damages  to  or  defects  in  such  equipment,   plumbing,
         facilities or other appurtenance of the Property.

12.      The plumbing  facilities  shall not be used for any other  purpose than
         that for which they are constructed,  and no liquids or other materials
         or  substances  which  might  cause  injury  to the  plumbing,  foreign
         substance of any kind shall be placed  therein,  and the expense of any
         breakage,  stoppage,  or  damage  resulting  from a  violation  of this
         provision by Lessee or Lessees  agents,  employees or invitees shall be
         borne by Lessee and Lessor shall not be liable therefor.

13.      All contractors  and technicians  performing work for Lessee within the
         Building  shall be referred to Lessor for  approval  before  performing
         such work. Lessor shall not unreasonably withhold or delay its approval
         of Lessees  contractors or technicians.  This  preapproval  requirement
         shall apply to all work, including, but not limited to, installation of
         telephones,  telegraph  equipment,  electrical devices and attachments,
         and all installations affecting floor, walls, windows, doors, ceilings,
         equipment or any other  physical  feature of the Property or the Leased
         Premises.  None of this  work  shall be done by or on  behalf of Lessee
         without Lessors prior written consent.

14.      Should  Lessee  desire to place in the  Property  any  unusually  heavy
         equipment,  including  but not  limited to,  large  files,  safes,  and
         electronic  data  processing  equipment,  it shall first obtain written
         approval  of  Lessor  for  the  use of  Building  elevators  and of the
         proposed location in which such equipment is to be installed or placed.
         Maximum live floor loads (excluding partitioning only) shall not exceed
         fifty (50) pounds per square  foot.  Lessee,  at Lessees  sole cost and
         expense,  shall  repair  all  damage  done to the  Property,  including
         without  limitation,  the Leased  premises,  arising by reason of or in
         connection  with the placement of heavy items,  which  over-stress  the
         floor.

15.      There  shall  not  be  used  in any  space,  or in  the  public  halls,
         sidewalks,  corridors,  or passageways  of the Property,  either by any
         Lessee  or  by  jobbers  or  others  in  the  delivery  or  receipt  of
         merchandise,  any hand trucks,  except those equipped with rubber tires
         and rubber side guards.

                                       26
<PAGE>

                                    EXHIBIT F

                               PAGE THREE OF FOUR

                         BUILDING RULES AND REGULATIONS

16.      No person or contractor not employed by Lessor shall be used to perform
         janitor work,  window  washing,  cleaning,  repair or other work in the
         Leased Premises. Lessors janitors shall not be hindered by Lessee after
         6:00 p.m.  daily.  Nothing shall be swept or thrown into the corridors,
         halls, elevator shafts, stairways or similar areas.

17.      Lessee must dispose of crates,  boxes and the like which are associated
         with the initial move-in and occupancy of the Premises, the purchase of
         any other  furniture or  equipment  during the term of the Lease or any
         other  items  which  are  in  excess  of  normal  office  supplies  and
         stationery.  In no event  shall  Lessee  set such  items in the  public
         hallways or other areas of the Property for disposal.

18.      Lessee,  at Lessees sole cost and  expense,  shall repair all damage to
         flooring as a result of rust or corrosion of file cabinets, plants, pot
         holders, roller chairs, and metal objects.

19.      Lessees  employing  laborers or others  outside of the Leased  Premises
         shall not have their employees paid in the Property.

20.      Lessee shall not advertise  the  business,  profession or activities of
         Lessee in any manner which violates the letter or spirit of any code of
         ethics adopted by any recognized association or organization pertaining
         thereto or use the name of the Property for any purpose other than that
         of the business address of Lessee or use any picture or likeness of the
         Property or the Property name in any letterheads, envelopes, circulars,
         notices,  advertisements,  containers,  or wrapping materials,  without
         Lessors prior written consent.

21.      Lessor  reserves  the right to refuse  access to any persons  Lessor in
         good faith judges to be a threat to the safety, reputation, or property
         of the Property and its occupants.

