<PAGE>
                                                                    EXHIBIT 10.1
 
                         [LOGO OF SOUTH COAST PLAZA]
 
 
                        SOUTH COAST PLAZA RETAIL CENTER
 
 
                              SOUTH COAST PLAZA,
                                   Landlord
 
                                      and
 
 
                             ST. JOHN KNITS, INC.,
                                    Tenant
 
                                                            Approved as to Form.
                                                              Latham & Watkins

                                                             By /s/ JW DANIELS
                                                                --------------
                                                                    JW DANIELS 
<PAGE>
 
                        SOUTH COAST PLAZA RETAIL CENTER

          In consideration of the rents and covenants hereinafter set forth,
Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the
following described premises upon the following terms and conditions:

                          FUNDAMENTAL LEASE PROVISIONS
<TABLE> 
<CAPTION> 

<S>                                                                             <C> 
Dated (for identification purposes):  June 5, 1998
Landlord: SOUTH COAST PLAZA, a California general partnership
Tenant:   ST. JOHN KNITS, INC., a California corporation
Tenant's Tradename:  ST. JOHN KNITS / AMEN WARDY HOME
Suite Number:  2533 and 3011
Use of Premises:  See Addendum                                                  (Section 6.01)
Initial Monthly Minimum Rent:   $76,920.00* ($60.00 per sq. ft. per yr.)        (Section 3.01)
Rent Commencement Date:  See Addendum                                           (Section 2.02)
Lease Expiration Date:  January 31, 2014                                        (Section 2.01)
Outside Date for PDM:  June 15, 1998                                            (Section 17.02)
Outside Date for Start of Tenant's Work:  See Addendum                          (Section 17.04)
Percentage Rent:  6% in excess of a breakpoint of $15,384,000 per lease year*   (Section 3.03)
Estimated Initial Common Area Charges:  $15.32 per sq. ft. per yr.**            (Section 14.05)
Estimated Initial Real Property Taxes:  Included in Common Area Charges         (Secs. 5.01, 14.05)
Estimated Initial Premises VAC Charges:  $4.99 per sq. ft. per yr.**            (Section 12.04)
Estimated Initial Enclosed Mall VAC Charges:  $1.32 per sq. ft. per yr.**       (Section 12.05)
Promotional Fund:  $3.48 per sq. ft. per yr.**                                  (Section 16.15)
Initial Promotional Fund Payment:  None  See Addendum                           (Section 16.15)
Floor Area of Premises:  15,384 sq. ft.*                                        (Section 16.04)
Security Deposit:  None  See Addendum                                           (Section 16.05)
Plan Review Fee:  None                                                          (Section 17.03)
VAC Hookup and Upgrade Fee:  None                                               (Section 17.04)
Broker(s):  None                                                                (Section 16.12)
Advertised Address for Premises:  SOUTH COAST PLAZA                             (Section 15.04)
Address for Notices:                                                            (Section 16.11)
</TABLE> 

To Landlord:                                  To Tenant:
 
South Coast Plaza Management Offices          St. John Knits, Inc.
3333 Bristol Street                           17422 Derian Avenue
Costa Mesa, California 92626                  Irvine, California  92713
Attn:  General Manager                        Attn:  Mr. Robert Gray, President
FAX:  (714) 540-7334                          FAX:  (949) 223-3283


With a copy to:


South Coast Plaza
3315 Fairview Road
Costa Mesa, California 92626
Attn:  Controller
FAX:  (714) 546-9835

*    To be adjusted to reflect actual Floor Area
**   Based upon estimated amounts for current calendar year, without
     representation as to actual amounts determined for current and future
     calendar years

     The Fundamental Lease Provisions are an integral part of this lease and
each reference in this lease to any of the Fundamental Lease Provisions shall be
construed to incorporate all of the terms provided under each such Fundamental
Lease Provision. In the event of any conflict between any Fundamental Lease
Provision and the balance of this lease, the latter shall control. References to
specific Sections are for convenience only and designate some of the Sections
where references to the particular Fundamental Lease Provisions appear. The
listing in the Fundamental Lease Provisions of monetary charges payable by
Tenant shall not be construed to be an exhaustive list of all amounts payable by
Tenant pursuant to this lease.


                                                         LANDLORD'S     TENANT'S
                                                          INITIALS      INITIALS
                                                         ----------     --------
                                                           J.E.S.          DD
                                                           H.T.S.

                                       i
<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------

                                                                            Page
                                                                            ----

ARTICLE I. - PREMISES......................................................... 1

     Section 1.01  Premises Defined  See Addendum............................. 1

ARTICLE II. - TERM............................................................ 1

     Section 2.01  Length Of Term; Early Termination  See Addendum............ 1
     Section 2.02  Lease Commencement Date And Rent Commencement Date  See
                   Addendum................................................... 1
     Section 2.03  Lease Year................................................. 1

ARTICLE III. - RENT........................................................... 1

     Section 3.01  Minimum Rent; Increases  See Addendum...................... 1
     Section 3.02  Cost Of Living Increase  [Intentionally Deleted]........... 2
     Section 3.03  Percentage Rent  See Addendum.............................. 2
     Section 3.04  Rent Defined  See Addendum................................. 2
     Section 3.05  Place For Payments......................................... 3

ARTICLE IV. - RECORDS, REPORTS AND ACCOUNTING................................. 3

     Section 4.01  Records  See Addendum...................................... 3
     Section 4.02  Statements Of Gross Sales  See Addendum.................... 4
     Section 4.03  Audit  See Addendum........................................ 4

ARTICLE V. - TAXES............................................................ 4

     Section 5.01  Real Property Taxes........................................ 4
     Section 5.02  Definitions  See Addendum.................................. 4
     Section 5.03  Other Taxes  See Addendum.................................. 5

ARTICLE VI. - CONDUCT OF BUSINESS BY TENANT................................... 5

     Section 6.01  Use Of Premises  See Addendum.............................. 5
     Section 6.02  Restrictions On Use  See Addendum.......................... 6
     Section 6.03  Other Locations  See Addendum..............................17

ARTICLE VII. - MAINTENANCE, REPAIRS AND ALTERATIONS........................... 9

     Section 7.01  Landlord's Obligations  See Addendum....................... 9
     Section 7.02  Tenant's Obligations  See Addendum......................... 9
     Section 7.03  Alterations And Additions  See Addendum....................10
     Section 7.04  Cleanliness; Waste And Nuisance............................10
     Section 7.05  Health Matters  See Addendum...............................10

ARTICLE VIII. - INSURANCE; INDEMNITY..........................................11

     Section 8.01  Liability Insurance-Premises  See Addendum.................11
     Section 8.02  Fire Insurance-Fixtures, Equipment And Tenant Improvements
                   See Addendum...............................................12
     Section 8.03  Landlord's Insurance  See Addendum.........................12
     Section 8.04  Insurance Policies  See Addendum...........................13
     Section 8.05  Waiver Of Subrogation  See Addendum........................13
     Section 8.06  Indemnity  See Addendum....................................13
     Section 8.07  Exemption Of Landlord  See Addendum........................14
     Section 8.08  Landlord's Security  See Addendum..........................14
     Section 8.09  Tenant's Security..........................................14

ARTICLE IX. - REPAIRS AND RESTORATION.........................................14

     Section 9.01  Insured Or Minor Damage....................................14
     Section 9.02  Major Damage To Premises  See Addendum.....................15
     Section 9.03  Major Damage To Center  See Addendum.......................15
     Section 9.04  Damage Near End Of Term  See Addendum......................15
     Section 9.05  Abatement Of Rent; Remedies For Non-Performance  
                   See Addendum...............................................15
     Section 9.06  Definitions................................................16


                                                         LANDLORD'S     TENANT'S
                                                          INITIALS      INITIALS
                                                         ----------     --------
                                                           J.E.S.          DD
                                                           H.T.S.

                                      ii
<PAGE>
 
ARTICLE X. - ASSIGNMENT AND SUBLETTING........................................16

     Section 10.01  Landlord's Rights  See Addendum...........................16
     Section 10.02  Transfers In Bankruptcy...................................19
     Section 10.03  No Release Of Tenant......................................19

ARTICLE XI. - EMINENT DOMAIN..................................................19

     Section 11.01  Entire Or Substantial Taking..............................19
     Section 11.02  Partial Taking  See Addendum..............................19
     Section 11.03  Taking Of Center  See Addendum............................19
     Section 11.04  Awards  See Addendum......................................19
     Section 11.05  Sale Under Threat Of Condemnation  See Addendum...........20

ARTICLE XII. - UTILITY SERVICES...............................................20

     Section 12.01  Utility Charges...........................................20
     Section 12.02  Furnishing Of Services  See Addendum......................20
     Section 12.03  Interruption Of Service  See Addendum.....................20
     Section 12.04  Central System............................................20
     Section 12.05  Enclosed Mall Air Conditioning............................21

ARTICLE XIII. - DEFAULTS AND REMEDIES.........................................21

     Section 13.01  Defaults  See Addendum....................................21
     Section 13.02  Remedies  See Addendum....................................22
     Section 13.03  Default By Landlord  See Addendum.........................23
     Section 13.04  Expense Of Litigation  See Addendum.......................24
     Section 13.05  Holding Over  See Addendum................................24
     Section 13.06  Landlord's Rights  See Addendum...........................24
     Section 13.07  Lien For Rent  [Intentionally Deleted]   See Addendum.....25
     Section 13.08  Trial Without Jury........................................25
     Section 13.09  Submission To Arbitration.................................25

ARTICLE XIV. - COMMON AREAS...................................................26

     Section 14.01  Definition  See Addendum..................................26
     Section 14.02  Use  See Addendum.........................................27
     Section 14.03  Control By Landlord  See Addendum.........................27
     Section 14.04  Common Area Costs  See Addendum...........................28
     Section 14.05  Proportionate Payment  See Addendum.......................30

ARTICLE XV. - SIGNS, LIGHTING AND ADVERTISING.................................30

     Section 15.01  Prohibited Activities  See Addendum.......................30
     Section 15.02  Maintenance  See Addendum.................................31
     Section 15.03  Display Window Lighting...................................31
     Section 15.04  Advertised Name And Address  See Addendum.................31
     Section 15.05  Advertising Expenditures  See Addendum....................32
     Section 15.06  Acceptance Of Center Gift Certificates  See Addendum......32
     Section 15.07  Publications Program Advertising  See Addendum............33
     Section 15.08  Signs On Exterior Fascia  See Addendum....................33

ARTICLE XVI. - MISCELLANEOUS..................................................33

     Section 16.01  Estoppel Statements  See Addendum.........................33
     Section 16.02  Landlord's Right Of Access  See Addendum..................34
     Section 16.03  Transfer Of Landlord's Interest...........................34
     Section 16.04  Floor Area................................................34
     Section 16.05  Deposit And Financial Statements  See Addendum............35
     Section 16.06  Late Payments And Deliveries  See Addendum................35
     Section 16.07  Separability..............................................35
     Section 16.08  Time Of Essence  See Addendum.............................35
     Section 16.09  Headings..................................................35
     Section 16.10  Incorporation Of Prior Agreements; Amendments; 
                    Counterparts..............................................36
     Section 16.11  Notices  See Addendum.....................................36
     Section 16.12  Brokers  See Addendum.....................................36
     Section 16.13  Waivers  See Addendum.....................................36


                                                         LANDLORD'S     TENANT'S
                                                          INITIALS      INITIALS
                                                         ----------     --------
                                                           J.E.S.          DD
                                                           H.T.S.

                                      iii
<PAGE>
 
     Section 16.14  Recording  See Addendum...................................37
     Section 16.15  Advertising And Promotional Fund  See Addendum............37
     Section 16.16  Liens  See Addendum.......................................38
     Section 16.17  Subordination  See Addendum...............................38
     Section 16.18  Tenant's Authority  See Addendum..........................38
     Section 16.19  Safety And Health  See Addendum...........................39
     Section 16.20  Indemnities...............................................39
     Section 16.21  Non-Disclosure Of Lease Terms  See Addendum...............39
     Section 16.22  Gender; Tenants...........................................40
     Section 16.23  Force Majeure  See Addendum...............................40
     Section 16.24  Yield Up Premises.........................................40
     Section 16.25  Relocation Of Tenant  [Intentionally Deleted].............40
     Section 16.26  No Option  See Addendum...................................40
     Section 16.27  Landlord Liability........................................41
     Section 16.28  Termination  See Addendum.................................41
     Section 16.29  Tax Benefits..............................................42
     Section 16.30  Accord And Satisfaction  See Addendum.....................42
     Section 16.31  Financing  See Addendum...................................42
     Section 16.32  Landlord's Consent  [Intentionally Deleted]...............42
     Section 16.33  Mortgagee Cure Rights.....................................42
     Section 16.34  Obligations of a Mortgagee................................42

ARTICLE XVII. - CONSTRUCTION OF PREMISES......................................43

     Section 17.01  Condition Of Premises  See Addendum.......................43
     Section 17.02  Design Review  See Addendum...............................43
     Section 17.03  Plans For Tenant's Work  See Addendum.....................44
     Section 17.04  Tenant's Work  See Addendum...............................44

EXHIBIT "A"      -  Site Plan of Center with Premises Depicted
EXHIBIT "B"      -  Lease Plan of Premises
EXHIBIT "B-1"    -  Plot Plan Showing Center Boundaries
EXHIBIT "B-2"    -  Map Showing Prohibited Area
EXHIBIT "B-3"    -  Statement of Compliance
EXHIBIT "C"      -  General Description of Landlord's Work and of Tenant's Work
EXHIBIT "D"      -  Tenant Cold Air Annual Charge Schedule
EXHIBIT "E"      -  Detailed Design Criteria and Standards for Landlord's Work
                    and Tenant's Work
EXHIBIT "F"      -  Accelerated Building Plan Review Agreement
EXHIBIT "G"      -  Rules and Regulations for South Coast Plaza
EXHIBIT "H"      -  Known Locations of Asbestos-Bearing Construction Materials
EXHIBIT "I"      -  Form of Lease Estoppel Certificate
EXHIBIT "J"      -  Form of Tenant's Gross Sales Reports
EXHIBIT "K"      -  Paragraph 10 of Reciprocal Easement Agreement

                                                         LANDLORD'S     TENANT'S
                                                          INITIALS      INITIALS
                                                         ----------     --------
                                                           J.E.S.          DD
                                                           H.T.S.

                                      iv 
<PAGE>
 
                                    ARTICLE I.
                                    PREMISES

PREMISES DEFINED          Section 1.01  See Addendum
                             Landlord hereby leases to Tenant and Tenant hereby
                          hires from Landlord those certain premises (the
                          "Premises") located in the South Coast Plaza Retail
                          Center in the City of Costa Mesa, County of Orange,
                          State of California (the "Center"), which Center,
                          Premises and the enclosed mall on which the Premises
                          open (the "Enclosed Mall") are more particularly
                          depicted on Exhibit "A" attached hereto, for the term,
                          at the rental, and upon all of the conditions and
                          agreements set forth herein; reserving to Landlord,
                          however, (a) the use of the exterior walls, roof,
                          return air plenum and the area under the Premises
                          floor and (b) the rights to make structural (building)
                          modifications and to install, maintain, use, repair
                          and replace pipes, ducts, conduits, and wires serving
                          other portions of the Center through the Premises in
                          locations which will not materially interfere with
                          Tenant's use thereof. Landlord further reserves the
                          right, prior to the commencement of Tenant's Work in
                          the Premises, to make changes in the lease lines shown
                          on Exhibit "B," so long as such changes do not
                          materially change the size of the Premises.

                                   ARTICLE II.
                                      TERM

LENGTH OF TERM; EARLY     Section 2.01
TERMINATION                  (a) The term of this lease shall be from the Lease
                          Commencement Date determined pursuant to Section 2.02
                          to and until the lease expiration date specified in
                          the applicable Fundamental Lease Provision, unless
                          earlier terminated pursuant to any provision of this
                          lease.
                             (b)  [Intentionally Deleted]

LEASE COMMENCEMENT        Section 2.02   See Addendum
DATE AND RENT                (a) The "Lease Commencement Date" of this lease
COMMENCEMENT DATE         shall be the date on which Landlord delivers
                          possession of the Premises to Tenant. Delivery of
                          possession shall be by telephonic notice from Landlord
                          to Tenant or Tenant's architect or contractor of the
                          date on which the Premises will be available and ready
                          for Tenant to commence Tenant's Work pursuant to
                          Section 17.04, whether or not any work by Landlord
                          remains to be completed. It shall be Tenant's
                          responsibility to obtain a key to the Premises from
                          Landlord's construction coordinator. From and after
                          the Lease Commencement Date, Tenant shall observe and
                          perform all obligations of the tenant pursuant to this
                          lease, other than those requiring the payment of
                          Minimum Rent, Percentage Rent and additional rent. The
                          "Rent Commencement Date" of this lease shall be the
                          first to occur of the date specified in or determined
                          pursuant to the applicable Fundamental Lease Provision
                          or the date on which Tenant opens the Premises for
                          business. From and after the Rent Commencement Date,
                          Tenant shall observe and perform all obligations of
                          the tenant pursuant to this lease, including those
                          requiring the payment of Minimum Rent, Percentage Rent
                          and additional rent. No delay in Landlord's delivery
                          of the Premises shall entitle Tenant to terminate this
                          lease or to any damages on account of such delay.
                             (b)  [Intentionally Deleted]
                             (c)  [Intentionally Deleted]

LEASE YEAR                Section 2.03
                             A lease year is a period of twelve (12) full
                          calendar months commencing on the first day of
                          February and ending on the last day of January, except
                          that if the Lease Commencement Date occurs on a date
                          other than February 1 there shall be a partial lease
                          year for the period from the Lease Commencement Date
                          to the next following January 31, both dates
                          inclusive, and the last lease year, if this lease is
                          terminated on a date other than January 31, shall be a
                          partial lease year for the period beginning on
                          February 1 following the last preceding full lease
                          year and ending on the termination date.

                                   ARTICLE III.
                                      RENT

MINIMUM RENT;             Section 3.01   See Addendum
INCREASES                    (a) Tenant shall pay to Landlord for each full
                          calendar month following the Rent Commencement Date
                          the monthly Minimum Rent specified in the applicable
                          Fundamental Lease Provision, subject to any adjustment
                          pursuant to Sections 3.01(b), 3.02, 10.01(e) and
                          16.04. The first month's Minimum Rent shall be paid
                          with Tenant's delivery of this lease. Thereafter,

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       1
<PAGE>
 
                          Minimum Rent shall be payable in advance upon the
                          first day of each calendar month or partial calendar
                          month without any deduction or offset. The Minimum
                          Rent for any fractional part of a calendar month at
                          the beginning or end of the lease term shall be a
                          proportionate part of the Minimum Rent for a full
                          calendar month. Such proration and all other
                          prorations pursuant to this lease shall be made on the
                          basis of a thirty (30) day month and a 360 day year.
                             (b)  [Intentionally Deleted]

COST OF LIVING INCREASE   Section 3.02  [Intentionally Deleted]

PERCENTAGE RENT           Section 3.03   See Addendum
                             (a) In addition to the Minimum Rent, Tenant shall
                          pay to Landlord for each lease year or partial lease
                          year following the Rent Commencement Date, as
                          Percentage Rent, the percentage specified in the
                          applicable Fundamental Lease Provision of Tenant's
                          gross sales (as hereinafter defined) for such lease
                          year or partial lease year in excess of the Percentage
                          Rent breakpoint specified in the applicable
                          Fundamental Lease Provision (as adjusted in the case
                          of partial lease years). Upon any adjustment of the
                          Minimum Rent pursuant to Sections 3.01(b), 3.02,
                          10.01(e), 16.04, or any other provision of this lease,
                          the Percentage Rent breakpoint shall be adjusted to
                          that amount determined by dividing the annual Minimum
                          Rent after such adjustment by the Percentage Rent rate
                          set forth in the applicable Fundamental Lease
                          Provision. The Percentage Rent breakpoint for any
                          partial lease year shall be determined by multiplying
                          the Percentage Rent breakpoint for a full lease year
                          by a fraction, the numerator of which is the number of
                          days in the partial lease year and the denominator of
                          which is 360.
                             With respect to any lease year or partial lease
                          year in which the breakpoint changes by virtue of an
                          increase in Minimum Rent during such year, Tenant's
                          Percentage Rent breakpoint for such lease year or
                          partial lease year shall be determined as follows. The
                          annual Percentage Rent breakpoint in effect prior to
                          the increase in Tenant's Minimum Rent shall be
                          multiplied by a fraction, the numerator of which shall
                          be the number of days in such lease year or partial
                          lease year subsequent to the Rent Commencement Date
                          through the day of the increase in Tenant's Minimum
                          Rent and the denominator of which shall be 365. The
                          annual Percentage Rent breakpoint in effect subsequent
                          to the increase in Minimum Rent shall be determined in
                          the manner described above, and such annual Percentage
                          Rent breakpoint shall be multiplied by a fraction, the
                          numerator of which shall be the number of days in such
                          lease year or partial lease year subsequent to the
                          increase in Tenant's Minimum Rent and the denominator
                          of which shall be 365. The amounts derived pursuant to
                          the two immediately preceding sentences shall be added
                          together and shall be the Percentage Rent breakpoint
                          for such lease year or partial lease year. From and
                          after the effective date of the event giving rise to
                          such increase in Tenant's Minimum Rent, the annual or
                          partial lease year breakpoint determined pursuant to
                          this subsection shall be used in determining Tenant's
                          payments, if any, on account of Percentage Rent for
                          the remainder of the year. With the commencement of
                          each new lease year thereafter, the annual Percentage
                          Rent breakpoint shall be calculated as set forth
                          above.
                             (b) On or before the fifth (5th) day following each
                          calendar month following the Rent Commencement Date,
                          Tenant shall pay to Landlord, on account of such
                          Percentage Rent, the stated percentage of the amount,
                          if any, of Tenant's gross sales for such preceding
                          calendar month in excess of one-twelfth (1/12) of the
                          annual Percentage Rent breakpoint. Promptly upon
                          Tenant's submission pursuant to Section 4.02(b) of
                          Tenant's annual certified statement of gross sales (or
                          upon Landlord's election if such statement is not
                          submitted within the time required by this lease), the
                          parties shall make any adjustment necessary to place
                          the Percentage Rent on a lease year basis. Any
                          additional amount due from Tenant shall be paid by
                          Tenant to Landlord with Tenant's annual statement of
                          gross sales pursuant to Section 4.02(b) or within ten
                          (10) days after the date of Tenant's receipt of
                          Landlord's invoice therefor if no such annual
                          statement is furnished. Any refund due to Tenant shall
                          be credited against the next Percentage Rent payable
                          by Tenant pursuant to Section 3.03(a) or, if at the
                          end of the term, applied against any amount then owed
                          by Tenant to Landlord pursuant to this lease and the
                          balance, if any, refunded to Tenant.
                             (c) (i) The term "gross sales" as used herein means
                          the entire amount charged, whether wholly or partly
                          for cash, on credit or otherwise, for all merchandise
                          sold, and all charges made for services performed or
                          for the extension of credit in, at or from the
                          Premises, or through the substantial use of the
                          Premises, by Tenant or anyone acting on Tenant's
                          behalf or under a sublease, license or concession from
                          Tenant, including, without limiting the generality of
                          the foregoing, the amount allowed upon any "trade-in,"
                          the retail price of any merchandise delivered on
                          redemption of trading stamps, all deposits not
                          refunded to purchasers, all catalog sales at or from
                          the Premises, all direct mail sales made from any
                          location but based upon a list of Tenant's customers
                          at the Premises, the gross proceeds from the sale of
                          stamps or theater or sporting event tickets, all
                          receipts from electronic or other video games and from
                          advertising conducted at the Premises by Tenant for

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       2
<PAGE>
 
                          others and all orders taken in or from the Premises or
                          which Tenant would in the normal course of its
                          operations credit or attribute to its business in the
                          Premises, even though such orders may be filled
                          elsewhere, without deduction in any case for
                          uncollected or uncollectible credit accounts. There
                          shall also be included in "gross sales" the gross
                          receipts from all mechanical, electronic and other
                          vending devices placed in the Premises by Tenant or
                          under authority from Tenant, other than such devices
                          which are installed in portions of the Premises not
                          open to the public for the convenience of Tenant's
                          employees, mail or phone order sales solicited from or
                          returned to the Premises and mail order or telephone
                          order sales from the Premises in response to
                          advertisements using the Premises address or telephone
                          number and all sales made by televideo or other
                          electric or electronic media of any type where such
                          media direct the sale or order to the Premises. Gross
                          receipts from sales made and orders taken in the
                          Premises shall be included in "gross sales" even
                          though the account may be transferred elsewhere for
                          collection and although the delivery of merchandise
                          sold or the performance of services ordered may be
                          made elsewhere than at the Premises. Every transaction
                          on a deferred payment basis shall be treated as a sale
                          for the full price at the time such transaction is
                          entered into, irrespective of the time for payment or
                          the time when title passes. Gross sales of each
                          sublessee, licensee, concessionaire or other person
                          using all or a portion of the Premises under authority
                          from Tenant shall be included in Tenant's gross sales
                          statements.
                                  (ii) The term "gross sales" as used herein
                          shall not include (or, if included, there shall be
                          deducted to the extent of such inclusion) the amount
                          of any cash or credit refund in fact made upon sales
                          from the Premises, where the merchandise sold or some
                          part thereof is returned by the purchaser and accepted
                          by Tenant, nor exchanges and transfers of merchandise
                          between stores of Tenant, where made solely for the
                          convenient operation of Tenant's business and not
                          having the effect of consummating a sale made or which
                          would have been made at the Premises, nor returns to
                          shippers or manufacturers, nor sales of fixtures or
                          equipment after their substantial use in the conduct
                          of Tenant's business in the Premises, nor the amount
                          of any sales, luxury or excise taxes on sales from the
                          Premises, where such taxes are both added to the
                          selling price (or absorbed therein) and paid to the
                          taxing authorities by Tenant (but not by any vendor of
                          Tenant).
                                  (iii)  [Intentionally Deleted]


RENT DEFINED              Section 3.04   See Addendum
                             As used in this lease, the term "rent" shall mean
                          Minimum Rent, Percentage Rent and additional rent, and
                          the term "additional rent" shall mean all amounts
                          payable by Tenant to Landlord pursuant to this lease
                          other than Minimum Rent and Percentage Rent. All
                          Minimum Rent, Percentage Rent and additional rent
                          shall be paid in lawful money of the United States
                          which shall be legal tender at the time of payment.
                          Where no other time is stated herein for payment,
                          payment of any amount due from Tenant to Landlord
                          hereunder shall be made within ten (10) days after
                          Tenant's receipt of Landlord's invoice or statement
                          therefor.

PLACE FOR PAYMENTS        Section 3.05
                             All payments to be made by Tenant to Landlord
                          pursuant to this lease shall, until further notice by
                          Landlord to Tenant, be made to Landlord at the
                          following address:

                               South Coast Plaza
                               File No. 54876
                               Los Angeles, CA 90074-4876

                                   ARTICLE IV.
                         RECORDS, REPORTS AND ACCOUNTING

RECORDS                   Section 4.01   See Addendum
                               Tenant shall keep and shall require its
                          subtenants and concessionaires, if any, to keep at the
                          Premises or at such other place as Landlord may
                          approve in writing, complete and accurate books of
                          account and records of, but not limited to, all
                          purchases and receipts of merchandise, inventories and
                          all sales and other transactions from which Tenant's
                          gross sales and advertising expenditures at, upon or
                          from the Premises can be determined. Tenant agrees to
                          record all sales, at the time each sale is made,
                          whether for cash or on credit, in a cash register(s)
                          containing locked-in cumulative tapes with cumulation
                          capacity satisfactory to Landlord or a point of sale
                          computer recording system, in either case with the
                          capacity to identify individual sales by method of
                          payment (cash, check or credit card). Tenant shall
                          keep all pertinent original sales records, which
                          records shall include, as applicable, (a) daily dated
                          register tapes; (b) serially numbered sales slips; (c)
                          mail and catalog orders; (d) telephone orders; (e)
                          settlement report sheets of transactions with
                          sublessees, concessionaires and licensees; (f) records
                          showing that merchandise returned by customers was
                          purchased by such customers at or from the Premises;
                          (g) receipts or other records of merchandise

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                          leased, licensed or taken out on approval; (h)
                          duplicate bank deposit slips and bank statements; (i)
                          such other records as would normally be required to be
                          kept and examined by an independent accountant in
                          accordance with accepted auditing practices in
                          performing an audit of Tenant's gross sales; and (j)
                          all income, sales and occupation tax returns. In
                          addition to Landlord's audit rights pursuant to
                          Section 4.03, Landlord may periodically conduct on-
                          Premises observations to confirm compliance by Tenant
                          with this Section. If Tenant is not in substantial
                          compliance, the cost of such observations shall be
                          reimbursed by Tenant to Landlord as additional rent.

STATEMENTS OF GROSS       Section 4.02   See Addendum
SALES                        (a) Tenant shall submit to Landlord, on or before
                          the fifth (5th) day of each month, a written statement
                          showing in reasonable detail the gross sales in, at or
                          from the Premises for the preceding calendar month.
                             (b) Tenant shall submit to Landlord, on or before
                          the tenth (10th) day of the month following the end of
                          each lease year or partial lease year, a written
                          statement certified by the chief financial officer of
                          Tenant showing in reasonable detail the gross sales
                          in, at or from the Premises for such preceding lease
                          year or partial lease year.
                             (c) All statements pursuant to this Section shall
                          be in such form and shall contain such information as
                          Landlord reasonably determines. Each certification
                          shall be satisfactory to Landlord in scope and
                          substance and shall be without qualification except as
                          expressly permitted by Landlord.

AUDIT                     Section 4.03   See Addendum
                             (a) The acceptance by Landlord of payments of
                          Percentage Rent shall be without prejudice to
                          Landlord's right to examine Tenant's records of gross
                          sales and inventories of merchandise in the Premises
                          in order to verify the amount of Tenant's gross sales.
                             (b) At any reasonable time, and upon five (5) days
                          prior written notice to Tenant, Landlord may cause a
                          special audit to be made of Tenant's records relating
                          to the Premises for the period covered by any annual
                          statement of gross sales. Except as provided in (c)
                          below, the cost of such audit shall be paid by
                          Landlord. Any such special audit performed by a
                          certified public accountant selected by Landlord shall
                          be binding upon the parties.
                             (c) If it shall be determined as a result of such
                          audit that there has been a deficiency in the payment
                          of Percentage Rent, then such deficiency shall become
                          immediately due and payable with interest at the rate
                          per annum determined pursuant to Section 16.06 from
                          the date when such payment should have been made. If
                          the aforementioned deficiency is in excess of two
                          percent (2%) of the Percentage Rent theretofore
                          computed and paid by Tenant for the period covered by
                          the audit, Tenant shall also pay to Landlord the cost
                          of the audit. If Tenant is permitted by Landlord to
                          maintain its books and records with respect to the
                          Premises outside of Orange County, California, then
                          the phrase "cost of the audit" shall include the
                          reasonable travel, meal and lodging expenses of
                          Landlord's auditor(s).

                                    ARTICLE V.
                                     TAXES

REAL PROPERTY TAXES       Section 5.01
                             Tenant shall pay, at the time and in the manner
                          specified in Article XIV, Tenant's proportionate share
                          of all real property taxes applicable to the Center,
                          including the common areas thereof. Tenant's
                          proportionate share of such real property taxes shall
                          be determined pursuant to Sections 14.04 and 14.05.
                          For the purposes of this Article and Article XIV, real
                          property taxes shall be included in common area costs.

DEFINITIONS               Section 5.02   See Addendum
                             (a)  The term "real property taxes" shall include:
                                  (i) All taxes, assessments, license fees,
                          license taxes and other governmental charges and
                          surcharges levied upon or with respect to the real
                          property and improvements within the Center, including
                          those portions thereof defined in Section 14.01 as
                          "common areas";
                                  (ii) All other taxes, assessments and other
                          governmental charges and surcharges levied upon or
                          with respect to the fixtures, equipment and other
                          property of Landlord in or about the Center, whether
                          real or personal;
                                  (iii) Fees and assessments for any
                          governmental service(s) to the Center, including
                          service payments in lieu of taxes;
                                  (iv) Any and all taxes payable by Landlord:
                          (A) upon, allocable to, or measured by or on the gross
                          or net rent payable hereunder, including without
                          limitation any gross income tax, sales tax or excise
                          tax levied by the state, any political subdivision
                          thereof, or the federal government with respect to the
                          receipt of such rent; (B) upon or with respect to the
                          possession,

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                          leasing, operation, management, maintenance,
                          alteration, repair, use or occupancy of the Premises
                          or any portion thereof, including any sales, use or
                          service tax imposed as a result thereof, (C) upon or
                          measured by Tenant's gross receipts or payroll or the
                          value of Tenant's equipment, furniture, fixtures, and
                          other personal property of Tenant or leasehold
                          improvements, alterations or additions located in the
                          Premises; or (D) upon this transaction or any document
                          to which Tenant is a party creating or transferring an
                          interest or an estate in the Premises; and
                                  (v) All expenses reasonably incurred by
                          Landlord in seeking reduction by the taxing
                          authorities of the taxes described in clauses (i)
                          through (iv) above.

                          Provided, however, that the term "real property taxes"
                          shall not include any franchise, estate, inheritance,
                          succession, capital levy, net income or excess profits
                          taxes imposed upon Landlord, except that, if real
                          property taxes are withdrawn in whole or in part and
                          any substitute tax is made therefor, such tax shall in
                          any event for the purpose of this lease be considered
                          a tax included in "real property taxes" pursuant to
                          this Section 5.02, regardless of how denominated or
                          the source from which it is collected. 
                              (b) For the purposes of this Section, real
                          property taxes which are levied on a fiscal year basis
                          shall be deemed to apply one-twelfth (1/12th) to each
                          calendar month in such fiscal year.

OTHER TAXES               Section 5.03   See Addendum
                             Tenant shall be responsible for and shall pay
                          before delinquency all municipal, county, state or
                          federal taxes, levies, assessments and fees of every
                          kind and nature, including but not limited to general
                          or special assessments, assessed during the term of
                          this lease against any leasehold interest, leasehold
                          improvements or personal property of any kind owned by
                          or placed in, upon or about the Premises by Tenant or
                          upon Tenant's business operations in the Premises.
                          When possible, Tenant shall cause such personal
                          property and other items to be assessed and billed
                          separately from the Premises and the Center. If any
                          such taxes, levies and assessments are levied against
                          Landlord or the Center or if the assessed value of the
                          Center is increased by the inclusion therein of a
                          value placed upon any items described in this Section
                          and if Landlord pays the taxes, levies and assessments
                          based upon such increased assessment, which Landlord
                          shall have the right to do regardless of the validity
                          thereof, but only under proper protest if requested by
                          Tenant, Tenant shall upon demand repay to Landlord, as
                          additional rent, the taxes, levies and assessments so
                          levied against Landlord, or the proportion of such
                          taxes, levies and assessments resulting from such
                          increase in the assessment, together with interest
                          thereon from the date of payment by Landlord to the
                          date of reimbursement by Tenant at the rate determined
                          pursuant to Section 16.06. Provided, however, that in
                          any such event Tenant shall have the right, in the
                          name of Landlord and with Landlord's full cooperation
                          but without any cost to Landlord, to bring suit in any
                          court of competent jurisdiction to recover the amount
                          of any such taxes, levies and assessments so paid
                          under protest, any amount so recovered to belong to
                          Tenant.

                                   ARTICLE VI.
                         CONDUCT OF BUSINESS BY TENANT

USE OF PREMISES           Section 6.01   See Addendum
                             (a) Tenant shall use the Premises solely for the
                          use specified in the applicable Fundamental Lease
                          Provision, and shall not change such use except with
                          the prior written approval of Landlord, which Landlord
                          may give or withhold in its sole discretion. Tenant
                          shall use the Premises solely under the tradename
                          specified in the applicable Fundamental Lease
                          Provision and under no other tradename whatsoever
                          without the prior written consent of Landlord, which
                          Landlord may give or withhold in its sole discretion.
                          Tenant shall devote the entire Premises to such use,
                          except for areas reasonably required for office or
                          storage space uses limited to the business conducted
                          by Tenant in the Premises. Tenant shall continuously
                          and uninterruptedly during the term hereof conduct its
                          business activity in the Premises during all business
                          hours usual for Tenant's type of business, but in any
                          event during those minimum hours from time to time
                          established by Landlord for the Center, including
                          Sundays, unless Tenant is prevented from doing so by
                          strike, fire or other cause beyond Tenant's reasonable
                          control. Failure of any other tenant of the Center,
                          with or without the consent of Landlord, to observe
                          the minimum hours of operation established by Landlord
                          for the Center shall not relieve Tenant of its
                          obligation to observe such minimum hours or prevent
                          Landlord from requiring Tenant to observe such minimum
                          hours. Tenant shall at all times carry a full and
                          complete stock of merchandise offered for sale and
                          shall maintain an adequate staff for the service of
                          its customers. Tenant shall employ its best judgment,
                          efforts and abilities to operate the business
                          conducted by it in the Premises in such manner as to
                          produce the maximum profitable volume of sales
                          reasonably obtainable and to enhance the reputation
                          and attractiveness of the Center. Nothing herein,
                          however, shall be deemed to give Landlord any right of
                          consent or

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                          approval with respect to prices charged by Tenant.
                             (b)  [Intentionally Deleted]

RESTRICTIONS ON USE       Section 6.02   See Addendum
                             (a) Tenant shall comply promptly with all
                          applicable statutes, ordinances, rules, regulations,
                          orders and requirements regulating the use by Tenant
                          of the Premises and all requirements of all insurance
                          carriers or underwriters providing coverage on the
                          Center, the Premises or the contents thereof. Tenant
                          shall, at Tenant's expense, procure any and all
                          governmental licenses and permits required for
                          Tenant's permitted use of the Premises and shall at
                          all times comply with all requirements of each such
                          license or permit. Tenant shall not use or permit the
                          use of the Premises in any manner that will tend to
                          create a nuisance, create an ultra-hazardous use, tend
                          to disturb other tenants or occupants of the Center,
                          tend to injure the reputation of the Center or which
                          will invalidate any insurance maintained on the
                          Premises or the Center. No auction, fire sale,
                          bankruptcy sale, sidewalk sale, end of lease sale, or
                          going out of business sale shall be conducted in the
                          Premises, nor shall Tenant use any form of advertising
                          for any such sale, without the prior written consent
                          of Landlord, which may be withheld in Landlord's sole
                          discretion. Any such sale shall comply with any
                          reasonable conditions established by Landlord, which
                          conditions shall not include pricing. Tenant shall use
                          its best efforts to complete or cause to be completed
                          all deliveries, loading, unloading, rubbish removal,
                          and other services to the Premises prior to 10:00 a.m.
                          of each day and shall not permit loading, unloading or
                          parking of delivery vehicles in areas of the Center
                          other than those designated by Landlord for such
                          purpose. Landlord reserves the right to further
                          regulate the activities of Tenant in regard to
                          deliveries and servicing of the Premises, and Tenant
                          agrees to abide by such further nondiscriminatory
                          regulations of Landlord.
                             (b) Tenant shall comply at all times with the Rules
                          and Regulations attached to this lease as Exhibit "G"
                          and such amendments and modifications thereof and
                          additions thereto as Landlord may from time to time
                          reasonably adopt for the safety, care and cleanliness
                          of the Center or the preservation of good order
                          therein. Landlord shall not be liable to Tenant for
                          the failure of any tenant or other person to comply
                          with such Rules and Regulations.
                             (c) Without limiting the generality of the
                          foregoing provisions of this Section, Tenant covenants
                          and agrees that Tenant, its employees, agents,
                          contractors and other third parties entering upon the
                          Center at the request or invitation of Tenant shall
                          not bring into, maintain upon, generate, use, store,
                          dispose of or release or discharge in or about the
                          Center any hazardous or toxic substances or hazardous
                          waste (collectively, "hazardous materials"). The
                          foregoing covenant shall not extend to substances
                          typically found or used in general retail applications
                          so long as (i) such substances and any equipment which
                          generates such substances are maintained only in such
                          quantities as are reasonably necessary for Tenant's
                          operations in the Premises, (ii) such substances are
                          used and stored strictly in accordance with all
                          applicable laws and regulations, the manufacturers'
                          instructions therefor and the highest standards
                          prevailing in the industry for such substances, (iii)
                          such substances are not disposed of in or about the
                          Center in a manner which would constitute a release or
                          discharge thereof, and (iv) all such substances and
                          any equipment which generates such substances are
                          removed from the Center by Tenant upon the expiration
                          or earlier termination of this lease. Any use,
                          storage, generation, disposal, release or discharge by
                          Tenant of hazardous materials in or about the Center
                          as is permitted pursuant to this subsection shall be
                          carried out in compliance with all applicable federal,
                          state and local laws, ordinances, rules and
                          regulations. Moreover, no hazardous waste resulting
                          from any operations by Tenant shall be stored or
                          maintained by Tenant in or about the Center for more
                          than ninety (90) days prior to removal by Tenant.
                          Tenant shall, annually within thirty (30) days after
                          Tenant's receipt of Landlord's written request
                          therefor, provide to Landlord a written list
                          identifying any hazardous materials then maintained by
                          Tenant in the Center, the use of each such hazardous
                          material and the approximate quantity of each such
                          hazardous material so maintained by Tenant, together
                          with written certification by Tenant stating, in
                          substance, that neither Tenant nor any person for whom
                          Tenant is responsible has released or discharged any
                          hazardous materials in or about the Center.
                             In the event that Tenant proposes to conduct any
                          use or to operate any equipment which will or may
                          utilize or generate a hazardous material other than as
                          specified in the first paragraph of this subsection,
                          Tenant shall first in writing submit such use or
                          equipment to Landlord for approval. No approval by
                          Landlord shall relieve Tenant of any obligation of
                          Tenant pursuant to this subsection, including the
                          removal, cleanup and indemnification obligations
                          imposed upon Tenant by this subsection. Tenant shall,
                          within five (5) days after receipt thereof, furnish to
                          Landlord copies of all notices and other
                          communications received by Tenant with respect to any
                          actual or alleged release or discharge of any
                          hazardous material in or about the Premises or the
                          Center and shall, whether or not Tenant receives any
                          such notice or communication, notify Landlord in
                          writing of any discharge or release of hazardous
                          material by Tenant or anyone for whom Tenant is
                          responsible in or about the 

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                          Premises or the Center. In the event that Tenant is
                          required to maintain any hazardous materials license
                          or permit in connection with any use conducted by
                          Tenant or any equipment operated by Tenant in the
                          Premises, copies of each such license or permit, each
                          renewal or revocation thereof and any communication
                          relating to suspension, renewal or revocation thereof
                          shall be furnished to Landlord within five (5) days
                          after receipt thereof by Tenant. Compliance by Tenant
                          with the two immediately preceding sentences shall not
                          relieve Tenant of any other obligation of Tenant
                          pursuant to this subsection.
                             Upon any violation of the foregoing covenants,
                          Tenant shall be obligated, at Tenant's sole cost, to
                          clean up and remove from the Center all hazardous
                          materials introduced into the Center by Tenant or any
                          person or entity for whom Tenant is responsible. Such
                          clean up and removal shall include all testing and
                          investigation required by any governmental authorities
                          having jurisdiction and preparation and implementation
                          of any remedial action plan required by any
                          governmental authorities having jurisdiction. All such
                          cleanup and removal activities of Tenant shall, in
                          each instance, be conducted to the satisfaction of
                          Landlord and all governmental authorities having
                          jurisdiction. Landlord's right of entry pursuant to
                          Section 16.02 shall include the right to enter,
                          inspect and test the Premises for hazardous materials
                          and violations of Tenant's covenants herein. If any
                          governmental authority or lender to Landlord shall
                          require testing for hazardous materials in the
                          Premises, then Tenant shall reimburse Landlord for all
                          costs of such testing upon demand as additional rent
                          hereunder.
                             Tenant shall indemnify, defend and hold harmless
                          Landlord, its partners, and its and their respective
                          successors, assigns, partners, officers, trustees,
                          beneficiaries, members, employees, agents, lenders and
                          attorneys ("Indemnified Parties") from and against any
                          and all claims, liabilities, losses, actions, costs
                          and expenses (including attorneys' fees and costs of
                          defense) incurred by such Indemnified Parties, or any
                          of them, as the result of (A) the introduction into or
                          about the Center by Tenant or anyone for whom Tenant
                          is responsible of any hazardous materials, (B) the
                          usage, storage, maintenance, generation, production or
                          disposal by Tenant or anyone for whom Tenant is
                          responsible of hazardous materials in or about the
                          Center, (C) the discharge or release in or about the
                          Center by Tenant or anyone for whom Tenant is
                          responsible of any hazardous materials, (D) any injury
                          to or death of persons or damage to or destruction of
                          property resulting from the use, introduction,
                          maintenance, storage, generation, disposal,
                          disposition, release or discharge by Tenant or anyone
                          for whom Tenant is responsible of hazardous materials
                          in or about the Center, and (E) any failure of Tenant
                          or anyone for whom Tenant is responsible to observe
                          the foregoing covenants of this subsection.
                             Within 180 days prior to the expiration of this
                          lease (or within thirty (30) days after any earlier
                          termination), Landlord may at its election retain a
                          hazardous materials consultant to conduct a survey or
                          audit of the Premises to determine whether or not
                          hazardous materials introduced by Tenant or its
                          agents, employees or contractors are present in or
                          about the Premises. Tenant shall cooperate fully with
                          Landlord and such consultant in the conduct of any
                          such survey or audit and shall reimburse Landlord, as
                          additional rent, for the costs and fees of such
                          consultant within ten (10) days after receipt of
                          Landlord's invoice therefor. If the audit or survey
                          discloses the presence of hazardous materials
                          introduced by Tenant or its agents, employees or
                          contractors, the third, fourth and sixth paragraphs of
                          this subsection shall apply to such hazardous
                          materials and Tenant's obligations with respect
                          thereto.
                             Upon any violation of the foregoing covenants,
                          Landlord shall be entitled to exercise all remedies
                          available to a landlord against a defaulting tenant,
                          including but not limited to those set forth in
                          Article XIII. Without limiting the generality of the
                          foregoing, Tenant expressly agrees that upon any such
                          violation Landlord may, at its option, (I) immediately
                          terminate this lease or (II) continue this lease in
                          effect until compliance by Tenant with its clean-up
                          and removal covenant, notwithstanding any earlier
                          expiration date of the term of this lease. No action
                          by Landlord hereunder shall impair the obligations of
                          Tenant pursuant to this subsection.
                             As used in this subsection, "hazardous materials"
                          shall include all asbestos, petroleum substances and
                          all hazardous materials, hazardous wastes and
                          hazardous or toxic substances as defined in the
                          Comprehensive Environmental Response, Compensation and
                          Liability Act of 1980, as amended (42 U.S.C. (S)(S)
                          9601 et seq.), the Resource Conservation and Recovery
                          Act, as amended (42 U.S.C. (S)(S) 6901 et seq.), the
                          Toxic Substances Control Act, as amended (15 U.S.C.
                          (S)(S) 2601 et seq.) and California Health and Safety
                          Code Section 25316, including such hazardous or toxic
                          substances or wastes as are identified, defined or
                          listed elsewhere where such identifications,
                          definitions or lists are incorporated into such acts
                          or section by reference, as well as all products
                          containing such hazardous substances. By its signature
                          to this lease, Tenant confirms that it has conducted
                          its own examination of the Premises and the Center
                          with respect to hazardous materials and accepts the
                          same "AS IS" and with no hazardous materials present
                          thereon except as set forth in subsection (d) below.

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                             (d) PURSUANT TO CALIFORNIA HEALTH AND SAFETY CODE
                          SECTION 25915.5, LANDLORD HEREBY NOTIFIES TENANT THAT
                          LANDLORD HAS HAD AN ASBESTOS SURVEY PERFORMED WITH
                          RESPECT TO THE CENTER AND THAT ASBESTOS-BEARING
                          MATERIALS WERE LOCATED IN PHASE I OF THE CENTER.
                          DETAILED INFORMATION AS TO SUCH SURVEY, THE LOCATIONS
                          OF SUCH MATERIALS, ABATEMENT EFFORTS BEING CONDUCTED
                          BY LANDLORD AND PROCEDURES TAKEN TO AVOID RELEASE OF
                          SUCH MATERIALS IS SET FORTH IN EXHIBIT "C," AND TENANT
                          IS DIRECTED TO SUCH EXHIBIT FOR SUCH INFORMATION, FOR
                          CERTAIN INFORMATION AS TO POTENTIAL HEALTH RISKS
                          RESULTING FROM EXPOSURE TO SUCH MATERIALS AND FOR
                          CERTAIN NOTICE REQUIREMENTS APPLICABLE TO TENANT WITH
                          RESPECT TO ITS EMPLOYEES AND CONTRACTORS.
                             (e) Tenant acknowledges that incorporation of any
                          material containing asbestos into the Premises, or any
                          portion of Tenant's Work, is absolutely prohibited.
                          Tenant agrees, represents and warrants that it shall
                          not incorporate or permit or suffer to be
                          incorporated, knowingly or unknowingly, any material
                          containing asbestos into the Premises or Tenant's
                          Work.

OTHER LOCATIONS           Section 6.03   See Addendum
                             (a) Neither Tenant nor any parent, affiliate or
                          subsidiary of Tenant, directly or indirectly, shall
                          operate, manage or have any interest in any competing
                          store or any Outlet Store or trunk show, each as
                          defined below, including a concession in another
                          store, located within the prohibited area. The
                          prohibited area shall be Orange County, California.
                          Landlord and Tenant acknowledge that the foregoing
                          restriction is reasonable in light of Tenant's ability
                          to draw clientele from significant distances as a
                          result of Tenant's extensive reputation for providing
                          goods and services of the highest quality. Tenant and
                          Landlord further acknowledge that the prohibited area
                          reasonably approximates the geographic area of
                          Tenant's anticipated clientele. Attached hereto as
                          Exhibits "B-1" and "B-2" are illustrations depicting,
                          respectively, the outside boundaries of the Center and
                          the prohibited area.
                             (b) Without limiting Landlord's remedies, if Tenant
                          should violate the covenant contained in this Section,
                          Landlord may, at its option, include the gross sales
                          of such competing store in the gross sales transacted
                          in the Premises for the purpose of computing
                          Percentage Rent due hereunder, as though said sales
                          had actually been made from the Premises. If Landlord
                          so elects, all the provisions of Article IV hereof
                          shall be applicable to all records pertaining to such
                          competing store or business. However, any such
                          competing store or business (other than a trunk show)
                          existing as of the date of this lease may continue to
                          be operated, managed, conducted and owned in the same
                          manner as on the date of this lease.
                             (c)  For the purpose of this Section:
                                  (i) A "parent" of Tenant shall be any person
                          or entity who or which holds, directly or indirectly,
                          a majority of the outstanding voting rights in or
                          profit and loss interests in Tenant; a "subsidiary" of
                          Tenant shall be any entity as to which Tenant holds,
                          directly or indirectly, a majority of the outstanding
                          voting rights in or profit and loss interests of such
                          entity; and an "affiliate" shall be (A) any officer,
                          director or general partner of Tenant, (B) any
                          franchisee or licensee of Tenant or any parent or
                          subsidiary of Tenant or of any other affiliate of
                          Tenant, (C) any subsidiary of any parent of Tenant,
                          and (D) if Tenant is a natural person, any spouse,
                          sibling or first generation lineal descendant of
                          Tenant.
                                  (ii) A "competing store" shall be any store
                          operation, retail or wholesale, conducted under a
                          tradename which is the same as or similar to the
                          tradename then in use at the Premises or conducted
                          under a different tradename but offering for sale
                          merchandise or services which are substantially
                          similar to or the same as the merchandise or services
                          offered for sale at the Premises. Differences in the
                          prices charged at the Premises and in a competing
                          store for merchandise or services shall not be deemed
                          to make the merchandise or services at the two
                          locations dissimilar. A competing store shall include
                          any office operation or outside salesperson
                          established or retained to make so-called corporate
                          sales, "shop-in-shop" operations, Outlet Stores and
                          all trunk shows other than those conducted at the
                          Premises. For the purposes of this subsection, a 
                          "shop-in-shop" operation shall be a portion of a store
                          which is devoted exclusively or substantially
                          exclusively to the retail sale of merchandise which is
                          the same as or similar to that sold in the Premises
                          and which is separately identified with a tradename
                          which is the same as or similar to that in use at the
                          Premises either through the use of store exterior
                          identification such as a separate store entrance,
                          separate exterior signage or a separate storefront
                          facade or through the use of interior physical
                          separation from the balance of the store (such as an
                          open space, wide aisle, low wall, planters, picket
                          fence, moat, rock formation, fountain or the like)
                          together with interior identification with a tradename
                          which is the same as or similar to that in use at the
                          Premises. A "trunk show" shall be a showing or sale of
                          lines of merchandise to be carried in the Premises
                          before such lines are available for sale in the
                          Premises and at which customers have an opportunity to

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                          purchase or order such merchandise.
                                  (iii) An "Outlet Store" shall be any store for
                          which or as to which the owners and/or tenant thereof
                          advertises or promotes the store as a wholesale
                          outlet, factory direct store, clearance store,
                          discount store, seconds store, overruns store, off-
                          season store, value store, warehouse club store,
                          direct factory outlet or in any other manner which
                          states or suggests that the prices charged for
                          merchandise or services in such store are less than
                          the prices charged for similar merchandise or services
                          in the corresponding store located at the Center. An
                          Outlet Store need not bear the same tradename as or a
                          tradename similar to the tradename used, from time to
                          time, at the Premises so long as such store otherwise
                          is within the description set forth in this clause
                          (iii) and is owned, operated or managed by tenant or
                          any parent, subsidiary or affiliate of Tenant.
                                  (iv) Nothing contained in this Section 6.03 or
                          elsewhere in this lease shall be deemed or construed
                          to prevent or restrict Landlord in leasing space in
                          the Center or in any other center owned by landlord or
                          any affiliate of Landlord to other tenants, including
                          one or more tenants who may, in whole or in part,
                          compete with Tenant at the Center. In addition,
                          nothing in this lease shall be deemed or construed to
                          constitute a warranty or commitment by Landlord as to
                          (and Landlord does not warrant or commit that there
                          will occur) any particular level of pedestrian traffic
                          at the Center, any particular level of tenant
                          occupancy or any particular tenant mix at the Center.
                             (d) Tenant acknowledges that Tenant's continuing
                          compliance with the obligations of this Section 6.03
                          constitutes a material economic consideration for
                          Landlord's agreement to enter into this lease. As a
                          further consideration to Landlord, Tenant agrees to
                          confirm its continued compliance with this Section
                          6.03 on an annual basis by executing and delivering to
                          Landlord a statement of compliance in substantially
                          the form of Exhibit "B-3" to this lease, within ten
                          (10) days after Tenant's receipt of Landlord's written
                          request therefor.
                             (e) By its execution of this lease, Tenant
                          represents and warrants that the execution and
                          delivery by Tenant hereof upon the terms described
                          herein will not violate the terms and provisions of
                          any agreement to which Tenant is a party or by which
                          Tenant or any of its properties are bound, including
                          without limitation the provisions of any radius
                          restriction or other prohibition or limitation on
                          locations of Tenant's stores.

                                   ARTICLE VII.
                      MAINTENANCE, REPAIRS AND ALTERATIONS

LANDLORD'S OBLIGATIONS    Section 7.01   See Addendum
                             Subject to the provisions of Articles IX and XI
                          hereof, Landlord shall during the term of this lease
                          keep in first-class order, condition and repair the
                          foundations, the interior and exterior surfaces of
                          exterior walls of the Center (excluding the interior
                          surfaces of exterior walls of premises, including the
                          Premises, leased to tenants), all windows, doors,
                          plate glass and showcases of the Center (excluding
                          windows, doors, plate glass and showcases located in
                          or comprising a part of premises, including the
                          Premises, leased to tenants), downspouts, gutters and
                          roofs of the buildings constituting the Center, except
                          for any damage thereto caused by any negligent act or
                          omission of Tenant or its agents, employees or
                          invitees, and except for reasonable wear and tear;
                          provided, however, that Landlord shall have no
                          obligation to repair until a reasonable time after
                          receipt by Landlord of written notice of the need for
                          repairs, which notice Tenant shall give Landlord
                          promptly when Tenant determines any such repairs are
                          required. Tenant waives the provisions of any law
                          permitting Tenant to make repairs at Landlord's
                          expense.
                             Landlord's costs and expenses for the foregoing
                          maintenance and repair, excluding partial or complete
                          restoration necessitated by casualty or condemnation
                          and paid for with insurance proceeds or an eminent
                          domain award, but including Landlord's cost of the
                          insurance provided pursuant to Section 8.03 hereof and
                          any deductible or reserve to be paid by Landlord in
                          the event of a casualty, shall be included in common
                          area expenses reimbursed by Tenant to Landlord
                          pursuant to Article XIV of this lease.

TENANT'S OBLIGATIONS      Section 7.02   See Addendum
                             (a) Subject to the provisions of Articles IX and XI
                          hereof and Section 7.01, Tenant shall during the term
                          of this lease keep in first-class order, condition and
                          repair the Premises and every part thereof, including,
                          without limiting the generality of the foregoing, all
                          plumbing, heating, air conditioning, ventilating,
                          electrical and lighting facilities and equipment
                          serving solely the Premises, fixtures, interior walls
                          and interior surfaces of exterior walls, ceilings,
                          floors and floor coverings, windows, doors, plate
                          glass, showcases, skylights, entrances and vestibules
                          located within the Premises. Tenant shall paint all
                          painted surfaces and treat all architectural finishes
                          as often as may be required to maintain such surfaces
                          and finishes in a first class condition.
                             (b) If Tenant fails to perform its obligations
                          under this Section 7.02, Landlord may at 

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                          its option, if such failure continues after five (5)
                          days written notice to Tenant, enter upon the Premises
                          and put the same in good order, condition and repair
                          and the cost thereof shall become due and payable as
                          additional rent by Tenant to Landlord upon demand.
                             (c) On the last day of the term hereof, or on any
                          sooner termination, Tenant shall surrender the
                          Premises to Landlord in good condition, reasonable
                          wear and tear, damage by fire, the elements or any
                          other cause beyond the control of Tenant and for which
                          this lease is terminated pursuant to Article IX
                          excepted.

ALTERATIONS AND           Section 7.03   See Addendum
ADDITIONS                 (a) Tenant shall not, without the prior written
                          consent of Landlord, make any alterations,
                          improvements, remodeling or additions to either the
                          interior or exterior of the Premises or to fixtures
                          installed therein in accordance with approved fixture
                          plans, or mark, paint, drill or in any way deface any
                          portion of the Premises. All alterations,
                          improvements, remodeling and additions shall be
                          subject to the provisions of Sections 6.02 and 16.16,
                          Article XVII, all plans and specifications therefor
                          approved by Landlord and Exhibits "C," "E" and "F"
                          hereto.
                             (b) All alterations, improvements, remodeling,
                          additions and fixtures, other than trade fixtures not
                          permanently affixed to the Premises, which may be made
                          or installed in the Premises and which are attached to
                          the floor, walls or ceiling of the Premises and any
                          floor covering which is cemented or otherwise affixed
                          to the floor of the Premises, shall be the property of
                          Landlord and shall remain upon and be surrendered with
                          the Premises at the expiration or termination of this
                          lease, unless Landlord shall direct Tenant to remove
                          such items, or some of them, by written notice given
                          to Tenant not less than thirty (30) days prior to the
                          expiration of this lease or within ten (10) days after
                          the earlier termination hereof. All such alterations,
                          additions and improvements shall, however, be made by
                          Tenant at Tenant's sole expense. Tenant shall remove
                          any items which Tenant is permitted or required to
                          remove, at Tenant's cost, prior to the expiration of
                          this lease, or in the event of an early termination,
                          within fifteen (15) days after Landlord's notice.
                             Within thirty (30) days after Tenant opens for
                          business in the Premises, Tenant shall deliver to
                          Landlord an inventory or listing of the furniture,
                          furnishings, equipment and trade fixtures installed by
                          Tenant in the Premises which (i) Tenant believes are
                          not permanently attached to the Premises and (ii)
                          Tenant proposes to remove from the Premises upon the
                          expiration or any earlier termination of this lease.
                          Similarly, within thirty (30) days after any
                          remodeling or renovation of the Premises by Tenant,
                          Tenant shall deliver to Landlord a written supplement
                          to such inventory listing any additions to the
                          original inventory delivered by Tenant. Within thirty
                          (30) days after Landlord's receipt of any such
                          inventory (or supplement thereto), Landlord may, by
                          written notice to Tenant, delete from such inventory
                          or supplement one or more items which Landlord, in
                          good faith, determines are not items which may be
                          removed by Tenant pursuant to the provisions of this
                          subsection. In the event of any dispute between
                          Landlord and Tenant as to whether a particular item(s)
                          is removable by Tenant pursuant to this subsection,
                          the reasonable determination in good faith by
                          Landlord's construction coordinator shall be
                          conclusive upon the parties. If Tenant fails to
                          deliver to Landlord any listing or inventory required
                          pursuant to this subsection, then upon the expiration
                          or any earlier termination of this lease Tenant shall
                          be entitled to remove from the Premises only Tenant's
                          merchandise, unattached furniture and furnishings and
                          unattached miscellaneous personal property in the
                          Premises.
                             (c)  [Intentionally Deleted]

CLEANLINESS; WASTE AND    Section 7.04
NUISANCE                     Tenant shall keep the Premises at all times in a
                          neat, clean and sanitary condition, shall neither
                          commit nor permit any waste or nuisance thereon, and
                          shall keep the walks and corridors adjacent thereto
                          free from Tenant's waste or debris.

HEALTH MATTERS            Section 7.05   See Addendum
                             If Tenant's permitted use of the Premises pursuant
                          to the applicable Fundamental Lease Provision or any
                          addendum to this lease includes the sale or
                          preparation of food, then the following provisions
                          shall apply. Further, the last two sentences of
                          subsection (a), the last two sentences of subsection
                          (b) and subsections (c), (d), (e) and (f) shall apply
                          to all tenants other than those involved in the sale
                          or preparation of food:
                             (a) Tenant shall, at its own cost, retain a
                          licensed, bonded professional pest and sanitation
                          control service to perform inspections of the Premises
                          not less frequently than once each thirty (30) days
                          for the purpose of eliminating infestations by and
                          controlling the presence of insects, rodents and
                          vermin and shall promptly cause any corrective or
                          extermination work recommended by such service to be
                          performed. Such work shall be performed pursuant to a
                          written contract, and a copy thereof shall be
                          delivered to Landlord by Tenant upon demand. If Tenant
                          fails

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                          to perform its obligations under this Section 7.05,
                          Landlord may, at its option and after five (5) days
                          written notice to Tenant, cause such inspection to be
                          performed and any necessary corrective or
                          extermination work which is recommended to be done and
                          the cost of such inspection and corrective or
                          extermination work shall be additional rent payable
                          upon demand. In addition, Landlord may elect to
                          provide the services specified in this subsection to
                          tenants other than those engaged in the sale or
                          preparation of food. In such event, the cost of
                          providing such services shall be included in common
                          area costs pursuant to Article XIV charged to those
                          tenants for whom Landlord provides such services.
                             (b) Tenant acknowledges that Health Department
                          requirements and Landlord's construction requirements
                          may require that Tenant (i) enlarge the sanitary sewer
                          line from the Premises to the main sewer line and (ii)
                          install a grease trap in the sanitary sewer line of
                          the Premises. Tenant acknowledges that it shall, if
                          required and as a part of Tenant's Work pursuant to
                          Article XVII, enlarge such sewer line and install such
                          grease trap and shall, during the term of this lease,
                          clean and maintain such grease trap as a part of
                          Tenant's obligations pursuant to Section 7.02 in such
                          manner as may be required by the Health Department,
                          other governmental authorities having jurisdiction, or
                          Landlord. Moreover, all exhaust hoods, ducts and
                          mechanical equipment shall be inspected, cleaned and
                          maintained not less frequently than quarterly. Such
                          work shall be performed by a licensed, bonded
                          professional maintenance company retained and paid for
                          by Tenant, and a copy of the report prepared by such
                          company shall be delivered to Landlord upon
                          completion.
                             (c) Tenant shall store all waste and garbage in a
                          refrigerated or cool and dry location within the
                          Premises and shall dispose of all waste and garbage
                          (including wet garbage and food) only in trash
                          containers placed in service areas by Landlord for
                          such purpose. All liquids shall be disposed of into
                          the sanitary sewer line and not in Landlord's trash
                          containers. Tenant shall not accumulate or permit such
                          materials to accumulate in hallways, service corridors
                          or other common areas. Any waste or garbage, and any
                          food deliveries, stored or accumulated by Tenant
                          outside of the Premises (other than garbage placed in
                          Center trash containers) may be removed immediately by
                          Landlord without notice to Tenant and the cost of such
                          removal, together with $50.00 per occurrence to cover
                          Landlord's administrative expense in providing such
                          service to Tenant, shall be administrative rent
                          payable by Tenant to Landlord upon demand.
                             (d) Without limiting any other obligation of Tenant
                          pursuant to this Section, Tenant shall comply with all
                          governmental laws, ordinances, regulations, guidelines
                          and rules and with all voluntary programs adopted by
                          Landlord now or hereafter applicable to the Premises
                          with respect to disposal of water, trash, garbage and
                          other matter (liquid or solid) generated by Tenant,
                          including but not limited to laws, ordinances,
                          regulations, guidelines, rules and voluntary programs
                          with respect to recycling and other forms of
                          reclamation (collectively, "Waste Management
                          Requirements"). Tenant's obligations hereunder shall
                          include compliance with all rules and regulations
                          established by Landlord from time to time to comply
                          with governmental Waste Management Requirements
                          applicable to Landlord (i) as owner of the Premises
                          and (ii) in performing Landlord's obligations under
                          this lease, if any. Tenant's obligations under this
                          subsection shall survive the expiration or earlier
                          termination of this lease.
                             (e) Tenant shall comply with all Health Department
                          and other governmental rules and regulations
                          applicable to Tenant's operations in the Premises and
                          shall promptly (i) furnish or cause to be furnished to
                          Landlord copies of all Health Department and other
                          governmental reports, notices and citations issued
                          with respect to the Premises and (ii) cure or
                          otherwise eliminate all deficiencies and violations
                          noted by the Health Department and other governmental
                          authorities and take all required actions to prevent
                          the reoccurrence of such deficiencies and violations.
                             (f) Failure of Tenant to perform any obligation
                          pursuant to subsections (a) through (e) above shall be
                          deemed an event of default pursuant to this lease
                          entitling Landlord to exercise all remedies available
                          to a landlord against a defaulting tenant, including
                          those provided for in Article XIII of this lease.

                                  ARTICLE VIII.
                              INSURANCE; INDEMNITY

LIABILITY                 Section 8.01   See Addendum
INSURANCE-PREMISES         Tenant shall at all times during the term hereof and
                          at Tenant's cost, for the protection of Tenant and
                          Landlord, as their interests may appear, maintain in
                          full force and effect a policy or policies of
                          insurance which afford the following coverages:
                             (a) Worker's Compensation in the statutorily
                          required amount, together with employer's liability
                          coverage in a liability amount not less than
                          $1,000,000 per occurrence.
                             (b) Commercial General Liability Insurance with an
                          aggregate liability amount not less than $3,000,000
                          combined single limit for both bodily injury and
                          property damage, including 

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                          blanket contractual liability (including Tenant's
                          indemnification obligation under Section 8.06), broad
                          form property damage, personal injury, completed
                          operations, products liability, host liquor liability
                          (or liquor liability, if applicable), owned and non-
                          owned automobile coverage and acts or omissions of any
                          security guards hired by Tenant. At least $1,000,000
                          of such coverage shall be provided by a primary
                          liability policy, and any balance may be provided by a
                          so-called umbrella policy. The liability insurance
                          policy required to be maintained by Tenant pursuant to
                          this clause shall be on an occurrence (as opposed to a
                          claims made) basis. Further, if such policy has an
                          aggregate liability limit, not less than $3,000,000 of
                          such limit per annum shall be available for claims
                          originating at the Premises.
                             The minimum limit of the coverage provided in
                          clause (b) above may be adjusted upward or downward at
                          the expiration of each third (3rd) lease year as
                          follows: Not less than sixty (60) days prior to the
                          relevant adjustment date, Landlord may request such
                          insurance brokerage firm as is then placing insurance
                          for Landlord (the "Reviewing Broker") to review
                          Tenant's then existing liability insurance coverage,
                          to review the then use of the Premises and the claims
                          history with respect thereto and to recommend, in
                          writing, the amount of coverage to be carried by
                          Tenant pursuant to clause (b). Such recommendation
                          shall be based upon the use of the Premises and the
                          liability claims history with respect to the Premises
                          and shall be consistent with amounts of coverage
                          generally recommended by such Reviewing Broker for
                          similar types of tenants or users of property with
                          uses similar to that of the Premises in the
                          geographical area which includes the Center. If the
                          Reviewing Broker shall recommend an increase in the
                          amount of coverage then provided by Tenant under
                          clause (b), Tenant shall promptly increase its
                          coverage to the recommended amount. In no event shall
                          there be any reduction in the amount of coverage
                          provided by Tenant under clause (b) to less than the
                          initial amount set forth herein, notwithstanding any
                          recommendation by the Reviewing Broker.
                             Landlord, and any other persons designated by
                          Landlord and having an insurable interest in the
                          Premises, shall be added as additional insureds
                          pursuant to such policies (although they shall not
                          have any obligations of "named" insureds therein). The
                          insurance required by this Section shall be the
                          primary insurance as respects Landlord (and any other
                          additional insureds designated by Landlord) and not
                          contributory with any other available insurance. The
                          policy or policies providing the coverage required by
                          clause (b) above shall contain an endorsement
                          providing, in substance, that "such insurance as is
                          afforded hereby for the benefit of [Landlord and any
                          additional insureds designated by Landlord] shall be
                          primary and any insurance carried by [Landlord and any
                          additional insureds designated by Landlord] shall not
                          be contributory." In addition, such policy shall
                          contain a cross-liability endorsement in favor of the
                          additional insureds. In no event shall the limits of
                          any coverage maintained by Tenant pursuant to this
                          Section be considered as limiting the liability of
                          Tenant pursuant to this lease.

FIRE                      Section 8.02   See Addendum
INSURANCE-FIXTURES,          (a) Tenant shall at all times during the term
EQUIPMENT AND TENANT      hereof, and at its cost, maintain in effect policies
IMPROVEMENTS              of insurance covering (i) all tenant improvements on
                          or in the Premises, providing protection against any
                          peril included within the classification "All Risk,"
                          including but not limited to insurance against fire,
                          windstorm, cyclone, tornado, hail, explosion, riot,
                          riot attending a strike, civil commotion, aircraft,
                          vehicles, smoke damage, sprinkler leakage, vandalism
                          and malicious mischief, such insurance to be in an
                          amount not less than the full replacement value of
                          such improvements, which shall be determined at the
                          time the policy is initially obtained, and not less
                          frequently than once every three (3) years thereafter,
                          and such other insurance as may be required by
                          Landlord's lender; (ii) all personal property of
                          Tenant located in or on the Premises, including but
                          not limited to fixtures, furnishings, equipment,
                          furniture, inventory and stock in trade, in an amount
                          not less than their full replacement value, providing
                          protection against any peril included within the
                          classification "All Risk," including but not limited
                          to insurance against fire, sprinkler leakage,
                          vandalism and malicious mischief, and (iii) all plate
                          glass on the Premises. The insurance required by this
                          subsection shall be the primary insurance with respect
                          to the property covered thereby.
                             (b)  [Intentionally Deleted]
                             (c)  [Intentionally Deleted]

LANDLORD'S INSURANCE      Section 8.03   See Addendum
                             Landlord shall at all times during the term hereof
                          maintain in effect a policy or policies of insurance
                          covering the Center, including Landlord's interest in
                          all tenant improvements in the Premises paid for by
                          Landlord, providing protection against any peril
                          included within the classification "All Risk,"
                          together with insurance against sprinkler leakage,
                          vandalism and malicious mischief. If and for so long
                          as Landlord so elects, the coverages maintained by
                          Landlord 

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                          shall include (a) earthquake and flood insurance with
                          respect to the Center, Landlord's interest in all
                          tenant improvements in the Premises and the items
                          described in clauses (i) and (iii) of Section 8.02(a),
                          (b) rental interruption insurance assuring that the
                          rent due under this lease will be paid to Landlord for
                          a period of not less than twelve (12) months if the
                          Premises are destroyed or rendered inaccessible by a
                          risk insured against under the coverages described
                          herein and in Section 8.02(a) and (c) comprehensive
                          general liability insurance with liability amounts
                          selected by Landlord. Landlord's cost of maintaining
                          such insurance and any other insurance maintained by
                          Landlord with respect to the Center, including the
                          cost of funding all deductibles and self-insurance
                          reserves maintained by Landlord or required by its
                          carrier in connection with the coverages maintained by
                          Landlord, shall be included in common area costs
                          pursuant to Article XIV. Tenant shall have no rights
                          in any policy or policies maintained by Landlord.

INSURANCE POLICIES        Section 8.04   See Addendum
                             All insurance required to be carried by Tenant
                          hereunder shall be with companies rated A:VIII, or
                          better, in the then most recent version of Best's Key
                          Rating Guide and licensed or otherwise permitted to
                          provide the relevant insurance in the State of
                          California. Tenant shall deliver to Landlord on or
                          prior to the date possession of the Premises is
                          delivered to Tenant, and thereafter at least thirty
                          (30) days prior to the expiration or renewal date of
                          any policy maintained by Tenant, copies of the
                          policies or certificates evidencing such insurance.
                          All policies and certificates delivered pursuant to
                          this Section shall contain liability limits not less
                          than those set forth in Sections 8.01 and 8.02, shall
                          list the additional insureds, shall specify all
                          endorsements and special coverages required by such
                          Sections and shall be effective on or before the
                          possession date or prior policy expiration, as
                          applicable. Each such policy shall contain provisions
                          (by endorsement or otherwise) requiring not less than
                          thirty (30) days written notice to Landlord prior to
                          any cancellation, non-renewal or material amendment
                          thereof and requiring that the proceeds of the
                          insurance maintained pursuant to clauses (i) and (iii)
                          of Section 8.02(a) shall be payable to Landlord. For
                          the purposes of this Article VIII, the phrase "term of
                          this lease" shall mean the period from the Lease
                          Commencement Date through the later of the expiration
                          or termination of the lease term or the date Tenant
                          surrenders physical possession of the Premises to
                          Landlord. Any insurance required pursuant to this
                          lease may be provided by means of a so-called
                          "blanket" policy, so long as the Premises are
                          specifically covered (by rider, endorsement or
                          otherwise) and the policy otherwise complies with the
                          provisions of this lease, without reduction or
                          diminution due to use of such blanket policy. If on
                          account of the failure of Tenant to comply with any
                          provision of this Article, Landlord or any additional
                          insured is adjudged a co-insurer by its insurance
                          carrier, then any loss or damage Landlord or such
                          additional insured shall sustain by reason thereof
                          shall be borne by Tenant and shall be paid by Tenant
                          upon receipt of a bill therefor and evidence of such
                          loss. If Tenant shall fail to deliver to Landlord a
                          certificate of renewal at least ten (10) days prior to
                          the expiration date of any insurance policy required
                          to be maintained by Tenant, Landlord may place such
                          insurance for Tenant pursuant to Section 13.06.

WAIVER OF SUBROGATION     Section 8.05   See Addendum
                             Landlord and Tenant each hereby waives any and all
                          rights of recovery against the other, and against any
                          other tenant or occupant of the Center and against the
                          officers, employees, agents, representatives,
                          customers and business visitors of such other party
                          and of each such other tenant or occupant of the
                          Center, for loss of or damage to such waiving party or
                          its property or the property of others under its
                          control, arising from any cause insured against under
                          any policy of insurance required to be carried by such
                          waiving party pursuant to the provisions of this lease
                          (or any other policy of insurance carried by such
                          waiving party in lieu thereof) at the time of such
                          loss or damage. The foregoing waiver shall be
                          effective whether or not a waiving party actually
                          obtains and maintains the insurance which such waiving
                          party is required to obtain and maintain pursuant to
                          this lease (or any substitute therefor). Landlord and
                          Tenant shall, upon obtaining the policies of insurance
                          which they are required to maintain hereunder, give
                          notice to their respective insurance carrier or
                          carriers that the foregoing mutual waiver of
                          subrogation is contained in this lease.

INDEMNITY                 Section 8.06   See Addendum
                             To the fullest extent permitted by law, Tenant
                          shall indemnify, defend and hold the Indemnified
                          Parties harmless from and against any liability or
                          expense (including but not limited to attorneys' fees
                          and costs of defense) for any damage or injury to
                          persons or property in or about the Center which may
                          result from the use or occupation of the Premises by
                          or the breach of the provisions of this lease by
                          Tenant, its agents, employees, invitees, licensees,
                          concessionaires or other persons claiming under
                          Tenant. In addition, if any person not a party to this
                          lease shall institute any other type of action against
                          Tenant in which any Indemnified Party, involuntarily
                          and without cause, shall be made a party defendant,
                          Tenant shall indemnify, hold harmless and defend such
                          Indemnified Party from all liability by reason
                          thereof. All indemnification covenants are 

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                          intended to apply to losses, damages, injuries and
                          claims incurred directly by the Indemnified Parties
                          and their property, as well as by the Indemnifying
                          Party or a third party, and their property. It is
                          understood and agreed that payment shall not be a
                          condition precedent to enforcement of the foregoing
                          indemnification obligations. Tenant's defense
                          obligation hereunder shall include the obligation,
                          upon demand, to defend each Indemnified Party against
                          any claim or action of the types herein specified by
                          legal counsel reasonably satisfactory to Landlord.
                          Provided, however, that the foregoing shall not extend
                          to any damage or injury which Tenant establishes in a
                          court of competent jurisdiction was solely and
                          proximately caused by the negligence of Landlord, its
                          agents or employees.

EXEMPTION OF LANDLORD     Section 8.07   See Addendum
                             The Indemnified Parties shall not be liable for
                          injury or damage which may be sustained by the person,
                          goods, wares, merchandise or property of Tenant,
                          Tenant's employees, invitees or customers or any other
                          person in or about the Premises caused by or resulting
                          from any peril which may affect the Premises,
                          including but not limited to fire, steam, electricity,
                          gas, water or rain, which may leak or flow from or
                          into any part of the Premises, or from the breakage,
                          leakage, obstruction or other defects of the pipes,
                          sprinklers, wires, appliances, plumbing, air
                          conditioning or lighting fixtures of the same, whether
                          such damage or injury results from conditions arising
                          upon the Premises or upon other portions of the
                          building of which the Premises are a part, or from
                          other sources. The Indemnified Parties shall not be
                          liable for any damage arising from any act or neglect
                          of any other tenant of the Center, or any of their
                          officers, employees, agents, representatives,
                          customers, business visitors or invitees. Provided,
                          however, that the foregoing shall not apply to any
                          damage or injury which Tenant establishes in a court
                          of competent jurisdiction was solely and proximately
                          caused by the negligence of Landlord, its agents or
                          employees.

LANDLORD'S SECURITY       Section 8.08   See Addendum
                             Landlord may, but shall have no obligation to, from
                          time to time, employ one or more persons or entities
                          to patrol or provide security for the common areas.
                          Tenant and its employees shall cooperate with
                          Landlord's security personnel, including those
                          providing common area security for employees after
                          closure of Center stores. Notwithstanding any such
                          activity, Tenant shall have the sole responsibility of
                          providing security for the Premises, the persons
                          therein and all vehicles of Tenant and Tenant's
                          employees. Under no circumstances shall the
                          Indemnified Parties be liable to Tenant or to any
                          other person by reason of any theft, burglary,
                          robbery, assault, trespass, unauthorized entry,
                          vandalism, or any other act of any third person
                          occurring in or about the Premises. Tenant shall
                          indemnify, defend and hold all Indemnified Parties
                          harmless from and against any and all losses,
                          liabilities, judgments, costs and expenses (including
                          but not limited to reasonable attorneys' fees and
                          other costs of investigation or defense) which such
                          Indemnified Parties may suffer by reason of any claim
                          asserted by any person arising out of, or related to,
                          any of the foregoing. To the extent Landlord elects to
                          provide such patrol or security services, the cost
                          thereof shall be included in common area costs
                          pursuant to Section 14.04 hereof.

TENANT'S SECURITY         Section 8.09
                             Tenant shall be solely responsible to purchase,
                          install, maintain and replace all security devices and
                          features required by Tenant for the Premises,
                          including but not limited to solid storefronts, solid
                          grilles, locks, burglar and other alarms and sensory
                          systems. All such features and items shall be subject
                          to written approval of Landlord prior to construction
                          or installation, which approval shall be limited to
                          aesthetics and non-interference of such items with
                          systems and devices maintained by Landlord for the
                          Center. All such features, systems and other security
                          items shall comply with all applicable governmental
                          requirements and all applicable provisions of this
                          lease and Exhibits "C" and "E" hereto. Tenant shall be
                          responsible to provide any employee safety courses
                          deemed necessary by Tenant and shall cooperate with
                          and require its employees to attend any such courses
                          furnished by or through Landlord.

                                   ARTICLE IX.
                            REPAIRS AND RESTORATION

INSURED OR MINOR DAMAGE   Section 9.01
                             Subject to the provisions of Sections 9.03 and
                          9.04, if at any time during the term hereof the
                          Premises are destroyed or damaged and either (a) such
                          damage is not "substantial" as that term is
                          hereinafter defined, or (b) such damage was caused by
                          a casualty required to be insured against under
                          Sections 8.02 and 8.03, then Landlord shall promptly
                          repair such damage to portions of the 

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                          Center located outside of the exterior boundaries of
                          the Premises, Tenant shall repair the Premises and
                          this lease shall continue in full force and effect.

MAJOR DAMAGE TO           Section 9.02   See Addendum
PREMISES                     Subject to the provisions of Sections 9.03 and
                          9.04, if at any time during the term hereof the
                          Premises are destroyed or damaged and if such damage
                          is "substantial" as that term is hereinafter defined,
                          and if such damage was caused by a casualty not
                          required to be insured against under Sections 8.02 and
                          8.03, then Landlord may at its option either (a)
                          promptly conduct the repair to be made by Landlord
                          pursuant to Section 9.01 and this lease shall continue
                          in full force and effect, or (b) terminate this lease
                          as of the date of Landlord's notice, by giving Tenant
                          written notice of its election to do so within thirty
                          (30) days after the date of occurrence of such damage.
                          If Landlord elects to repair pursuant to clause (a),
                          Tenant shall also repair pursuant to Section 9.01.

MAJOR DAMAGE TO CENTER    Section 9.03   See Addendum
                             In the event that premises in the Center
                          aggregating twenty-five percent (25%) or more of the
                          total Floor Area of all buildings within the Center
                          leased or offered for lease to tenants (other than
                          tenant owned buildings) shall be damaged or destroyed,
                          whether or not the Premises are damaged or destroyed,
                          Landlord may, at Landlord's option, terminate this
                          lease by giving written notice to Tenant of Landlord's
                          election to do so within sixty (60) days after the
                          date of occurrence of such damage, in which event this
                          lease shall terminate on the date such notice is
                          given. If Landlord does not terminate pursuant to this
                          Section, then each party shall repair pursuant to
                          Section 9.01.

DAMAGE NEAR END OF TERM   Section 9.04   See Addendum
                             If the Premises are destroyed or damaged during the
                          last twenty-four (24) months of the term of this lease
                          and the estimated cost of repair exceeds ten percent
                          (10%) of the Minimum Rent then remaining to be paid by
                          Tenant for the balance of the term, Landlord may at
                          its option terminate this lease as of the date of
                          Landlord's notice by giving written notice to Tenant
                          of its election to do so within thirty (30) days after
                          the date of occurrence of such damage. If Landlord
                          shall not so elect to terminate this lease, the repair
                          of such damage shall be governed by Sections 9.01,
                          9.02 or 9.03, as the case may be.

ABATEMENT OF RENT;        Section 9.05   See Addendum
REMEDIES FOR               (a) If the Premises or the Center are destroyed or
NON-PERFORMANCE           damaged and Landlord is required to or elects to
                          repair or restore pursuant to the provisions of this
                          Article, Tenant shall continue the operation of its
                          business in the Premises to the extent reasonably
                          practicable from the standpoint of prudent business
                          management. The Minimum Rent, Percentage Rent and
                          additional rent payable hereunder shall be abated in
                          proportion to the degree to which Tenant's use of the
                          Premises is impaired for the period from the date of
                          the casualty until the earlier of the 60th day
                          following completion of any work by Landlord (or the
                          casualty if there is no work by Landlord) or
                          completion of all repair and restoration of the
                          Premises, but only to the extent that Landlord is
                          compensated for such loss by the insurance carried
                          pursuant to Section 8.03. Neither such abatement, nor
                          any other abatement of rent pursuant to this lease,
                          shall defeat or diminish any right of Landlord to
                          recover the proceeds of any rental interruption
                          insurance maintained by Landlord. Tenant shall have no
                          claim against the Indemnified Parties for any damage
                          suffered by Tenant by reason of any such damage,
                          destruction, repair or restoration. Tenant waives the
                          provisions of Civil Code Sections 1932(2) and 1933(4)
                          and any present or future laws or case decisions to
                          the same effect. Upon completion of such repair or
                          restoration, Tenant shall promptly refixture and
                          restock the Premises substantially to the condition
                          prior to the casualty and shall reopen for business if
                          closed by the casualty.
                             (b) If either party shall be obligated to repair or
                          restore under the provisions of this Article and shall
                          not commence such repair or restoration within thirty
                          (30) days after such obligation shall accrue, the
                          other may at its option terminate this lease as of the
                          date of written notice by giving to the non-performing
                          party written notice of its election to do so at any
                          time after the expiration of such thirty (30) day
                          period and prior to the commencement of such repair or
                          restoration. Landlord's obligation shall be deemed to
                          accrue on the later of (i) receipt by Landlord of any
                          governmental permit or approval necessary to commence
                          such work and (ii) settlement of any insurance claim
                          with respect to such casualty. The restoration
                          obligations of Tenant shall be deemed to accrue upon
                          completion by Landlord of so much of Landlord's work
                          as is reasonably necessary for Tenant to commence
                          Tenant's work and shall include repair, restoration or
                          replacement of Tenant's equipment and personal
                          property. If the parties are required to or elect to
                          repair or restore pursuant to this Article, then each
                          party shall be entitled to the proceeds of the

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                          insurance maintained pursuant to Sections 8.02 and
                          8.03 as pertain to the improvements to be repaired or
                          restored by it.