22.      Lessee  shall  not make or  permit  any  noise or odors  that  annoy or
         interfere  with other Lessees or persons having  business  within or at
         the  Property.  Lessee  shall not  otherwise  interfere in any way with
         other tenants,  leases,  or other persons having  business at or in the
         Property.

23.      Lessee  shall not do any thing in or around the Leased  Premises or the
         Property that may cause or that causes excessive  vibration in any part
         of the Property.

24.      No Lessee, employee or invitee shall go upon the roof of the Property.

25.      Lessee shall not suffer or permit smoking or carrying of lighted cigar,
         pipes or  cigarettes  in areas  designated  by Lessor or by  applicable
         governmental rules, ordinances,  regulations or agencies as non-smoking
         areas.

26.      Lessee shall not install, maintain or operate any vending machines upon
         the Premises without Lessors written  consent,  which consent shall not
         be unreasonably withheld, unless the Property contains vending machines
         in the Building Common Areas, in which case, such consent may be denied
         or withheld in Lessors sole discretion.

27.      Lessee shall comply with all safety,  fire  protection  and  evacuation
         regulations established by Lessor or any applicable governmental rules,
         ordinances, regulations or agency.

28.      Lessee and Lessees  employees,  agents and invitees shall not enter the
         mechanical   rooms,  air  conditioning   rooms,   electrical   closets,
         janitorial  closets, or similar areas and shall not go upon the roof of
         the Property without the prior written consent of Lessor.

29.      Any  additional  services as are  routinely  provided  to lessees,  not
         required by the Lease to be performed by Lessor,  which Lessee requests
         Lessor to perform,  and which are performed by Lessor,  shall be billed
         to Lessee at Lessors  cost plus 15% and  Lessee  shall pay such bill on
         the next maturing date as an installment  of Base Rental.  The requests
         of Lessees for building services,  maintenance and repair shall be made
         in  writing to the Lessor  and will be  attended  to only upon  written
         application  at the  Management  Office of the  Property.  Employees of
         Lessor  shall not  perform  any work or do  anything  outside  of their
         regular duties,  unless under special  instructions from the Management
         Office of the Building.

30.      Lessee  shall not  change  locks or install  additional  locks on doors
         without the prior written  consent of Lessor.  Lessee shall not make or
         cause  to be made  duplicates  of keys to the  Property  or the  Leased
         Premises  without the prior written consent of Lessor.  All keys to the
         Leased Premises shall be surrendered to Lessor upon  termination of the
         Lease.

                                       27
<PAGE>

                                    EXHIBIT F

                                PAGE FOUR OF FOUR

                         BUILDING RULES AND REGULATIONS

31.      No  sign,  advertisement,  notice  or hand  bill  shall  be  exhibited,
         distributed, painted or affixed by Lessee, its employees or agents, on,
         about or from any part of the Leased  Premises or the Property  without
         the prior written consent of Lessor. Lessor will provide and maintain a
         directory in the Property and no other directory shall be permitted.

32.      Lessee shall place solid pads under all rolling chairs.

33.      Lessee  agrees to  cooperate  and assist  Lessor in the  prevention  of
         canvassing, soliciting and peddling within the Property.

34.      Lessee shall comply with parking rules and regulations as may be posted
         and distributed from time to time.

35.      Lessee  shall  not  place or  install  any  window  treatments  without
         Landlords prior written consent.

36.      Lessor  reserves  the right to: (a) change the name and  address of the
         Property;  (b) use the roof; (c) have pass keys to the Leased Premises;
         (d) install any signs on the exterior or interior of the Property;  and
         (e) make changes to the common areas or other parts of the Property.

37.      Lessor may prevent  access to the Property by any person who in Lessors
         judgment may be  detrimental  to the safety,  character,  reputation or
         interest of the  Property or any tenant or lessee of the  Property,  or
         any part thereof.

38.      Except as expressly  permitted  in the Lease,  Lessee shall not use the
         Leased  Premises  or the  Property  to offer  or to sell  any  items or
         services at retail  price or cost  without  prior  written  approval of
         Lessor.   The   sale  of   services   for   stenography,   typewriting,
         blueprinting, duplicating and similar businesses shall not be conducted
         from or within the Leased  Premises or the  Property for the service or
         accommodation  of occupants of the Property  without the prior  written
         consent of Lessor.  Lessee  shall not conduct any auction on the Leased
         Premises nor store goods, wares, or merchandise on the Leased Premises,
         except for Lessees own use.