DEFINITIONS               Section 9.06
                             (a) For the purposes of this Article, "substantial"
                          damage to the Premises shall be deemed to be damage to
                          the Premises, the estimated cost of repair of which
                          exceeds one fifth (1/5) of the then-estimated
                          replacement cost of the Premises.
                             (b) The determination in good faith by Landlord of
                          the estimated cost of repair of any damage and/or of
                          the estimated replacement cost of the Premises shall
                          be conclusive for the purposes of this Article.

                                    ARTICLE X.
                           ASSIGNMENT AND SUBLETTING

LANDLORD'S RIGHTS         Section 10.01   See Addendum
                             (a) Tenant shall not, either voluntarily or by
                          operation of law, assign, sell, encumber, pledge,
                          grant any profit or other interest in or otherwise
                          transfer all or any part of Tenant's leasehold estate
                          hereunder, or permit the Premises to be occupied by
                          anyone other than Tenant or Tenant's employees or
                          sublet, license or grant concessions with respect to
                          the Premises or any portion thereof, without
                          Landlord's prior written consent in each instance,
                          which consent may be given or withheld by Landlord in
                          its sole and absolute discretion for any reason deemed
                          sufficient by Landlord and without reference to any
                          standard of reasonableness. Such consent and other
                          matters related to any assignment or subletting shall
                          be in accordance with the provisions of subsections
                          (b) through (i) below. Consent by Landlord to one or
                          more assignments of this lease, to one or more
                          sublettings of the Premises or to any other event
                          requiring the consent of Landlord shall not operate to
                          exhaust Landlord's rights under this Section. The
                          voluntary or other surrender of this lease by Tenant
                          or a mutual cancellation hereof shall not work a
                          merger, and shall, at the option of Landlord,
                          terminate all or any existing subleases or
                          subtenancies or shall, at Landlord's option, operate
                          as an assignment to Landlord of such subleases or
                          subtenancies. If Tenant is a corporation whose capital
                          stock is not traded on a national securities exchange,
                          or is an unincorporated association or partnership,
                          the transfer, assignment, hypothecation or new
                          issuance of any stock or interest in such corporation,
                          association or partnership in the aggregate in excess
                          of twenty-five percent (25%) of the total outstanding
                          prior to such event shall be deemed an assignment
                          within the meaning and provisions of this Article.
                             In connection with any request for Landlord's
                          consent pursuant to this Section, Tenant shall pay to
                          Landlord the sum of (i) One Thousand Five Hundred
                          Dollars ($1,500.00) plus (ii) all attorneys' fees and
                          other out-of-pocket costs incurred by Landlord in
                          responding to such request. Tenant shall deposit with
                          Landlord the sum of Two Thousand Five Hundred Dollars
                          ($2,500.00) concurrently with Tenant's delivery of the
                          information required under subsection (b) below, and
                          Landlord's obligation to respond to such request shall
                          not commence unless and until Landlord shall also
                          receive said deposit. One Thousand Five Hundred
                          Dollars ($1,500.00) of such deposit shall be non-
                          refundable; Landlord may use or apply the $1,000.00
                          balance of such deposit against actual out-of-pocket
                          costs and expenses, including actual attorneys' fees
                          and costs, incurred by Landlord in processing and
                          documenting such request or against any other amounts
                          owed by Tenant to Landlord at the conclusion of such
                          request, and the balance, if any, of such $1,000.00
                          shall be returned to Tenant. Landlord shall not be
                          required to keep this deposit separate from its
                          general funds and Tenant shall not be entitled to
                          interest on the deposit. In the event that actual
                          costs and expenses incurred by Landlord in responding
                          to Tenant's request exceed $1,000.00, Tenant shall pay
                          such excess amount to Landlord within ten (10) days
                          after Landlord's demand therefor. Any such excess
                          shall be deemed additional rent pursuant to this
                          lease, and may be recovered in any unlawful detainer
                          or other action instituted by Landlord upon any
                          default by Tenant as rent, whether or not included in
                          any notice given to Tenant by Landlord prior to or as
                          a condition to the institution of such action.
                             (b) If Tenant desires at any time to assign this
                          lease or to sublet the Premises or any portion thereof
                          or to engage in any other transaction described in
                          subsection (a), it shall first notify Landlord in
                          writing of its desire to do so and shall submit in
                          writing to Landlord (i) the name of the proposed
                          subtenant or assignee; (ii) the nature of the proposed
                          subtenant's or assignee's business to be carried on in
                          the Premises and the tradename under which the
                          proposed subtenant or assignee proposes to operate in
                          the Premises; (iii) the terms and provisions of the
                          proposed sublease or assignment and the proposed
                          effective date thereof, including a copy of any
                          agreement, escrow instructions or other document which
                          contains or memorializes such terms and provisions,
                          and the information required by subsection (e) below;
                          and (iv) such reasonable financial information as
                          Landlord may request concerning the proposed subtenant
                          or assignee, including but not limited to a 

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                          balance sheet of the proposed subtenant or assignee as
                          of a date within ninety (90) days prior to the request
                          for Landlord's consent, statements of income or profit
                          and loss of the proposed subtenant or assignee for the
                          two-year period preceding the request for Landlord's
                          consent and a written statement in reasonable detail
                          as to the business and retail merchandising experience
                          of the proposed subtenant or assignee during the five
                          (5) years preceding the request for Landlord's
                          consent.
                             (c) At any time within thirty (30) days after
                          Landlord's receipt of the information specified in
                          subsection (b), Landlord may, by written notice to
                          Tenant, elect to (i) consent to the subletting or
                          assignment upon the terms and to the subtenant or
                          assignee proposed; (ii) refuse to give its consent,
                          specifying the reason(s) therefor; or (iii) sublease
                          the Premises or the portion proposed to be subleased
                          or take an assignment of Tenant's leasehold estate
                          hereunder upon the same terms (excluding terms
                          relating to the purchase of stock, the use of Tenant's
                          name or the continuation of Tenant's business) as
                          those offered to the proposed subtenant or assignee,
                          as the case may be. If Landlord elects to proceed
                          pursuant to clause (iii) above, any payment by
                          Landlord to Tenant pursuant to such clause shall not
                          exceed the amount which Tenant would have received
                          pursuant to subsection (e) below if Landlord had
                          elected to proceed pursuant to clause (i) above. If
                          Landlord takes an assignment or sublets with respect
                          to the entire Premises, this lease shall be terminated
                          with respect to the entire Premises and the term shall
                          end on the date stated in Tenant's notice as the
                          effective date of the proposed sublease or assignment
                          as if that date had been originally fixed in this
                          lease for the expiration of the term. If Landlord
                          recaptures only a portion of the Premises, the Minimum
                          Rent and additional rent during the unexpired term
                          shall be reduced in proportion to the Floor Area
                          recaptured by Landlord. Tenant shall, at Tenant's own
                          cost and expense, discharge in full any commissions
                          which may be due and owing as a result of any proposed
                          assignment or subletting, whether or not the Premises
                          are recaptured pursuant hereto and rented by Landlord
                          to the proposed tenant or any other tenant.
                             (d) Landlord shall have the right to approve or
                          disapprove any proposed assignee, sublessee or other
                          transferee pursuant to subsection (a) above, which
                          approval shall be subject to the sole and absolute
                          discretion of Landlord. In exercising such right of
                          approval or disapproval, Landlord shall be entitled to
                          take into account any fact or factor which Landlord
                          deems relevant to such decision. Moreover, Landlord
                          shall be entitled to be satisfied that each and every
                          covenant, condition and obligation imposed upon Tenant
                          by this lease and each and every right, remedy and
                          benefit afforded Landlord by this lease is not
                          impaired or diminished by such assignment, subletting
                          or other transfer. In no event shall there be any
                          change in the tradename in use at the Premises or any
                          substantial change in the use of the Premises in
                          connection with any assignment, subletting or other
                          transfer except as expressly approved in writing by
                          Landlord in advance. Landlord and Tenant acknowledge
                          that the provisions set forth in this lease dealing
                          with assignment, subletting and other transfers,
                          including those set forth in subsections (c), (d), (e)
                          and (f), have been freely negotiated and are
                          reasonable at the date hereof taking into account
                          Tenant's proposed use of the Premises and the nature
                          and quality of the Center. No withholding of consent
                          by Landlord for any reason deemed sufficient by
                          Landlord shall give rise to any claim by Tenant or any
                          proposed assignee, subtenant or transferee or entitle
                          Tenant to terminate this lease or to any abatement of
                          rent. Approval of any assignment of Tenant's interest
                          shall, whether or not expressly so stated, be
                          conditioned upon such assignee assuming in writing all
                          obligations of Tenant hereunder by a written
                          instrument satisfactory to Landlord.
                             (e) In connection with any assignment, subletting
                          or other transfer, Landlord shall be entitled to
                          receive, in the case of a subletting or transfer other
                          than an assignment, all rent (however denominated and
                          paid) payable by the subtenant or transferee to Tenant
                          in excess of that payable by Tenant to Landlord
                          pursuant to the other provisions of this lease and, in
                          the case of an assignment, all consideration given,
                          directly or indirectly, by the assignee to Tenant in
                          connection with such assignment and allocable to
                          Tenant's leasehold estate, and Landlord shall be
                          entitled to increase the monthly Minimum Rent to the
                          then fair market rental value of the Premises. The
                          determination of fair market rental value shall be
                          based upon the then highest and best use of the
                          Premises, notwithstanding any use restrictions
                          contained in this lease. For the purposes of this
                          subsection, the term "rent" shall mean all
                          consideration paid or given, directly or indirectly,
                          for the use of the Premises or any portion thereof.
                          The term "consideration" shall mean and include money,
                          services, property and any other thing of value such
                          as payment of costs, cancellation of indebtedness,
                          discounts, rebates and the like. "Sublet" and
                          "sublease" shall include a sublease as to which Tenant
                          is sublessor and any sub-sublease or other sub-
                          subtenancy, irrespective of the number of tenancies
                          and tenancy levels between the ultimate occupant and
                          Landlord, and as to which Tenant receives any
                          consideration, as defined in this subsection. Tenant
                          shall require on any sublease which it executes that
                          Tenant receive the profit from all sub-subtenancies,
                          irrespective of the number of levels thereof. Any rent
                          or other consideration which is to be passed through
                          to Landlord by Tenant pursuant to this subsection
                          shall be paid to Landlord promptly upon receipt by
                          Tenant and shall be 

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                          paid in cash, irrespective of the form in which
                          received by Tenant from any subtenant or assignee. In
                          the event that any rent or other consideration
                          received by Tenant from a subtenant or assignee is in
                          a form other than cash, Tenant shall pay to Landlord
                          in cash the fair market value of such consideration.
                          Landlord and Tenant agree that the payment required by
                          this subsection represents payment for Landlord's
                          property rights in and to the leasehold estate hereby
                          created.
                             The information to be supplied to Landlord under
                          subsection 10.01(b) shall include an itemized
                          statement of all rent and consideration (whether for
                          the use of the Premises, the leasehold estate,
                          leasehold improvements, furniture, fixtures and
                          equipment, inventory, franchises, licenses or
                          otherwise) to be paid to Tenant in connection with the
                          assignment, subletting or other transfer. Such
                          statement shall allocate the total to be paid to
                          Tenant among all such items as reasonably agreed by
                          Tenant and Tenant's assignee, subtenant or transferee,
                          and such allocations shall be subject to the review
                          and approval of Landlord. If Tenant and Landlord
                          cannot agree as to the amount to be allocated for the
                          use of the Premises or the leasehold estate, which
                          amount shall belong to Landlord in accordance with the
                          provisions of this subsection, then such amount shall
                          be determined as follows: The amount to be allocated
                          to each of leasehold improvements, furniture, fixtures
                          and equipment, inventory, franchises, licenses and
                          other hard assets shall be the then current book value
                          of each such item as determined in accordance with
                          generally accepted accounting principles by a
                          certified public accountant selected by Landlord, and
                          such determination shall be binding upon the parties.
                          The total of all such book value amounts shall be
                          deducted from the total of all rent and consideration
                          to be paid to Tenant in connection with such
                          assignment, subletting or other transfer, and all of
                          the remainder shall belong to Landlord as the amount
                          due hereunder for the use of the Premises or the
                          leasehold estate.
                             (f)  [Intentionally Deleted]
                             (g) If Landlord consents to such assignment,
                          subletting or other transfer or does not exercise any
                          option set forth in subsection (c) within said thirty
                          (30) day period, Tenant may thereafter within sixty
                          (60) days after the expiration of said thirty (30) day
                          period enter into a valid assignment, sublease or
                          other transfer of the Premises or portion thereof,
                          upon the terms and conditions described in the
                          information required to be furnished by Tenant to
                          Landlord pursuant to subsection (b), or upon other
                          terms not less favorable to Tenant. Provided, however,
                          that any material change in such terms shall be
                          subject to Landlord's consent as provided in this
                          Section and, provided further, that any amounts to be
                          paid to Landlord by Tenant in connection therewith
                          pursuant to subsections (e) and (f) shall be paid to
                          Landlord upon the later of consummation of such
                          transaction or receipt by Tenant of such
                          consideration.
                             (h) For the purposes of this Section, the terms
                          "assignment" and "subletting" are herein,
                          collectively, used to refer to all events of the types
                          described in subsection (a) above. As used in this
                          Section, the term "assignment" shall include not only
                          a transfer of the entire tenant's interest pursuant to
                          this lease, but also any transfer in which or by which
                          the then tenant hereunder grants or purports to grant
                          to any person or entity any interest, security, profit
                          or other, in such leasehold interest. The term
                          "sublease" shall include any grant or purported grant
                          of the right to use or occupy all or any portion of
                          the Premises other than an assignment, however such
                          grant may be denominated. The term "assignee" shall
                          include the transferee or proposed transferee with
                          respect to any assignment as herein defined and the
                          term "subtenant" shall include any grantee or proposed
                          grantee with respect to any sublease as herein
                          defined.
                             (i) Tenant acknowledges that Tenant has been
                          advised concerning and is aware of Civil Code Sections
                          1995.210 through 1995.340 and 1997.010 through
                          1997.270 and acknowledges that the rights of Landlord
                          with respect to a proposed assignment, subletting,
                          other transfer, change in tradename and change in use
                          are absolute and in the sole discretion of Landlord
                          and may be deemed or construed to constitute
                          prohibitions thereof as permitted by Civil Code
                          Sections 1995.230 and 1997.230. Tenant agrees that
                          there is no implied requirement that Landlord's
                          consent not be unreasonably withheld pursuant to Civil
                          Code Sections 1995.260 and 1997.260 and that the
                          remedies provided in Civil Code Sections 1995.310 and
                          1997.260 shall not be available to Tenant. Tenant also
                          acknowledges that it is Landlord's practice not to
                          permit hypothecation or pledge of leasehold interests
                          by its tenants.

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TRANSFERS IN BANKRUPTCY   Section 10.02
                             In the event that this lease is assigned to any
                          person or entity pursuant to the provisions of the
                          United States Bankruptcy Code (11 U.S.C. Sec. 101 et
                          seq.) (the "Code"), all consideration payable or
                          otherwise to be delivered in connection with such
                          assignment shall be paid or delivered to Landlord,
                          shall be and remain the exclusive property of Landlord
                          and shall not constitute property of Tenant or of the
                          estate of Tenant within the meaning of the Code. Any
                          consideration constituting Landlord's property
                          pursuant to the immediately preceding sentence not
                          paid or delivered to Landlord shall be held in trust
                          for the benefit of Landlord and be promptly paid or
                          delivered to Landlord. For the purposes of this
                          Section, the term "consideration" shall have the
                          meaning given to such term in Section 10.01(e). In
                          addition, the last two sentences of Section 10.01(f)
                          shall apply with respect to such assignment.

NO RELEASE OF TENANT      Section 10.03
                             No subletting, assignment or other transfer, even
                          with the consent of Landlord, shall relieve Tenant of
                          its obligation to pay the rent and to perform all of
                          the other obligations to be performed by Tenant
                          hereunder. The acceptance by Landlord of any payment
                          due hereunder from any person other than Tenant shall
                          not be deemed to be a waiver by Landlord of any
                          provision of this lease or be a consent to any
                          assignment or subletting. The foregoing restrictions
                          shall be binding upon any assignee or subtenant to
                          which Landlord has consented. Any sale, assignment,
                          mortgage, transfer of this lease or subletting which
                          does not comply with the provisions of this Article
                          shall be void. If any assignee defaults in any
                          performance due hereunder, Landlord may proceed
                          directly against Tenant without exhausting its
                          remedies against such assignee. Landlord may consent
                          to subsequent assignments, sublettings, amendments and
                          modifications without notice to or consent of Tenant
                          or any assignee and without releasing Tenant or any
                          such assignee.

                                   ARTICLE XI.
                                 EMINENT DOMAIN

ENTIRE OR SUBSTANTIAL     Section 11.01
TAKING                     If the entire Premises, or so much thereof as to make
                          the balance not reasonably adequate for the conduct of
                          Tenant's business, as determined by Landlord,
                          notwithstanding restoration by Landlord as hereinafter
                          provided, shall be taken under the power of eminent
                          domain, this lease shall automatically terminate as of
                          the date on which the condemning authority takes
                          possession. Each party waives the provisions of Code
                          of Civil Procedure Section 1265.130 allowing either
                          party to petition the Superior Court to terminate this
                          lease.

PARTIAL TAKING            Section 11.02   See Addendum
                             In the event of any taking under the power of
                          eminent domain which does not result in a termination
                          of this lease, the Minimum Rent and all additional
                          rent other than Percentage Rent payable hereunder
                          shall be reduced, effective as of the date on which
                          the condemning authority takes possession, in the same
                          proportion which the Floor Area of the portion of the
                          Premises taken bears to the Floor Area of the entire
                          Premises prior to the taking, Landlord shall promptly
                          at its expense restore the portion of the Premises not
                          so taken to as near its former condition as is
                          reasonably possible, and this lease shall continue in
                          full force and effect. In no event, however, shall
                          Landlord be required to spend more on restoration than
                          the award received by Landlord, net of expenses
                          incurred in obtaining such award, or to repair or
                          restore any portion of the Premises for which Tenant
                          has received compensation from the condemning
                          authority.

TAKING OF CENTER          Section 11.03   See Addendum
                             If premises in the Center aggregating twenty-five
                          percent (25%) or more of the total Floor Area of all
                          buildings within the Center leased or offered for
                          lease to tenants (other than tenant owned buildings)
                          shall be taken by eminent domain, whether or not the
                          Premises are so taken, Landlord may, at its option,
                          terminate this lease by written notice to Tenant of
                          its election to do so prior to the date the condemning
                          authority requires possession, and this lease shall
                          terminate on the date the condemning authority
                          requires possession.

AWARDS                    Section 11.04   See Addendum
                             Any award for any taking of all or any part of the
                          Premises under the power of eminent domain shall be
                          the property of Landlord, whether such award shall be
                          made as compensation for diminution in value of the
                          leasehold or for taking of the fee. Nothing contained
                          herein, however, shall be deemed to preclude Tenant
                          from obtaining, or to give Landlord any interest in,
                          any award to 

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                          Tenant for loss of or damage to Tenant's trade
                          fixtures and removable personal property or for
                          damages for cessation or interruption or relocation of
                          Tenant's business, provided such award does not
                          diminish the award to Landlord.

SALE UNDER THREAT OF      Section 11.05   See Addendum
CONDEMNATION               A sale by Landlord to any authority having the power
                          of eminent domain, either under threat of condemnation
                          or while condemnation proceedings are pending, shall
                          be deemed a taking under the power of eminent domain
                          for all purposes under this Article. Landlord may,
                          without any obligation to Tenant, agree to sell and/or
                          convey to any authority having the power of eminent
                          domain all or any portion of the Center free from this
                          lease and the rights of Tenant hereunder without first
                          requiring that any action or proceeding be instituted
                          or pursued to judgment.

                                   ARTICLE XII.
                                UTILITY SERVICES

UTILITY CHARGES           Section 12.01
                             Tenant shall pay, to the purveyors of such
                          services, all charges, surcharges, taxes and other
                          fees, including installation and hookup charges
                          (however denominated) for gas, water, sewer,
                          electricity, telephone and other utility services used
                          in the Premises during the lease term and separately
                          metered to Tenant. If any such charges are not paid
                          when due, Landlord may pay the same, and any amount so
                          paid by Landlord shall thereupon become due to
                          Landlord from Tenant as additional rent. If any such
                          service is supplied to Tenant by means of a common
                          line serving Tenant and other tenants and without a
                          separate meter to measure Tenant's consumption, Tenant
                          shall pay Landlord, as additional rent on a periodic
                          basis, a reasonable portion, as determined by
                          Landlord, of the total cost of the service provided by
                          such common line.

FURNISHING OF SERVICES    Section 12.02   See Addendum
                          If Landlord shall elect to furnish any utility
                          services to the Premises, Tenant shall purchase its
                          requirements thereof from Landlord so long as the
                          rates charged therefor by Landlord do not exceed those
                          which Tenant would be required to pay on an individual
                          basis if such services were furnished to it directly
                          by a public utility. Any such payments shall be based
                          on usage by Tenant and shall be made monthly or on
                          such other periodic basis as is determined by
                          Landlord. Landlord may discontinue, without notice,
                          any utility service being furnished by Landlord if
                          Tenant fails to pay, when due, the bills for such
                          service or any rent payable by Tenant hereunder.

INTERRUPTION OF SERVICE   Section 12.03   See Addendum
                             Landlord shall not be liable in damages or
                          otherwise for any failure or interruption of any
                          utility service being furnished to the Premises and no
                          such failure or interruption shall entitle Tenant to
                          terminate this lease, or to an abatement of the rent
                          due hereunder.

CENTRAL SYSTEM            Section 12.04
                             Landlord shall operate and maintain a central cold
                          or conditioned air distribution system and shall
                          provide cold or conditioned air to the Premises, at
                          the times and meeting the standards set forth in
                          Exhibits "C," "D" and "E." Tenant shall pay Landlord,
                          as additional rent, for such cold or conditioned air,
                          monthly in advance, one-twelfth (1/12th) of the annual
                          amount determined using the annual per square foot
                          charge (and the Floor Area of the Premises) determined
                          from Schedule "A" to Exhibit "D, adjusted as provided
                          in Exhibit "D." Tenant shall operate its business in
                          such a manner as not to use unreasonable quantities of
                          the cold or conditioned air so furnished, and so as to
                          maintain in the Premises approximately the same
                          temperatures which are from time to time maintained by
                          Landlord in the Enclosed Mall. Such cold or
                          conditioned air meeting the criteria set forth in
                          Exhibit "D" shall be provided to the Premises during
                          the same hours that cold or conditioned air is
                          provided to the Enclosed Mall pursuant to Section
                          12.05. Tenant shall promptly notify Landlord in
                          writing of any changes in the lighting system for the
                          Premises which increase the power draw of such system
                          or which change the appearance of the Premises.
                          Landlord may enter the Premises, from time to time, to
                          ascertain if any changes have been made which may
                          alter the cooling load of the Premises. If any such
                          alteration is noted, Landlord may measure such cooling
                          load and may, at Landlord's option, recalculate the
                          amount due from Tenant to Landlord pursuant to Exhibit
                          "D" and the Schedules thereto from the date of such
                          alteration. Any additional amount due shall be paid
                          within ten (10) days after Tenant's receipt of
                          Landlord's invoice therefor. Tenant's initial base
                          charge for cold or conditioned air furnished to the
                          Premises shall be determined pursuant to Schedule "A"
                          to Exhibit "D" and Tenant's initial additional charge,
                          if any, for cold o conditioned air furnished to the
                          Premises in quantities in excess of those determined
                          based upon the

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                    assumptions set forth in Exhibit "D" shall be determined
                    pursuant to Schedule "B" to Exhibit "D." If Landlord shall
                    hereafter revise such Schedules "A" and "B" to reflect
                    changes in the costs incurred by Landlord in providing cold
                    or conditioned air, such revised Schedules shall be
                    substituted for the Schedules attached to Exhibit "D" upon
                    delivery of copies of such revised schedules to Tenant. From
                    and after the date of each revision, the charges to Tenant
                    for base and excess cold or conditioned air furnished to the
                    Premises shall be determined using such revised Schedules.

ENCLOSED MALL       Section 12.05
AIR CONDITIONING         Landlord shall operate and maintain an air conditioning
                    system to cool and ventilate the Enclosed Mall during the
                    required minimum and optional opening hours from time to
                    time established by Landlord. Tenant shall pay for such
                    services, as additional rent, in equal monthly installments
                    in advance, the sum specified in the applicable Fundamental
                    Lease Provision per year per square foot of Floor Area of
                    the Premises, subject to adjustment pursuant to Exhibit "D."
                    Any such adjustment shall be computed in the same manner
                    specified in Exhibit "D" for the computation of adjustments
                    in rates for cold or conditioned air supplied to the
                    Premises.


                                 ARTICLE XIII.
                             DEFAULTS AND REMEDIES

DEFAULTS            Section 13.01   See Addendum
                         The occurrence of any one or more of the following
                    events shall constitute a default hereunder by Tenant:

                         (a) The abandonment of the Premises by Tenant.
                    Abandonment shall include, but is not limited to, any
                    absence by Tenant from the Premises for five (5) consecutive
                    days or longer.

                         (b) The failure by Tenant to make any payment of rent,
                    additional rent, or other payment required to be made by
                    Tenant hereunder, as and when due, or the failure of Tenant
                    to observe the minimum hours of operation established by
                    Landlord, where any such failure shall continue for a period
                    of three (3) days after written notice thereof from Landlord
                    to Tenant; provided, however, that any such notice shall be
                    in lieu of, and not in addition to, any notice required
                    under California Code of Civil Procedure Sec. 1161, et seq.,
                    as amended. For purposes of this subsection (b), Tenant
                    shall not be deemed to have cured a default resulting from
                    Tenant's failure to observe the minimum hours of operation
                    established by Landlord if Tenant shall, within thirty (30)
                    days after any purported cure, again fail to observe such
                    minimum hours of operation.

                         (c) The failure by Tenant to observe or perform any of
                    the covenants or provisions of this lease to be observed or
                    performed by Tenant, other than as specified in (a) or (b)
                    above, where such failure shall continue for a period of ten
                    (10) days after written notice thereof from Landlord to
                    Tenant; provided, however, that any such notice shall be in
                    lieu of, and not in addition to, any notice required under
                    California Code of Civil Procedure Sec. 1161, et seq., as
                    amended. Provided further, that if the nature of Tenant's
                    default is such that more than ten (10) days are reasonably
                    required for its cure, then Tenant shall not be deemed to be
                    in default if Tenant shall commence such cure within said
                    ten (10) day period and thereafter diligently prosecute such
                    cure to completion. Notwithstanding the foregoing, if the
                    covenant or other provision of this lease which is violated
                    by Tenant cannot thereafter be performed (such as obtaining
                    Landlord's prior written consent to an assignment of
                    Tenant's interest in this lease, a subletting of the
                    Premises, a change in tradename, a change in use, a physical
                    alteration to the Premises, or a release of hazardous
                    materials) by Tenant, then Landlord need not give the
                    foregoing notice demanding performance to Tenant (or to any
                    subtenant or assignee) for such violation to constitute a
                    default under this lease entitling Landlord to exercise its
                    remedies upon a default by Tenant, including those set forth
                    in this Article XIII.

                         (d)  (i)  The making by Tenant of any general
                    assignment for the benefit of creditors; (ii) the filing by
                    or against Tenant of a petition to have Tenant adjudged a
                    "Debtor" or a petition for reorganization or arrangement
                    under any law relating to bankruptcy (unless, in the case of
                    a petition filed against Tenant, the same is dismissed
                    within thirty (30) days); (iii) the appointment of a trustee
                    or receiver to take possession of substantially all of
                    Tenant's assets located at the Premises or of Tenant's
                    interest in this lease, where possession is not restored to
                    Tenant within thirty (30) days; (iv) the attachment,
                    execution or other judicial seizure of substantially all of
                    Tenant's assets located at the Premises or of Tenant's
                    interest in this lease, where such seizure is not discharged
                    within thirty (30) days; or (v) Tenant's convening of a
                    meeting of its creditors or any class thereof for the
                    purpose of effecting a moratorium upon or composition of its
                    debts, or any class thereof.

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                         (e) The revocation or termination or purported
                    revocation or termination by any guarantor of Tenant's
                    obligations under this lease of such guaranty obligations.

REMEDIES            Section 13.02   See Addendum
                         (a) In the event of any default by Tenant as defined in
                    Section 13.01 or elsewhere in this lease, and subject to the
                    provisions of Section 13.09, Landlord may exercise the
                    following remedies:
                    
                             (i)  Terminate Tenant's right to possession of the
                    Premises by any lawful means, in which case this lease shall
                    terminate and Tenant shall immediately surrender possession
                    of the Premises to Landlord. In such event Landlord shall be
                    entitled to recover from Tenant all amounts which Landlord
                    is entitled to recover pursuant to Section 1951.2 of the
                    California Civil Code (or any successor thereto), including,
                    but not limited to:

                                  (A)  The worth at the time of award of the
                    amount by which the unpaid rent and additional rent for the
                    balance of the term after the time of award exceeds the
                    amount of such loss that Tenant proves could be reasonably
                    avoided; and

                                  (B)  Any other amount necessary to compensate
                    Landlord for all the detriment proximately caused by
                    Tenant's failure to perform its obligations under this lease
                    or which in the ordinary course of things would be likely to
                    result therefrom, including, but not limited to, the cost of
                    recovering possession of the Premises, removal (including
                    repair of any damage caused by such removal) and storage or
                    disposal of Tenant's personal property, equipment and
                    fixtures, expenses of reletting, including brokerage
                    commissions and any necessary repair, renovation and
                    alteration of the Premises, reasonable attorneys' fees, and
                    any other reasonable costs.

                         The "worth at the time of award" of all rent other than
                    that referred to in clause (A) above shall be computed by
                    allowing interest at the rate per annum determined pursuant
                    to Section 16.06 from the date such amounts accrue to
                    Landlord. The worth at the time of award of the amount
                    referred to in clause (A) above shall be computed by
                    discounting such amount at one (1) percentage point above
                    the discount rate of the Federal Reserve Bank of San
                    Francisco at the time of award.

                             (ii)  In the event of the vacation or abandonment
                    of the Premises by Tenant, Landlord may relet the Premises
                    or any portion thereof in accordance with subsection (b)
                    below, at any time or from time to time and for such terms
                    and upon such conditions and rental as Landlord in its
                    discretion may deem proper, with the right to make
                    alterations or repairs to the Premises.

                             (iii) Landlord may terminate this lease by express
                    written notice to Tenant of its election to do so. Such
                    termination shall not relieve Tenant of any obligation
                    hereunder which has accrued prior to the date of such
                    termination. In the event of such termination, Landlord
                    shall be entitled to recover from Tenant the amounts
                    determined pursuant to clause (i) above.

                         (b) Landlord and Tenant shall each use commercially
                    reasonable efforts to mitigate any damages resulting from a
                    default by the other party pursuant to this lease. For this
                    purpose, Landlord and Tenant agree that:

                             (i)  Landlord's obligation to mitigate damages
                    after a default by Tenant pursuant to this lease which
                    results in Landlord regaining possession of the Premises
                    shall be satisfied in full if Landlord undertakes to lease
                    the Premises to another tenant (a "Substitute Tenant") in
                    accordance with the following criteria:

                                  (A)  Landlord shall have no obligation to
                    enter into negotiations with a proposed Substitute Tenant
                    for the Premises until Landlord obtains full and complete
                    possession of the Premises including, without limitation,
                    the final and unappealable legal right to relet the Premises
                    free of any claim of Tenant.

                                  (B)  Landlord shall not be obligated to offer
                    the Premises to any prospective Substitute Tenant when other
                    premises in the Center suitable for such prospective
                    tenant's use are currently available or will be available
                    within three (3) months after Landlord obtains possession of
                    the Premises.

                                  (C)  Landlord shall not be obligated to lease
                    the Premises to a Substitute Tenant for a Minimum Rent less
                    than the Minimum Rent then being obtained by Landlord for
                    spaces similar to the Premises in the Center from tenants
                    similar to the prospective Substitute Tenant.

                                  (D)  Landlord shall not be obligated to enter
                    into a new lease containing any terms or conditions that are
                    unacceptable to Landlord under Landlord's then current
                    leasing practices for comparable space in the Center.

                                  (E)  Landlord shall not be obligated to enter
                    into a lease with any proposed Substitute Tenant that does
                    not have, in Landlord's reasonable judgment, sufficient
                    financial resources or operating experience to operate the
                    Premises in a first class manner.

                                  (F)  Landlord shall not be obligated to spend
                    any money to alter, remodel or renovate the Premises for use
                    by a Substitute Tenant unless (1) Tenant pays any such 


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                    sum to Landlord in advance of Landlord's execution of a
                    lease with such Substitute Tenant (which payment shall not
                    be in lieu of any damages or other sums to which Landlord
                    may be entitled as a result of Tenant's default pursuant to
                    this lease) or (2) Landlord, in its sole discretion,
                    determines that any such expenditure is financially
                    justified in connection with entering into a lease with such
                    Substitute Tenant.

                                  (G)  Landlord shall not be obligated to enter
                    into a lease with any Substitute Tenant whose use would (1)
                    not be compatible with the tenant mix of the portion of the
                    Center in which the Premises is located, (2) violate any
                    restriction, covenant or requirement contained in the lease
                    of any other tenant of the Center or in the reciprocal
                    easement agreement for the Center, (3) be of a lesser
                    quality than the uses in the portion of the Center in which
                    the Premises is located, (4) adversely affect the reputation
                    of the Center or (5) be incompatible with the operation of
                    the Center as a first class regional retail center.

                             (ii)  Compliance by Landlord with the criteria set
                    forth in clause (i) above shall fully satisfy Landlord's
                    obligation to mitigate damages under this lease and under
                    any applicable law or judicial ruling in effect on the date
                    of this lease or at the date Landlord obtains possession of
                    the Premises following a default by Tenant hereunder. Tenant
                    waives and releases, to the fullest extent permitted by law,
                    any right to assert in any action by Landlord to recover
                    damages for a default by Tenant hereunder any defense,
                    counterclaim or right of setoff or recoupment respecting the
                    mitigation of damages by Landlord unless and to the extent
                    that Landlord maliciously or in bad faith fails to act in
                    accordance with the provisions of this subsection.

                             (iii) If Landlord relets the Premises or any
                    portion thereof, then rent received by Landlord from such
                    reletting shall be applied: first, to the payment of any
                    indebtedness other than rent due hereunder from Tenant to
                    Landlord; second, to the payment of any cost of such
                    reletting; third, to the payment of the cost of any
                    alterations and repairs to the Premises; fourth, to the
                    payment of rent due and unpaid hereunder; and the residue,
                    if any, shall be held by Landlord and applied in payment of
                    future amounts as the same may become due and payable
                    hereunder. Landlord may execute any lease made pursuant
                    hereto in its own name, and the lessee thereunder shall be
                    under no obligation to see to the application by Landlord of
                    any proceeds to Landlord, nor shall Tenant have any right to
                    collect any such proceeds. Landlord shall not by any re-
                    entry or other act be deemed to have relieved Tenant of any
                    obligations hereunder, unless Landlord shall have given
                    Tenant express written notice of Landlord's election to do
                    so as set forth herein.

                         (c)  Landlord shall be under no obligation to observe
                    or perform any covenant of this lease on its part to be
                    observed or performed which accrues after the date of any
                    default by Tenant hereunder.

                         (d)  In any action for unlawful detainer commenced by
                    Landlord against Tenant by reason of any default hereunder,
                    and in any arbitration pursuant to Section 13.09 below, the
                    reasonable rental value of the Premises for the period of
                    the unlawful detainer or for the period at issue in such
                    arbitration, as applicable, shall be deemed to be the amount
                    of rent and additional rent reserved in this lease for such
                    period, unless Landlord or Tenant shall prove to the
                    contrary by competent evidence.

                         (e)  The rights and remedies reserved to Landlord
                    herein, including those not specifically described, shall be
                    cumulative, and except as provided by Section 13.09 or
                    California statutory law in effect at the time, Landlord may
                    pursue any or all of such rights and remedies, at the same
                    time or otherwise.

                         (f)  No delay or omission of Landlord to exercise any
                    right or remedy shall be construed as a waiver of any such
                    right or remedy or of any default by Tenant hereunder. The
                    acceptance by Landlord of any rent hereunder shall not be a
                    waiver of any preceding breach or default by Tenant of any
                    provision hereof, other than the failure of Tenant to pay
                    the particular rent accepted, regardless of Landlord's
                    knowledge of such preceding breach or default at the time of
                    acceptance of such rent, or a waiver of Landlord's right to
                    exercise any remedy available to Landlord by virtue of such
                    breach or default. The acceptance of any payment from a
                    debtor in possession, a trustee, a receiver or any other
                    person acting on behalf of Tenant or Tenant's estate shall
                    not waive or cure a default under Section 13.01(d).

                         (g)  Tenant hereby waives any right of redemption or
                    relief from forfeiture under California Code of Civil
                    Procedure Sections 1174 and 1179, and under any present or
                    future statutes or case decisions to the same effect, in the
                    event Tenant is evicted or Landlord takes possession of the
                    Premises by reason of any default by Tenant hereunder.


DEFAULT BY LANDLORD Section 13.03   See Addendum
                         Landlord shall not be deemed to be in default in the
                    performance of any obligation required to be performed by it
                    hereunder unless and until it has failed to perform such
                    obligation within thirty (30) days after written notice by
                    Tenant to Landlord specifying wherein Landlord has failed to

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                    perform such obligation. Provided, however, that if the
                    nature of Landlord's obligation is such that more than
                    thirty (30) days are required for its performance then
                    Landlord shall not be deemed to be in default if it shall
                    commence such performance within such thirty (30) day period
                    and thereafter diligently prosecute the same to completion.
                    If Landlord shall have notified Tenant of the name and
                    address of any lender having a lien on the Center or
                    Landlord's interest therein, a copy of any notice to
                    Landlord pursuant to this Section shall concurrently be sent
                    to such lender by registered or certified mail, and such
                    lender shall have a thirty (30) day period to cure any such
                    default following the expiration of Landlord's cure period
                    herein. Tenant's remedies for Landlord's default shall be
                    limited to suit or action and shall not extend to
                    withholding or offsetting rent. Tenant's right to seek
                    damages from Landlord as a result of a default by Landlord
                    pursuant to this lease shall be conditioned upon Tenant
                    taking all actions reasonably required under the
                    circumstances to minimize any loss to Tenant or to third
                    parties that may be caused by any such default of Landlord.


EXPENSE OF          Section 13.04   See Addendum
LITIGATION          If either party incurs any expense, including reasonable
                    attorneys' fees, in connection with any action or
                    proceeding, including any arbitration proceeding, instituted
                    by either party by reason of any default or alleged default
                    of the other party hereunder, the party prevailing in such
                    action or proceeding shall be entitled to recover its said
                    reasonable expenses from the other party, including expenses
                    of investigation and enforcement. For purposes of this
                    provision, in any unlawful detainer or other action or
                    proceeding instituted by Landlord based upon any default or
                    alleged default by Tenant hereunder, Landlord shall be
                    deemed the prevailing party if (a) judgment is entered in
                    favor of Landlord or (b) prior to arbitration, trial or
                    judgment Tenant shall pay all or any portion of the rent and
                    charges claimed by Landlord, eliminate the condition(s),
                    cease the act(s) or otherwise cure the omission(s) claimed
                    by Landlord to constitute a default by Tenant hereunder.


HOLDING OVER        Section 13.05   See Addendum
                         If Tenant or anyone claiming under Tenant shall remain
                    in possession of the Premises or any part thereof after
                    expiration of the lease term or earlier termination thereof
                    without any agreement in writing between Landlord and Tenant
                    with respect thereto, Tenant shall (a) occupy upon all of
                    the terms and conditions of this lease except that the
                    monthly Minimum Rent due from Tenant shall be equal to the
                    greater of three hundred percent (300%) of the monthly
                    Minimum Rent in effect at the end of the term or the then
                    fair market rental value of the Premises (determined as
                    provided in Section 10.01(e)), (b) pay all damages sustained
                    by Landlord by reason of such retention and (c) indemnify,
                    defend, and hold Landlord harmless from and against any loss
                    or liability resulting from such holding over. If Landlord
                    so notifies Tenant in writing, such holding over shall
                    constitute a renewal of this lease for a one year term;
                    otherwise Landlord's acceptance of rent shall create only a
                    month-to-month tenancy, in either case upon the terms set
                    forth in this Section. Any such month-to-month tenancy shall
                    be terminable at the end of any calendar month by either
                    party by written notice to the other party given not less
                    than ten (10) days prior to the end of such month. Nothing
                    contained in this Section shall be deemed or construed to
                    waive Landlord's right of reentry or any other right of
                    Landlord hereunder or at law.


LANDLORD'S          Section 13.06   See Addendum
RIGHTS                   All covenants and agreements to be performed by Tenant
                    under this lease shall be performed by Tenant at Tenant's
                    sole cost and expense and without any abatement of rent. If
                    Tenant fails to pay any sum of money, other than rent,
                    required to be paid by it or fails to perform any other act
                    on its part to be performed, and such failure continues
                    beyond any applicable grace period set forth in the Article
                    providing for such obligation (or if no grace period is set
                    forth in such Article, then the applicable grace period
                    pursuant to this Article), then in addition to any other
                    remedies provided herein Landlord may, but shall not be
                    obligated so to do, without waiving or releasing Tenant from
                    any obligations of Tenant, make any such payment or perform
                    any such other act on Tenant's part, including the removal
                    of any offending signs. Landlord's election to make any such
                    payment or perform any such act on Tenant's part shall not
                    give rise to any responsibility of Landlord to continue
                    making the same or similar payments or performing the same
                    or similar acts. Tenant shall, within ten (10) days after
                    written demand therefor by Landlord, reimburse Landlord for
                    any sums so paid by Landlord and all necessary incidental
                    costs, together with interest thereon at the rate determined
                    pursuant to Section 16.06, accruing from the date of such
                    payment by Landlord, and the late performance charge
                    provided therein. Landlord shall have the same rights and
                    remedies in the event of failure by Tenant to pay such
                    amounts as Landlord would have in the event of a default by
                    Tenant in payment of rent. In addition, as to any non-
                    monetary obligation of Tenant hereunder which Tenant
                    performs only after written notice from Landlord of failure
                    to perform or which Tenant fails to perform and Landlord
                    performs pursuant to this Section, Tenant shall pay to

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD   
                                                            H.T.S.              

                                       24
<PAGE>
 
                    Landlord, as additional rent, an administrative fee in an
                    amount equal to the greater of $100 or ten percent (10%) of
                    the cost paid or incurred by Landlord to perform such
                    obligation.


LIEN FOR RENT       Section 13.07  [Intentionally Deleted]  See Addendum


TRIAL WITHOUT JURY  Section 13.08
                         LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT HAS HAD
                    THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS
                    RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTIONS OF THE
                    UNITED STATES AND THE STATE OF CALIFORNIA. EACH PARTY
                    EXPRESSLY AND KNOWINGLY WAIVES AND RELEASES ALL SUCH RIGHTS
                    TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
                    BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY MATTERS
                    ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE,
                    TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM
                    FOR INJURY OR DAMAGE.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         
                                                            H.T.S.              

SUBMISSION TO       Section 13.09
ARBITRATION              (a)  Except as provided in subsection (b) below, any
                    controversy, dispute or claim of whatsoever nature arising
                    out of, in connection with, or in relation to the
                    interpretation, performance or breach of this lease,
                    including any claim based on contract, tort or statute,
                    shall be determined by final and binding arbitration
                    conducted before a single arbitrator at a location
                    determined by the arbitrator in Orange County, California
                    and administered by Judicial Arbitration & Mediation
                    Services, Inc. ("JAMS"), or if JAMS shall not then exist,
                    such other organization as to which Landlord and Tenant
                    agree. If Landlord and Tenant are unable to so agree within
                    fifteen (15) days after the dispute arises, the organization
                    shall be selected by the presiding judge of the Orange
                    County Superior Court or his or her designee upon
                    application by any party to the dispute. Judgment upon any
                    award rendered by the arbitrator may be entered by any state
                    or federal court having jurisdiction thereof.

                         (b)  The provisions of this Section shall not apply to:

                              (i)   Any unlawful detainer action instituted by
                    Landlord as the result of a default or alleged default by
                    Tenant pursuant to this lease.

                              (ii)  Any specific controversy, dispute, question
                    or issue as to which this lease specifically provides
                    another method of determining such controversy, dispute,
                    question or issue and provides that a determination pursuant
                    to such method is final and binding, unless both Landlord
                    and Tenant agree in writing to waive such procedure and to
                    proceed instead pursuant to this Section.

                              (iii) Any request or application to any State or
                    Federal court having jurisdiction thereof for an order or
                    decree granting any provisional or ancillary remedy (such as
                    a temporary restraining order or injunction) in aid of or
                    with respect to any right or obligation of either party to
                    this lease, and any preliminary determination of the
                    underlying controversy, dispute, question or issue as is
                    required to determine whether or not to grant the relief
                    requested or applied for. A final and binding determination
                    of such underlying controversy, dispute, question or issue
                    shall be made by an arbitration conducted pursuant to this
                    Section after an appropriate transfer or reference to JAMS
                    upon motion or application of either party hereto. Any
                    ancillary or provisional relief which is granted pursuant to
                    this clause (iii) shall continue in effect pending an
                    arbitration determination and entry of judgment thereon
                    pursuant to this Section.

                              (iv)  Exercise of any remedies to enforce any
                    judgment entered based upon a determination made by
                    arbitration pursuant to this Section.

                         (c)  Any arbitration pursuant to this Section shall be
                    conducted in accordance with the streamlined Arbitration
                    Rules and Procedures of JAMS (the "Rules"), regardless of
                    the amount in dispute, except that, whether or not such
                    Rules so provide:

                              (i)   There shall be a pre-hearing conference
                    prior to the arbitration hearing to reach agreement on
                    procedural matters, arrange for the exchange of information,
                    obtain stipulations and attempt to narrow the issues to be
                    arbitrated.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD   
                                                            H.T.S.              

                                       25
<PAGE>
 
                              (ii)   There shall be no mediation or settlement
                    conferences unless all parties agree thereto in writing.

                              (iii)  Discovery shall be limited to that
                    permitted by the Rules, and "good cause" where a condition
                    to discovery shall be strictly construed.

                              (iv)   All motions shall be in letter form and
                    hearings thereon shall be by conference telephone calls
                    unless the arbitrator orders otherwise.

                              (v)    Hearings shall require only twenty (20)
                    days prior written notice.

                              (vi)   All notices in connection with any
                    arbitration may be served in any manner permitted by Section
                    16.11 of this lease.

                              (vii)  Fees and costs paid or payable to JAMS
                    shall be included in "reasonable expenses" for purposes of
                    Section 13.04. The arbitrator shall specifically have the
                    power to award to the prevailing party such party's
                    reasonable expenses incurred in such proceeding, except as
                    otherwise provided in subsection (d) below. Reasonable
                    expenses shall include attorneys' fees and fees and costs
                    paid or payable to JAMS.

                              (viii) The selection of the arbitrator shall be in
                    accordance with the then existing Rules of JAMS, provided
                    that Landlord and Tenant may agree to extend the period of
                    time by which an arbitrator must be selected by them. In the
                    event that the parties are unable to agree upon an
                    arbitrator within thirty (30) days after submission of a
                    matter to arbitration, the arbitrator shall be appointed by
                    the administrator of the Orange County office of JAMS or its
                    successor, if any, as provided in the Rules.

                              (ix)   The arbitration award shall include
                    findings of fact and conclusions of law and shall not be
                    limited as to amount.

                         (d)  As soon as practicable after selection of the
                    arbitrator, the arbitrator or his or her designated
                    representative shall determine a reasonable estimate of
                    anticipated fees and costs of the arbitrator and shall
                    deliver a statement to each party setting forth that party's
                    pro rata share of such fees and costs. Each party shall
                    deposit its pro rata share of such fees and costs with the
                    arbitrator within ten (10) days after receipt of such
                    statement. If either party fails to make a required deposit
                    hereunder, the other party may make such deposit on behalf
                    of the defaulting party and the amount of such deposit, plus
                    interest thereon at the rate determined pursuant to Section
                    16.06, shall be awarded against the defaulting party by the
                    arbitrator in making any final arbitration award without
                    regard to whether the defaulting party is the prevailing
                    party in the arbitration pursuant to this Section. In
                    addition, if Tenant fails to make a required deposit
                    hereunder, Landlord may make such deposit on behalf of
                    Tenant and the amount of such deposit, plus interest thereon
                    at the rate determined pursuant to Section 16.06 from date
                    of deposit to date of repayment, shall be additional rent
                    pursuant to this lease payable by Tenant within ten (10)
                    days after Tenant's receipt of Landlord's invoice therefor.

                         (e)  The arbitrator shall have no authority or power to
                    award any party any exemplary or punitive damages.

                         (f)  Any guaranty of the tenant's obligations pursuant
                    to this lease, whether provided at the execution of this
                    lease or thereafter, shall be subject to the provisions of
                    this Section, whether or not expressly so stated therein.


                                 ARTICLE XIV.
                                 COMMON AREAS

DEFINITION          Section 14.01   See Addendum
                         All areas within the exterior boundaries of the Center
                    which are not now or hereafter held for exclusive use by
                    Landlord or by other persons entitled to occupy floor space
                    in the Center, including, without limiting the generality of
                    the foregoing, parking areas and structures, driveways,
                    truckways, delivery passages, elevators and escalators,
                    loading docks, sidewalks, ramps, open and enclosed courts
                    and malls, landscaped and planted areas, exterior stairways,
                    bus stops, retaining walls, management offices, restrooms
                    not located within the premises of any tenant, and other
                    areas and improvements provided by Landlord for the common
                    use of Landlord and tenants and their respective employees
                    and invitees, shall be deemed "common areas." Landlord may
                    make changes at any time and from time to time in the size,
                    shape, location, number and extent of the common areas
                    (including Enclosed Mall areas) or tenant areas or either of
                    them, and no such change shall entitle Tenant to any
                    abatement of rent. Without limiting the generality of the
                    foregoing, Landlord may add additional department stores,
                    retail store buildings and parking decks anywhere in the
                    Center.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD   
                                                            H.T.S.              

                                       26
<PAGE>
 
USE                 Section 14.02   See Addendum
                         Tenant and its employees and invitees shall be entitled
                    to use the common areas during the lease term, in common
                    with Landlord and with other persons authorized by Landlord
                    from time to time to use such areas, subject to such
                    reasonable rules and regulations relating to such use as
                    Landlord may from time to time establish.


CONTROL BY          Section 14.03   See Addendum
LANDLORD                 (a)  Landlord shall operate, manage, equip, police,
                    light, repair, clean and maintain the common areas in such
                    manner as Landlord may in its sole discretion determine to
                    be appropriate. Landlord may temporarily close any common
                    area for repairs or alterations, to prevent a dedication
                    thereof or the accrual of prescriptive rights therein or for
                    any other reason deemed sufficient by Landlord.

                         (b)  Landlord shall at all times during the term of
                    this lease have the sole and exclusive control of the
                    automobile parking areas, driveways, entrances and exits,
                    sidewalks and pedestrian passageways and other common areas,
                    and may at any time and from time to time during the term
                    hereof restrain any use or occupancy thereof except as
                    authorized by the rules and regulations for the use of such
                    areas established by Landlord from time to time. Without
                    limiting the generality of the foregoing, Landlord may
                    operate or cause to be operated a valet parking service for
                    Center customers in one or more locations in the Center
                    selected by Landlord, and the cost of such service shall be
                    a common area cost pursuant to Section 14.04. The rights of
                    Tenant in and to the common areas shall at all times be
                    subject to the rights of Landlord, the other tenants of
                    Landlord and the other owners of stores in the Center to use
                    the same in common with Tenant, and Tenant shall keep said
                    areas free and clear of any obstructions created or
                    permitted by Tenant or resulting from Tenant's operation. If
                    in the opinion of Landlord unauthorized persons are using
                    any of said areas by reason of the presence of Tenant in the
                    Center, Tenant, upon demand of Landlord, shall restrain such
                    unauthorized use by appropriate proceedings. Nothing herein
                    shall affect the right of Landlord at any time to remove any
                    such unauthorized person from the common areas or to
                    prohibit the use of any of said areas by unauthorized
                    persons.

                         (c)  Tenant and its employees shall park their vehicles
                    only in such parking areas as are from time to time
                    designated for that purpose by Landlord, and Landlord may
                    change such designated areas or assign particular spaces for
                    use by Tenant and its employees at any time upon written
                    notice to Tenant. Those areas designated for employee
                    parking may be located on the highest level of Center
                    parking structures and in those portions of the Center most
                    distant from the store buildings. Tenant shall furnish
                    Landlord with a list of its and its employees' vehicle
                    license numbers within fifteen (15) days after taking
                    possession of the Premises and Tenant shall thereafter
                    notify Landlord of any change in such list within five (5)
                    days after such change occurs. Tenant agrees to assume
                    responsibility for compliance by its employees with the
                    parking provisions contained herein. If Tenant or its
                    employees park in other than such designated parking areas,
                    then Landlord may charge Tenant, as additional rent, Fifty
                    Dollars ($50.00) per day for each day or partial day each
                    such vehicle is parked in any part of the common areas other
                    than those so designated. Tenant acknowledges that Landlord
                    may tow away from the Center any vehicle belonging to Tenant
                    or Tenant's employees parked in violation of these
                    provisions, and/or attach violation stickers or notices to
                    such vehicle. All costs of such towing will be charged to
                    the Tenant or the employee who owns the towed vehicle and
                    must be paid prior to the release of the vehicle to its
                    owner. Each Tenant and its employees shall be solely
                    responsible for locking and the safety of their respective
                    vehicles.

                         Without limiting the generality of the foregoing,
                    Landlord shall have the right, during the Christmas shopping
                    period (Veterans' Day through December 31) and during any
                    promotional event at the Center, to locate offsite parking
                    at any location within two (2) miles of the Center, to
                    designate such offsite areas as parking for Tenant's
                    employees and to require Tenant's employees to park in such
                    offsite parking and to shuttle-bus from such offsite parking
                    areas to the Center. If Landlord elects to use such offsite
                    employee parking, Tenant shall (i) park and require Tenant's
                    employees to park in such offsite parking areas and use
                    Landlord's shuttle buses for travel to and from the Center
                    and (ii) pay to Landlord, as a part of common area expenses,
                    Tenant's proportionate share of Landlord's costs incurred in
                    using such offsite areas and providing shuttle bus service
                    to the Center. Tenant's proportionate share of such costs
                    shall be determined in the manner specified in Section
                    14.05(a) and shall be included in common area costs paid by
                    Tenant pursuant to such Section.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD   
                                                            H.T.S.              

                                       27
<PAGE>
 
                         (d)  In the event Landlord elects or is required to
                    limit or control parking by customers or invitees of the
                    Center, whether by validation of parking tickets or any
                    method of assessment, or any program for free or reduced
                    cost transportation, Tenant agrees to participate in such
                    validation, assessment or transportation program under such
                    reasonable rules and regulations as are from time to time
                    established by Landlord with respect thereto. Without
                    limiting the generality of the foregoing:

                              (i)   Landlord and Tenant agree to cooperate and
                    use their best efforts to participate in governmentally
                    mandated and voluntary traffic management programs generally
                    applicable to businesses located in Costa Mesa, California
                    or to the Center and, initially, shall encourage and support
                    van and car pooling by employees and shall encourage and
                    support staggered and flexible working hours for employees
                    to the fullest extent permitted by the requirements of
                    Tenant's business. Neither this subsection nor any other
                    provision in this lease, however, is intended to or shall
                    create any rights or benefits in any other person, firm,
                    company, governmental entity or the public.

                              (ii)  Landlord and Tenant agree to cooperate and
                    use their best efforts to comply with any and all guidelines
                    or controls imposed upon either Landlord or Tenant by
                    federal or state governmental organizations or by any energy
                    conservation association to which Landlord is a party
                    concerning energy management.

                              (iii) All costs, fees, assessments and other
                    charges paid by Landlord to any governmental authority or
                    voluntary association in connection with any program of the
                    types described in this Section, all costs and fees paid by
                    Landlord to any governmental authority or third party
                    pursuant to or to effect such program and all costs
                    associated with administration and management of such
                    program or compliance therewith, shall be included in common
                    area costs for the purposes of Section 14.04, whether or not
                    specifically listed in such Section. However, any costs,
                    fees, fines or other levies assessed against Landlord as the
                    result of failure of any tenant to comply with this
                    subsection shall be reimbursed by such noncomplying tenant
                    to Landlord as additional rent.


COMMON AREA         Section 14.04   See Addendum
COSTS                    Tenant shall pay to Landlord, as additional rent in the
                    manner and at the time provided in Section 14.05, Tenant's
                    proportionate share, as defined in Section 14.05, of all
                    costs and expenses incurred by Landlord in the management,
                    operation, repair and maintenance of the common areas during
                    the term of this lease, including property taxes assessed
                    against the Center and Landlord's expenses pursuant to
                    Section 7.01. Such costs and expenses shall include, without
                    limiting the generality of the foregoing:

                         (a)  Utility costs, including telephone, not separately
                    metered to tenants (including costs and fees charged to or
                    incurred by Landlord in connection with membership in energy
                    conservation associations).

                         (b)  Gardening, landscaping, planting and replacement
                    of interior and exterior plants, planters and landscaping,
                    cleaning, re-striping, repair, replacement and repaving and
                    resurfacing of roads and other paved areas.

                         (c)  Maintenance, cleaning, repair and replacement of
                    sidewalks, curbs, pedestrian bridges and concourses, loading
                    and service areas, carpeting, benches, furniture, restrooms,
                    trash compactors and other common areas and facilities.

                         (d)  Costs to acquire, maintain, repair and replace
                    elevators, escalators, moving sidewalks, stairways, fire
                    escapes, flagpoles, statues, fountains, satellite dishes,
                    signage for the Center, Center tenant directories and other
                    equipment and machinery used in connection with the common
                    areas, including any personal property taxes thereon.

                         (e)  Surcharges and license and permit fees required by
                    law for or with respect to parking and transportation
                    facilities, including traffic management fees and charges,
                    as well as the cost of any valet parking provided for Center
                    patrons and the offsite parking and shuttle buses provided
                    pursuant to Section 14.03.

                         (f)  Premiums paid for public liability, property
                    damage, vandalism, malicious mischief, environmental loss
                    and other insurance maintained by Landlord, together with
                    the cost of funding all deductibles and reserves maintained
                    by Landlord with respect to any such insurance.

                         (g)  Real property taxes (as defined in Section 5.02),
                    personal property taxes and vehicle taxes and fees paid by
                    Landlord with respect to the Center, the improvements
                    thereto and Landlord's vehicles and other personal property
                    therein.

                         (h)  Maintenance, painting, sealing, cleaning, staining
                    and replacement (including roof and structural repair,
                    maintenance and replacement pursuant to Section 7.01) of the
                    Center and all common area structural elements.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD   
                                                            H.T.S.              

                                       28
<PAGE>
 
                         (i)  Maintenance, repair and replacement of traffic and
                    directional signs, markers and bumpers.

                         (j)  Costs of alarm monitoring, pest control,
                    accounting, legal, architectural, engineering and other
                    services required in the operation of the Center.

                         (k)  Maintenance, repair, operation and replacement of
                    utility lines, fire sprinklers, sewer lines, security
                    systems, lighting standards and fixtures, irrigation
                    systems, pipes and other systems and equipment serving the
                    Center.

                         (l)  Maintenance and operation of special amenities
                    such as meeting rooms, amusements, a concierge desk, police
                    and security facilities.

                         (m)  Fees and costs paid by Landlord for management,
                    security and other services provided with respect to the
                    Center, as well as license and permit fees relating to
                    operation and management of the Center and providing
                    security and other services therefor.

                         (n)  Painting, lighting (including replacements),
                    cleaning, trash removal, depreciation of equipment, security
                    and fire protection and similar items.

                         (o)  The cost of purchase, installation and removal of
                    seasonal decorations at the Center, together with the cost
                    of supplying to Center patrons customer services determined
                    by Landlord to be advantageous to attract such patrons or to
                    assist them in shopping at the Center, such as the costs of
                    leasing and/or operating shuttle buses and other
                    transportation systems, public or private, and the costs of
                    providing shopping bags, toddler strollers, wheelchairs,
                    Center gift certificates, and children's rides and
                    entertainment.

                         (p)  Costs incurred for monitoring, improving and
                    remedying indoor air quality within the Center, whether
                    incurred to comply with applicable laws and regulations or
                    for the purpose of improving indoor building environmental
                    quality.

                         (q)  Costs of installation and operation of loudspeaker
                    systems, music program services and other similar audio or
                    video transmission systems, including licensing fees, and
                    all security systems for the Center.

                         (r)  Computer and other technology costs relating to
                    the common areas.

                         (s)  Costs incurred in connection with abatement of
                    asbestos and other hazardous material in the common areas of
                    the Center, including the Enclosed Mall and other enclosed
                    common areas.

                         (t)  Costs incurred by Landlord to promote tourist
                    visits to the Center, including the costs of advertisements,
                    promotional literature and incentives provided to travel
                    agents, public and charter transportation carriers and
                    others engaged in the tourism industry.

                         (u)  The costs of providing management, maintenance,
                    engineering and security offices at the Center and the cost
                    of providing center management and support staff to operate
                    such offices and the Center, including all employee-related
                    costs and all office administration costs.

                         (v)  An amount equal to fifteen percent (15%) of all
                    other common area costs and expenses to cover Landlord's
                    indirect administrative and overhead expenses.

                         Such costs and expenses shall not include any allowance
                    for depreciation of common area improvements, or any costs
                    or expenses attributable to the ventilating or air
                    conditioning of the Enclosed Mall. Such costs and expenses
                    shall include all other costs and expenses incurred for the
                    purposes specified in the first sentence of this Section,
                    including all capital purchases, whether such costs and
                    expenses are now or hereafter classified as expenses or
                    capital expenditures under generally accepted accounting
                    principles, and without requirement of amortization other
                    than as may be elected, from time to time, by Landlord. Such
                    costs and expenses shall include interest paid by Landlord
                    on monies borrowed by Landlord to fund costs and expenses of
                    the types described in this Section. Such costs and expenses
                    shall include all charges, surcharges and other levies of
                    whatsoever nature imposed by, and all costs (whether or not
                    capital in nature) of compliance with the requirements of,
                    any federal, state or local governmental agency regulating
                    the environmental, health and safety aspects of the Center
                    and all costs, as reasonably amortized by Landlord with
                    interest at the rate actually incurred by Landlord, of any
                    capital improvement which is reasonably calculated to reduce
                    common area costs. Any receipts received by Landlord on
                    account of the foregoing costs and expenses shall be
                    deducted therefrom after addition of the administrative and
                    overhead expense allowance and prior to billing to Tenant.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD   
                                                            H.T.S.              

                                       29
<PAGE>
 
PROPORTIONATE     Section 14.05   See Addendum
PAYMENT               (a)  Tenant's proportionate share of such common area
                  costs shall be that portion thereof which the Floor Area of
                  the Premises bears to the Floor Area of the premises from time
                  to time leased and occupied by tenants in the Center (other
                  than tenant-owned buildings and certain other tenants who pay
                  on a basis other than a proportionate share and certain
                  exterior restaurant seating as described in Section 16.04).
                  Tenant's proportionate share shall be based upon the common
                  area costs remaining after the deduction of costs paid
                  directly by the owners of tenant-owned buildings and
                  contributions at rates or in amounts specified in leases
                  between Landlord and certain other tenants. Such deductions
                  shall be made after inclusion of the fifteen percent (15%) fee
                  provided for in Section 14.04.
                      (b)  Prior to January 1 of each calendar year, Landlord
                  shall give Tenant a written estimate of Tenant's proportionate
                  share of such common area costs (after taking into account the
                  contributions referred to in (a) above) for the ensuing
                  calendar year. Tenant shall pay such estimated amount to
                  Landlord in equal monthly installments, in advance. In the
                  event that actual common area costs experienced during any
                  calendar year shall be greater or lesser than the estimates
                  used by Landlord for calculating Tenant's monthly
                  installments, Landlord may revise its estimates and Tenant's
                  monthly installments thereof. Any changes to Tenant's monthly
                  installment payments shall be effective with the first full
                  calendar month following Tenant's receipt of notice from
                  Landlord setting forth such revisions. Within ninety (90) days
                  after the end of each such calendar year, Landlord shall
                  furnish to Tenant a statement summarizing the costs and
                  expenses incurred by Landlord for the operation and
                  maintenance of the common areas (taking into account the
                  contributions referred to in (a) above) during such calendar
                  year, and the parties shall make any adjustment necessary to
                  place Tenant's proportionate share on a calendar year basis.
                  Any additional amount due from Tenant shall be paid by Tenant
                  to Landlord within ten (10) days after Tenant's receipt of
                  Landlord's invoice therefor. Any amount due Tenant shall be
                  credited against installments next coming due under this
                  Section or, if at the end of the term, applied against any
                  amount then owed by Tenant to Landlord pursuant to this lease
                  and the balance, if any, refunded to Tenant. Landlord's final
                  statement of common area costs and expenses for any calendar
                  year shall be final and conclusive upon Landlord and Tenant.
                  All estimates and statements furnished by Landlord pursuant to
                  this subsection shall be in such format, shall contain only
                  such detail as Landlord determines and shall be final and
                  binding on the parties.

                                  ARTICLE XV.
                        SIGNS, LIGHTING AND ADVERTISING

PROHIBITED        Section 15.01   See Addendum
ACTIVITIES            Tenant shall not, without Landlord's prior written
                  consent, do any of the following:

                      (a)  Install or affix to the exterior of the Premises any
                  lighting or plumbing fixtures, shades, awnings, or exterior
                  decorations (including exterior painting).
                      (b)  Install or affix to the Enclosed Mall storefront of
                  the Premises or within four feet of such doors and windows and
                  visible therefrom, any signs, lettering, placards, sign easels
                  or the like. In no event shall such signs, lettering and
                  placards exceed four (4) square feet in size.
                      (c)  Display or sell merchandise in, or otherwise 
                  obstruct, any area outside of the Premises.
                      (d)  Cause or permit to be used any advertising materials
                  or methods which are objectionable to Landlord or which
                  intrude upon the premises of other tenants of the Center,
                  including, without limiting the generality of the foregoing,
                  loudspeakers, phonographs, radios, television, mechanical or
                  moving display devices, unusually bright or flashing lights
                  and similar devices the effect of which may be seen or heard
                  or otherwise experienced outside the Premises.
                      (e)  Solicit business in the parking or other common
                  areas, distribute any hand bills or other advertising matter
                  in the parking area or in other common areas or utilize any
                  truck or other vehicle signs.
                      (f)  Use any sign or advertising material that is not of
                  professional quality.

                      For the purpose of this Article, the term "exterior" shall
                  include exposures on the Enclosed Mall. No signs, lighting or
                  advertising shall be permitted on any portion of the Premises
                  which is exposed to the parking areas. Landlord may, without
                  notice, remove any materials which violate the provisions of
                  this Section, and the cost of such removal shall be additional
                  rent payable by Tenant upon demand.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       30
<PAGE>
 
MAINTENANCE       Section 15.02   See Addendum
                      Tenant shall at all times maintain its display windows,
                  signs, doors, storefront and storefront entrance floor in a
                  neat, clean and orderly condition. If, as to any such sign,
                  display window, door, storefront or entrance floor located on
                  an exposure to the Enclosed Mall or the parking areas, Tenant
                  shall fail to do so within two (2) days after receipt of
                  written notice from Landlord, Landlord may repair, clean or
                  maintain such sign, display window, door, storefront or
                  entrance floor and the cost thereof shall be payable by Tenant
                  to Landlord upon demand as additional rent.

DISPLAY WINDOW    Section 15.03
LIGHTING              Tenant shall keep its display windows well lighted during
                  all operating hours of Tenant and until such reasonable time
                  as may be fixed from time to time by Landlord for all of the
                  tenants in the Center, unless prevented by causes beyond
                  Tenant's reasonable control.

ADVERTISED NAME   Section 15.04  See Addendum
AND ADDRESS           (a)  In no event shall Tenant use or shall Landlord
                  approve any tradename of Tenant for use at the Premises or in
                  or on any sign, stationery, business cards, advertising or
                  promotional material or other written or oral disseminations
                  by Tenant which contains as a portion of such tradename the
                  words "South Coast Plaza," "South Coast," "Plaza," "Carousel
                  Court" or "Jewel Court." In no event shall Tenant use any
                  picture or likeness of the Center in any advertisement,
                  correspondence, notice, announcement or other communication.
                      (b)  TENANT SHALL USE AS ITS ADVERTISED BUSINESS ADDRESS
                  OF THE PREMISES (AND FOR NO OTHER PURPOSE) THE WORDS "SOUTH
                  COAST PLAZA," AND SHALL NOT USE THE NAME "COSTA MESA." TENANT
                  SHALL NOT ACQUIRE ANY PROPERTY RIGHT IN OR TO ANY NAME WHICH
                  CONTAINS SUCH REQUIRED WORD COMBINATION AS A PART THEREOF.
                  SUCH PERMITTED USE BY TENANT OF THE WORDS "SOUTH COAST PLAZA"
                  DURING THE TERM OF THIS LEASE SHALL NOT PERMIT TENANT TO USE,
                  AND TENANT SHALL NOT USE, SUCH WORDS EITHER AFTER THE
                  TERMINATION OF THIS LEASE OR AT ANY OTHER LOCATION. THE
                  FOREGOING SHALL NOT PRECLUDE TENANT, DURING THE TERM OF THIS
                  LEASE, FROM USING THE WORDS "SOUTH COAST PLAZA" IN ANY LISTING
                  OF TENANT'S STORE LOCATIONS AT ANOTHER STORE OR ON STATIONERY,
                  ADVERTISING MATERIALS OR PROMOTIONAL MATERIALS. ANY USE BY
                  TENANT OF THE NAME "SOUTH COAST PLAZA" IN ANY ADVERTISING BY
                  TENANT SHALL BE SOLELY AS THE GEOGRAPHICAL LOCATION OF
                  TENANT'S STORE IN THE PREMISES AND NOT AS A PART OF ANY
                  TRADENAME USED BY TENANT. IF TENANT IDENTIFIES IN ANY
                  ADVERTISING OF TENANT'S STORES ITS STORES BY CITY LOCATION, IT
                  SHALL IDENTIFY THE PREMISES AS LOCATED IN "SOUTH COAST PLAZA,"
                  RATHER THAN IN COSTA MESA. LANDLORD MAY CHANGE THE NAME OF THE
                  CENTER AT ANY TIME. NO TENANT SIGN AT THE PREMISES SHALL
                  IDENTIFY ANY OTHER LOCATION OF TENANT.
                      TENANT ACKNOWLEDGES AND AGREES THAT IT HAS READ THE
                  PROVISIONS OF THIS SECTION 15.04, THAT IN EACH ADVERTISEMENT
                  OF TENANT WHICH IDENTIFIES TENANT'S STORE IN THE PREMISES SUCH
                  STORE WILL BE IDENTIFIED AS LOCATED AT OR IN "SOUTH COAST
                  PLAZA" AND THAT LANDLORD WILL TREAT ANY FAILURE BY TENANT TO
                  COMPLY WITH THIS SECTION 15.04 AS A MATERIAL BREACH OF THIS
                  LEASE BY TENANT ENTITLING LANDLORD TO EXERCISE ALL REMEDIES
                  AVAILABLE UPON A DEFAULT BY TENANT.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                      (c)  Landlord and Tenant each desire to establish and
                  maintain within the trade area, as defined below, strong
                  public recognition of the high quality of Tenant's location in
                  the Center and the Center itself. Such goal shall be achieved
                  through, among other things, Tenant's advertising program as
                  now or hereafter existing, and but for Tenant's agreement to
                  foster such goal Landlord would not enter into this lease upon
                  the terms contained herein. Accordingly, in all Tenant's
                  advertising and publicity in which one or more existing or
                  future locations of Tenant within the trade area are
                  identified, enumerated or listed, Tenant shall identify or
                  include in such listing or enumeration the Premises in a
                  manner which gives to the Premises equal prominence with the
                  most

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       31
<PAGE>
 
                  prominent other trade area location so identified, listed or
                  enumerated. Failure of Tenant to comply with this subsection
                  shall be a default by Tenant entitling Landlord to exercise
                  its remedies pursuant to Article XIII. For the purposes of
                  this subsection:
                      (i)   "Advertising and publicity" means all advertising
                  and publicity, in any form, type or media, which identifies or
                  lists any of Tenant's locations in the trade area, and shall
                  include advertising pursuant to Section 15.05, and all
                  advertising and publicity in connection with a "grand opening"
                  or other extraordinary event occurring or concerning any other
                  Tenant location in the trade area.
                      (ii)  "Equal prominence" means that the tone, position,
                  color, type face, type style or other characteristics of the
                  listing or identification of the Premises are the same as or
                  as conspicuous to the listener, viewer or reader as the same
                  characteristics of the listing or identification of another
                  trade area location(s) of Tenant to which comparison is made.
                      (iii) The "trade area" means the County of Orange, 
                  California.

ADVERTISING       Section 15.05  See Addendum
EXPENDITURES          (a)  Tenant shall spend each lease year an amount equal to
                  not less than two percent (2%) of its gross sales for such
                  lease year on advertising its South Coast Plaza location in or
                  for magazines, newspapers, radio, television, direct mail
                  advertising or other measured media providing advertising
                  external to the Center and selected by Tenant, but providing
                  for distribution or dissemination within the primary trade
                  area of the Center. For this purpose and for the purpose of
                  subsection (c), the primary trade area of the Center shall be
                  the largest prohibited area described in Section 6.03 (without
                  reference to any typed or interlineated changes to such
                  Section). If Tenant includes one or more other locations in
                  any advertising pursuant to this Section then, so long as the
                  Premises is identified with equal prominence (as defined in
                  Section 15.04) to the identification of each such other
                  location, the amount to be credited against Tenant's
                  advertising requirement pursuant to this Section shall be
                  determined by multiplying the total cost to Tenant of such
                  advertising by a fraction, the numerator of which is one (1)
                  and the denominator of which is the total number of locations
                  listed or identified in such advertising. If the Premises is
                  identified less prominently than any other location, then no
                  portion of the cost of such advertising shall be credited
                  against Tenant's requirement pursuant to this Section.
                      (b)  Tenant shall furnish to Landlord, together with the
                  annual statement furnished under Section 4.02(b), a statement
                  showing the amounts spent by Tenant on advertising its South
                  Coast Plaza location as provided in subsection (a) during the
                  preceding lease year, including all credits, if any, pursuant
                  to Section 15.07. If it shall appear from such statement or
                  from an audit of Tenant's records that Tenant has expended for
                  such advertising less than the required two percent (2%) of
                  gross sales as herein provided, Tenant shall pay the
                  difference between the amount actually expended for such
                  advertising and two percent (2%) of Tenant's gross sales for
                  such lease year to the Fund within thirty (30) days after
                  demand is made therefor by Landlord. The audit right specified
                  in Sections 4.03(a) and (b) shall extend to Tenant's books and
                  records as to advertising expenditures for the Premises, and
                  Landlord may examine such advertising records separately or
                  concurrently with any examination of Tenant's books and
                  records with respect to gross sales.
                      (c)  In addition to Tenant's annual advertising
                  requirement set forth in this Section, Tenant shall spend on
                  advertising appearing during the period from thirty (30) days
                  prior to thirty (30) days subsequent to the date on which
                  Tenant opens the Premises for business an amount equal to two
                  (2) months initial Minimum Rent. Such expenditures shall be
                  limited to advertisements promoting the opening of the
                  Premises, and such media shall be as selected by Tenant and
                  any such media shall be distributed or disseminated in the
                  primary trade area of the Center. The first statement
                  submitted by Tenant pursuant to subsection (b) above shall
                  separately set forth the amount expended by Tenant pursuant to
                  this subsection (c), and if Tenant shall fail to spend the
                  amount required by this subsection, then Tenant shall pay the
                  difference between the amount required to be spent hereunder
                  and the amount actually spent by Tenant to the Fund within
                  thirty (30) days after demand is made therefor by Landlord.

ACCEPTANCE OF     Section 15.06  See Addendum
CENTER GIFT           For so long as Landlord or any agent or contractor of
CERTIFICATES      Landlord sells gift certificates for redemption at Center
                  stores, Tenant shall accept such certificates at the Premises.
                  Sales made in exchange for gift certificates shall be treated
                  by Tenant on the same basis as cash sales. Tenant shall redeem
                  gift certificates exchanged at the Premises with Landlord or
                  Landlord's agent or contractor, as designated from time to
                  time by Landlord. Nothing herein shall obligate Landlord to
                  continue such gift certificate program for any particular
                  period of time or at all.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       32
<PAGE>
 
PUBLICATIONS      Section 15.07  See Addendum
PROGRAM               In addition to all other advertising and promotional fund
ADVERTISING       expenditures to be made by Tenant pursuant to this lease,
                  Tenant shall purchase advertisements of its location in the
                  Premises (only) in either (a) two (2) of the seasonal catalogs
                  prepared and disseminated annually by Landlord or (b) in any
                  other publications then included in Landlord's Publications
                  Program for the Center. To the extent that Tenant elects to
                  utilize alternative (b) for any advertisement(s), the cost of
                  such advertisement(s) placed in such other publication(s)
                  shall be at least equal to the then cost of an advertisement
                  in Landlord's seasonal catalog. Such advertisements shall be
                  of any size made available by Landlord and the costs thereof
                  shall be established by Landlord. The costs of such
                  advertisements shall not be credited against any other
                  obligation of Tenant pursuant to this lease; provided,
                  however, that any amount spent by Tenant pursuant to this
                  Section in excess of the cost of two (2) seasonal catalog
                  advertisements shall be credited against Tenant's annual
                  advertising requirement pursuant to Section 15.05. Nothing
                  herein shall require Landlord to continue the preparation and
                  distribution of such seasonal catalogs or to continue its
                  Publications Program, and if Landlord elects to cease
                  publishing such catalogs or to cease such Publications
                  Program, Landlord may designate other advertising vehicles to
                  be used by Tenant with a cost for such advertisements
                  equivalent to the cost of the two (2) required catalog
                  advertisements. If Tenant shall fail to place any
                  advertisement required by this Section or shall place and then
                  cancel any such advertisement, Tenant shall pay to the Fund as
                  additional rent and within ten (10) days after Tenant's
                  receipt of Landlord's invoice therefor, an amount equal to the
                  cost which Tenant would have incurred for such advertisement.
                  The particular seasonal catalogs and/or other publications in
                  which Tenant shall place its advertisements shall be selected
                  by Tenant from Landlord's Publications Program in effect from
                  time to time and need not be the same catalogs or other
                  publications from year to year.

SIGNS ON          Section 15.08   See Addendum
EXTERIOR FASCIA       Tenant acknowledges that it has been advised by Landlord
                  that Landlord's present sign policy and the ordinances of the
                  City of Costa Mesa substantially restrict signs on the
                  exterior fascia of the Center (i.e., the exterior of the
                  Center common areas). Accordingly, Tenant acknowledges that
                  Landlord has informed Tenant that Tenant may not place any
                  sign on the exterior fascia of the Center and Tenant agrees to
                  comply with such restriction. Nothing contained herein,
                  however, shall be deemed or construed to preclude Tenant's
                  signs (in conformity with the provisions of Exhibits "C" and
                  "E" hereto) on the exterior of the Premises fronting onto the
                  Enclosed Mall.

                                 ARTICLE XVI.
                                 MISCELLANEOUS

ESTOPPEL          Section 16.01  See Addendum
STATEMENTS            (a)  Tenant shall, at any time and from time to time, upon
                  not less than twenty (20) days' prior written notice from
                  Landlord, execute, acknowledge and deliver to Landlord a
                  statement in writing (i) certifying that this lease is
                  unmodified and in full force and effect (or, if modified,
                  stating the nature of such modification and certifying that
                  this lease, as so modified, is in full force and effect) and
                  the dates to which the Minimum Rent and additional rent are
                  paid in advance, if any, (ii) acknowledging that there are
                  not, to Tenant's knowledge, any uncured defaults on the part
                  of Landlord hereunder, or specifying such defaults, if any are
                  claimed, and (iii) acknowledging (if true) the accuracy of
                  such other facts regarding Tenant, the Premises or this lease
                  as are included in such statement by Landlord. Any such
                  statement may be relied upon by any prospective purchaser or
                  encumbrancer of the Premises or of all or any portion of the
                  Center.
                      (b)  Tenant's failure to deliver such statement within
                  such time period shall be conclusive upon Tenant (i) that this
                  lease is in full force and effect, without modification except
                  as may be represented by Landlord, (ii) that there are no
                  uncured defaults in Landlord's performance, (iii) that not
                  more than one month's Minimum Rent has been paid in advance
                  and (iv) that any other statements of fact regarding Tenant,
                  the Premises or this lease included by Landlord in the
                  statement are correct.
                      (c)  Tenant shall be liable for all losses, costs and
                  expenses resulting from the failure of any sale or funding of
                  any loan caused by any material misstatement contained in any
                  estoppel certificate supplied by Tenant or the failure of
                  Tenant to deliver any statement required by this Section.
                  Tenant irrevocably appoints Landlord as attorney-in-fact for
                  Tenant with full power and authority to execute and deliver in
                  the name of Tenant any estoppel certificate if Tenant fails to
                  deliver the same within such twenty (20) day period, and such
                  certificate, as signed by Landlord, shall be binding on
                  Tenant.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       33
<PAGE>
 
LANDLORD'S RIGHT  Section 16.02   See Addendum
OF ACCESS             Landlord and its agents shall have the right (a) to enter
                  the Premises at all reasonable times for the purposes of
                  examining or inspecting the same to ascertain if they are in
                  good repair, monitoring, improving and remedying indoor air
                  quality within the Center, taking field measurements for the
                  use of Landlord or any subsequent tenant of the Premises and
                  making such alterations, repairs, improvements or additions to
                  the Premises as Landlord may be required or permitted to make
                  hereunder, exhibiting the same to prospective purchasers,
                  lenders and tenants and posting notices which Landlord may
                  deem necessary for its protection and (b) at any time in an
                  emergency. Tenant shall cooperate with Landlord in exhibiting
                  the Premises to prospective purchasers, lenders and tenants.
                  Access by Landlord hereunder shall not, under the
                  circumstances, unreasonably interfere with Tenant's use and
                  enjoyment of the Premises, and Tenant waives any claim for
                  damages for any injury or inconvenience to or interference
                  with Tenant's business, occupancy or quiet enjoyment arising
                  out of any permitted entry by Landlord. Tenant acknowledges
                  that Landlord shall not retain a key to the Premises and may,
                  in any emergency, enter the Premises in any manner which
                  Landlord reasonably determines to be necessary, without
                  liability therefor to Tenant. No entry by Landlord pursuant to
                  this Section shall be deemed to constitute an eviction of
                  Tenant or a forcible detainer of the Premises.

TRANSFER OF       Section 16.03
LANDLORD'S            The term "Landlord" as used herein shall be limited to
INTEREST          mean and include only the owner(s) at the time in question of
                  fee title to or a ground lease interest in the Center. In the
                  event of any transfer or transfers of the landlord's interest
                  in the Premises (other than a transfer for security purposes
                  only), the transferor shall be automatically relieved of any
                  and all obligations and liabilities on the part of the
                  landlord accruing from and after the date of such transfer. If
                  any security deposit has been made by Tenant, the landlord may
                  transfer such security deposit to such transferee, and
                  thereupon the transferor shall be discharged from any further
                  liability with respect thereto. Landlord and any transferee
                  shall have the absolute right to transfer its interest or any
                  portion thereof in the Center.

FLOOR AREA        Section 16.04
                      (a)  "Floor Area" as used in this lease means, with
                  respect to the Premises and with respect to each store
                  separately leased, the aggregate of (i) the number of square
                  feet of floor space on all floor levels, including mezzanines,
                  measured from the center line of party walls between tenant
                  areas and the exterior face of all other walls, and (ii) all
                  outside selling areas used for the sale of merchandise by
                  tenants, other than restaurant seating areas located outside
                  of the lease lines of restaurant premises either in the
                  Enclosed Mall or exterior common areas of the Center. No
                  deduction or exclusion from Floor Area shall be made by reason
                  of columns, stairs, elevators, escalators, or other interior
                  construction or equipment. Landlord may, at any time and from
                  time to time, make changes or additions to the Center which
                  result in an increase or decrease in the aggregate Floor Area
                  occupied or designed for occupancy by tenants of the Center;
                  provided, that, except as provided herein, no such change or
                  addition shall increase or decrease the Floor Area of the
                  Premises without Tenant's prior consent. 
                      (b)  Landlord shall, upon completion of Tenant's Work,
                  cause the Premises to be measured in accordance with the
                  provisions of this Section and shall notify Tenant in writing
                  as to the Floor Area as finally determined. In the event that
                  the Floor Area of the Premises as so determined is greater or
                  lesser than that set forth in the applicable Fundamental Lease
                  Provision, Landlord shall, effective as of the Rent
                  Commencement Date, adjust the monthly Minimum Rent (based upon
                  the per square foot rate set forth in the applicable
                  Fundamental Lease Provision) and all items of additional rent
                  based upon Floor Area (based upon the applicable charge rates
                  in effect at the Rent Commencement Date), and shall supply to
                  Tenant a statement setting forth, in reasonable detail, such
                  adjustments. Any additional Minimum Rent or additional rent
                  due as the result of such adjustment shall be paid by Tenant
                  to Landlord within ten (10) days after Tenant's receipt of
                  Landlord's statement; any overpayment by Tenant shall be
                  credited against the next rent payable by Tenant. Subsequent
                  to such adjustment, Tenant shall pay monthly Minimum Rent
                  based upon such adjusted Floor Area and all items of
                  additional rent based upon Floor Area in the adjusted amounts
                  set forth in such statement. Upon any change in the Floor Area
                  of the Center, Landlord shall make a similar adjustment to
                  additional rent pursuant to this Section.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       34
<PAGE>
 
DEPOSIT AND       Section 16.05  See Addendum
FINANCIAL             (a)  Tenant has deposited with Landlord the sum specified
STATEMENTS        in the applicable Fundamental Lease Provision as security for
                  the full and faithful performance of every provision of this
                  lease to be performed by Tenant. If Tenant defaults with
                  respect to any provisions of this lease, including but not
                  limited to the provisions relating to the payment of rent,
                  Landlord may, but shall not be required to, use, apply or
                  retain all or any part of this security deposit for the
                  payment of any rent or other sum in default, or for the
                  payment of any other amount which Landlord may spend or become
                  obligated to spend by reason of Tenant's default, or to
                  compensate Landlord for any other loss or damage which
                  Landlord may suffer by reason of Tenant's default, including
                  without limitation, costs and attorneys' fees incurred by
                  Landlord to recover possession of the Premises upon a default
                  by Tenant hereunder. If any portion of said deposit is so used
                  or applied, Tenant shall, within five (5) days after receipt
                  of written demand therefor, deposit cash with Landlord in an
                  amount sufficient to restore the security deposit to its
                  original amount and Tenant's failure to do so shall be a
                  material breach of this lease. Landlord shall not be required
                  to keep this security deposit separate from its general funds,
                  and Tenant shall not be entitled to interest on such deposit.
                  If Tenant shall fully and faithfully perform every provision
                  of this lease to be performed by it, the security deposit
                  shall be applied against any amounts owed by Tenant to
                  Landlord at the expiration or termination of this lease and
                  any balance thereof shall be returned to Tenant (or at
                  Landlord's option, to the last assignee of Tenant's interest
                  hereunder) within thirty (30) days after Tenant delivers
                  possession of the Premises to Landlord.
                      (b)  Tenant shall, prior to or upon its execution and
                  delivery of this lease to Landlord, provide to Landlord
                  current financial statements consisting of at least (i) a
                  balance sheet of Tenant as of a date within ninety (90) days
                  prior to Tenant's execution of this lease, (ii) an income or
                  profit and loss statement of Tenant for its last full fiscal
                  year and (iii) if Tenant's last full fiscal year ended more
                  than ninety (90) days prior to the date of Tenant's execution
                  of this lease, a profit and loss statement for the period from
                  the end of such last full fiscal year to a date within ninety
                  (90) days prior to the date of Tenant's execution of this
                  lease. If such financial statements are audited or reviewed by
                  an independent public accountant, such financial statements
                  shall be accompanied by the letter or certificate of such
                  accountant. Otherwise, such financial statements shall be
                  accompanied by a certificate executed by Tenant's chief
                  financial officer certifying as to the accuracy and
                  completeness of such financial statements.