39.      Lessee, its employees, agents and invitees, and anyone else who desires
         to enter the Property after normal  working hours,  will be required to
         identify  themselves  and to sign in  upon  entry  and  sign  out  upon
         leaving,  giving  their  location  during  their stay and their time of
         arrival and departure. Property will normally be open for business form
         7:00 a.m. until 6:00 p.m. daily,  Monday through Friday,  and from 8:00
         a.m. until 1:00 p.m. on Saturdays, holidays excepted.

40.      Lessee must obtain Lessors prior written  approval for  installation of
         any solar screen  material,  window shades,  blinds,  drapes,  awnings,
         window ventilators, or other similar equipment and any window treatment
         of any kind whatsoever.  Lessor will control all internal lighting that
         may be visible  from the  exterior of the  Property  and shall have the
         right to change any unapproved  lighting,  without notice to Lessee, at
         Lessees expense.

                                       28
<PAGE>

                                    EXHIBIT H

                              CORPORATE RESOLUTION

         The  undersigned,  as secretary of the  corporation  named below,  does
hereby  certify  that at a  special  meeting  of the board of  directors  of the
corporation,  duly  called  and held on the , day of  ________  20___ at which a
quorum of the  directors  were  present  and acting  through  out the  following
resolutions were unanimously adopted and are still in force and effect:

         RESOLVED  that the president or the vice  president of the  corporation
shall be  authorized  to  execute  a lease  for  office  space on  behalf of the
corporation  and/or  to  guarantee  performance  of a lease  for  office  space,
described below:

         Date of Lease:
                           -----------------------------------------------------
         Lessor:            HSO     Corporate    Drive    Limited    Partnership
                           -----------------------------------------------------
         Lessee:            Enerteck Chemical Corp.
                           -----------------------------------------------------
         Building Name:     THE ATRIUM BUILDING
                           -----------------------------------------------------
         Suite No.:         Suite #293
                            ----------------------------------------------------
         Address:           10701 Corporate Drive
                           -----------------------------------------------------
         City/State/Zip     Stafford,  Texas, 77477
                           -----------------------------------------------------

         RESOLVED  FURTHER,  that  the  president  or vice  president  shall  be
authorized  on behalf of the  Corporation  to execute  and deliver to the Lessor
thereunder all  instruments  reasonably  necessary for such lease.  Lessor under
such lease shall be entitled to rely upon the above  resolutions until the board
of directors of the corporation revokes, alters, or countermands same in written
form, certified by the secretary of the corporation, and deliver same, certified
mail,  return  receipt  requested,  to the  Lessor,  Said  corporation  is  duly
organized  and is in good  standing  under the laws of the State of Texas..  The
undersigned  further  certifies that on the meeting date referred to above,  the
names and respective titles of the officers of the corporation were as follows:

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

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

         WITNESS MY HAND this                  day of              , 20        .
                              ----------------        -------------    --------

                                         Enerteck Chemical Corp.
                                         ---------------------------------------
                                         Type name of corporation

                                         S/s
                                         Signature of secretary of corporation

                                         Tom Kaminsky
                                         ---------------------------------------
                                         Printed Name

THE STATE OF________________

COUNTY OF___________________

         This instrument was acknowledged before me on _____________, ____ 2001,
by ___________________, Secretary of ___________________________________,  Inc.,
a ___________corporation, on behalf of said corporation.

                                         Notary Public in and

for the State of _______________
(INK STAMP NOTARY SEAL)
                                         -----------------------------

                                         -----------------------------
                                         Name: (Printed or Typed)

                                         My Commission Expires:_______

                                       29
<PAGE>

                                    EXHIBIT I

                                 RENEWAL OPTION
                                    (MARKET)

Intentially Left Blank.

                                       30
<PAGE>

                                    EXHIBIT J

                               SPECIAL PROVISIONS

Intentially left blank.

                                       31

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