LATE PAYMENTS     Section 16.06  See Addendum
AND DELIVERIES        (a)  Any amount due from Tenant to Landlord hereunder
                  which is not paid to Landlord when due shall bear interest at
                  the maximum rate of interest which Landlord is then permitted
                  to charge by the applicable usury law, accruing from the date
                  due until the same is fully paid. Payment of such interest
                  shall not excuse or cure any default by Tenant pursuant to
                  this lease. Such rate shall remain in effect after the
                  occurrence of any breach or default hereunder by Tenant to and
                  until payment of the entire amount due.
                      (b)  [Intentionally Deleted]
                      (c)  [Intentionally Deleted]

SEPARABILITY      Section 16.07
                      Any provision of this lease which shall prove to be
                  invalid, void or illegal shall in no way affect, impair or
                  invalidate any other provision hereof, and such remaining
                  provisions shall remain in full force and effect.

TIME OF ESSENCE   Section 16.08   See Addendum
                      Time is of the essence with respect to the performance of
                  every provision of this lease in which time of performance is
                  a factor. All references in this lease to "days" shall mean
                  calendar days unless specifically indicated to the contrary.

HEADINGS          Section 16.09
                     The Article and Section captions contained in this lease
                  are for convenience only and shall not be considered in the
                  construction or interpretation of any provision hereof.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       35
<PAGE>
 
INCORPORATION OF  Section 16.10
PRIOR AGREEMENTS;     This lease and the exhibits and any addenda hereto cover
AMENDMENTS;       in full each and every agreement of every kind and nature
COUNTERPARTS      whatsoever between the parties hereto concerning the Premises
                  and the Center, and all preliminary negotiations and
                  agreements of whatsoever kind with respect to the Premises or
                  the Center, except those contained herein, are superseded and
                  of no further force or effect. No person, firm or corporation
                  has at any time had any authority from Landlord to make any
                  representations or promises on behalf of Landlord, and Tenant
                  expressly agrees that if any such representations or promises
                  have been made by Landlord or others, Tenant hereby waives all
                  right to rely thereon. No verbal agreement or implied covenant
                  shall be held to vary the provisions hereof, any statute, law
                  or custom to the contrary notwithstanding. No provision of
                  this lease may be amended or added to except by an agreement
                  in writing signed by the parties hereto or their respective
                  successors in interest and, if Landlord has notified Tenant of
                  a lender to Landlord pursuant to Section 13.03, the written
                  consent of such lender. No employee or agent of Landlord shall
                  have authority, by letter, memorandum or other written
                  communication, to amend, vary or delete any provision of this
                  lease or any exhibit hereto, unless such written instrument
                  bears the signature of Landlord's managing general partner.
                  This lease shall be construed strictly neither against
                  Landlord nor Tenant. This lease shall be executed in several
                  counterparts, each of which shall be deemed an original, but
                  all of which shall constitute one and the same instrument.

NOTICES           Section 16.11   See Addendum
                      Any notice, consent or approval ("Notice") required or
                  permitted to be given hereunder shall be in writing and may be
                  served personally or by mail; if served by mail it shall be
                  addressed as specified in the applicable Fundamental Lease
                  Provision. Any Notice to Tenant may, after Tenant opens the
                  Premises for business, be sent instead to it at the Premises.
                  Any Notice which is personally served shall be effective upon
                  service; any Notice given by mail shall be deemed effectively
                  given, if deposited in the United States mail in the State of
                  California, registered or certified with return receipt
                  requested, postage prepaid and addressed to the Premises (for
                  Tenant) or as specified in the applicable Fundamental Lease
                  Provision, on the date of receipt, refusal or non-delivery
                  indicated on the return receipt. In addition, either party may
                  send Notices by FACS or by any reputable courier service which
                  provides written proof of delivery. Any Notice sent by FACS
                  shall be effective upon confirmation of receipt in legible
                  form, and any Notice sent by courier shall be effective upon
                  the date of delivery or refusal as set forth in the courier's
                  delivery receipt. Either party may, by Notice to the other
                  from time to time, specify a different address for Notice
                  purposes.

BROKERS           Section 16.12   See Addendum
                      Tenant warrants that it has had no dealings with any real
                  estate broker or agent in connection with the negotiation of
                  this lease, excepting only the broker, if any, named in the
                  applicable Fundamental Lease Provision, and that Tenant knows
                  of no other real estate broker or agent who might be entitled
                  to a commission in connection with this lease. Tenant
                  expressly agrees and covenants to hold Landlord harmless and
                  to defend Landlord (with counsel reasonably satisfactory to
                  Landlord) from any claims, threatened or asserted, by any
                  broker, finder or agent claiming under or through Tenant in
                  connection with the negotiation and execution of this lease.
                  Any broker or finder specified in the applicable Fundamental
                  Lease Provision shall be paid by Landlord, but only in such
                  amount(s) and at such time(s) as shall be agreed upon in
                  writing by Landlord and such broker or finder. Payment of any
                  broker or finder claiming through Tenant shall, except as set
                  forth in the immediately preceding sentence, be the sole
                  responsibility of Tenant.

WAIVERS           Section 16.13  See Addendum
                       No waiver of any provision hereof shall be deemed a
                  waiver of any other provision hereof. Consent to or approval
                  of any act by one of the parties hereto shall not be deemed to
                  render unnecessary the obtaining of such party's consent to or
                  approval of any subsequent act. Failure of Landlord to take
                  any action or send any notice to Tenant shall not be deemed a
                  waiver by Landlord of any failure by Tenant to timely and
                  properly exercise any option granted to Tenant pursuant to
                  this lease or any amendment hereto. Any such option which is
                  not exercised within the time and in the manner specified for
                  exercise shall automatically lapse without requirement of any
                  action by Landlord. No act or thing done by Landlord or
                  Landlord's agents during the term of this lease shall be
                  deemed an acceptance of a surrender of the Premises, unless
                  done in a writing signed by Landlord. Tenant's delivery of
                  keys to any employee or agent of Landlord shall not operate as
                  a termination of this lease or a surrender of the Premises
                  unless done pursuant to a written agreement to such effect
                  executed by Landlord.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
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                                                            H.T.S.

                                       36
<PAGE>
 
RECORDING         Section 16.14  See Addendum
                      Tenant shall not record this lease without the prior
                  written consent of Landlord. Tenant, upon the request of
                  Landlord, shall execute, acknowledge and deliver a "short
                  form" memorandum of this lease for recording purposes.

ADVERTISING AND   Section 16.15   See Addendum
PROMOTIONAL FUND      (a)  Tenant acknowledges that Landlord has established a
                  promotional fund for the Center (the "Fund") to establish
                  centralized control of promotional policies, activities and
                  expenditures.
                      (b)  The Fund shall be maintained and used as follows:
                           (i)   Landlord shall operate the Fund to furnish and
                  maintain professional advertising and sales promotions for the
                  benefit of all contributing tenants of the Center. The
                  purposes of the Fund shall be to assist the businesses of
                  contributing tenants by sales promotions, group advertising
                  and other activities promoting contributing tenants and the
                  Center.
                           (ii)  The initial annual contribution to the Fund by
                  Tenant shall be at the rate per square foot of Floor Area set
                  forth in the applicable Fundamental Lease Provision (or in the
                  minimum amount of $2,500 per year). Tenant's initial
                  contribution may be adjusted at the end of each lease year as
                  reasonably determined by Landlord to be necessary to cover
                  increased costs in operating the Fund and/or to advertise and
                  promote the Center in a manner satisfactory to Landlord. The
                  rate used for determining the amount of Tenant's contributions
                  to the Fund need not be the same rate used in determining the
                  amount of contributions to the Fund by other tenants of the
                  Center. Contributions to the Fund shall be additional rent
                  pursuant to this lease, and failure of Tenant to pay any
                  required contribution to the Fund as and when due shall be
                  deemed a default under this lease entitling Landlord to
                  exercise all remedies available to a landlord against a
                  defaulting tenant, including those set forth in Article XIII.
                  Such contribution shall be payable in equal monthly
                  installments in advance at the same times as Minimum Rent
                  payments are due.
                           (iii) Landlord agrees to contribute to the Fund each
                  lease year an amount equal to twenty-five percent (25%) of the
                  aggregate contributions of tenants of the Center to the Fund,
                  provided that Landlord's aggregate contribution to the Fund
                  for any lease year shall not exceed $30,000.
                           (iv)  Landlord shall have the exclusive right to hire
                  a marketing director, secretary and other personnel who, in
                  Landlord's sole judgment, are required to carry out the
                  purposes of the Fund. All such personnel shall be under the
                  exclusive control and supervision of Landlord, who shall have
                  the sole authority and responsibility to hire and discharge
                  such personnel and to determine their compensation and
                  benefits. Landlord shall have the sole authority to direct the
                  performance by such personnel of their activities, including
                  but not limited to, placement of advertising, scheduling of
                  promotional events and attendance at trade or industry
                  conventions.
                           (v)   Landlord shall have the exclusive right to
                  select a committee, composed of a representative of Landlord
                  and at least four (4) representatives of tenants at the
                  Center, to render advice to Landlord in connection with
                  promotional and advertising activities conducted through the
                  Fund. All such committee members shall be selected by and
                  shall serve at the pleasure of Landlord. The sole function of
                  such committee shall be to render advice when and if requested
                  by Landlord, and such committee shall have no approval or
                  consent rights with respect to Landlord's decisions concerning
                  the use of the Fund. Tenant (or Tenant's manager at the
                  Premises) shall serve as a member of such committee if so
                  requested by Landlord.
                           (vi)  Nothing contained herein shall require Landlord
                  to spend more in any lease year in operating the Fund than
                  Landlord collects from tenant contributions to the Fund plus
                  Landlord's contribution specified above. Landlord may charge
                  all costs and expenses of operating the Fund in any lease year
                  against the budget therefor. Said costs and expenses may
                  include without limitation the following:
                                 (A)  the services of a marketing director and
                  all staff and outside consultants (including professional
                  marketing service organizations) deemed necessary by Landlord
                  to carry out effectively the purposes of the Fund, including
                  without limitation all payroll, payroll taxes and employee
                  benefits of any such director and staff;
                                 (B)  such reasonable amount of space within the
                  Center or elsewhere as may be necessary to operate the Fund,
                  the rental therefor to be comparable to the rentals for
                  similarly sized tenant spaces in the Center;
                                 (C)  all actual costs incurred in advertising
                  and promoting the Center, including without limitation radio,
                  newspaper, television, direct and indirect costs of services,
                  artwork, copy, printing, paper, stationery and supplies; and
                                 (D)  such office equipment, utilities and
                  telephones as may be deemed necessary by the promotional
                  director.

                                                          LANDLORD'S    TENANT'S
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                                                          ----------    --------
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                                                            H.T.S.

                                       37
<PAGE>
 
                      (c)  [Intentionally Deleted]
LIENS             Section 16.16  See Addendum
                      Tenant shall do all things reasonably necessary to prevent
                  the filing of any mechanics' or other liens against the Center
                  or any part thereof by reason of work, labor, services or
                  materials supplied or claimed to have been supplied to Tenant,
                  or anyone holding the Premises, or any part thereof, through
                  or under Tenant. If any such lien shall at any time be filed
                  against the Center, Tenant shall either cause the same to be
                  discharged of record within twenty (20) days after the date of
                  filing of the same or, if Tenant in Tenant's discretion and in
                  good faith determines that such lien should be contested,
                  shall furnish such security as may be necessary or required to
                  (a) prevent any foreclosure proceedings against the Center
                  during the pendency of such contest, and (b) cause Chicago
                  Title Insurance Company or other mutually satisfactory title
                  company to remove such lien as a matter affecting title to the
                  Center on a title report or title policy issued with respect
                  to the Center. If Tenant shall fail to either discharge such
                  lien or furnish such security within such period, then, in
                  addition to any other right or remedy of Landlord resulting
                  from Tenant's said default, Landlord may, but shall not be
                  obligated to, discharge the same either by paying the amount
                  claimed to be due or by procuring the discharge of such lien
                  by giving security or in such other manner as is, or may be,
                  prescribed by law. Tenant shall repay to Landlord, on demand,
                  all sums disbursed or deposited by Landlord pursuant to the
                  foregoing provisions of this Section 16.16, including
                  Landlord's costs, expenses and reasonable attorneys' fees
                  incurred in connection therewith, with interest thereon at the
                  rate determined pursuant to Section 16.06 from date of payment
                  by Landlord until repaid by Tenant. Nothing contained herein
                  shall imply any consent or agreement on the part of Landlord
                  to subject Landlord's estate to liability under any mechanics'
                  or other lien law. Tenant shall give Landlord adequate
                  opportunity and Landlord shall have the right to post such
                  notices of nonresponsibility as are provided for in the
                  mechanics' lien laws of California.

SUBORDINATION     Section 16.17  See Addendum
                      This lease shall, at Landlord's option, be either superior
                  or subordinate to all ground or underlying leases and any
                  mortgage, deed of trust or other security instrument that may
                  exist or hereafter be placed upon the Center or any part
                  thereof and to any and all advances to be made thereunder and
                  to the interest thereon and to all renewals, replacements and
                  extensions thereof. Tenant shall, within ten (10) days after
                  receipt of written demand by Landlord, (a) execute such
                  instruments as may be required at any time and from time to
                  time to subordinate the rights and interests of Tenant under
                  this lease to any such ground lease or the lien of any such
                  mortgage, deed of trust, or other security instrument, or, if
                  requested by Landlord, to subordinate any such ground lease,
                  mortgage, deed of trust or other security instrument to this
                  lease and (b) supply such financial information concerning
                  Tenant as may be requested by any ground lessor or lender.
                  Provided, however, that Tenant shall, in the event any
                  proceedings are brought for the termination of such ground
                  lease or the foreclosure of any such mortgage or deed of
                  trust, attorn to the ground lessor or purchaser upon
                  foreclosure sale or sale under power of sale, and shall
                  recognize such ground lessor or purchaser as landlord under
                  this lease, and, so long as Tenant is not in default
                  hereunder, such termination or foreclosure shall not terminate
                  this lease or otherwise affect Tenant's rights hereunder.
                  Tenant expressly waives any right to terminate this lease on
                  account of any such termination or foreclosure.
                      Without limiting the generality of the foregoing, Tenant
                  shall, promptly following the Rent Commencement Date, and
                  within ten (10) days after receipt of written request therefor
                  by Landlord, execute and deliver to Landlord six (6) copies of
                  a lease estoppel certificate in the form attached hereto as
                  Exhibit "I." Landlord shall, upon the occurrence of the Rent
                  Commencement Date, complete all information required in such
                  certificate and deliver execution copies of the certificate to
                  Tenant along with Landlord's written request pursuant to this
                  paragraph.

TENANT'S          Section 16.18  See Addendum
AUTHORITY             Each individual executing this lease on behalf of Tenant
                  represents and warrants that the execution and delivery of
                  this lease on behalf of Tenant is duly authorized, that he or
                  she is authorized to execute and deliver this lease on behalf
                  of Tenant and that this lease is binding upon Tenant in
                  accordance with its terms. If Tenant is a corporation, Tenant
                  shall also deliver to Landlord concurrently with executed
                  copies of this lease a certified copy of a resolution of
                  Tenant's board of directors or the executive committee thereof
                  authorizing or ratifying the execution of this lease. Failure
                  of Tenant to provide such resolution shall not, however,
                  relieve Tenant of its obligations pursuant to this lease.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
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                                                            H.T.S.

                                       38
<PAGE>
 
SAFETY AND        Section 16.19  See Addendum
HEALTH                (a)  Tenant covenants at all times during the term of this
                  lease to comply with:
                           (i)   The requirements of the Occupational Safety and
                  Health Act of 1970, 29 U.S.C. Section 651 et seq. and any
                  analogous legislation in California (collectively, the "Act"),
                  to the extent that the Act applies to the Premises and any
                  activities therein;
                           (ii)  The Americans with Disabilities Act of 1990,
                  Chapter 31A of the California Code of Regulations, the latest
                  version of the Uniform Building Code adopted by the City of
                  Costa Mesa and all regulations promulgated under any of the
                  foregoing dealing with the handicapped (collectively, the
                  "ADA") including, without limitation, those provisions of the
                  ADA which apply to employment and access to public
                  accommodations and facilities, insofar as the ADA is
                  applicable to the Premises; and
                           (iii) California AB13 dealing with the smoking of
                  tobacco products in enclosed work places, any local ordinances
                  covering the same subject and all regulations issued under
                  such legislation or such ordinances (collectively, "AB13"), to
                  the extent applicable to the Premises.
                      (b)  Without limiting the generality of the foregoing,
                  Tenant covenants to maintain all working areas, all machinery,
                  structures, electrical facilities and the like upon the
                  Premises in a condition that fully complies with the
                  requirements of the Act, ADA and AB13, including such
                  requirements as would be applicable with respect to agents,
                  employees or contractors of Landlord who may from time to time
                  be present upon the Premises, and Tenant agrees to indemnify
                  and hold harmless Landlord from any liabilities, claims or
                  damages arising as a result of a breach of the foregoing
                  covenant and from all costs, expenses and charges arising
                  therefrom including, without limitation, attorneys' fees and
                  court costs incurred by Landlord in connection therewith.
                  Tenant's compliance obligations pursuant to this Section shall
                  be at Tenant's sole cost and shall, if required, include (i)
                  implementation of policies relating to hiring, promotion and
                  other employment-related matters required by Title I of ADA
                  and (ii) implementation of readily achievable changes,
                  auxiliary aides and policies to facilitate reasonable access
                  as required by Title III of ADA.

INDEMNITIES       Section 16.20
                      The obligations of the indemnifying party under each and
                  every indemnification and hold harmless provision contained in
                  this lease shall survive the expiration or earlier termination
                  of this lease to and until the last to occur of (a) the last
                  date permitted by law for the bringing of any claim or action
                  with respect to which indemnification may be claimed by the
                  indemnified party against the indemnifying party under such
                  provision or (b) the date on which any claim or action for
                  which indemnification may be claimed under such provision is
                  fully and finally resolved and, if applicable, any compromise
                  thereof or judgment or award thereon is paid in full by the
                  indemnifying party and the indemnified party is reimbursed by
                  the indemnifying party for any amounts paid by the indemnified
                  party in compromise thereof or upon a judgment or award
                  thereon and in defense of such action or claim, including
                  reasonable attorneys' fees incurred. Payment shall not be a
                  condition precedent to recovery upon any indemnification
                  provision contained herein.

NON-DISCLOSURE    Section 16.21  See Addendum
OF LEASE TERMS        Landlord and Tenant agree that the terms of this lease are
                  confidential and constitute proprietary information of the
                  parties hereto. Disclosure of the terms hereof could adversely
                  affect the ability of Landlord to negotiate with other tenants
                  of the Center. Each of the parties hereto agrees that such
                  party, and its respective partners, officers, directors,
                  employees, agents and attorneys, shall not disclose the terms
                  and conditions of this lease to any other person without the
                  prior written consent of the other party hereto except
                  pursuant to an order of a court of competent jurisdiction.
                  Provided, however, that Landlord may disclose the terms hereof
                  to any lender now or hereafter having a lien on Landlord's
                  interest in the Center, or any portion thereof, and either
                  party may disclose the terms hereof to its respective
                  independent accountants who review its respective financial
                  statements or prepare its respective tax returns, to any
                  prospective transferee of all or any portions of their
                  respective interests hereunder (including a prospective
                  sublessee or assignee of Tenant), to any lender or prospective
                  lender to such party, to any governmental entity, agency or
                  person to whom disclosure is required by applicable law,
                  regulation or duty of diligent inquiry and in connection with
                  any action brought to enforce the terms of this lease, on
                  account of the breach or alleged breach hereof or to seek a
                  judicial determination of the rights and obligations of the
                  parties hereunder.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
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                                                            H.T.S.

                                       39
<PAGE>
 
GENDER; TENANTS   Section 16.22
                      The use of the masculine pronoun includes the feminine and
                  neuter genders; the use of the singular form of a pronoun
                  includes the plural and vice-versa. If there be more than one
                  person or entity indicated as Tenant herein, (a) each person
                  or entity subscribing as Tenant shall be jointly and severally
                  liable for all obligations of Tenant hereunder and (b) the act
                  or signature of or notice from or to any one or more of them
                  with respect to this lease shall be binding upon each and all
                  of the persons and entities subscribing as Tenant. Subject to
                  the provisions of Article X, the terms, conditions and
                  covenants contained herein shall be binding upon and inure to
                  the benefit of the heirs, successors, executors,
                  administrators, marital communities, if any, and assigns of
                  the parties hereto. Nothing herein shall constitute Landlord
                  and Tenant as partners or joint venturers.

FORCE MAJEURE     Section 16.23   See Addendum
                      In the event that either Landlord or Tenant is delayed in
                  performing any obligation of Landlord or Tenant pursuant to
                  this lease by any cause beyond the reasonable control of the
                  party required to perform such obligation, the time period for
                  performing such obligation shall be extended by a period of
                  time equal to the period of the delay. For the purpose of this
                  Section:
                      (a)  A cause shall be beyond the reasonable control of a
                  party to this lease when such cause would affect any person
                  similarly situated (such as a power outage, labor strike or
                  truckers' strike) but shall not be beyond the reasonable
                  control of such party when peculiar to such party (such as
                  financial inability or failure to order long lead time
                  materials sufficiently in advance).
                      (b)  This Section shall not apply to any obligation to pay
                  money or delay the Rent Commencement Date.
                      (c)  In the event of any occurrence which a party believes
                  constitutes a cause beyond the reasonable control of such
                  party and which will delay any performance by such party
                  hereunder, such party shall promptly in writing notify the
                  other party of the occurrence and nature of such cause, the
                  anticipated period of delay and the steps being taken by such
                  party to mitigate the effects of such delay.

YIELD UP          Section 16.24
PREMISES              At the expiration or earlier termination of this lease,
                  Tenant shall peaceably yield up the Premises and all additions
                  made upon the same and the keys thereto to Landlord within
                  fifteen (15) days after such expiration or termination date,
                  in the condition specified in Section 16.28(a) and shall
                  execute, acknowledge and deliver to Landlord, within five (5)
                  days after written demand from Landlord to Tenant, any
                  quitclaim deed or other document which may be reasonably
                  requested by any reputable title company to remove this lease
                  as a matter affecting title to the Premises on a title policy
                  or preliminary title report with respect to the Center.

RELOCATION OF     Section 16.25  [Intentionally Deleted]
TENANT

NO OPTION         Section 16.26   See Addendum
                      Submission of this lease to Tenant shall not be deemed to
                  be an offer or option for Tenant to lease the Premises or a
                  reservation of the Premises. Landlord shall not be bound
                  hereby until its delivery to Tenant of an executed copy hereof
                  signed by Landlord, already having been signed by Tenant, and
                  until such delivery Landlord reserves the right to exhibit and
                  lease the Premises to other prospective tenants.
                  Notwithstanding anything contained herein to the contrary,
                  Landlord may withhold delivery of possession of the Premises
                  to Tenant until such time as Tenant has paid to Landlord the
                  security deposit required by Section 16.05, the first month's
                  Minimum Rent pursuant to Section 3.01, the initial
                  contribution to the Fund required by Section 16.15, the Plan
                  Review fee required by Section 17.03, the clean-up deposit
                  required by Section 17.04, and any other sum owed pursuant
                  hereto, and has delivered to Landlord a certificate as to
                  Tenant's insurance pursuant to Article VIII, certified
                  resolutions pursuant to Section 16.18 (if applicable) and any
                  guaranty required with respect to Tenant's obligations.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
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                                                            H.T.S.

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<PAGE>
 
LANDLORD          Section 16.27
LIABILITY             The obligations of Landlord herein are intended to be
                  binding only on the property of the entity acting as Landlord
                  and shall not be personally binding, nor shall any resort be
                  had to the private properties of, the general partners thereof
                  or any employees or agents of Landlord. Without limiting the
                  foregoing, (a) no partner, agent or employee of Landlord shall
                  be personally liable for any amount payable by Landlord
                  hereunder, for the observance or performance of any
                  obligations or covenants of Landlord herein or for the breach
                  by Landlord of any representations or warranties, (b) any
                  judgment or decree in any action brought to enforce any
                  obligation of Landlord hereunder shall be enforceable against
                  its partners only against their respective partnership
                  interests in Landlord, (c) any such judgment or decree shall
                  not be subject to execution upon or be a lien upon the assets
                  of any partner other than such partner's interest in the
                  partnership assets of Landlord, and (d) neither a negative
                  capital account of a partner, nor any obligation of a partner
                  to restore a negative capital account, to contribute capital
                  to or to make a loan to Landlord, shall be a partnership asset
                  of Landlord, and Tenant shall not have any right to collect,
                  enforce or proceed against any partner of Landlord on account
                  of any such negative capital account, contribution obligation
                  or loan obligation.

TERMINATION       Section 16.28  See Addendum
                      If this lease is terminated by either party under any
                  provision hereof, and upon the expiration of the term of this
                  lease (collectively, the "termination date"), the following
                  shall pertain:
                      (a)  Tenant shall, within fifteen (15) days after the
                  termination date, remove from the Premises all merchandise,
                  furniture, furnishings, equipment and movable trade fixtures
                  and shall surrender the Premises to Landlord in the condition
                  required by Sections 7.02(c), 7.03 and 7.04. Tenant shall, at
                  Tenant's cost, repair any damage to the Premises caused by
                  such removal. Any items which Tenant is permitted to remove
                  but fails to remove prior to the surrender of the Premises to
                  Landlord shall be deemed abandoned by Tenant, and Landlord may
                  retain or dispose of the same as Landlord sees fit without
                  claim by Tenant thereto or to any proceeds thereof. If
                  Landlord elects to remove and dispose of any such items
                  abandoned by Tenant, the cost of such removal and disposal
                  shall be additional rent payable by Tenant to Landlord upon
                  demand. Tenant shall pay all amounts payable by it through
                  surrender of possession following the termination date and any
                  costs charged pursuant to the immediately preceding sentence,
                  each of the parties shall bear their own costs and fees
                  incurred (including all costs incurred in performing their
                  respective obligations hereunder) through surrender of
                  possession following the termination date and from and after
                  surrender of possession following the termination date neither
                  party shall have any further obligations to the other, except
                  for those obligations set forth in this subsection, in Section
                  16.16 and in subsection (b) below.
                      (b)  Notwithstanding the provisions of subsection (a),
                  upon any such termination or expiration, the following shall
                  pertain:
                           (i)   Landlord agrees to defend, indemnify and hold
                  harmless Tenant from and against any and all claims, costs,
                  expenses, losses, damages, actions and causes of action for
                  which Landlord is responsible under this lease and which
                  accrue on or before surrender of possession following the
                  termination date.
                           (ii)  Tenant agrees to defend, indemnify and hold
                  harmless Landlord from and against any and all claims, costs,
                  losses, expenses, damages, actions and causes of action for
                  which Tenant is responsible under this lease and which accrue
                  on or before surrender of possession following the termination
                  date.
                           (iii) Tenant shall remain liable for the cost of all
                  utilities used in or at the Premises through surrender of
                  possession following the termination date accrued and unpaid,
                  whether or not then billed, as of surrender of possession
                  following the termination date until full payment thereof by
                  Tenant. Tenant shall obtain directly from the companies
                  providing such services closing statements for all services
                  rendered through surrender of possession following the
                  termination date and shall promptly pay the same. If any
                  utility statement with respect to the Premises includes
                  charges for a period partially prior to and partially
                  subsequent to surrender of possession following the
                  termination date, such charges shall be prorated as between
                  Landlord and Tenant, with Tenant responsible for the portion
                  thereof (based upon a fraction the numerator of which is the
                  number of days of service on such statement through surrender
                  of possession following the termination date and the
                  denominator of which is the total number of days of service on
                  such statement) through surrender of possession following the
                  termination date and Landlord shall be responsible for the
                  balance. The party receiving any such statement which requires
                  proration hereunder shall promptly pay such statement and the
                  other party shall, within ten (10) days after receipt of a
                  copy of such statement, remit to the party paying the
                  statement any amount for which such other party is responsible
                  hereunder.

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                                                            H.T.S.

                                       41
<PAGE>
 
                      (iv)  Tenant shall remain responsible for any taxes of the
                  type described in Section 5.03 and assessed against the
                  Premises and the personal property located therein or thereon
                  with a lien date prior to surrender of possession following
                  the termination date, irrespective of the date of the billing
                  therefor, and shall indemnify and hold Landlord harmless with
                  respect to any claims for such taxes or resulting from non-
                  payment thereof.

TAX BENEFITS      Section 16.29
                      Landlord shall be entitled to all tax benefits arising
                  from all construction by Landlord with respect to the Premises
                  and any allowance provided by Landlord to Tenant pursuant to
                  this lease. Subject to the immediately preceding sentence,
                  Tenant shall be entitled to all tax benefits arising from
                  Tenant's Work with respect to the Premises pursuant to Section
                  17.03, arising from any alterations to or renovation of the
                  Premises conducted by Tenant or arising from the installation
                  by Tenant in the Premises of furniture, furnishings and
                  equipment. Neither party shall claim or attempt to claim any
                  tax benefits which are the property of the other party
                  hereunder. Prior to payment to Tenant of any tenant allowance,
                  Tenant shall supply to Landlord a detailed list of the items
                  included in Tenant's Work and their respective costs,
                  including costs of installation.

ACCORD AND        Section 16.30  See Addendum
SATISFACTION          (a)  The receipt, retention, cashing, depositing or
                  endorsement by Landlord of any check, draft or other
                  instrument of payment delivered by Tenant or any proposed
                  assignee of or successor to Tenant shall not be deemed to be
                  an acceptance by Landlord of any attempted alteration,
                  assignment or notation written on said instrument by the maker
                  thereof.
                      (b)  No payment by Tenant or receipt by Landlord of a
                  lesser amount than the rent herein stipulated shall be deemed
                  to be other than on account of the earliest accruing rent, nor
                  shall any endorsement or statement on any check or any letter
                  accompanying any such check or payment be deemed an accord and
                  satisfaction. Landlord may accept such check or payment
                  without prejudice to Landlord's right to recover the balance
                  of such rent or pursue any other remedy provided for in this
                  lease or available at law or in equity.

FINANCING         Section 16.31  See Addendum
                      If any lending institution with which Landlord has
                  negotiated or may negotiate for financing for the Center
                  requires any changes to this lease, Tenant shall promptly
                  execute and deliver an amendment to this lease prepared by
                  Landlord and embodying such changes, so long as such changes
                  do not materially increase Tenant's obligations hereunder. In
                  the event that Tenant shall fail to execute and deliver such
                  amendment within twenty (20) days after receipt thereof by
                  Tenant, such failure shall constitute a default hereunder by
                  Tenant and shall entitle Landlord to all remedies available to
                  a landlord against a defaulting tenant pursuant to a written
                  lease, including but not limited to those remedies set forth
                  in Article XIII.

LANDLORD'S        Section 16.32  [Intentionally Deleted]
CONSENT

MORTGAGEE CURE    Section 16.33
RIGHTS                Within ten (10) days after receiving written notice from
                  the holder of any mortgage, deed of trust or other security
                  interest (collectively, a "Mortgage") to the effect that such
                  Mortgage covers the Premises as a part of the property
                  encumbered by such Mortgage, Tenant shall, so long as the
                  Mortgage is outstanding, give to the holder of the Mortgage
                  the same notice and opportunity to correct any default on the
                  part of Landlord as is provided to Landlord pursuant to
                  Section 13.03. Such notices by Tenant to the holder of the
                  Mortgage shall be sent to the holder at the address specified
                  in the written notice from the holder to Tenant, and any such
                  notice may be given by Tenant to Landlord and such holder
                  concurrently. Tenant shall not be liable for failure to give
                  notice of any default by Landlord to the holder of the
                  Mortgage, but if Tenant fails to notify the holder of a
                  Mortgage of a default by Landlord hereunder, the time within
                  which such holder shall have the right to cure such default by
                  Landlord shall not commence to run until such holder shall
                  have been notified by Tenant of the default on the part of
                  Landlord.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       42
<PAGE>
 
OBLIGATIONS OF    Section 16.34
A MORTGAGEE           In connection with any assignment of this Lease and/or the
                  rents payable hereunder, whether as security or absolute, in
                  connection with financing on all or part of the Center, Tenant
                  agrees that the holder of a Mortgage who receives an
                  assignment of Landlord's interest in this lease and/or the
                  rents hereunder in connection with such financing shall never
                  be treated as a mortgagee in possession or be liable for any
                  obligations of Landlord, even if such holder shall have
                  commenced collecting rents hereunder, until such time as the
                  holder shall have obtained actual legal title to or actual
                  physical possession of the Premises. Further, no holder of a
                  Mortgage or any other person or entity acquiring title to the
                  Premises through foreclosure or transfer by or in lieu of
                  enforcement of the lien of a Mortgage shall ever be
                  responsible or liable to Tenant for (a) damages or offset for
                  any default or act or omission by any predecessor landlord,
                  (b) any credit against Tenant's obligations under this lease
                  for rents prepaid more than one month in advance, (c) any
                  termination or assignment of this lease except strictly in
                  accordance with the terms of this lease and with the consent
                  of such holder, (d) any deposit or other sum held or on behalf
                  of Landlord as security for Tenant's performance hereunder
                  unless such security is transferred to such holder, (e) any
                  change to this lease made without the prior written consent or
                  written joinder of such holder or (f) any unperformed
                  construction obligation or other defaults of a continuing
                  nature which are cured within a reasonable time following the
                  acquisition by any such party of title to the Premises.
                  Further, notwithstanding anything to the contrary contained in
                  Section 16.27 or elsewhere in this lease, no holder of a
                  Mortgage or any other person or entity acquiring title to the
                  Premises through foreclosure or transfer by or in lieu of
                  enforcement of the lien of a Mortgage shall be personally
                  liable for the obligations of Landlord under this lease, nor
                  shall any resort be had to any assets of such holder or other
                  person other than such holder's or other person's interest in
                  the Center.

                                 ARTICLE XVII.
                           CONSTRUCTION OF PREMISES

CONDITION OF      Section 17.01  See Addendum
PREMISES              Tenant accepts the Premises "AS IS" and after inspection
                  by Tenant, which inspection is confirmed by Tenant's signature
                  hereto. Tenant acknowledges that neither Landlord nor any
                  agent of Landlord has made any representation or warranty with
                  respect to the Premises or the Center or the suitability of
                  either for the conduct of Tenant's business.

DESIGN REVIEW     Section 17.02   See Addendum
                      On or before the date specified in the applicable
                  Fundamental Lease Provision, Tenant and Landlord's architect
                  shall hold a preliminary design meeting (the "PDM"), to review
                  and discuss Tenant's Work pursuant to Section 17.04. The PDM
                  shall be subject to and in accordance with the following:
                      (a)  Tenant shall be responsible to schedule the PDM
                  promptly upon receipt by Tenant of a fully executed copy of
                  this lease. The PDM shall be scheduled through Landlord's
                  architectural department at (714) 546-0110. Tenant shall not
                  commence preparation of working drawings and specifications
                  until the PDM has been held, and in no event will Landlord
                  review and approve working drawings and specifications until
                  the PDM has been held.
                      (b)  Tenant shall cause its architect and any other
                  person(s), such as interior design consultants and
                  electrical/mechanical engineers employed by Tenant in
                  connection with Tenant's Work, whom Tenant believes will be
                  involved in the design of Tenant's Work, to attend the PDM.
                  Landlord shall cause its architect and any consultant(s)
                  deemed necessary by Landlord to participate in the PDM. If
                  Tenant or its architect/consultants are not located in the
                  geographical area in which the Center is located, the PDM may
                  be held by conference telephone call after submission of the
                  items required pursuant to subsection (c).
                      (c)  At least three (3) days prior to the PDM, Tenant
                  shall deliver to Landlord's architect each of the following:
                           (i)   A conceptual color board with colors and
                  materials which Tenant intends to use as part of Tenant's
                  Work;
                           (ii)  A conceptual dimensioned storefront elevation
                  with all colors and materials identified and Tenant's sign
                  depicted on the Premises storefront or, in the alternative,
                  photographs, artists' renderings or a study model of
                  storefronts previously constructed by Tenant;
                           (iii) Material samples of the conceptual interior
                  floor covering and entry floor covering which Tenant proposes
                  to use in the Premises; and
                           (iv)  Any other samples, photographs or renderings of
                  other Tenant locations which Tenant believes will be useful to
                  Landlord in reviewing and considering Tenant's proposed

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       43
<PAGE>
 
                  concept for the Premises. All materials submitted by Tenant
                  shall be tagged or otherwise identified to Tenant and shall be
                  dated. All such materials will be retained by Landlord until
                  completion of Tenant's Work.
                      (d)  At the PDM, the following shall occur:
                           (i)   Landlord's architect shall review Tenant's
                  submission and shall orally and in writing advise Tenant of
                  any items which do not meet the requirements of Exhibits "C"
                  and "E."
                           (ii)  Landlord and Tenant shall establish a design
                  and construction schedule (in bar-chart form) for design and
                  construction of Tenant's Work. However, nothing contained on
                  such schedule shall be deemed or construed to alter or affect
                  the Rent Commencement Date.
                           (iii) Tenant shall designate one individual employee
                  or agent who shall be authorized to act on behalf of Tenant
                  with respect to all matters pertaining to this lease,
                  including all matters relative to Tenant's Work. Landlord may
                  treat any approval or consent given by such person as the
                  approval or consent of Tenant. Tenant may, by written notice
                  to Landlord, change its designated representative with respect
                  to matters arising after the date of Landlord's receipt of
                  such notice.
                      (e)  The PDM is not a substitute for working drawings and
                  specifications, and no approvals given at the PDM shall be
                  construed as relieving Tenant of its responsibility to prepare
                  and submit such items. Any approvals given by Landlord at the
                  PDM will be as to concept only, and shall not relieve Tenant
                  of its obligation to comply with the specific criteria set
                  forth in Exhibits "C" and "E" nor eliminate Landlord's right
                  to require changes upon submission by Tenant of working
                  drawings and specifications. Required participation in a PDM
                  shall be waived only under special circumstances and only in a
                  writing signed by Landlord.

PLANS FOR         Section 17.03  See Addendum
TENANT'S WORK         (a)  Promptly upon completion of the PDM, Tenant, at
                  Tenant's sole cost and expense, shall cause to be prepared and
                  delivered to Landlord for Landlord's approval four (4) sets of
                  working drawings and specifications ("working drawings")
                  prepared in conformity with the applicable provisions of
                  Exhibits "C" and "E" by a licensed architect approved by
                  Landlord. Landlord shall promptly notify Tenant of the
                  respects, if any, in which said working drawings fail to
                  conform to the applicable provisions of Exhibits "C" and "E,"
                  and Tenant shall promptly make any revisions necessary to
                  correct such matters and obtain Landlord's approval.
                  Landlord's approval, which shall not be unreasonably withheld
                  or delayed, shall be evidenced by Landlord's causing one (1)
                  set of such working drawings to be initialed on its behalf and
                  returned to Tenant.
                      (b)  After Landlord's approval of the working drawings, no
                  change shall be made therein except as provided in this
                  subsection (b):
                           (i)   No change may be made by either party without
                  the prior written consent of the other party (which shall not
                  be unreasonably withheld or delayed); and
                           (ii)  All architectural services necessitated shall
                  be rendered by Tenant's architect at the expense of the party
                  requesting the change.
                      (c)  For purposes of design and approval of Tenant's Work:
                           (i)   Tenant's working drawings shall contain
                  detailed depictions of all aspects of Tenant's Work, and shall
                  be at least as detailed as the sample drawing and storefront
                  elevation attached to Exhibit "E."
                           (ii)  Tenant shall be solely responsible to ensure
                  compliance with Divisions 1-4 of Title 24 of the California
                  Administrative Code. Accordingly, at or prior to the date that
                  Tenant submits its working drawings to Landlord, Tenant shall
                  submit to Landlord (A) engineered electrical drawings for the
                  Premises signed by an electrical engineer licensed in the
                  State of California and (B) a complete set of calculations
                  showing the electrical load for the Premises (upon completion
                  of Tenant's Work) and demonstrating compliance, both as to
                  electrical and mechanical requirements, with Title 24.
                           (iii) Landlord's review and approval of
                  specifications and working drawings pursuant to this Section
                  shall indicate no more than aesthetic approval. Approval by
                  Landlord shall not relieve Tenant of its obligation to obtain
                  all approvals and permits from all governmental authorities
                  having jurisdiction or constitute a warranty that any items
                  approved by Landlord comply with applicable law or any
                  requirements of governmental authorities having jurisdiction.
                      (d)  [Intentionally Deleted]

TENANT'S WORK     Section 17.04  See Addendum
                      (a)  As a material consideration for the execution by
                  Landlord of this lease, Tenant agrees to construct tenant
                  improvements in the Premises with quality work using first
                  class materials. Such work of redecorating, remodeling and
                  renovating ("Tenant's Work") shall include a new storefront
                  and sign, new fixtures, and new wall and floor coverings.
                  Landlord and Tenant agree

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       44
<PAGE>
 
                  that Landlord shall, in exercising its approval rights with
                  respect to Tenant's Work, have the right to insist on a
                  distinctive, high quality store using only first class
                  materials and workmanship and meeting the specific criteria
                  set forth in this lease. Moreover, Landlord's insistence upon
                  production of a higher quality store (in terms of design,
                  materials and workmanship) than previously constructed by
                  Tenant in the Center or in any other location, as a condition
                  to the grant of any approval required to be obtained by Tenant
                  from Landlord, shall not be deemed to render Landlord's
                  approval or disapproval unreasonable. Subject to the
                  foregoing, however, Landlord's approvals pursuant to Section
                  17.03 shall not be unreasonably withheld so long as Tenant's
                  Work complies with all applicable requirements of Exhibits "C"
                  and "E" and governmental authorities having jurisdiction and
                  provides for a store of a quality commensurate with that of
                  the Center. Without limiting the generality of the foregoing,
                  Tenant's obligation to comply with applicable governmental
                  requirements shall include but not be limited to (i)
                  construction and equipping of any bathroom(s) required in the
                  Premises and (ii) compliance of Tenant's Work with the Act,
                  ADA and AB13, all as defined in Section 16.19. If Tenant
                  permits the smoking of tobacco products in any portion of the
                  Premises, Tenant shall be solely responsible to comply with
                  all requirements of AB13, including those requiring
                  modifications or additions to the ventilation system serving
                  the Premises. In such event, ventilation of smoke shall not be
                  to the Enclosed Mall or to Landlord's system serving the
                  Center, but must instead be through a separate ventilation
                  system to the outside air. Any such ventilation system shall
                  be subject to the prior written approval of Landlord and shall
                  not interfere with Landlord's ventilation system for the
                  Center.
                      (b)  Tenant shall cause Tenant's Work to be performed by a
                  licensed general contractor or contractors approved by
                  Landlord, which approval must be obtained prior to
                  solicitation of contract bids. Tenant's Work shall be
                  commenced on or before the outside date for commencement of
                  such work specified in the applicable Fundamental Lease
                  Provision. Tenant shall cause Tenant's Work to be completed in
                  accordance with the applicable provisions of Exhibits "C," "E"
                  and "F" on or before the Rent Commencement Date and shall open
                  the Premises for business upon such completion, having
                  theretofore, at its sole expense, completed the equipping,
                  decoration and stocking of the Premises to the extent
                  necessary to enable it to so open for business. Tenant
                  acknowledges that it has ascertained those portions, if any,
                  of Tenant's Work which require a long lead time for
                  fabrication or delivery, that all such items will be available
                  in sufficient time to permit Tenant to complete Tenant's Work
                  by the Rent Commencement Date and that no delays arising from
                  late delivery of such items shall delay or affect the Rent
                  Commencement Date.
                      (c)  Tenant's Work shall be at Tenant's sole cost and
                  expense and there shall be no allowance or abatement of any
                  kind by Landlord to or for Tenant on account of Tenant's Work,
                  or the cost thereof. The provisions of Section 16.16 shall be
                  specifically applicable to Tenant's Work, and Tenant shall
                  promptly furnish to Landlord upon completion of Tenant's Work
                  (i) a copy of a Notice of Completion with respect to Tenant's
                  Work showing thereon the recording stamp of the Orange County
                  Recorder, (ii) evidence reasonably satisfactory to Landlord
                  that all of Tenant's Work has been paid in full and that no
                  claim of any mechanic or materialman may become a lien on the
                  Premises and (iii) a copy of the inspection card for Tenant's
                  Work with all final signatures thereon. As and when progress
                  payments are made by Tenant with respect to Tenant's Work,
                  Tenant shall obtain, from each person furnishing labor or
                  material with respect to Tenant's Work, unconditional waivers
                  and releases of lien claims in the forms required by
                  California Civil Code Section 3262.
                      (d)  Landlord and Tenant acknowledge that review by the
                  City of Costa Mesa (the "City") of plans for and issuance of a
                  permit with respect to Tenant's Work may require several weeks
                  due to the backlog of projects currently in the City awaiting
                  review and approval. Landlord has made arrangements to
                  expedite such process by use of an independent engineer
                  approved by the City. Accordingly, in connection with Tenant's
                  Work, Tenant shall enter into an Accelerated Building Plan
                  Review Agreement (the "Agreement") with the City and an
                  engineer approved by the City and substantially in the form of
                  Exhibit "F" attached hereto. All plans with respect to
                  Tenant's Work requiring City approval shall be submitted to
                  such engineer for review and approval and all fees and costs
                  incurred in such review and approval process shall be borne by
                  Tenant. Landlord shall cooperate with Tenant as required in
                  effecting such review and approval (including executing the
                  Agreement if required), but all costs and fees in connection
                  therewith shall be borne by Tenant.
                      (e)  Prior to commencement of Tenant's Work in the
                  Premises, Tenant or Tenant's general contractor shall deposit
                  with Landlord the sum of $3,000 if the Floor Area of the
                  Premises is less than 3,000 square feet and $5,000 if the
                  Floor Area of the Premises is 3,000 square feet or larger, to
                  insure the full and faithful compliance by Tenant's contractor
                  of its clean-up and trash removal obligations pursuant to
                  Exhibit "E" and completion of all punch-list work. If Tenant's
                  contractor defaults with respect to any such obligation,
                  Landlord may use, apply or retain any part of this deposit for
                  the payment of any amount which Landlord may spend or become
                  obligated to spend by reason of Tenant's contractor's default,
                  or to compensate Landlord for any other loss or

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       45
<PAGE>
 
                  damage which Landlord may suffer by reason of Tenant's
                  contractor's default. Landlord shall not be required to keep
                  this deposit separate from its general funds, and the
                  depositor shall not be entitled to interest on such deposit.
                  If Tenant's contractor shall fully and faithfully perform each
                  of its clean-up, trash removal and punch-list obligations,
                  this deposit shall be applied against any other amounts owed
                  by the depositor to Landlord at the time of such fulfillment
                  of Tenant's contractor's obligations and any balance thereof
                  shall be returned to the depositor within the time specified
                  in California Civil Code Section 1950.7.
                      (f)  [Intentionally Deleted]
                      (g)  Any additional work of remodeling during the lease
                  term shall be subject to all of the provisions of Sections
                  7.03 and 16.16, this Article XVII and the applicable
                  provisions of Exhibits "C," "E" and "F" hereto, subject,
                  however, in each case to the use of such time period(s) and
                  date(s) therefor as shall be agreed upon by Landlord and
                  Tenant.
                      (h)  Failure of Tenant to perform its obligations pursuant
                  to this Article XVII in timely fashion shall be deemed a
                  default by Tenant pursuant to this lease entitling Landlord to
                  exercise all remedies available to a landlord against a
                  defaulting tenant, including but not limited to those provided
                  in Article XIII.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                       46
<PAGE>
 
          IN WITNESS WHEREOF, the parties have executed this lease, consisting
of the foregoing provisions, any typed addenda appended hereto and all Exhibits
attached hereto, on the dates indicated below, the latter of which shall be
deemed the date of execution of this lease.

                           SOUTH COAST PLAZA, a partnership

                           By    C. J. Segerstrom & Sons, a general partnership,
                                 Managing General Partner

                                 By   /s/ HENRY T. SEGERSTROM
                                    --------------------------------------------
                                                                         Manager

                                 By   /s/ JEANETTE E. SEGERSTROM
                                    --------------------------------------------
                                                                         Manager

                                                      "Landlord"

                           Date:    June 10, 1998
                                 ---------------------------


                           ST. JOHN KNITS, INC.,
                           a California corporation

[CORPORATE SEAL]
                           By    /s/ DAN DEMILLE                           V.P.
                              --------------------------------------------------
                                                                           Title

                           By    Dan DeMille                               V.P.
                              --------------------------------------------------
                                                                           Title

                                                      "Tenant"

                           Date:    June 9, 1998
                                 ---------------------------

                                       47
<PAGE>
 
                      ADDENDUM TO LEASE DATED JUNE 5, 1998
                           BETWEEN SOUTH COAST PLAZA,
                       a CALIFORNIA GENERAL PARTNERSHIP,
                     as LANDLORD, and ST. JOHN KNITS, INC.,
                      a CALIFORNIA CORPORATION, as TENANT
                      -----------------------------------


Section 1.01  Premises
------------  --------        

     Notwithstanding anything to the contrary contained in Section 1.01 of the
lease form:

     (a) All work by Landlord pursuant to clauses (a) and (b) of such Section
shall be performed in a manner which causes the least practicable interference
with the operation of Tenant's business in the Premises.

     (b) In the event of any work by Landlord pursuant to either or both of such
clauses (a) and (b), Landlord shall, promptly upon completion of such work and
at Landlord's cost, repair, restore and redecorate all affected portions of the
Premises to substantially the same condition as prior to the commencement of
such work by Landlord.

     (c) The last sentence of Section 1.01 of the lease form shall have no
application with respect to this lease.

     (d) The Floor Area of the Premises includes certain mezzanine space which
Tenant may or may not retain when Tenant performs Tenant's Work pursuant to
Addendum Section 17.02.  Whether or not Tenant retains some or all of such
mezzanine space (i.e., Tenant may demolish some or all of the mezzanine), (i)
the Minimum Rent shall be based upon the current Floor Area of the Premises as
set forth in the applicable Fundamental Lease Provision assuming that all of the
mezzanine remains intact and (ii) additional rent shall be based upon the actual
Floor Area of the Premises, measured as provided in Section 16.04 of the lease
form after giving effect to Tenant's Work (i.e., removal of some or all of the
mezzanine).

Section 2.02  Commencement Date and Rent Commencement Date
------------  -------------------------------------------- 

     (a) Tenant acknowledges that the Premises are currently operated by the
proprietor of the Barneys New York store ("Old Tenant") pursuant to a lease (the
"Old Lease") which terminates by its own terms on July 31, 1998 (the "Surrender
Date").  Landlord and Tenant agree that:

              (i)   Landlord shall not extend the term of the Old Lease or Old
Tenant's right to occupy the Premises beyond the Surrender Date.

              (ii)  In the event that Old Tenant fails to vacate and surrender
the Premises on or before the Surrender Date, Landlord shall use reasonable
efforts to cause Old Tenant to vacate and surrender possession as promptly as
practicable thereafter. Such reasonable efforts may, but need not, include the
filing by Landlord of a legal action to recover possession of the Premises from
Old Tenant.

              (iii) Promptly following recovery of possession of the Premises
from Old Tenant, Landlord shall perform any work required pursuant to Addendum
Section 17.01 and deliver possession to Tenant in the manner provided in
subsection (b) below.

     (b) The Lease Commencement Date of this lease shall be that date on which
Landlord shall deliver to Tenant possession of the entire Premises.  Delivery of
possession shall be by not less than five (5) days prior written notice from
Landlord to Tenant setting forth the date on which the Premises shall be
available and ready for Tenant to commence Tenant's Work pursuant to Section
17.04 of the lease form and Addendum Section 17.02.  Landlord and Tenant
acknowledge that they contemplate that the Lease Commencement Date shall be on
August 1, 1998.  From and after the Lease Commencement Date, Tenant shall
observe and perform all obligations of the tenant pursuant to this lease, other
than those requiring the payment of Minimum Rent, Percentage Rent and additional
rent.

     (c) The Rent Commencement Date of this lease shall be the 120th day
following the Lease Commencement Date.  From and after the Rent Commencement
Date, Tenant shall observe or perform all obligations of the tenant pursuant to
this lease, including those requiring the payment of Minimum Rent, Percentage
Rent and additional rent.

     (d) Within thirty (30) days following the Rent Commencement Date, Landlord
and Tenant shall execute a letter agreement setting forth the Lease Commencement
Date and the Rent Commencement Date of this lease.  However, failure of Tenant
to execute and deliver such letter agreement shall not affect Landlord's
determination of the Lease Commencement Date and Rent Commencement Date in
accordance with the provisions of this lease.

                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
                                      48
<PAGE>
 
     (e) Notwithstanding anything to the contrary in this lease, if Landlord
does not deliver possession of the Premises to Tenant by August 30, 1998, Tenant
may elect not to open for business in the Premises until February 14, 1999.  If
Tenant so elects, the Rent Commencement Date shall not occur, and Tenant shall
not be obligated to pay rent until the earlier of February 14, 1999 or the date
upon which Tenant opens for business in the Premises.

     (f) In the event that Landlord does not deliver possession of the entire
Premises to Tenant on or before November 30, 1998 (the "Adios Date"), then
Tenant shall have the option to terminate this lease.  Such option shall be
exercised, if at all, by written notice from Tenant to Landlord given at any
time after the Adios Date and prior to the date upon which Landlord delivers
possession of the entire Premises to Tenant pursuant to subsection (b) above.
If Tenant is not entitled to exercise such option or is entitled to exercise
such option but fails to do so in the manner and within the time herein
specified, such option shall lapse and thereafter shall not be exercisable.

     If Tenant is entitled to exercise such option and timely and properly does
so, then (i) this lease shall terminate on the date of Landlord's receipt of
Tenant's notice of exercise, (ii) Landlord shall promptly return to Tenant any
funds deposited by Tenant pursuant to this lease, (iii) each party shall bear
its own costs and fees incurred in the negotiation and preparation of this lease
and in performing its respective obligations hereunder through the date of
termination and (iv) neither party shall have any further rights or obligations
pursuant to this lease.  Pending any termination of this lease pursuant to this
subsection, each party shall diligently pursue its respective obligations
pursuant to this lease.


Section 2.04  Termination of Existing Lease
------------  -----------------------------

     Landlord and Tenant acknowledge that Tenant currently operates a "St. John
Knits" store in Suites 2401 and 2407 (the "Current Premises") pursuant to a
lease dated June 25, 1992 (the "Current Lease").  Within three (3) days
following the date upon which Tenant opens for business in the Premises, Tenant
shall relocate from the Current Premises to the Premises, vacate the Current
Premises and surrender the Current Premises to Landlord.  Such relocation,
vacation and surrender shall be in accordance with the following:

     (a) Such relocation shall be the sole responsibility of Tenant, both as to
performance and payment of the costs thereof.  Moreover, such relocation shall
be conducted in accordance with all reasonable instructions or directions of the
general manager of the Center or his designee.

     (b) Vacation and surrender of the Current Premises shall be in accordance
with Section 16.28 of the Current Lease, except that such surrender shall be
effected within three (3) days after Tenant opens for business in the Premises.

     (c) Upon surrender of possession of the Current Premises and the keys
thereto to Landlord, the Current Lease shall terminate.  Such termination shall
be in accordance with Section 16.28(b) of the Current Lease.

     (d) In connection with the surrender of the Current Premises, Tenant may
remove such movable items as Tenant elects to remove and shall not be required
to demolish any of the improvements to the Premises.


 

Section 3.01  Minimum Rent; Increases
------------  -----------------------

     (a) Subject to the provisions of subsection (b) below, and Sections
10.01(e) and 16.04(b) of the lease form, monthly Minimum Rent shall be as
follows:

              (i)   For the period from the Rent Commencement Date through
January 31, 2003, the sum of $76,920 ($60.00 per square foot of Floor Area per
year).

              (ii)  For the period from February 1, 2003 through January 31,
2007, the sum of $84,612 ($66.00 per square foot of Floor Area per year).

              (iii) For the period from February 1, 2007 through January 31,
2011, the sum of $93,586 ($73.00 per square foot of Floor Area per year).

              (iv)  For the balance of the lease term, the sum of $102,560
($80.00 per square foot of Floor Area per year).

     (b) In the event that, pursuant to Section 16.04(b) of the lease form, the
final Floor Area of the Premises is determined to be greater or lesser than that
set forth in the applicable Fundamental Lease Provision, monthly Minimum Rent
shall be redetermined using the final Floor Area of the Premises as so
determined and one-twelfth (1/12th) of the per annum rates set forth in
subsection (a) above.

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     (c) The second sentence of Section 3.01(a) of the lease form shall be
deleted.  The first monthly payment of Minimum Rent shall be made on or before
the Rent Commencement Date.

     (d) The language "a thirty (30) day" appearing in the last sentence of
Section 3.01(a) of the lease form shall be amended to read "an actual calendar."
The term "360" appearing in such sentence shall be amended to read "365."


Section 3.03  Percentage Rent
------------  ---------------

     (a) Subject to the provisions of subsection (b) below, the annual
Percentage Rent breakpoints shall be as follows:

              (i)   For the period from the Rent Commencement Date through
January 31, 2003, the sum of $15,384,000.

              (ii)  For the period from February 1, 2003 through January 31,
2007, the sum of $16,922,400.

              (iii) For the period from February 1, 2007 through January 31,
2011, the sum of $18,717,200.

              (iv)  For the balance of the lease term, the sum of $20,508,000.

     (b) In the event of any change in the Minimum Rent pursuant to Sections
10.01(e) or 16.04 of the lease form or Addendum Section 3.01(b), the annual
Percentage Rent breakpoints shall be redetermined in the manner provided in
Section 3.03(a) of the lease form.

     (c) The term "lease year" appearing in Section 3.03(a) of the lease form
shall be amended to read fiscal year each place where such term appears.  The
term "partial lease year" appearing in such Section shall be amended to read
"partial fiscal year."  The term "360" appearing in the last sentence of the
first paragraph of such Section shall be amended to read "365."

     (d) The first sentence of Section 3.03(b) of the lease form shall have no
application with respect to this lease.  The language "place the Percentage Rent
on a lease year basis" appearing in the second sentence of such Section shall be
amended to read "reflect accounting changes to Tenant's gross sales for such
full or partial lease year."  The last sentence of such Section shall have no
application with respect to this lease.

     (e) The following shall be deleted from Section 3.03(c)(i) of the lease
form:

              (i)   The language "the amount allowed upon any `trade-in'."

              (ii)  The language "all direct mail sales . . . at the Premises."

              (iii) The language "and from advertising . . . for others."

              (iv)  The language "without deduction . . . credit accounts."

In addition, the words "gross proceeds" appearing in the first sentence of such
Section and the words "gross receipts" appearing in the second sentence of such
Section shall be amended to read "net proceeds" and "net receipts."  the words
"such transaction is entered into" appearing in the next to last sentence of
such Section shall be amended to read "such sale is recorded as a sale on
Tenant's books and records."

     (f) The words "from the Premises" appearing in the first sentence of
Section 3.03(c)(ii) shall be deleted.

     (g) Notwithstanding anything to the contrary contained in Section 3.03 of
the lease form, during each fiscal year (as defined in subsection (j) below) or
partial fiscal year, Tenant shall not be required to make monthly payments on
account of Percentage Rent to and until Tenant's aggregate fiscal year to date
gross sales exceed Tenant's Percentage Rent breakpoint for such fiscal year or
partial fiscal year.  Accordingly, for the month in which Tenant's fiscal year
to date aggregate gross sales first exceed Tenant's Percentage Rent breakpoint
for such fiscal year or partial fiscal year, Tenant shall pay, on account of
Percentage Rent, an amount equal to six percent (6%) of such excess.  For each
succeeding month of such fiscal year or partial fiscal year, Tenant shall pay,
on account of Percentage Rent, an amount equal to six percent (6%) of Tenant's
gross sales for such month.  All such payments shall be made concurrently with
Tenant's delivery of its gross sales statement for such month (i.e., within
twenty (20) days after the expiration of each calendar month).

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     (h) Any refund due to Tenant on account of an overpayment by Tenant of
Percentage Rent for any fiscal year shall be credited against the next rent
payable by Tenant to Landlord pursuant to this lease.  If such overpayment is
equal to or greater than one month's Minimum Rent, such overpayment shall be
refunded to Tenant, without interest, within thirty (30) days after
determination of the amount of the overpayment.  At the expiration or earlier
termination of this lease, any such overpayment shall be offset against any
amounts owed and unpaid by Tenant to Landlord pursuant to this lease and the
balance shall be refunded to Tenant, without interest, within thirty (30) days
after such expiration or earlier termination.

     (i) Notwithstanding anything to the contrary contained in Section 3.03(b)
of the lease form:

              (i)   Deposits received by Tenant for purchase of merchandise or
services at the Premises shall be included in gross sales only upon the first to
occur of completion of the sale generating such deposit or the occurrence of the
date (by passage of time or otherwise) upon which Tenant is no longer required
to refund such deposit to the depositor.

              (ii)  Gross receipts from direct mail sales by Tenant (or any
affiliate or parent of Tenant) and from catalog sales, telephone sales,
televideo and other electric and electronic media sales of all types by Tenant
(or any affiliate or parent of Tenant) shall be allocated to the gross sales of
the Premises or other premises of Tenant or Tenant's parents or affiliates in
accordance with Tenant's general operating policies, provided that such policies
do not have the effect of unfairly discriminating against allocation to the
Premises.

              (iii) Gross sales shall not include (or if included there shall be
deducted to the extent of such inclusion):


                    (A) Uncollected or uncollectible credit accounts, bounced
checks and other bad debts. In the event that Tenant recovers any amount on
account of an item deducted pursuant to this clause, the amount so recovered
shall be included in gross sales for the month of such receipt.

                    (B) Sales taxes, excise taxes, gross receipts taxes, and
other taxes now or hereafter imposed upon the sale or value of merchandise or
services and collected from customers or included in the retail selling price,
except that no value added tax, no franchise or capital stock tax, and no
income, gross receipts or similar tax based upon income, profits or gross
receipts shall be deducted or excluded from gross sales.

                    (C) Any exchange or transfer of goods or merchandise between
the stores, outlet stores or warehouses of Tenant, except to the extent Landlord
can reasonably demonstrate by a preponderance of the evidence that specific
exchanges were made for the purpose of depriving Landlord of the benefits of a
sale that otherwise would have been made at or from the Premises.

                    (D) The amount of any cash or credit refund made in respect
of any merchandise or services returned to or issued from the Premises.

                    (E) Merchandise or services sold or made available by Tenant
to its employees at the Premises at a discount of not less that thirty-three
percent (33%) of the retail price.

                    (F) Returns to shippers or manufacturers.

                    (G) Sales of fixtures, machinery or equipment which are not
a part of Tenant's stock in trade.

                    (H) Charges by Tenant to its customers for shipping and
alterations, where such charges approximate Tenant's costs of providing such
services.

                    (I) Direct cash donations made by Tenant to recognized tax-
exempt charities or organizations which represent a portion of sales made as
part of charity benefits or other fund-raising events for such charities or
organizations held in the Premises.

                    (J) The value of any trading stamps or similar promotional
devices or methodology issued or used by Tenant for the benefit of its customers
and without charge to its customers upon redemption of such stamps in the
Premises.

                    (K) Credits or payments in settlement of claimed losses.

                    (L) Punitive damages or treble damages received in antitrust
litigation.

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                    (M) Receipts from public telephones and vending machines
used solely by Tenant's employees.

                    (N) Proceeds from sales of gift certificates from the
Premises. Upon redemption of any gift certificates at the Premises (irrespective
of the place of sale of such certificates) the amounts redeemed shall be
included in gross sales at or from the Premises.

                    (O) Charges or discounts (on payments to Tenant) made by
credit card issuers in connection with credit card sales accepted by Tenant at
the Premises.

                    (P) Wholesale sales made by the wholesale division of
Tenant, including wholesale sales at trunk shows, as defined in clause (vii)
below.

The amount excluded by Tenant pursuant to clauses (E) and (I) for any fiscal
year or partial fiscal year shall not exceed, in the aggregate, two percent (2%)
of Tenant's gross sales for such fiscal year or partial fiscal year, determined
prior to such exclusions.

              (iv) Gross receipts from telephone sales by Tenant (or any
affiliate or parent of Tenant) shall be allocated to the gross sales of the
Premises or other premises of Tenant or Tenant's parent or affiliate in
accordance with Tenant's general operating policies, provided that such policies
do not have the effect of unfairly discriminating against allocation to the
Premises.

              (v) Each sale made upon an installment or credit basis or made on
a so-called "layaway" basis shall be treated as a sale for the full price of the
merchandise and services sold in the month in which such sale is treated as a
sale or income by Tenant.

              (vi) With respect to any trunk show, as defined below, held by
Tenant within the area described in Section 6.03 of the lease form, only fifty
percent (50%) of the gross receipts from such trunk show shall be included in
gross sales from the Premises. For the purposes of this provision, a trunk show
shall mean a preview sale or show which (A) is held not more than twice per year
within the area described in Section 6.03 of the lease form, (B) is by
invitation to customers or potential customers of Tenant, (C) consists of
merchandise which is not yet in stock at the Premises and which will not be in
stock at the Premises for at least thirty (30) days following the trunk show,
(D) includes merchandise bearing the labels which Tenant carries or is permitted
to carry in the Premises and (E) is conducted as a special event for which
Tenant provides special items not normally included with a periodic sale at the
Premises, such as models, catering and travel for special sales representatives
from Tenant's corporate offices. For the purposes of this provision, Landlord
and Tenant agree that a trunk show shall be a special event as recognized in
Tenant's industry, as opposed to a normal periodic sale.

    (j) Notwithstanding anything herein to the contrary, Tenant shall calculate
its gross sales and pay its Percentage Rent due thereon, if any, on the basis of
Tenant's fiscal year.  Such fiscal year is presently the period from November 1
through the next succeeding October 31.  In the event that the Minimum Rent rate
and Percentage Rent breakpoint change during any fiscal year or partial fiscal
year pursuant to Addendum Section 3.01 and this Section, Landlord and Tenant
shall make any adjustments required to determine a Percentage Rent breakpoint
for such fiscal year or partial fiscal year and Tenant shall pay its Percentage
Rent for such period on the basis of the Percentage Rent breakpoint determined
for such period.  The parties acknowledge that there shall be a partial fiscal
year ending October 31, 1999 at the commencement of the term of this lease and a
partial fiscal year ending January 31, 2014 at the expiration of the term of
this lease.  The Percentage Rent breakpoint for any partial fiscal year at the
commencement and expiration (or earlier termination) of the lease term shall be
prorated in the manner provided in Section 3.03(a) of the lease form.


Section 3.04  Rent Defined
------------  ------------

     The term "ten (10)" appearing in Section 3.04 of the lease form shall be
amended to read "thirty (30)."


Section 4.01  Records
------------  -------

     (a) Clauses (f), (g), (h) and (j) of Section 4.01 of the lease form shall
have no application with respect to this lease.  The following shall be added at
the end of the next to last sentence of such Section:  "which observations shall
not interfere with the conduct of Tenant's business."

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     (b) Notwithstanding anything to the contrary contained in Section 4.01 of
the lease form:

              (i) By its signature hereto, Landlord approves Tenant's use in the
Premises of an STS cash register system or such other point of sale system which
automatically records sales made for reporting and retaining sales information.

              (ii) Initially, upon any audit conducted by or at the direction of
Landlord, Landlord shall be entitled to review or audit only Tenant's records as
to gross sales.  Landlord shall be entitled to review other records pertaining
to sales of the types described in such Section only if, in Landlord's
reasonable judgment, Tenant's gross sales records are insufficient for Landlord
to reasonably determine the amount of Tenant's gross sales from the Premises for
any period.

              (iii)  For so long as Tenant's financial statements (alone or
consolidated with any parent of Tenant) are audited by any reputable national or
regional independent certified public accounting firm, Tenant need not maintain
the records described in clauses (a) through (h) of such Section but may
maintain only those records described in clause (i) of such Section.


 

Section 4.02  Statements of Gross Sales
------------  -------------------------

     (a) The term "fifth (5th)" appearing in Section 4.02(a) of the lease form
shall be amended to read "twentieth (20th)."  The word "retail" shall be added
before the word "calendar" in such Section.

     (b) The term "tenth (10th)" appearing in Section 4.02(b) of the lease form
shall be amended to read "sixtieth (60th)."  The term "lease year" appearing in
such Section shall be amended to read "fiscal year" in each place where such
term appears.

     (c) The language "such form . . . reasonably determines" appearing in the
first sentence of Section 4.02(c) of the lease form shall be amended to read
"the form of Exhibit "J" attached hereto."

     (d) Within thirty (30) days after the end of each fiscal year or partial
fiscal year, Tenant shall supply to Landlord by telephone Tenant's then best
estimate of Tenant's gross sales for such fiscal year or partial fiscal year.
Such telephone call shall be initiated by Tenant to Landlord's accounting
department and shall be without prejudice to any year end adjustments to such
gross sales initiated by Tenant or Tenant's auditors.  Tenant shall supply to
Landlord its final, certified statement of gross sales for each fiscal year or
partial fiscal year within sixty (60) days after the expiration of such fiscal
year or partial fiscal year, which statement shall set forth Tenant's final
gross sales after giving effect to any such adjustments.


 

Section 4.03  Audit
------------  -----

     (a) The term "five (5) days" appearing in the first sentence of Section
4.03(b) of the lease form shall be amended to read "thirty (30) days."  The last
sentence of such Section shall have no application with respect to this lease.

     (b) Notwithstanding anything to the contrary contained in Section 4.03 of
the lease form:

              (i)   In the event that Landlord does not commence an audit of
Tenant's gross sales for any fiscal year or partial fiscal year within three (3)
years after delivery to Landlord of Tenant's final certified gross sales
statement with respect to such fiscal year or partial fiscal year, the gross
sales as reported by Tenant for such fiscal year or partial fiscal year shall be
final and conclusive upon Landlord and Tenant.

              (ii)  Landlord's audit right shall be limited to those records
which Tenant is required to maintain pursuant to Addendum Section 4.01.

              (iii) Any audits of Tenant's gross sales conducted by Landlord
shall be no more frequent than once during any fiscal year. In addition, no more
than one (1) such audit shall be conducted by Landlord with respect to any
fiscal year.

              (iv) If Tenant shall not, within sixty (60) days after receipt of
an audit report, in writing in reasonable detail object to such report, such
report shall be conclusive and binding upon Landlord and Tenant.

              (v)   If Tenant shall object to any audit report in the manner and
within the time specified in clause (iv), Tenant and Landlord shall endeavor to
agree upon any deficiency (or lack thereof) with respect to the period(s)
covered by such audit.  Any such agreement shall be reduced to writing, executed
by Landlord and Tenant and conclusive and binding upon Landlord and Tenant.

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              (vi)  If Tenant shall object to any audit report in the manner and
within the time specified in clause (iv), and if such objection shall not be
disposed of pursuant to clause (v) within sixty (60) days after Tenant's
objection, then either party may demand by written notice to the other that the
matter be resolved by arbitration.  In such event, the following shall pertain:


                    (A) The arbitration shall be conducted in Orange County,
California in accordance with the then rules of the American Arbitration
Association and this subsection.

                    (B) Within twenty (20) days after arbitration is demanded by
written notice, each party shall designate one arbitrator by written notice to
the other party. Within twenty (20) days after the designation of the second
arbitrator, the two arbitrators shall select a third arbitrator. If either party
shall fail to designate its arbitrator within such twenty (20) day period, the
other party may appoint such arbitrator at any time thereafter and prior to such
designation. If the two designated arbitrators shall fail to select a third
arbitrator within twenty (20) days after the designation of the second
arbitrator, the third arbitrator shall be appointed by the presiding judge of
the Orange County Superior Court (or his or her designee) upon application by
either party. Each arbitrator designated or selected pursuant to this subsection
shall be a licensed certified public accountant with ten (10) years of
experience in retail sales.

                    (C) The arbitration shall be held as promptly as practical
after the selection of the third arbitrator and in any event within sixty (60)
days after such selection. The decision of the arbitrators or any two of them
shall be conclusive and binding upon Landlord and Tenant and may include a
designation of a prevailing party.

                    (D) If either party shall be designated as the prevailing
party in such proceedings (i.e., the decision of the arbitrators most closely
approximates such party's position), the other party shall bear the reasonable
costs and fees of all three arbitrators. If no party is designated as the
prevailing party, then each party shall bear the costs and fees of the
arbitrator designated by it and one-half (1/2) of the costs and fees of the
third arbitrator. Each party shall also bear its own expenses, including
attorneys' fees, incurred in the arbitration proceeding.

                    (E) Pending the decision of the arbitrators, Tenant shall
not be required to pay any deficiency set forth in the audit report (or the cost
of the audit, if applicable). Within thirty (30) days after receipt of the
decision of the arbitrators, Tenant shall pay any deficiency determined by the
arbitrators, the reasonable costs of the audit, if applicable, interest on any
deficiency as provided in Section 4.03(c) of the lease form, and if Landlord is
declared the prevailing party, the reasonable costs and fees of the three
arbitrators. Within thirty (30) days after receipt of the decision of the
arbitrators, Landlord shall refund to Tenant any overpayment determined by the
arbitrators with interest thereon as provided in Section 4.03(c) of the lease
form, pay the reasonable costs of the audit incurred by Tenant and Tenant's
costs and fees incurred in connection with the arbitration, if applicable, and
if Tenant is declared the prevailing party, the reasonable costs and fees of the
three arbitrators. The pendency of an arbitration proceeding pursuant to this
subsection shall not stop the accrual of interest pursuant to Section 4.03(c) of
the lease form.

                    (F) Either party may have judgment entered in any court of
competent jurisdiction upon any arbitration decision rendered pursuant to this
subsection.

              (vii) If either party shall fail to designate its arbitrator
within the time specified herein, the other party may, by written notice to the
party failing to so designate, elect to have the matter determined by the sole
arbitrator designated by such electing party. In such event, the decision of
such sole arbitrator shall be final and binding upon the parties and the costs
and fees of such sole arbitrator shall be divided equally between Landlord and
Tenant.

              (viii) If neither party elects an arbitration within thirty (30)
days after the expiration of the sixty (60) day period specified in clause (iv)
above, either party shall be free to thereafter file a legal action to have such
dispute determined. In the event that such legal action is filed and served
prior to an election to arbitrate, such dispute shall be settled pursuant to
such action rather than through arbitration.

     (c) In the event that there shall be no increase in Tenant's gross sales as
the result of any audit conducted by Landlord, then Landlord shall pay to
Tenant, within twenty (20) days after Landlord's receipt of reasonable
documentary evidence as to such costs, the reasonable out-of-pocket costs
incurred by Tenant in connection with such audit, including Tenant's fees and
costs incurred in connection with any arbitration proceeding pursuant to
subsection (b) above.


Section 5.02  Definitions
------------  -----------

     (a) The words "commonly known as real estate taxes and" shall be added
after the word "surcharges" in clause (i) of Section 5.02(a) of the lease form.
The language "but not including special assessments with respect to the original
construction of the Center" shall be added at the end of the clause (ii) of such
Section.  The words "and used exclusively in the operation and maintenance of
the Center" shall be added at the end of clause (ii) of such Section.

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     (b) For the purposes of clauses (iii), (iv) and (v) of Section 5.02(a) of
the lease form, the taxes payable by Tenant thereunder shall be limited to (i)
taxes imposed in lieu of taxes upon real property or increases in taxes upon
real property and (ii) taxes and other charges used to fund a service provided
by any governmental authority for which funding was historically provided by
taxes upon real property.

     (c) Landlord represents and warrants to Tenant that:

              (i) There is no work currently in process or pending at the Center
which will be the subject of a special assessment after the date of this lease
and there is no special assessment against the Center which is being paid as of
the date of this lease.

              (ii) The management offices of the Center are, and will be during
the term of this lease, limited only to servicing the Center. Neither Landlord
nor any other person or entity is conducting in such offices a general real
estate, real estate brokerage or other business.


Section 5.03  Other Taxes
------------  -----------

     The words "if requested by Tenant" appearing in the third sentence of
Section 5.03 of the lease form shall be deleted.  The words "of payment"
appearing in such sentence shall be amended to read "twenty (20) days after
demand."


 

Section 6.01  Use of Premises
------------  ---------------

     (a) The word "entire" appearing in the third sentence of Section 6.01 of
the lease form shall be deleted.  The words "continuously and uninterruptedly"
appearing in the fourth sentence of such Section shall be deleted.  The words
"time to time . . . including Sundays" appearing in such fourth sentence shall
be amended to read "set forth in Addendum Section 6.01."  The language "Except
as provided in Addendum Section 6.01," shall be added at the beginning of the
fifth sentence of such Section.  The sixth sentence of such Section shall be
deleted in its entirety.

     (b) The Premises consists of space located on the second and third levels
of the Center.  Tenant shall, as a part of Tenant's Work pursuant to Addendum
Section 17.02, develop the Premises as two separate but physically connected
stores as follows:

              (i)   One store shall be a fashion apparel and accessories store
operated under the tradename "St. John Knits" ("Store No. 1").  Store No. 1
shall be on two (2) levels and shall, subject to clause (vi) below and Addendum
Section 6.03(g), consist of not less than 5,000 square feet of Floor Area and
not more than 10,000 square feet of Floor Area, with a vertical connection
between the two levels.

              (ii)  The other store shall be a home store operated under the
tradename "Amen Wardy Home" ("Store No. 2").  Store No. 2 shall initially be on
two (2) levels and shall, subject to clause (vi) below, consist of not less than
3,000 square feet of Floor Area and not more than 10,000 square feet of Floor
Area.

              (iii) Each of Store No. 1 and Store No. 2 shall be physically
connected on each level and each store shall have a separate customer entrance
and separate storefront signage on each level.

              (iv) Notwithstanding the development of the Premises as Store No.
1 and Store No. 2, the Premises shall be treated as a single store for purposes
of calculation of Minimum Rent, gross sales, Percentage Rent and additional rent
pursuant to this lease.

              (v) Subject to the limitations contained in clauses (i), (ii) and
(iii) above, Tenant may during the term of this lease change the allocations of
Floor Area as between Store No. 1 and Store No. 2.  Any remodeling or renovation
required in connection with such reallocation of Floor Area shall be the sole
responsibility of Tenant, both as to performance and payment of the costs
thereof, and shall be subject to all applicable provisions of this lease.

              (vi) Notwithstanding the provisions of clauses (i), (ii), (iii)
and (v) above, Tenant may eliminate the Amen Wardy Home store at the Premises,
subject to each of the following:

                    (A) Tenant concurrently eliminates (i.e., closes) all Amen
                                                                      ---
Wardy Home stores then operated by Tenant or any parent, subsidiary or affiliate
of Tenant.

                    (B) Concurrently with such elimination Tenant adds the
portion(s) of the Premises previously operated as an Amen Wardy Home store to
the St. John Knits store at the Premises (i.e., the entire Premises are operated
as a St. John Knits store). Any remodeling or renovation required in connection
with clause (A) above and 

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<PAGE>
 
this clause (B) shall be the sole responsibility of Tenant, both as to
performance and payment of the costs thereof, and shall be subject to all
applicable provisions of this lease.


                    (C) If Tenant eliminates the Amen Wardy Home store from the
Premises pursuant to this clause (vi), neither Tenant nor any parent, subsidiary
or affiliate shall thereafter, during the term of this lease or any renewals or
extension thereof, open a home store within Orange County, California, either
under the name Amen Wardy or under any other name used or developed by Tenant or
its parents, subsidiaries or affiliates (such as St. John Knits Home).

     (c) Subject to clause (vi) of subsection (b) above and Addendum Section
6.03(g), Store No. 2 shall be used solely for the retail sale of furniture and
home accessories as typically carried at the Amen Wardy Home stores at the Forum
Shops in Las Vegas, Nevada and in Aspen, Colorado.

     (d) Store No. 1 shall be used principally and primarily for the retail sale
of fashion ladies ready to wear apparel and secondarily for the retail sale of
closely related accessories.  As used herein, the term "principally and
primarily" shall mean that such merchandise shall occupy at least seventy-five
percent (75%) of the sales area of Store No. 1.  The term secondarily shall mean
that such merchandise shall not occupy more than twenty-five percent (25%) of
the sales area of Store No. 1.

                    With respect to the apparel carried in Store No. 1 at least
sixty-five percent (65%) of such apparel shall bear the label "St. John Knits."
The balance of such apparel shall bear labels or brand names proprietary to
Tenant or its parents, subsidiaries or affiliates, such as "St. John Sport" and
"Griffith & Gray," except that not more than ten percent (10%) of such apparel
may bear labels or brands not proprietary to Tenant or its parents, subsidiaries
or affiliates, but with label or brand name quality comparable to the quality of
the St. John Knits label. The accessories carried in Store No. 1 may but need
not bear labels or brands proprietary to Tenant or its parents, subsidiaries or
affiliates so long as such labels or brands have a quality comparable to the
quality of the "St. John Knits" label.

     (e) Tenant shall be required to be open for business in the Premises only
during the following hours on the following days:

                              Non-Holiday Season
                           (January 1 to November 7
                           ------------------------
                   Monday-Friday       10:00 a.m. to 9:00 p.m.
                   Saturday            10:00 a.m. to 7:00 p.m.
                   Sunday              11:00 a.m. to 6:30 p.m.

                                Holiday Season
                          (November 8 to December 31
                          ---------------------------
                   Monday-Friday       10:00 a.m. to 10:00 p.m.
                   Saturday            10:00 a.m. to 10:00 p.m.
                   Sunday              10:30 a.m. to 7:30 p.m.

There are certain exceptions to such hours, such as:

                   Easter Sunday            Closed
                   Memorial Day             10:00 a.m. to 6:00 p.m.
                   Independence Day         10:00 a.m. to 6:00 p.m.
                   Labor Day                10:00 a.m. to 6:00 p.m.
                   Thanksgiving Day         Closed
                   Day After Thanksgiving   9:00 a.m. to 10:00 p.m.
                   Christmas Day            Closed
                   News Years Day           11:00 a.m. to 6:00 p.m.


Moreover, such hours are subject to change, from time to time, by Landlord upon
notice to tenants of the Center, based upon changes in shopping patterns, the
days of the week upon which certain holidays fall, wind-drift and other factors
deemed relevant by Landlord.

     (f) Notwithstanding the foregoing subsection (e), Tenant shall be obligated
to be open for business only on those hours and during those days when (i) any
two (2) of the Sak's, Macy's Men's, Nordstrom and Macy's stores are open for
business and (ii) seventy-five percent (75%) of the other stores in the Sak's,
Macy's Men's, Macy's, Nordstrom wing of the Center (upper and lower levels) are
open for business.  For the purposes of this provision and any other provision
of this lease where reference is made to the Sak's, Macy's Men's, Nordstrom and
Macy's stores, such reference shall mean the store buildings currently operated
under such names, and both parties recognize that such store buildings may be
hereafter operated under other names by successors or assigns of the current
operators.  For the 

                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
                                      56
<PAGE>
 
purposes of this provision, the Sak's, Macy's Men's, Nordstrom and Macy's wing
of the Center shall mean that portion of the Center located to the West of the
dotted line appearing on Exhibit "A" attached hereto.

     (g) Notwithstanding the foregoing subsections (e) and (f), Tenant may be
closed during any period (i) of repair or restoration following a casualty or
condemnation to the extent reasonably required thereby or in connection with any
remodeling or renovation of the Premises by Tenant, (ii) where such closure is
otherwise specifically permitted pursuant to this lease and (iii) not more than
five (5) days per calendar year for the purposes of taking inventory at the
Premises, redecorating the Premises or such other business activities with
respect to the Premises which reasonably require such closure.  No such closure
pursuant to clause (iii) shall be during the holiday season as defined in
subsection (e) above.

     (h) Notwithstanding the provisions of Section 6.01 of the lease form,
Tenant may, without the prior written consent of Landlord, change the tradename
of Store. No. 2 to the same tradename to which Tenant (or its parents,
subsidiaries and affiliates) concurrently changes the tradename of all stores
then operated by Tenant or its parents, subsidiaries or affiliates under the
tradename "Amen Wardy Home."  Provided, that with respect to any such change in
tradename pursuant to this subsection:

                   (A) The new tradename shall reflect or denote a quality of
use comparable to the high quality of use of the Premises required by this lease
and shall not indicate any off-price, discount, cut-rate, wholesale or other low
end use of Store No. 2.

                    (B) The last sentence of clause (vi)(B) of subsection (b)
above shall apply with respect to any change in Tenant's signage for Store No. 2
as a result of such change in tradename.

                    (C) Neither Tenant nor any parent, subsidiary or affiliate
of Tenant shall, during the term of this lease or any renewals or extensions
thereof, open or operate any store in Orange County, California under the
tradename "Amen Wardy Home," any variant thereof or any tradename which includes
such tradename.


Section 6.02  Restrictions on Use
------------  -------------------

     (a) The words "standard All Risk insurance" shall be added before the word
"coverage" in the first sentence of Section 6.02(a) of the lease form.  The
words "tend to" appearing in the third sentence of such Section shall be
deleted.  The words "create an ultrahazardous . . . reputation of the Center"
appearing in such Section shall be deleted.  The words "standard policy of all
risk" shall be added before the word "insurance" in such Section.

     (b) The word "absolutely" appearing in the first sentence of Section
6.02(e) of the lease form shall be deleted.  The following shall be added at the
end of such Section:  "unless and only to the extent permitted by applicable
laws and regulations."

     (c) Landlord hereby represents and warrants to Tenant that:

                    (i) Tenant's proposed use of the Premises as specifically
permitted by this lease complies with the applicable zoning for the Premises.

                    (ii) In the event that Tenant constructs Tenant's Work
solely for the purposes specifically permitted pursuant to this lease, the only
governmental approvals which shall be required in connection with such
construction shall be a demolition permit, a building permit and a certificate
of occupancy (which will be based upon periodic governmental inspections of
Tenant's Work as Tenant's Work proceeds). The foregoing representation and
warranty does not extend to a kitchen, special exhaust systems or any special
equipment not typically found in a retail clothing store.

     (d) Notwithstanding the provisions of Section 6.02(a) of the lease form:

                    (i) Tenant may accept deliveries to the Premises at any time
when the Center is open to the public. Any deliveries after 10:00 a.m. on days
when the Center is open for business shall be through the rear service door of
the Premises.

                    (ii) Any regulations adopted by Landlord pursuant to such
Section shall not and shall not be enforced so as to unduly interfere with the
conduct of Tenant's business in the Premises as specifically permitted by this
lease.

     (e) The rules and regulations provided for in Section 6.02 of the lease
form shall be enforced in a uniform and nondiscriminatory manner against tenants
of the Center other than the department stores.

                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
                                     57  
<PAGE>
 
     (f) Landlord shall indemnify, defend and hold harmless Tenant, and its
successors, assigns, partners, officers, employees, agents, lenders and
attorneys from and against any and all claims, liabilities, losses, actions,
costs and expenses (including reasonable attorneys' fees and costs of defense
incurred by such indemnified persons, or any of them) as a result of (i) the
introduction into or about the Center by Landlord or Landlord's agents,
employees, contractors, invitees or other persons claiming under Landlord (other
than tenants) of hazardous materials, (ii) the usage, storage, maintenance,
generation, production or disposal by Landlord or Landlord's agents, employees,
contractors, invitees or other persons claiming under Landlord (other than
tenants) of hazardous materials in or about the Center, (iii) the discharge or
release in or about the Center by Landlord or Landlord's agents, employees,
contractors, invitees or other persons claiming under Landlord (other than
tenants) of any hazardous materials, (iv) any injury or death of persons or
damage to or destruction of property resulting from the use, introduction,
maintenance, storage, generation, disposal, disposition, release or discharge by
Landlord or Landlord's agents, employees, contractors, invitees or other persons
claiming under Landlord (other than tenants) of hazardous materials in or about
the Center and (v) any failure by Landlord or Landlord's agents, employees,
contractors, invitees or other persons claiming under Landlord (other than
tenants) to observe the restrictions set forth in Section 6.02(c) of the lease
form.

     (g) Any termination of this lease by Landlord pursuant to the next to last
paragraph of Section 6.02(c) of the lease form shall be only after Tenant fails
to perform an obligation pursuant to such Section, Landlord gives to Tenant a
notice to cure pursuant to Section 13.01 of the lease form and Tenant fails to
cure or commence to cure within the applicable grace period.

     (h) Landlord has caused an inspection to be made of the Premises for the
purpose of determining the presence therein of asbestos bearing materials.  Such
inspection was performed at Landlord's cost by an inspection firm selected by
Landlord and licensed to conduct such inspections.  Landlord shall cause such
firm to prepare a report of such inspection.  Landlord shall cause a copy of
such report to be delivered to Tenant promptly upon completion of such report.
Based upon an oral report by Landlord's consultant and Landlord's ownership and
operation of the Center since its construction, Landlord represents and warrants
that there are no asbestos bearing materials in the Premises and that there will
be no such materials in the Premises upon delivery of possession to Tenant.

         In the event that any such materials are discovered by Tenant during
the course of Tenant's Work in the Premises, then:

         (i)   Tenant shall promptly notify Landlord in writing;

         (ii)  Landlord shall, as promptly as practicable and at Landlord's sole
cost and expense, remove all such materials from the Premises; and

         (iii) The Rent Commencement Date shall be extended by a period of
days equal to the number of days of delay in completion of Tenant's Work
occasioned by the presence of such materials, the removal thereof by Landlord,
interference with Tenant's Work, the need to redo or reconstruct any of such
Tenant's Work following Landlord's removal of such materials and any scheduling
problems for Tenant's contractor occasioned by the presence or removal of such
materials.

     (i) Notwithstanding anything to the contrary contained in the third and
fifth paragraphs of Section 6.02(c) of the lease form, Tenant shall be required
to reimburse Landlord for the cost of any such audit, inspection or testing only
if the audit, survey or testing discloses the presence in the Premises of
hazardous materials brought into the Premises by Tenant or any agent, employee,
contractor or other person for whom Tenant is responsible.


Section 6.03  Other Locations
------------  ---------------               

         (a)  The words "Except as otherwise provided in Addendum Section 6.03,"
shall be added at the beginning of Section 6.03(a) of the lease form.

         (b)  The sale by Tenant (or any parent, subsidiary or affiliate of
Tenant) of merchandise at wholesale to department store and specialty store
operators who are not franchisees, licensees, parents, subsidiaries or
affiliates of Tenant and who operate stores within the prohibited area shall not
violate the provisions of Section 6.03 of the lease form.

         (c)  Those trunk shows specifically permitted by clause (vi) of
Addendum Section 3.03(i)(vii) shall not be deemed to violate the provisions of
Section 6.03 of the lease form.

         (d)  A shop-in-shop shall not include a department in a department
store operated under the name of or bearing signage with the name of "St. John
Knits" so long as such department is not operated by Tenant or any parent,

                                                        LANDLORD'S     TENANT'S
                                                         INITIALS      INITIALS
                                                        ----------     --------
                                                          J.E.S.          DD
                                                          H.T.S.

                                       58
<PAGE>
 
subsidiary, affiliate, franchisee, licensee or concessionaire of Tenant and
Tenant does no more then sell merchandise at wholesale to the operator of the
store.

     (e)  The provisions of Section 6.03 of the lease form shall not be
violated by the acquisition by Tenant or any parent, subsidiary or affiliate of
Tenant of any store or chain of stores so long as any store operated in Orange
County, California is not a "competing store" as defined in Section 6.03(c)(ii)
of the lease form and subsection (f) below. The provisions of this subsection
shall permit both:

          (i)  The acquisition of an existing store or group of stores, one or
some or all of which may be located in Orange County, California; and

          (ii) The acquisition of an existing store or group of stores, all of
which are located outside of Orange County, California, and the subsequent
addition to such store or stores of an additional store or stores of the same
type and tradename in Orange County, California,

so long as any such store(s) operated in Orange County, California (whether
----------                                                                 
acquired or opened after the acquisition) are not "competing stores."  For this
purpose, any such store operated in Orange County, California shall be a
competing store only if (A) such store is operated under one of the tradenames
"St. John Knits," "Amen Wardy" or any tradename identified or described in
subsection (f) below and/or (B) such store sells merchandise bearing the labels
"St. John Knits," "Amen Wardy" or any tradename identified or described in
subsection (f) below.  By way of example, operation of a store under the
tradename or selling merchandise under the label "St. John Sport" would be
prohibited by this subsection (unless specifically permitted under another
provision of this lease), while operation of a store under the tradename or
selling merchandise under the labels "Mondy" or "T.J. Maxx" would be permitted.

     (f)  For purposes of the definition of a competing store in Section
6.03(c)(ii) of the lease form, "merchandise" shall include merchandise bearing
the labels "St. John Knits," "St. John Sport," "Griffith & Gray" and any other
proprietary label hereafter developed by Tenant or any parent, subsidiary or
affiliate of Tenant, such as "St. John Knits Men's."  With respect to St. John
Sport apparel, Griffith & Gray apparel and any apparel sold under any
proprietary tradename hereafter developed by Tenant or any parent, subsidiary or
affiliate of Tenant (such as St. John Knits Men's), for the first five (5) full
lease years of the lease term, Tenant shall not be permitted to own or operate a
competing store within the prohibited area described in Section 6.03 of the
lease form.  If, as to any such line of merchandise, Tenant desires to operate a
separate store after such five (5) year period, Tenant shall first, in writing,
offer to Landlord the opportunity to lease a separate, free-standing store at
the Center.  Upon receipt of such offer, Landlord and Tenant shall, in good
faith, attempt to agree upon the terms of a lease for such line of merchandise.
If Landlord does not have a space suitable for such store, or if Landlord and
Tenant are unable to reach agreement upon the terms of a lease for such store
within sixty (60) days after such offer by Tenant, then, in either such event,
Tenant shall be free to lease and operate a competing location for such line of
merchandise within the prohibited area but outside of the area depicted on
Exhibit "B-2(B)."  The provisions of this subsection (f) shall be separately
applied with respect to each of the merchandise lines described in this
subsection (i.e., St. John Knits men's apparel, St. John Sport, Griffith & Gray,
etc.).  Moreover, the provisions of this subsection shall be separately applied
on each occasion that Tenant approaches Landlord for a location at the Center
for each such merchandise line.  The  provisions of this subsection shall not
apply to a store under the tradenames "St. John Knits" or "Amen Wardy."

     (g)  In the event that, at any time during the term of this lease, Tenant
determines that it needs the entire Premises for the operation of the "St. John
Knits" store (including the non-St. John Knits label merchandise permitted to be
sold in such store), Tenant shall so advise Landlord in writing and offer to
lease space for a separate, free-standing "Amen Wardy" store in the Center or in
South Coast Plaza Crystal Court (the "Other Center").  Such offer ("Tenant's
Offer") shall indicate the approximate size of the space required for such "Amen
Wardy" store.  Upon receipt of Tenant's Offer, Landlord shall in good faith
reasonably attempt to locate and offer in writing to Tenant space in the Center
and/or in the Other Center for such "Amen Wardy" store meeting the size
requirement specified by Tenant, and shall use reasonable efforts to offer to
Tenant in writing at least two such spaces (in the Center, in the Other Center
or one each in the Center and the Other Center).  Any such written offer or
proposal by Landlord ("Landlord's Proposal") shall identify the space(s) offered
to Tenant, the Floor Area(s) of such space(s) and the rent, lease term and other
terms and conditions upon which Landlord proposes to lease such space(s) to
Tenant.  Landlord's Proposal shall also include the estimated date of
availability of each space identified therein.

     Following delivery of Landlord's Proposal, Tenant shall in good faith in
writing accept or reject the space offered to Tenant and, if more than one space
is offered to Tenant, may accept one space and reject the other or may reject
all spaces offered to Tenant.  If Tenant accepts any space offered to Tenant (a
"Tenant Acceptance"), Landlord and Tenant shall proceed in good faith to
prepare, attempt to agree upon and execute and deliver a new lease covering the
space identified in the Tenant Acceptance.

                                                        LANDLORD'S     TENANT'S
                                                         INITIALS      INITIALS
                                                        ----------     --------
                                                          J.E.S.          DD
                                                          H.T.S.

                                       59
<PAGE>
 
     If (i) Landlord is unable to locate and offer to Tenant a space or spaces
within twelve (12) months after Tenant's Offer, or (ii) Tenant rejects all
space(s) covered by Landlord's Proposals within such twelve (12) month period or
(iii) there is a Tenant Acceptance as to any space offered but Landlord and
Tenant are unable to agree upon and execute and deliver a new lease covering the
space identified in the Tenant Acceptance, then, in any such event, Tenant shall
be free to (A) close the "Amen Wardy" store in the Premises, (B) expand the "St.
John Knit" store into the entire Premises and (C) lease and operate an "Amen
Wardy" store within Orange County, California outside of the area depicted on
Exhibit "B-2(B)."

     (h)  Notwithstanding the provisions of Section 6.03 of the lease form,
ownership by any officer or director of Tenant of any stock or profit and loss
interest in any entity which operates a competing store shall not violate the
provisions of such Section 6.03 so long as (i) such officer or director is not
an officer, director, employee, general partner or otherwise in a position which
permits such shareholder to direct the policies of such entity and (ii) such
officer or director is not otherwise active in the operations of such entity.


Section 7.01  Landlord's Obligations
------------  ----------------------                      

     For the purposes of Section 7.01 of the lease form:

     (a)  Landlord's maintenance and repair obligations shall include all
utilities lines serving other portions of the Center (not including the
Premises) but located within the Premises and all utilities mains serving the
Center, including the Premises.

     (b)  Tenant's maintenance and repair obligations shall include all
utilities lines exclusively serving the Premises, whether located outside of or
within the Premises, to Tenant's points of connection to Landlord's mains. For
this purpose, Landlord warrants that the sewer and water lines serving the
Premises are already located under and within the Premises and that Tenant's
electrical connection for the Premises will be an electrical board sufficient
for 100 amperage service within fifty (50) feet of the demising line of the
Premises.

     (c)  Features to be maintained and repaired by Landlord will include roof
decking, the subfloor of the Premises, the structural components of the Center,
including the Premises, not constructed by Tenant and those elements which
require maintenance and repair as the result of negligent or intentional failure
of Landlord to perform its maintenance and repair obligations pursuant to such
Section.

     (d)  Repair and maintenance costs pursuant to such Section to be included
in common area costs shall not include any costs classified under generally
accepted accounting principles as capital in nature.

     (e)  Any cost incurred by Landlord pursuant to Section 7.01 of the lease
form for which Landlord is actually reimbursed from insurance proceeds,
condemnation proceeds, a warranty, another tenant or any other source shall not
be included in common area costs to the extent of such reimbursement.  Any such
cost incurred by Landlord for which Landlord is entitled to be reimbursed from
insurance proceeds, condemnation proceeds, another tenant or any other source
not including a warranty shall not be included in common area costs to the
extent of such entitlement, whether or not Landlord actually receives such
reimbursement.  Any such cost incurred by Landlord for which Landlord is
entitled to be reimbursed from a warranty shall not be included in common area
costs only to the extent of the reimbursement actually received by Landlord from
the maker of such warranty.


Section 7.02  Tenant's Obligations
------------  --------------------                    

     (a)  The language "and for which this lease is terminated pursuant to
Article IX" appearing in Section 7.02(c) of the lease form shall be deleted.

     (b)  Except for items which affect other tenants of the Center, Tenant's
cure period after notice from Landlord shall be fifteen (15) days.  In the event
that Tenant commences to cure any problem as to which Tenant has received notice
from Landlord within any applicable cure period, and for so long as Tenant
diligently pursues such cure, Landlord shall not be entitled to undertake such
work for the account of Tenant.  For this purpose, "commences to cure" shall
mean initiation of action required to effect a cure, such as ordering of parts
or materials or solicitation of bids from contractors.


Section 7.03  Alterations and Additions
------------  -------------------------

     (a)  The language "Landlord shall direct Tenant to remove such items"
appearing in the first sentence of Section 7.03(b) of the lease form shall be
deleted.

                                                        LANDLORD'S     TENANT'S
                                                         INITIALS      INITIALS
                                                        ----------     --------
                                                          J.E.S.          DD
                                                          H.T.S.

                                       60
<PAGE>
 
     (b)  Notwithstanding the provisions of Section 7.03(a) of the lease form,
Tenant may, without Landlord's prior written consent, make non-structural
alterations to the interior of the Premises which are consistent, as to style,
quality, materials and color, with the interiors, from time to time, of the
other stores operated in the continental United States by Tenant, its parents,
subsidiaries and affiliates under the same tradename then in use at the
Premises.  All such alterations shall be high quality.  Such alterations may
include new paint, wall and floor coverings, and replacement of fixtures,
furnishings and equipment.  All such work shall be the sole responsibility of
Tenant, both as to performance and payment of costs, shall comply with all
applicable provisions of this lease and all governmental authorities having
jurisdiction of the Premises and shall be high quality and professionally done.

     (c)  Except as provided in subsection (b) above (covering work as to which
Landlord's approval is not required), Landlord's approval of any proposed
alterations or additions by Tenant shall not be unreasonably withheld or delayed
so long as the items for which approval is requested shall be consistent in
quality with the Tenant's Work originally approved by Landlord.

     (d)  Notwithstanding the provisions of Section 7.03(b) of the lease form:

          (i)   Tenant may, at Tenant's cost and within fifteen (15) days after
the expiration or any earlier termination of this lease, remove all non-
structural decorative items and trade fixtures from the Premises.  Tenant shall
repair any damage caused by such removal and leave the Premises in a safe
condition, all at Tenant's cost.

          (ii)  At the expiration or earlier termination of this lease, Tenant
need not demolish (or restore) the Premises so long as Tenant's improvements to
the Premises are typical for a retail store.  If Tenant proposes to construct
any non-typical features in the Premises, Landlord may, at time of submission of
plans for such features to Landlord for approval, notify Tenant in writing that
Tenant must remove such features within fifteen (15) days after the expiration
or any earlier termination of this lease.  In the event that Tenant elects to
proceed with such non-typical features after notice from Landlord or proceeds
with such features without requesting approval by Landlord, Tenant shall, at
Tenant's cost (and upon notice from landlord pursuant to Section 7.03(b) of the
lease form as to non-typical features not submitted to Landlord for approval)
remove the same upon the expiration or earlier termination of this lease.  Such
removal shall be in accordance with clause (i) above.

     (e)  Section 7.03(c) of the lease form shall be amended to read, in its
entirety, as follows:

          "Tenant shall, at all times during the term of this lease, maintain
          the Premises in a first class condition and shall, at Tenant's sole
          cost and expense, perform such work in or to the Premises as and when
          necessary to comply with the foregoing covenant, including but not
          limited to refixturization, repainting and replacement of wall and
          floor coverings as and when required.  Any such work shall be subject
          to all applicable provisions of this lease and Exhibits "C" and "E"
          hereto, including the requirement of obtaining Landlord's prior
          written consent as and when required, which approval is not required
          with respect to work described in Addendum Section 7.03(b).


Section 7.05  Health Matters
------------  --------------

     (a)  The first sentence of Section 7.05 of the lease form, the first three
sentences of Section 7.05(a) of the lease form and the first two sentences of
Section 7.05(b) of the lease form shall all be deleted.  The words "arising out
of Tenant's operations" shall be added after the word "authorities" in Section
7.05(e) of the lease form.

     (b)  Landlord agrees that it shall enforce the provisions of subsections
(c) and (d) of Section 7.05 of the lease form in a uniform and non-
discriminatory manner against the tenants of the Center other than department
stores.


Section 8.01  Liability Insurance-Premises
------------  ----------------------------

     (a)  The language "(which automobile coverage may be maintained by Tenant
under a separate insurance policy)" shall be added after the words "automobile
coverage in clause (b) of Section 8.01 of the lease form.

     (b)  The language "recommended by such Reviewing Broker" appearing in the
third sentence of the first paragraph following clause (b) in such Section shall
be amended to read "maintained by tenants or users."  The words "tenants or
users of" appearing in the same sentence shall be deleted.  The words "or
decrease" shall be added after the word "increase" in each place where the word
increase appears in the fourth sentence of such paragraph.  The last sentence of
such paragraph shall be deleted.

     (c)  The language "other persons designated . . . in the Premises
"appearing in the first sentence of the last paragraph of Section 8.01 of the
lease form shall be amended to read "trust deed beneficiary, mortgagee, ground
lessor or 

                                                        LANDLORD'S     TENANT'S
                                                         INITIALS      INITIALS
                                                        ----------     --------
                                                          J.E.S.          DD
                                                          H.T.S.

                                       61
<PAGE>
 
managing agent designated by Landlord." The words "within thirty (30) days after
Tenant's receipt of notice from Landlord" shall be added after the word "added"
in the same sentence.


Section 8.02  Fire Insurance - Fixtures, Equipment and Tenant Improvements
------------  ------------------------------------------------------------

     (a)  The language "including but not limited . . . and malicious mischief"
appearing in clauses (i) and (ii) of Section 8.02 of the lease form shall be
deleted.  The word "reasonably" shall be added before the word "required" in
clause (i) of such Section.  The last sentence of such Section shall be deleted.

     (b)  Tenant shall not be required to carry plate glass coverage or the
insurance required by Section 8.02(c) of the lease form.  In the event that the
tenant hereunder elects not to carry either or both of such coverages on the
basis of this subsection and there occurs a casualty for which insurance
proceeds would have been available but for such decision not to maintain such
insurance, such tenant shall use its own funds to replace the proceeds which
would have been available but for the decision not to carry such insurance.

     (c)  Upon the occurrence of any casualty which does not result in a
termination of this lease, the proceeds of the insurance maintained by Tenant
pursuant to Section 8.02(a) of the lease form shall be applied to cover the
obligations of Tenant to repair or restore pursuant to Article IX of the lease
form, up to the exhaustion of such proceeds.  Any proceeds in excess of the
amount necessary to pay the costs of such repair or restoration shall be the
property of Tenant.

     (d)  Upon the occurrence of any casualty which results in the termination
of this lease, Landlord shall be entitled to all proceeds of the insurance
maintained by Landlord pursuant to Section 8.03 of the lease form and Tenant
shall be entitled to the balance of the proceeds from the insurance maintained
by Tenant pursuant to Section 8.02(a) of the lease form.


Section 8.03  Fire Insurance - Premises
------------  -------------------------                         

     Notwithstanding anything to the contrary contained in this lease:

     (a)  Landlord's All Risk insurance pursuant to Section 8.03 of the lease
form shall be in an amount equal to the full replacement value of all
improvements comprising the Center, other than those improvements owned by Sears
and May and those improvements constructed by tenants of the Center.  With
respect to the improvements owned by Sears, May and the other parties to the
reciprocal easement agreement covering the Center, Landlord shall indemnify and
hold harmless Tenant from and against any and all claims, costs, expenses
(including attorneys' fees and/or court costs) and liabilities arising from or
in respect of any damage to the property of the other parties to the reciprocal
easement agreement caused by any act or omission whatsoever, to the extent such
act or omission involves negligence, of Tenant or Tenant's agents, servants and
employees.  Landlord's indemnification obligation pursuant to this subsection
shall be as extensive as Landlord's indemnification obligation pursuant to
Paragraph 10(a)(ii) of such reciprocal easement agreement (Exhibit "K" to this
lease).  Landlord shall maintain with respect to such obligation a contractual
obligation endorsement to the public liability insurance policy maintained by
Landlord pursuant to this lease (and/or pursuant to the reciprocal easement
agreement), naming Tenant as an additional insured thereunder (it being
understood, however, that Landlord's liability under this Addendum Section
8.03(a) shall not be limited to the proceeds of insurance).  Landlord agrees
that it shall, throughout the term of this lease, carry public liability
insurance with respect to the Center with an aggregate liability coverage of not
less than $50 million and that, throughout the term of this lease, Tenant shall
be named, directly or indirectly, as an additional insured on all public
liability insurance actually carried by Landlord with respect to the Center,
whether or not some of such insurance is required pursuant to the provisions of
this subsection (a).  Tenant acknowledges that Landlord may maintain such public
liability insurance pursuant to a so-called blanket policy covering the Center
and other properties owned by Landlord and its affiliates, and that Landlord's
aggregate liability requirement pursuant to this subsection may be met by use of
a primary liability policy and one or more excess or umbrella policies, so long
as the obligations of Landlord pursuant to this subsection are in fact met.
With respect to the other tenants of the Center, Landlord shall use its best
efforts to obtain in all leases executed after the date hereof provisions which
are substantively identical to Section 8.05 of the lease form.

     (b)  Landlord's rental interruption insurance pursuant to Section 8.03 of
the lease form may be for any period of time determined, from time to time, by
Landlord.  However, Landlord may include in common area costs only such premium
(or portion thereof) as covers the first twelve (12) months of any such
interruption.

     (c)  The cost of reserves and deductibles which are maintained by Landlord
which may be charged to common area costs for any calendar year shall not exceed
the amount of premiums saved for such year by maintaining such reserves and
deductibles.

                                                        LANDLORD'S     TENANT'S
                                                         INITIALS      INITIALS
                                                        ----------     --------
                                                          J.E.S.          DD
                                                          H.T.S.

                                       62
<PAGE>
 
Section 8.04  Insurance Policies
------------  ------------------                  

     (a)  The language "and licensed or . . . State of California" appearing in
the first sentence of Section 8.04 of the lease form shall be deleted.  The
language "to Landlord" appearing at the end of the fourth sentence of such
Section shall be amended to read "as provided in Addendum Section 8.02."

     (b)  Tenant shall be required to maintain each of the provisions specified
in the fourth (4th) sentence of Section 8.04 of the lease form only to the
extent that such required provision is available to Tenant at no additional cost
other than a nominal service charge.

     (c)  Prior to the Rent Commencement Date, Tenant may maintain course of
construction or similar insurance rather than the insurance required pursuant to
Section 8.02(a) of the lease form.


Section 8.05  Waiver of Subrogation
------------  ---------------------                     

     (a)  The following shall be added at the beginning of the first sentence of
Section 8.05 of the lease form:

          "To the extent permitted by the insurance policies maintained by the
          respective parties,"

     (b)  In the event that either party shall be unable to obtain from its
insurance carrier a waiver (or an agreement to recognize such party's waiver) of
the type described in Section 8.05 of the lease form, such party shall add the
other party as an additional or named insured, as applicable, on any such policy
carried by the first party.  Such additional or named insured added pursuant to
this Section shall have no obligations pursuant to the policy maintained by the
other party.


Section 8.06  Indemnity
------------  ---------         

     (a)  The word "reasonable" shall be added before the word "attorneys'" in
the first sentence of Section 8.06 of the lease form.  The language "use or
occupation of . . . of this lease by" appearing in the same sentence shall be
amended to read "acts or omissions of."  The last sentence of such Section shall
be amended to read as follows:

          "Provided, however, that the foregoing shall not extend to any damage
          or injury which was caused by the negligence of Landlord, its agents
          or others for whom Landlord is responsible pursuant to Addendum
          Section 8.06."

     (b)  In the event that each party hereto shall be determined by a court of
competent jurisdiction to be partially liable for any damage or injury of the
types specified in Section 8.06 of the lease form, each party shall be
responsible for that portion of the total liability assessed (including
attorneys' fees and costs) which bears the same relation to the total as such
party's percentage of liability bears to one hundred percent (100%).

     (c)  To the fullest extent permitted by law, Landlord shall indemnify,
defend and hold harmless Tenant from and against any liability or expense
(including but not limited to reasonable attorneys' fees and costs of defense)
for any damage or injury to persons or property in or about the Center which may
result from the acts or omissions of Landlord, or its agents, employees,
contractors, invitees or other persons claiming under Landlord (other than other
tenants).  In addition, if any person not a party to this lease shall institute
any other type of action against Landlord in which Tenant, involuntarily and
without cause, shall be made a party defendant, Landlord shall indemnify, hold
Tenant harmless from and defend Tenant from all liability by reason thereof.  It
is understood and agreed that payment shall not be a condition precedent to
enforcement of the foregoing indemnity.  Landlord's defense obligation hereunder
shall include the obligation, upon demand, to defend Tenant against any claim or
action of the types herein specified by legal counsel reasonably satisfactory to
Tenant.  Provided, however, that the foregoing shall not extend to any damage or
injury which was caused by the negligence or intentional action of Tenant, its
agents, employees or others for whom Tenant is responsible pursuant to Section
8.06 of the lease form.


Section 8.07  Exemption of Landlord
------------  ---------------------                     

     (a)  The following shall be added at the beginning of the first sentence of
Section 8.07 of the lease form:

          "Unless caused by the acts or omissions of Landlord, its agents or
          employees, invitees or other persons claiming under Landlord (other
          than tenants),"

     (b)  The last sentence of such Section shall be amended to read, in its
entirety, as follows:

                                                        LANDLORD'S     TENANT'S
                                                         INITIALS      INITIALS
                                                        ----------     --------
                                                          J.E.S.          DD
                                                          H.T.S.

                                       63
<PAGE>
 
          "Provided, however, that the foregoing shall not apply to any damage
          or injury which was caused by the negligence of Landlord, its agents
          or employees."


Section 8.08  Landlord's Security
------------  -------------------                   

     (a)  The language "Under no circumstances shall the Indemnified Parties"
appearing in the fourth sentence of Section 8.08 of the lease form shall be
amended to read "Provided that Landlord complies with Addendum Section 8.08,
Landlord shall not."

     (b)  Notwithstanding anything to the contrary contained in Section 8.08 of
the lease form, Landlord shall at all times during the term of this lease
maintain such security with respect to the Center as shall be consistent with
good shopping center management practices, from time to time, for similar
centers in the geographical area which includes the Center.


Sections 9.02 and 9.03  Major Damage to Center
----------------------  ----------------------                      

     Notwithstanding anything to the contrary contained in Sections 9.02 and
9.03 of the lease form:

     (a)  Landlord shall not be entitled to terminate this lease pursuant to
either such Section unless Landlord concurrently terminates the leases of all
tenants located in the Sak's, Macy's Men's, Macy's, Nordstrom wing of the Center
(as defined in Addendum Section 6.01).

     (b)  In the event of a casualty to the Premises and/or the Center which
does not result in the termination of this lease:

          (i)  Landlord shall repair or restore those portions of the Center and
the Premises originally constructed by Landlord.  For this purpose, the Premises
shall be rebuilt by Landlord to a shell condition.  A shell condition shall mean
concrete slab, exposed stud demising walls on the Premises side, exposed
underside of slab above ceiling line and all main utility lines serving the
Center and points of connection for Tenant's individual lines (but not
individual lines serving the Premises).  Tenant shall repair or restore the
balance of the Premises.

          (ii) Abatement of rent shall be pursuant to Section 9.05(a) of the
lease form (including total, if applicable) and shall be from the date of the
occurrence of the casualty to and until the earlier of (A) the date on which
Tenant completes its work in the Premises and reopens the entire Premises for
business or (B) the 90th day after Landlord completes its work of repair or
restoration to the extent reasonably necessary for Tenant to commence its work
of repair or restoration in the Premises and to continue the same to completion
without interruption.  Landlord shall, prior to the expiration of such abatement
period, complete its repair and restoration work with respect to the Premises
and the Center as necessary for Tenant to reopen and conduct its business as
permitted pursuant to this lease.

     (c)  In the event that (i) the Center is damaged so as to render the
Premises unusable with respect to more than fifty percent (50%) of the sales
area of the Premises or (ii) the damage to the Center causes the Premises to be
partially or totally inaccessible by customers and (iii) Landlord is unable to
complete its repair or restoration so as to eliminate the conditions described
in clauses (i) and (ii) above within one hundred eighty (180) days after the
occurrence of such damage, then Tenant shall have the right to cancel and
terminate this lease upon the conditions set forth below.  Within thirty (30)
days after the occurrence of a casualty which results in either condition
specified in clauses (i) and (ii), Landlord shall provide to Tenant a written
estimate of the time required for Landlord to complete its repair or restoration
work so as to eliminate such condition.  In the event that Landlord's estimate
indicates that more than one hundred eighty (180) days from the date of the
casualty will be required to complete such repair or restoration, or in the
event that Landlord's estimate is less than one hundred eighty (180) days from
the date of the casualty but such work is not completed within such one hundred
eighty (180) day period, Tenant may terminate this lease by written notice to
Landlord given within fifteen (15) days after the receipt of Landlord's estimate
or at any time after the expiration of such one hundred eighty (180) day period
from the date of the casualty and prior to completion of such work, whichever is
applicable.


Section 9.04  Damage Near End of Term
------------  -----------------------                       

     The provisions of Section 9.04 of the lease form shall be mutual so that
either party may terminate this lease in the event of a casualty described in
such Section.  Any such notice of termination shall be given within the time
period specified in such Section.  If neither party elects to terminate, repair
or restoration shall be in accordance with Sections 9.01, 9.02 or 9.03 of the
lease form.

                                                        LANDLORD'S     TENANT'S
                                                         INITIALS      INITIALS
                                                        ----------     --------
                                                          J.E.S.          DD
                                                          H.T.S.

                                       64
<PAGE>
 
Section 9.05  Abatement of Rent; Remedies for Non-Performance
------------  -----------------------------------------------

     (a)  The language "reasonably practicable" appearing in the first sentence
of Section 9.05(a) of the lease form shall be amended to read "that Tenant
determines it is reasonable to do so."  The following shall be added at the end
of such sentence:

          "; otherwise tenant can close the Premises until completion of repairs
          and restoration."

The language "but only to the extent . . . pursuant to Section 8.03" appearing
at the end of the second sentence of such Section shall be deleted.  The fourth
sentence of such Section shall be deleted in its entirety.

     (b)  Any claims by Tenant against Landlord for any damage suffered by
Tenant by reason of any damage, destruction, repair or restoration shall be
subject to the provisions of Section 8.05 of the lease form and Addendum Section
8.05.


Section 10.01  Assignment and Subletting
-------------  -------------------------                         

     (a)  The language "but only to the extent permitted by law" shall be added
before the word "terminate" in the fourth sentence of Section 10.01(a) of the
lease form.  The term "twenty-five percent (25%)" appearing in the last sentence
of the first paragraph of such Section shall be amended to read "fifty percent
(50%)."  Moreover, the language "or new issuance" appearing in such last
sentence of the first paragraph of such Section 10.01(a) shall be deleted.  The
following shall be added at the end of such sentence ", except to the extent
permitted by Addendum Section 10.01."

     (b)  The language "One Thousand Five Hundred Dollars ($1,500)" appearing in
the second paragraph of Section 10.01(a) of the lease form shall be amended to
read "Seven Hundred Fifty Dollars ($750.00)" each place where such language
appears in such paragraph.  The language "Two Thousand Five Hundred Dollars
($2,500)" appearing in such paragraph shall be amended to read "One Thousand
Seven Hundred Fifty Dollars ($1,750)."

     (c)  The language "an outline of" shall be added at the beginning of clause
(iii) of Section 10.01(b) of the lease form.  The language "including a copy . .
 . such terms and provisions" appearing in such clause shall be deleted.  The
language "if tenant is requesting a release from liability under this lease"
shall be added at the beginning of clause (iv) of such Section.  The language
"(which may be a balance sheet prepared for internal use only)" shall be added
after the word "consent" in such clause (iv).  The term "two year" appearing in
such clause (iv) shall be amended to read "one year."

     (d)  The third sentence of Section 10.01(d) shall be deleted in its
entirety.  The last sentence of such Section shall be amended to read, in its
entirety, as follows:

          "Approval of any assignment of Tenant's interest shall, whether or not
          expressly so stated, be conditioned upon such assignee assuming in
          writing all obligations of Tenant hereunder accruing subsequent to the
          date of the assignment by a written instrument in form and substance
          reasonably satisfactory to Landlord."

     (e)  The term "sixty (60) days" appearing in Section 10.01(g) of the lease
form shall be amended to read "one hundred twenty (120) days."

     (f)  Notwithstanding anything to the contrary contained in Section 10.01 of
the lease form, the provisions of Section 10.01 of the lease form shall not
apply to, Landlord's consent shall not be required in connection with and
Landlord shall not share in any rent or other consideration in connection with:

          (i)    An assignment of Tenant's interest in this lease or a
subletting of the Premises to any subsidiary, parent or affiliate of Tenant (as
the terms subsidiary, parent and affiliate are defined in Section 6.03 of the
lease form) or to any entity which is controlled by, under common control with
or which controls Tenant;

          (ii)   A sale or transfer of all or substantially all of the
outstanding capital stock of Tenant, a sale or transfer of all or substantially
all of the assets of Tenant or a sale or transfer of seventy percent (70%) or
more of the stores then operated under the same tradename then in use at the
Premises; and

          (iii)  An assignment of Tenant's interest in this lease as a part of a
merger or consolidation to which Tenant is a party.

Provided, however, that in connection with any such transaction:

                                                        LANDLORD'S     TENANT'S
                                                         INITIALS      INITIALS
                                                        ----------     --------
                                                          J.E.S.          DD
                                                          H.T.S.

                                       65
<PAGE>
 
          (1)  Except as permitted by this lease, there shall be no change in
Tenant's tradename in use at the Premises and no substantial change in the
business conducted at the Premises without, in each instance, the prior written
consent of Landlord.

          (2)  Except in the case of a merger or consolidation as to which
Tenant is not the surviving party and in which the assignee assumes the
obligations of Tenant hereunder as a matter of law, the assignee, transferee or
surviving corporation shall execute and deliver to Landlord a written assumption
of the obligations of Tenant pursuant to this lease accruing from and after the
effective date of such transaction in form and substance reasonably satisfactory
to Landlord. Such delivery shall be made concurrently with the notice provided
for in clause (5) below.

          (3)  No such assignment or subletting shall relieve Tenant from any of
its obligations hereunder.

          (4)  Any subletting shall be subject to all of the terms and
provisions of this lease and shall, to the extent permitted by law, be
terminable by Landlord upon the expiration or any earlier termination of this
lease, including a termination resulting from the agreement of Landlord and
Tenant.

          (5)  Within twenty (20) days after the effective date of the
transaction, Tenant shall deliver to Landlord a written notice of the assignment
or subletting identifying the assignee or subtenant, the effective date of the
transaction, the facts which bring such transaction within the scope of this
subsection and any change in the address for notices and billings to the tenant
pursuant to this lease.  Upon request by Landlord, Tenant shall also deliver to
Landlord a copy of the sublease or assignment documents.

     (g)  Notwithstanding the provisions of Section 10.01(e) of the lease form:

          (i)   The allocation provided for in such subsection shall include an
allocation to all assets, both tangible and intangible, which may be reasonably
deemed to have a value to the assignee or subtenant, such as trademarks,
tradenames, customer lists, logos and contract rights.  There shall not,
however, be any allocation to "goodwill."

          (ii)  In determining the amount, if any, to be allocated for the use
of the Premises or the leasehold estate, there shall be deducted form the gross
amount received or to be received by Tenant each of the following:


                (A)   The aggregate amount allocated to all other assets
pursuant to Section 10.01(e) of the lease form and clause (i) above;

                (B)   All actual out-of-pocket costs incurred by Tenant in
connection with such transaction. Such costs shall include brokerage fees and
commissions, fees and costs paid by Tenant to professionals employed by Tenant
in connection with such transaction (such as attorneys and accountants),
attorneys' fees and costs reimbursed by Tenant to Landlord, escrow fees and
costs, costs of remodeling and renovation of the Premises for such assignee or
subtenant and costs of advertising or soliciting for such assignee or subtenant
and other costs incurred in effecting the transfer of physical possession of the
Premises; and

                (C)   The then unamortized cost of improvements to the Premises
constructed and paid for by Tenant.  For this purpose, amortization shall be on
a straight line basis over the useful lives of such improvements, but not longer
than the term of this lease.

          (iii) The amount to be paid by Tenant to Landlord pursuant to Section
10.01(e) of the lease form shall be equal to fifty percent (50%) of the net
excess rent or consideration (as the terms rent and consideration are defined in
such subsection) after (A) the allocation provided for in clause (i) above and
                 -----                                                        
such subsection and (B) the deductions provided for in clause (ii) above.

          (iv)  The provisions of Section 10.01(e) of the lease form shall not
apply to any transaction described in subsection (f) above.

          (v)   In the event that rent or consideration is paid on an
installment or deferred payment basis to Tenant in connection with any such
assignment or subletting, Landlord shall receive its portion thereof on the same
basis and as and when received by Tenant. For example, if consideration for an
assignment is in the form of a promissory note payable in four (4) equal
quarterly installments, then Landlord shall receive its proportionate share of
each such quarterly installment as and when received by Tenant.

                                                        LANDLORD'S     TENANT'S
                                                         INITIALS      INITIALS
                                                        ----------     --------
                                                          J.E.S.          DD
                                                          H.T.S.

                                       66
<PAGE>
 
Section 11.02  Partial Taking
-------------  --------------              

     The language "spend more on . . . award or to" appearing in the last
sentence of Section 11.02 of the lease form shall be deleted.  The following
shall be added at the end of such Section:

          "Upon any reduction in the Minimum Rent, the Percentage Rent
          breakpoints shall be adjusted as provided in Section 3.03(a) of the
          lease form."


Section 11.03  Taking of Center
-------------  ----------------                

     (a)  Notwithstanding the provisions of Section 11.03 of the lease form,
Landlord shall not be entitled to terminate this lease pursuant to such Section
unless Landlord concurrently terminates the leases of all tenants located in the
Sak's, Macy's Men's, Macy's and Nordstrom wing of the Center (as defined in
Addendum Section 6.01).

     (b)  In addition to Landlord's right to terminate pursuant to Section 11.03
of the lease form, Tenant shall also have the right to terminate in the event of
a taking of a major portion of the Center.  For the purposes of this provision,
taking of a major portion of the Center shall mean a taking of (a) two or more
of the Macy's, Sak's, Macy's Men's and Nordstrom stores or (b) other stores
located in the Macy's, Sak's, Macy's Men's and Nordstrom wing of the Center (as
defined in Addendum Section 6.01) with an aggregate Floor Area of 70,000 square
feet or more.  Tenant shall also have the right to terminate this lease in the
event of a taking which interferes, in Tenant's reasonable business judgment, in
a material way with the conduct of business by Tenant in the Premises as
permitted by this lease.  Such a taking shall include a taking which (i)
materially adversely affects customer access to or the view of the Premises from
the Enclosed Mall or which (ii) includes a taking of more than 3,500 square feet
of Floor Area of the Premises.  Such right to terminate shall be exercised, if
at all, by written notice from Tenant to Landlord given within thirty (30) days
after Tenant's receipt of written notice from Landlord as to the portion of the
Center to be taken.  If Tenant is entitled to terminate this lease pursuant to
this Section and timely and properly does so, this lease shall terminate on the
date upon which the condemning authority requires possession, and the provisions
of Section 16.28 of the lease form shall apply with respect to such termination.


Section 11.04  Awards
-------------  ------      

     The last sentence of Section 11.04 of the lease form shall be amended to
read, in its entirety, as follows:

          "Nothing contained herein, however, shall be deemed to preclude Tenant
          from obtaining, or to give Landlord any interest in, any award to
          Tenant for loss of or damage to Tenant's trade fixtures and removable
          personal property, for damages for cessation or interruption or
          relocation of Tenant's business, or for unamortized costs of fixtures
          and leasehold improvements paid for by Tenant and not reimbursed to
          Tenant by Landlord."


Section 11.05  Sale Under Threat of Condemnation
-------------  ---------------------------------

     The words "under threat of condemnation" shall be added after the words
"and/or convey" in the second sentence of Section 11.05 of the lease form.


Section 12.02  Furnishing of Services
-------------  ----------------------                      

     The language "the lesser of Landlord's cost of providing such services or"
shall be added after the word "exceed" in the first sentence of Section 12.03 of
the lease form.  The words "without notice" in the last sentence of such Section
shall be amended to read "on the same terms as a regulated purveyor of such
service could discontinue."


Section 12.03  Interruption of Service
-------------  -----------------------                       

     Notwithstanding the provisions of Section 12.03 of the lease form, in the
event that any failure or interruption of the type described in such Section
continues for three (3) or more consecutive days, then all rent payable by
Tenant pursuant to this lease shall be abated for the period of such
interruption in proportion to the degree of interference with Tenant's
operations in the Premises, including totally, if applicable.  For this purpose,
"degree of interference" shall be determined taking into account the actual
interference with or prevention of Tenant's business in the Premises, and Tenant
may, in its reasonable judgment, close the Premises entirely during such failure
or interruption if, in Tenant's reasonable judgment, Tenant is unable to
reasonably operate during such period.  No such abatement shall, however, defeat
or diminish Landlord's right to recover upon any rental interruption insurance
maintained by Landlord.

                                                        LANDLORD'S     TENANT'S
                                                         INITIALS      INITIALS
                                                        ----------     --------
                                                          J.E.S.          DD
                                                          H.T.S.

                                       67
<PAGE>
 


  [MAP OF CENTRAL ORANGE COUNTY AREA LOCATING THE FOLLOWING SHOPPING CENTERS]

                            1.  SOUTH COAST PLAZA  
                            2.  FASHION ISLAND 
                            3.  HUNTINGTON CENTER
                            4.  WESTMINSTER MALL  
                            5.  MAIN PLACE  
                            6.  THE CITY  
                            7.  BUENA PARK MALL  
                            8.  ANAHEIM PLAZA  
                            9.  ORANGE MALL  
                            10. BREA MALL  
                            11. LAGUNA HILLS MALL 
                            12. MISSION VIEJO MALL

                               SOUTH COAST PLAZA
                                  EXHIBIT B-2
                               -----------------


                                                          LANDLORD'S  TENANT'S
                                                           INITIALS   INITIALS
                                                          ----------  --------
                                                            J.E.S.       DD
                                                            H.T.S.

<PAGE>
 
  [MAP OF CENTRAL ORANGE COUNTY AREA LOCATING THE FOLLOWING SHOPPING CENTERS]

                             1. SOUTH COAST PLAZA
                             2. FASHION ISLAND
                             3. HUNTINGTON CENTER
                             4. WESTMINSTER MALL
                             5. MAIN PLACE
                             6. THE CITY
                             7. LAGUNA HILLS MALL
                             8. MISSION VIEJO MALL

                               SOUTH COAST PLAZA
                                  EXHIBIT B-2
                               -----------------
                                    CENTRAL
                                 ORANGE COUNTY
                                     AREA

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                               EXHIBIT "B-2(B)"

<PAGE>
 
South Coast Plaza
Management Offices
3333 Bristol Street
South Coast Plaza, CA  92626

Attn: General Manager

          Re:  Lease Dated June 5, 1998

Gentlemen:

          This letter is directed to you in connection with the referenced lease
(the "Lease") and Section 6.03 thereof.  The undersigned hereby represents and
warrants to you that the undersigned is, at the date hereof, in compliance with
the provisions of such Section of the Lease.  In other words, neither the
undersigned nor any parent, affiliate or subsidiary of the undersigned (as those
terms are defined in such Section 6.03), directly or indirectly operates,
manages or has any interest in any competing store with that operated under the
Lease and located within the areas described in such Section of the Lease.

                                         Very truly yours,

                                         St. John Knits, Inc.


                                         By
                                            ------------------------------
                                         Title
                                              ----------------------------
                                         Dated:
                                               ---------------------------



                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
                                  Exhibit B-3
<PAGE>
 
                               SOUTH COAST PLAZA

                                    GENERAL

                        DESCRIPTION OF LANDLORD'S WORK*

                                     AND OF

                                 TENANT'S WORK


-------------------
  * NOTWITHSTANDING ANY OF THE PROVISIONS OF THIS OR ANY OTHER EXHIBIT, THERE
SHALL BE NO LANDLORD'S WORK WITH RESPECT TO THE PREMISES COVERED BY THE LEASE TO
WHICH THIS EXHIBIT IS ATTACHED UNLESS SET FORTH SPECIFICALLY IN AN ADDENDUM OR
AMENDMENT TO THIS LEASE, AND ANY SUCH LANDLORD'S WORK SHALL BE LIMITED ONLY TO
THOSE ITEMS SPECIFICALLY SO SET FORTH. SUCH LANDLORD'S WORK, IF ANY, SHALL BE
PERFORMED IN ACCORDANCE WITH THE STANDARDS SET FORTH HEREIN.

                                   Exhibit C
<PAGE>
 
Section 13.01  Defaults
-------------  --------

     (a)  The second sentence of Section 13.01(a) of the lease form shall have
no application with respect to this lease.

     (b)  The words "in either case" shall be added after the word "Landlord"
the first time such word appears in Section 13.01(b) of the lease form. The term
"three (3) days" appearing in such Section shall be amended to read "five (5)
business days after Tenant's receipt of."

     (c)  The term "ten (10)" appearing in the first sentence of Section
13.01(c) of the lease form shall be amended to read "twenty (20)" in each place
where such word appears. The third sentence of such Section shall be deleted in
its entirety.

     (d)  Clauses (i), (ii), (iii) and (v) of Section 13.01 (d) shall be deleted
in their respective entireties.  The term "thirty (30)" appearing in clause (iv)
of such Section shall be amended to read "ninety (90)."

     (e)  The term "abandonment" as used in Section 13.01(a) of the lease form
shall include removal by Tenant of its merchandise, fixtures and equipment from
the Premises accompanied by either (i) a closure thereof with a duration of five
(5) consecutive days and removal of Tenant's signs or other objective evidence
that Tenant does not intend to reopen for business in the Premises or (ii)
delivery of Premises keys to Landlord or its agents.  Abandonment shall not
include any permitted closure of the Premises (irrespective of the duration
thereof) for remodeling, rebuilding or as otherwise expressly permitted by this
lease.  Nothing herein shall prevent Landlord from establishing in any court of
competent jurisdiction an abandonment of the Premises by any other facts
accepted by such court.

     (f)  Notwithstanding the provisions of Section 13.01(d) of the lease form,
the occurrence of an event described in clause (iv) thereof shall not constitute
a default by Tenant pursuant to this lease unless such seizure continues for the
ninety (90) day period therein described and for five (5) days after Tenant's
receipt of a notice of default with respect thereto given by Landlord after the
expiration of such ninety (90) day period.

Section 13.02  Remedies
-------------  --------

     (a)  The following shall be added after the word "lease" in the first
sentence of Section 13.02(a) of the lease form:

          "(for all purposes of this lease, Tenant shall not be in default, and
          a default shall not be deemed to have occurred unless Tenant has
          failed to perform an obligation of Tenant hereunder, Landlord shall
          have given to Tenant a notice thereof and such failure shall continue
          beyond any applicable grace period)"

     (b)  The language "amount of such loss . . . be reasonably avoided"
appearing in clause (A) of Section 13.02(a)(i) of the lease form shall be
amended to read "fair market rental value of the Premises for the balance of the
term."

     (c)  Sections 13.02(c) and the first sentence of Section 13.02(f) of the
lease form shall each be deleted in their respective entireties.  The following
shall be added at the end of Section 13.02(e) of the lease form:

          ", but only after a default (i.e., failure to perform, Landlord's
          notice to perform and Tenant's failure to cure within the applicable
          grace period)."

Section 13.03  Default by Landlord
-------------  -------------------

     Notwithstanding the provisions of Section 13.03 of the lease form, Tenant
shall not be required to provide the thirty (30) days notice specified in such
Section but may instead make repairs or otherwise cure for Landlord at
Landlord's expense under the following circumstances:

     (a)  The problem or condition necessitating such repair or cure shall be an
emergency or shall materially interfere with Tenant's ability to operate in the
Premises as permitted by this lease.  As used herein, an emergency shall be a
condition or state of facts which constitutes an imminent danger of damage to
property or physical harm to persons.

     (b)  Tenant shall first notify Landlord of the emergency or problem and
Landlord shall fail to cure the problem within a reasonable period of time after
such notice.  The notice required by this subsection may be oral, and what
constitutes a reasonable period of time shall be determined with reference to
the nature of the danger posed by such emergency or the interference caused by
such problem.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.
                                      68
<PAGE>
 
     (c)  The repair work conducted by Tenant at Landlord's expense shall be
limited to that reasonably necessary to cure the problem or condition as to
which Tenant has notified Landlord, and may not include any change to the
structure of the Center or any main electrical, water, plumbing or gas line or
the main heating, ventilating and air conditioning system for the Center, all as
reasonably determined by Tenant in its good faith judgment.

     (d)  Promptly upon completion of such work, Tenant shall pay the cost
thereof and supply to Landlord a paid receipt or other documentary evidence
reasonably satisfactory to Landlord as to the nature and cost of such work.
Landlord shall reimburse Tenant for the cost of such work within twenty (20)
days after receipt of such evidence as to the nature and cost of the work so
performed by Tenant.

     (e)  In no event may Tenant exercise its right under this Section if
landlord commences to cure the problem or condition within a reasonable period
of time after notice by Tenant and thereafter diligently pursues the same to
completion.

Section 13.04  Expense of Litigation
-------------  ---------------------

     (a)  The second sentence of Section 13.04 of the lease form shall have no
application with respect to this lease.

     (b)  For the purposes of Section 13.04 of the lease form, the term
"prevailing party" shall mean (i) the party determined to be the prevailing
party by the judge or arbitrator before whom a matter is determined, if a matter
is determined before a judge or arbitrator or (ii) if a matter is resolved
without a judge or arbitrator, the party whose claim is closest to the actual
resolution of a matter.  By way of example of the operation of clause (ii), a
resolution which results in payment by Tenant of all amounts claimed by Landlord
or performance by Tenant of all obligations claimed to be due by Tenant would
render Landlord as the prevailing party, while a resolution which results in
payment by Tenant of less than one-half (1/2) of the amount claimed by Landlord
or performance of only a portion of the obligations claimed to be due by Tenant
would render Tenant as the prevailing party.  Nothing herein shall prevent the
parties, in any resolution of a claim or claims between them, from reaching a
different agreement as to a prevailing party or that there is no prevailing
party.  In addition, if any dispute or claim is resolved without the filing of
an action (or an arbitration proceeding under Addendum Section 4.03 or Section
13.09 of the lease form) (such as payment after a notice to pay or quit), there
shall be no prevailing party and no entitlement to recovery of attorneys' fees
unless the parties specifically agree to the contrary.

Section 13.05  Holding Over
-------------  ------------

     (a)  The language "If Landlord so . . . year term; otherwise" appearing in
the second sentence of Section 13.05 of the lease form shall be deleted.

     (b)  Notwithstanding the provisions of Section 13.05 of the lease form,
Minimum Rent for the first 120 days of any holding over shall be in an amount
equal to one hundred fifty percent (150%) of the monthly Minimum Rent in effect
at the end of the term.  Thereafter for the duration of the holding over Minimum
Rent shall be in an amount equal to three hundred percent (300%) of the monthly
Minimum Rent in effect at the end of the term.  In addition, clauses (b) and (c)
of such Section shall apply only to a holding over with a duration of forty-five
(45) days or more.

Section 13.06  Landlord's Rights
-------------  -----------------

     The first sentence of Section 13.06 of the lease form shall have no
application with respect to this lease.  The words "this Article" appearing in
the second sentence of such Section shall be amended to read "Article XIII."
the term "ten (10)" appearing in the fourth sentence of such Section shall be
amended to read "thirty (30)."  The last sentence of such Section shall be
deleted in its entirety.

Section 13.07  Waiver of Landlord's Lien
-------------  -------------------------

     Landlord hereby waives all lien rights with respect to all personal
property, equipment, machinery and fixtures of Tenant placed by Tenant in the
Premises.  Landlord shall, within twenty (20) days after receipt of written
request therefor from tenant, execute and deliver to Tenant or Tenant's lender a
waiver of any lien of Landlord upon Tenant's personal property in the Premises
and a consent to a lien on such personal property by any such lender.  Provided,
however, that in connection with any such waiver and consent:

     (a)  The lien granted to any such lender may extend to Tenant's leasehold
hereunder but shall not include the possessory interest pursuant to this lease
without the prior written consent of Landlord, which may be granted or withheld
in Landlord's sole discretion.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      69
<PAGE>
 
     (b)  Landlord shall not be obligated to assist any lender or its agents in
gaining entry to the Premises or in removing any personal property therefrom.
Landlord shall, however, provide to one (1) such lender whose name and address
are furnished to Landlord in writing by Tenant a copy of each notice thereafter
given by Landlord to Tenant pursuant to Section 13.01 of the lease form.  Such
notice shall be furnished to such lender concurrently with service thereof upon
Tenant.  In addition, Landlord shall provide to such lender, upon any
termination (but not expiration) of this lease, written notice as to the
termination of this lease and an opportunity for fifteen (15) days following
such notice to remove from the Premises all property of Tenant in which such
lender claims a lien.  Such removal right shall not extend to any item which is
the property of Landlord pursuant to this lease.

     (c)  Landlord shall not be obligated to permit any lender or its agents to
conduct any auction or similar sale in the Premises, or to permit Tenant or any
lender or its agents to store any such personal property in the Premises more
than fifteen (15) days after the expiration or any earlier termination of this
lease.

     (d)  Upon any removal of Tenant's personal property, fixtures and equipment
from the Premises, Tenant's lender or such lender's agents shall, concurrently
with such removal and at the sole cost and expense of such lender, repair any
damage to the Premises caused by such removal and otherwise take such action as
necessary to eliminate any unsafe condition (such as capping of any exposed
utility lines) in the Premises caused by such removal.

     (e)  The form and substance of such instrument shall be reasonably
satisfactory to Landlord.

Section 14.01  Common Area Definition
-------------  ----------------------

     (a)  Notwithstanding the provisions of Section 14.01 of the lease form, no
such changes by Landlord shall materially adversely affect customer access to or
visibility of the Premises store-front from the Enclosed Mall.  The foregoing
provision shall not apply to any improvements located in the Enclosed Mall as of
the date of this lease, any low (i.e., not to exceed three (3) feet in height)
items such as benches, planters and trash receptacles or any temporary items
used in connection with any work of repair or maintenance of the Enclosed Mall,
such as scaffolding.  Any such scaffolding located in front of the Premises
storefront shall (i) be located in such manner as shall not prevent customer
access to the Premises from the Enclosed Mall and (ii) be located in front of
the Premises only for the minimum period reasonably necessary to accomplish the
work for which such scaffolding is erected.

     (b)  Landlord shall not convert the Center from an enclosed mall center to
an open air mall center.

     (c)  Notwithstanding the provisions of Section 14.01 of the lease form,
Landlord shall not during the term of this lease make any material change to the
Center which shall cause (i) the Center to cease to be a regional enclosed mall
retail center or (ii) substantially and adversely alter the quality of the
Center.  For the purpose of this subsection, examples of the types of changes
which would violate the provisions of this subsection would be conversion of a
substantial portion of the Floor Area of the Center or parking for the Center to
non-retail use such as offices, miniature golf, bowling alleys, amusement parks,
manufacturing or hotel usage, conversion of a substantial portion of the Center
to a discount or outlet type operation, any substantial addition to the Center
which consists of one or more of the foregoing types of uses and any conversion
of a substantial portion of the Center (or substantial addition to the Center)
which is devoted solely to restaurant and/or fast food uses.  For this purpose,
"substantial" shall mean (iii) thirty-five percent (35%) or more of the Floor
Area of the Center as of the date of this lease or (iv) twenty-five percent
(25%) of the Floor Area of the Sak's, Macy's, Macy's Men's and Nordstrom wing of
the Center, as defined in Addendum Section 6.01.  For the purposes of this
subsection, examples of changes which would not be a violation of the provisions
of this subsection would be replacement of any department store with another
department store of comparable quality, the addition to the Center of not more
than two (2) additional department stores of comparable quality to those
currently at the Center, the addition to the Center of additional Enclosed Mall
stores, the addition to the Center of any parking (including structure parking)
necessary to serve any additions to or changes to the Center not prohibited by
the provisions of this subsection and replacement, from time to time, of
Enclosed Mall tenants at the Center with other tenants with uses of comparable
or better quality.

Section 14.02  Use
-------------  ---

     All rules and regulations established by Landlord pursuant to Section 14.02
of the lease form shall be enforced in a uniform and non-discriminatory manner
against all tenants at the Center other than major department stores.

Section 14.03  Control by Landlord
-------------  -------------------

     (a)  The language "such manner as . . . to be appropriate" appearing in the
first sentence of Section 14.03(a) of the lease form shall be amended to read "a
first class manner consistent with the current image of the Center."

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      70
<PAGE>
 
     (b)  The language "Subject to the provisions of subsection (a) above,"
shall be added at the beginning of the first sentence of Section 14.03(b) of the
lease form. The language "in the opinion of Landlord" appearing in the fourth
sentence of such Section shall be deleted. The words "use reasonable effort to"
shall be added before the word "restrain" in the same sentence.

     (c)  The language "assume responsibility for compliance by" appearing in
the fourth sentence of Section 14.03(c) of the lease form shall be amended to
read "notify" and the word "with" in such sentence shall be amended to read
"of." The language "charge Tenant, as . . . those so designated" appearing in
the fifth sentence of such Section and the language "Tenant acknowledges that
Landlord may" appearing in the sixth sentence of such Section shall be deleted.

     (d)  The words "elects or" appearing in the first sentence of Section
14.03(d) of the lease form shall be deleted.  The words "and voluntary"
appearing in the first sentence of clause (i) of such Section shall be deleted.
The words "or voluntary association" appearing in clause (iii) of such Section
shall be deleted.

     (e)  Notwithstanding the provisions of Section 14.03(b) of the lease form:

          (i)   Landlord shall notify Tenant in writing with respect to any
vehicle of Tenant or Tenant's employees improperly parked at the Center (other
than vehicles parked in no-parking areas).  In the event that such vehicle is
again improperly marked, no notice shall be given and Landlord may simply tow or
cause such vehicle to be towed.

          (ii)  With respect to any vehicle parked in an area marked as a no-
parking area, no notice shall be required.  Landlord may tow or cause such
vehicle to be towed.

          (iii) With respect to any vehicles towed pursuant to this Section,
the owner of the vehicle shall be responsible to pay the towing and storage
charges incurred as a condition to reclaiming the vehicle.

          (iv)  For so long as Landlord operates a valet parking service at the
Center, Landlord shall maintain a valet park station at either of (A) the
entrance to the Enclosed Mall located between the Macy's Men's Store and Sak's
or (B) in the westerly portion of the north parking structure or at the entrance
to the Enclosed Mall westerly of such north parking structure.

          (v)   The third sentence of such Section shall be enforced in a
uniform and non-discriminatory manner against the tenants of the Center.

     (f)  The provisions of Section 14.03(c) of the lease form shall be enforced
in a uniform and non-discriminatory manner against the tenants of the Center.

     (g)  The words "required" and "mandatory" appearing in Section 14.03(d) of
the lease form and clause (i) thereof shall include any method or alternative
selected by Landlord to reach a governmentally required objective with respect
to parking or traffic management.

Section 14.04  Common Area Costs
-------------  -----------------

     (a)  The language "Subject to the limitations set forth in Addendum Section
14.04," shall be added at the beginning of the first sentence of Section 14.04
of the lease form.  The words "not separately metered to Tenants" appearing in
clause (a) of Section 14.04 of the lease form shall be amended to read "for
utilities not supplied to leasable premises."  The parenthetical phrase
appearing in clause (h) of such Section shall be deleted.

     (b)  Notwithstanding the provisions of Section 14.04 of the lease form, the
following shall not be included in common area costs charged to Tenant:

          (i)   Costs incurred by Landlord which are, under generally accepted
accounting principles, required to be capitalized rather than expensed, other
than as specifically permitted pursuant to the provisions of clause (iii) and
subsections (f) and (g) below;

          (ii)  Depreciation of improvements to the Center; and

          (iii) Amortization of the cost of improvements calculated to reduce
common area costs in excess of the costs so saved as the result of such
improvements in any calendar year.

     (c)  The inclusion of deductibles and reserves in common area costs shall
be subject to the limitations of Addendum Section 8.03.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      71
<PAGE>
 
     (d)  Personal property taxes and vehicle taxes and fees included in common
area costs shall be limited to those with respect to personal property and
vehicles used in the operation and maintenance of the Center.

     (e)  The costs included in common area costs pursuant to clause (u) of
Section 14.04 of the lease form shall be limited to the compensation and
benefits of personnel employed in such offices, utilities furnished to such
offices, furniture, furnishings and supplies for such offices and the
maintenance of such offices.

     (f)  Capital costs incurred to comply with governmental requirements
applicable to the Center shall be limited to governmental requirements which
become applicable to the Center after June 25, 1992, and such costs shall be
amortized over the useful lives of the improvements constructed or purchased
with such capital expenditures, with such useful lives to be as reasonably
determined by Landlord in accordance with generally accepted accounting
principles.  Only the amortization applicable to any calendar year shall be
included in common area costs for such calendar year.

     (g)  Notwithstanding the last paragraph of Section 14.04 of the lease form,
common area costs charged to Tenant shall not include any capital costs incurred
with respect to the original construction of the Center or with respect to any
addition to the Center, such as an additional department store, an additional
parking area or structure, additional enclosed mall area or a pedestrian bridge
across Bear Street.  The costs of maintaining and operating any common area
additions to the Center shall, however, be included in common area costs,
subject to the other limitations on common area costs chargeable to Tenant
contained in this lease.  Moreover, as to other capital expenditures included in
common area costs charged to Tenant, Landlord shall amortize such costs in
accordance with generally accepted accounting principles, and only the
amortization applicable to any calendar year shall be included in common area
costs charged to Tenant for such calendar year.

     (h)  Any cost incurred by Landlord pursuant to Section 14.04 of the lease
form for which Landlord is actually reimbursed from insurance proceeds,
condemnation proceeds, a warranty, another tenant or any other source shall not
be included in common area costs to the extent of such reimbursement.  Any such
cost incurred by Landlord for which Landlord is entitled to be reimbursed from
insurance proceeds, condemnation proceeds, another tenant or any other source
not including a warranty, shall not be included in common area costs to the
extent of such entitlement, whether or not Landlord actually receives such
reimbursement.  Any such cost incurred by Landlord for which Landlord is
entitled to be reimbursed from a warranty shall not be included in common area
costs only to the extent of the reimbursement actually received by Landlord from
the maker of such warranty.

     (i)  Notwithstanding anything to the contrary contained in this lease, in
no event shall the Other Center be treated as a part of the Center for purposes
of determining Tenant's common area costs or other additional rent payable by
Tenant pursuant to this lease. However, if Landlord constructs a pedestrian or
other bridge across Bear Street between the Center and the Other Center,
allocation by Landlord of the cost of operating and maintaining such bridge
between common area costs of the Center and common area costs of the Other
Center in a manner deemed reasonable by Landlord shall not violate the
prohibition contained in the first sentence of this subsection.

Section 14.05  Proportionate Payment
-------------  ---------------------

     (a)  The first sentence of Section 14.05(a) of the lease form shall read,
in its entirety, as follows:

          "Tenant's proportionate share of such common area costs shall be that
          portion thereof which the Floor Area of the Premises bears to the
          greater of (i) the Floor Area of premises from time to time leased and
          occupied by Tenants of the Center or (ii) ninety-five percent (95%) of
          the aggregate Floor Area of the Center, in each case excluding tenant
          owned buildings and certain major tenants who pay on a basis other
          than a proportionate share."

     (b)  Any overpayment by Tenant of common area costs to be credited or
refunded to Tenant shall bear interest at the rate determined pursuant to
Section 16.06 from July 1 of the calendar year for which collected until the
date such overpayment is credited or refunded to Tenant.

     (c)  The word "installments" appearing in the seventh sentence of Section
14.05(b) of the lease form shall be amended to read "rent."

Section 15.01  Prohibited Activities
-------------  ---------------------

     (a)  The word "side" shall be added after the word "exterior" the first
time such word appears in clause (a) of Section 15.01 of the lease form. The
word "four" appearing in clause (b) of such Section shall be amended to read
"two" the first time such word appears in such clause. The language "are
objectionable to Landlord or which" appearing in

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      72
<PAGE>
 
clause (d) of such Section shall be deleted as shall the language "the effect of
which . . . outside the Premises" appearing in the same clause.

     (b)  Nothing contained in Section 15.01(b) of the lease form shall preclude
the use of posters as a part of Tenant's store window or store decorations,
shall preclude the use of professionally done price signs in Tenant's store
windows or prohibit the use of professionally done signs generally so long as
not located within two (2) feet of Premises doors and windows.  For so long as
Tenant or a parent, subsidiary or affiliate of Tenant is the tenant pursuant to
this lease, the provisions of such Section shall apply only to items to be
affixed to the storefront of the premises.

     (c)  Landlord covenants and agrees to enforce the provisions of clauses
(c), (d) and (e) of Section 15.01 on a uniform and non-discriminatory basis
against tenants of the Center other than department stores.

     (d)  With respect to any request for Landlord's approval pursuant to
clauses (a), (b) or (d) of Section 15.01 of the lease form, Landlord's approval
shall not be unreasonably withheld taking into account the high quality of the
Center and the intended high quality of Tenant's store in the Premises.

     (e)  The term "professional quality" in Section 15.01(f) of the lease form
shall mean a quality compatible with the high quality of merchandise to be sold
in the Premises, even if not actually prepared by a professional sign maker.

Section 15.02  Maintenance
-------------  -----------

     For the purposes of Section 15.02 of the lease form, Landlord's right of
notice and self-help shall be limited to repair or replacement of broken items
and clean-up and removal of dust, dirt, debris and liquids.

Section 15.05 and 15.07  Tenant's Advertising
-----------------------  --------------------

     Notwithstanding the provisions of Sections 15.05 and 15.07 of the lease
form, for so long as Tenant or any assignee permitted without Landlord's consent
pursuant to Addendum Section 10.01 is the tenant pursuant to this lease:

     (a)  If and for so long as:

          (i)   Tenant continues in effect a national or corporate advertising
program; and

          (ii)  In advertisements for Tenant's continental United States stores
operated under the same tradename then in use at the Premises which list or
identify a number of locations with such tradename within the continental United
States, Tenant includes in such listing or identification the Premises with
equal prominence (i.e., tone, position, color, typeface, type style, etc.) to
the other locations listed therein,

the cost of such advertisements shall be credited against one percent (1%) of
Tenant's annual advertising requirement pursuant to Section 15.05 of the lease
form.  Tenant shall conduct local advertising with an aggregate cost equal to
the lesser of (A) one percent (1%) of Tenant's gross sales on an annual basis or
(B) $50,000 on an annual basis (prorated for any partial lease year).

     (b)  Section 15.05(c) of the lease form shall have no application with
respect to this lease.

     (c)  Tenant shall be required to purchase an advertisement in only one of
Landlord's catalogs published each year pursuant to Section 15.07 of the lease
form.  Tenant shall select the particular catalog in which to advertise each
year and need not select the same catalog in each year.  The cost of such
catalog shall be applied against Tenant's annual local advertising requirement.

Section 15.06  Acceptance of Center Gift and Certificates
-------------  ------------------------------------------

     There shall be no charge or fee to Tenant and no discount on payments to
Tenant in connection with its acceptance of Landlord's gift certificates
pursuant to Section 15.06 of the lease form.

Section 15.08  Signs on Exterior Fascia
-------------  ------------------------

     Landlord covenants and agrees to enforce the policy set forth in Section
15.08 of the lease form in a uniform and non-discriminatory manner.  Tenant
acknowledges that such policy does not prohibit (a) signage on the exterior
fascia of major department stores, (b) signage located on the exterior fascia of
certain restaurants located at the Center, (c) exterior signage for certain
tenants having entrances which open directly on the parking areas of the Center
and (d) exterior

                                                          LANDLORD'S    TENANT'S
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                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      73
<PAGE>
 
signage at entrances to the Enclosed Mall for a few existing tenants. Landlord
agrees that such Section does not apply to signage on the Premises storefront
onto the Enclosed Mall.

Section 16.01  Offset Statement
-------------  ----------------

     (a)  Section 16.01(b) and the second sentence of Section 16.01(c) of the
lease form shall have no application with respect to this lease.

     (b)  Landlord shall at any time and from time to time upon not less than
twenty (20) days' prior written notice from Tenant execute, acknowledge and
deliver to Tenant a statement in writing (i) certifying that this lease is
unmodified and in full force and effect (or, if unmodified, stating the nature
of such modification and certifying that this lease, as so modified, is in full
force and effect) and the dates to which the Minimum Rent and additional rent
are paid in advance, if any, (ii) acknowledging that there are not, to
Landlord's knowledge, any uncured defaults on the part of Tenant hereunder, or
specifying such defaults, if any are claimed, and (iii) acknowledging (if true)
the accuracy of such other facts regarding Landlord or this lease as are
included in such statement by Tenant.  Any such statement may be relied upon by
any prospective purchaser or encumbrancer of Tenant's interest in this lease or
any prospective sublessee of all or any portion of the Premises.

     (c)  Landlord shall be liable for all loss, cost or expense resulting from
the failure of any assignment, subletting or financing caused by any material
misstatement contained in any estoppel certificate supplied by Landlord.

Section 16.02  Landlord's Right of Access
-------------  --------------------------

     (a)  The language "Access by Landlord . . . the Premises and" appearing in
the third sentence of Section 16.02 of the lease form shall be deleted.  The
following shall be added at the end of such third sentence:  "conducted in
compliance with Addendum Section 16.02."  the word "No" appearing in the last
sentence of such Section 16.02 shall be amended to read "The mere."  The word
"not" shall be added after the word "shall" in such sentence.

     (b)  In connection with any entry by Landlord pursuant to Section 16.02 of
the lease form which can be made without interfering with the operation of
Tenant's business in the Premises, Landlord shall make such entry in such manner
as shall not interfere with Tenant's business in the Premises.  In connection
with any other entry by Landlord, including an entry in an emergency, Landlord
shall make such entry in such manner as shall interfere as little as possible
with the operation of Tenant's business in the Premises.

Section 16.05  Deposit and Financial Statements
-------------  --------------------------------

     Landlord and Tenant acknowledge and agree that Landlord currently holds a
security deposit under the Current Lease in the amount of $19,993.34.  In
consideration of Tenant's execution of this lease, Landlord shall, within ten
(10) days after Tenant's execution and delivery of this lease, return such
security deposit to Tenant.

Section 16.06  Late Payments and Deliveries
-------------  ----------------------------

     The first sentence of Section 16.06(a) of the lease form shall be amended
to read, in its entirety, as follows:

          "Any amount due from either party to the other party hereunder which
          is not paid when due shall bear interest at the lesser of the Bank of
          America (Los Angeles) reference rate plus three (3) points or the
          maximum rate which the party to whom payment is due is then permitted
          to charge by the applicable usury law, accruing from the later of
          demand therefor or the date due until the same is fully paid.

Section 16.08  Time for Performance
-------------  --------------------

     The deletion of Section 16.08 of the lease form shall not be deemed or
construed to relieve either party of any of its obligations pursuant to this
lease or to extend the time for performance by either party of any obligation
pursuant to this lease beyond the time periods provided in this lease.  Such
deletion shall be given no meaning at all by any court or other tribunal called
upon to interpret or apply the provisions of this lease.

Section 16.11  Notices
-------------  -------

     (a)  The second sentence of Section 16.11 of the lease form shall be
deleted in its entirety. The language "to the Premises (for Tenant) or"
appearing in the third sentence of such section shall be deleted. The language
"as reflected on the delivery receipt" shall be added after the word "service"
in such third sentence of such Section.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      74
<PAGE>
 
     (b)  Landlord and Tenant acknowledge that, at the request of Tenant,
Landlord has agreed that it will not serve notices upon Tenant at the Premises.
In consideration for such agreement by Landlord, Tenant hereby waives the
requirement of personal service of notices pursuant to Code of Civil Procedure
Section 1161 et seq. and of any other statute or rule of law which requires
             -- ---                                                        
personal service of a notice upon Tenant as a condition to exercise by Landlord
of any remedy against Tenant with respect to Tenant's obligations pursuant to
this lease.  Nothing herein shall be deemed or construed to relieve Landlord of
the obligation to serve any notice upon Tenant; rather, the parties instead
agree that any such notice shall be served upon Tenant at its address for notice
by any means permitted pursuant to Section 16.11 of the lease form.  Any such
notice served upon Tenant at such address in any manner specified in Section
16.11 of the lease form shall be deemed effective upon the date determined
pursuant to such Section, notwithstanding any statute or rule of law which
specifies a later effective date for such service.  Moreover, any statute or
rule of law which extends the time for response or action by Tenant as the
result of service of a notice other than by personal service shall not apply to
notices served pursuant to this subsection (b).

     (c)  The provisions of subsection (b) above shall also extend to the
service of any complaint and/or summons for breach of this lease or for recovery
of possession of the Premises on account of such breach by Tenant. Similarly,
service of such complaint and/or summons upon Tenant or Landlord at their
respective addresses specified in the applicable Fundamental Lease Provision in
any manner specified in Section 16.11 of the lease form shall be effective upon
the date determined pursuant to such Section, notwithstanding any statute or
rule of law which specifies a later effective date for such service. Finally,
any statute or rule of law which extends the time for a response by Tenant as
the result of service of such complaint and/or summons other than by personal
service shall not apply to a complaint and/or summons served pursuant to
subsection (b) above.

Section 16.12  Brokers
-------------  -------

     The language "claiming under or through Tenant" appearing in the second
sentence of Section 16.12 of the lease form shall be amended to read "with whom
Tenant has dealt directly."  The last sentence of such Section shall be deleted
in its entirety.

Section 16.13  Waivers
-------------  -------

     The first two sentences of Section 16.13 of the lease form shall be mutual
and shall extend to actions, notices and options of each of Landlord and Tenant.
The words "by Landlord" appearing in the third sentence of such Section shall be
deleted.

Section 16.14  Recording
-------------  ---------

     The first sentence of Section 16.14 of the lease form shall be amended to
read, in its entirety, as follows:

          "Neither party shall record this lease without the prior written
          consent of the other."

Section 16.15  Advertising and Promotional Fund
-------------  --------------------------------

     (a)  In lieu of the initial Fund contribution provided for in Section
16.15(c) of the lease form, Tenant shall hold a promotional event (the "Event")
in connection with the opening of the Premises.  Such Event shall:

          (i)   Have a cost as determined by Tenant;

          (ii)  Be of a quality consistent with Tenant's store in the Premises
but be as selected by Tenant (such as a cocktail party, dinner, fashion show,
ocean cruise, golf tournament, etc.); and

          (iii) Be held during the period from thirty (30) days prior to thirty
(30) days subsequent to the opening of the Premises for business.

     If Tenant fails to hold an Event of the quality and within the time period
herein specified, Tenant shall make an additional contribution to the Fund in
the amount of $52,000.  Such additional contribution shall be paid, as
additional rent, within sixty (60) days after the opening of the Premises for
business.

     (b)  Landlord covenants and agrees that Landlord does not and will not
derive any profit from promotional fund contributions.

     (c)  Notwithstanding the provisions of Section 16.15(b) of the lease form,
Tenant's annual contribution pursuant to the Fund for any year shall not exceed
one hundred eight percent (108%) of Tenant's annual contribution to

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      75
<PAGE>
 
the Fund for the immediately prior year. However, if such increases are made
less frequently than annually, the maximum increase shall be eight percent (8%)
for each year since the last increase.

Section 16.16  Liens
-------------  -----

     The language "or bonded as permitted by the applicable provision of the
California Civil Code" shall be added after the word "record" in the second
sentence of Section 16.16 of the lease form.

Section 16.17  Subordination
-------------  -------------

     Clause (b) of Section 16.17 of the lease form shall have no application
with respect to this lease.

Section 16.18  Tenant's Authority
-------------  ------------------

     The first sentence of Section 16.18 of the lease form shall be amended to
read, in its entirety, as follows:

          "Each individual executing this lease on behalf of a party represents
          and warrants that the execution and delivery of this lease on behalf
          of such party is duly authorized, that he or she is authorized to
          execute and deliver this lease on behalf of such party and that this
          lease is binding upon such party in accordance with its terms."

Section 16.19  Safety and Health
-------------  -----------------

     Notwithstanding anything to the contrary set forth in this lease, Landlord
and Tenant acknowledge that, as a part of Tenant's Work, Tenant proposes to
install an elevator to connect the two levels of the Premises (the "Elevator").
The elevator will be located in a portion of the Premises which is located over
the existing Tiffany store at the Center ("Tiffany").  Notwithstanding anything
to the contrary set forth herein, Landlord and Tenant agree that:

     (a)  The ability of Tenant to install and operate such elevator on
economically feasible terms is a condition to the continued effectiveness of
this lease.

     (b)  As promptly as practicable, and in any event within fifteen (15) days
after Tenant's execution and delivery of this lease, Tenant shall deliver to
Landlord a conceptual plan showing the location of the Elevator in relation to
the Tiffany store and any required alterations to the Tiffany store to
accommodate the Elevator.  Landlord shall promptly present such conceptual plan
to Tiffany with a request for approval by Tiffany of the location of the
Elevator and any required alterations to the Tiffany store.  Thereafter.
Landlord and Tenant shall reasonably cooperate as necessary to obtain such
approvals by Tiffany, including supplying by Tenant of any information
reasonably requested by Tiffany.

     (c)  If (i) Tenant is unable to obtain any required governmental approval
for the installation of such elevator, (ii) the cost of such installation shall
exceed $110,000, or (iii) the operator of Tiffany shall refuse to permit any
alteration of Tiffany required to accommodate the installation of the elevator
or shall require any financial accommodation from Tenant, then, in any such
event, Tenant shall have the option to terminate this lease.  For the purposes
of clause (iii) of this subsection, Tenant shall be responsible, both as to
performance and payment of the costs thereof, to make any alterations to the
Tiffany store required to accommodate the Elevator.  The cost of such
alterations shall be counted toward the cost of the Elevator but shall not be
deemed a "financial accommodation" to Tiffany.

     (d)  Tenant's option to terminate this lease pursuant to subsection (b)
shall be exercised, if at all, by written notice to Landlord given between (A)
the thirtieth (30th) day following delivery to Landlord of the conceptual plan
provided for in subsection (b) above and (B) the sixtieth (60th) day following
delivery of such conceptual plan if (x) Tenant is unable by the date of Tenant's
notice to obtain any required governmental approval for the Elevator, (y) Tenant
reasonably determines that the cost of the Elevator will exceed $110,000 and/or
(z) Landlord and Tenant are unable to obtain the required approval of Tiffany.
If such option is not exercised in such manner and within such time period, such
option shall lapse and thereafter not be exercisable by Tenant.  If Tenant is
entitled to exercise such option and timely and properly exercises such option,
then clauses (i) through (iv) of Addendum Section 2.02(f) shall apply and Tenant
shall promptly surrender possession of the Premises to Landlord, if possession
shall previously have been tendered to Tenant.  Pending any termination of this
lease pursuant to this Section, each party shall diligently perform its
respective obligations pursuant to this lease.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      76
<PAGE>
 
Section 16.21  Non-Disclosure of Lease Terms
-------------  -----------------------------

     The word "attorneys" shall be added before the word "independent" in the
fourth sentence of Section 16.21 of the lease form.  The words ", franchisee,
licensee or concessionaire" shall be added after the word "assignee" in the same
sentence of such Section.  The following shall be added at the end of such
Section:

          "Landlord and Tenant may each also disclose the terms hereof to their
          respective parents, subsidiaries, affiliates and partners and to those
          officers, directors and employees of such persons and entities
          involved in administering this lease, performing the obligations of a
          party hereunder or otherwise having a reasonable need to know such
          terms."

Section 16.23  Force Majeure
-------------  -------------

     Notwithstanding the provisions of Section 16.23 of the lease form, such
Section shall apply with respect to delays of the types specified therein in the
performance of Tenant's Work, which delays shall operate to extend the time
period set forth in Addendum Section 2.02(c).  For the purposes of this Section
and Section 16.23 of the lease form, delays which shall extend the time period
set forth in Addendum Section 2.02(c) shall be limited to any actual (i)
industry-wide delay or failure to perform by either party affecting all similar
works of construction in the Costa Mesa, California area or in the Center, due
to strikes, lockouts or other labor or industrial disturbance (whether or not on
the part of the employees of either party hereto), civil disturbance, future
order claiming jurisdiction, act of the public enemy, war, riot, sabotage,
blockade, embargo, inability to secure customary materials, supplies or labor
through ordinary sources by reason of regulation or order of any government or
regulatory body, (ii) delays due to the failure of Tenant to secure building
permits and approvals (including the failure to obtain a temporary certificate
of occupancy) within the same time periods that normally prevailed for obtaining
such permits and approvals in June 1998, and because of delays in completing its
space plan, construction documents or tenant improvements due to changes in
building and related codes, or the interpretation thereof, but if, and only if,
the failure to secure said permits and approvals, and such changes in codes or
interpretations thereof are (x) industry-wide, affecting all similar works of
construction in Costa Mesa, California, or Center-wide, or (y) are unique to the
Center and not caused by Tenant's unique design of the Premises, (iii) delays
due to lightning, earthquake, fire, storm, hurricane, tornado, flood, washout,
explosion which affect the Center and or the Premises, and (iv) or any industry-
wide or Center-wide causes beyond the reasonable control of Tenant, or any of
its contractors or other representatives.  The inability of Tenant to obtain,
install or construct products, materials or equipment to complete its plans or
to obtain necessary building permits or approvals which are attributable to a
unique design of Tenant and not typical of a high fashion retail tenant for
similar space shall not constitute a force majeure delay and shall not delay the
Rent Commencement Date.  Nothing herein shall be deemed to limit the effect of
subsections (a) or (c) of Section 16.23 of the lease form.

Section 16.26  No Option
-------------  ---------

     (a)  The first sentence of Section 16.26 of the lease form shall have no
application with respect to this lease.

     (b)  The items to be delivered by Tenant to Landlord pursuant to Section
16.26 of the lease form prior to Landlord's delivery of the Premises to Tenant
shall be limited to the following:

          (i)   Six (6) copies of this lease, executed and initialed by Tenant
and without change from the form previously agreed upon by Landlord and Tenant.

          (ii)  Tenant's insurance certificate(s) required pursuant to Article
VIII of the lease form.

          (iii) Documentary evidence meeting the requirements of Addendum
Section 16.18.

          (iv)  The financial statements required pursuant to Section 16.05(b)
of the lease form.

          (v)   The clean-up deposit required pursuant to Section 17.04(e) of
the lease form.

Section 16.28  Termination
-------------  -----------

     Notwithstanding anything to the contrary contained in Section 16.28 of the
lease form:

     (a)  Upon the expiration or any earlier termination of this lease, any
overpayments by Tenant pursuant to this lease shall be credited against any
amounts due from Tenant to Landlord hereunder, and any balance shall be refunded
to Tenant, without interest, within thirty (30) days after such expiration or
termination.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      77
<PAGE>
 
     (b)  Landlord's right to remove and discard items of Tenant remaining in
the Premises upon surrender of the Premises to Landlord shall be subject to the
limitations upon Tenant's obligation to remove items from the Premises set forth
in Addendum Section 7.02.

Section 16.30  Accord and Satisfaction
-------------  -----------------------

     (a)  The language "Tenant or" appearing in Section 16.30(a) of the lease
form shall be deleted.  The word "alteration" appearing in such Section shall
also be deleted.  The language "or notation written . . . by the maker thereof"
shall also be deleted.

     (b)  The language "nor shall any endorsement . . . accord and satisfaction"
appearing in the first sentence of Section 16.30(b) of the lease form shall be
deleted.

Section 16.31  Financing
-------------  ---------

     (a)  Tenant's obligation pursuant to the first sentence of Section 16.31 of
the lease form shall also be subject to the condition that any such amendment
shall not decrease Tenant's rights pursuant to this lease in other than
immaterial ways.

     (b)  The provisions of the second sentence of such Section shall not
preclude Tenant from challenging any amendment which has an effect prohibited by
the first sentence of such Section, and shall apply only after the resolution of
any such challenge.

Section 17.01  Landlord's Work
-------------  ---------------

     (a)  The language "Except as otherwise provided in this lease," shall be
added at the beginning of each sentence of Section 17.01 of the lease form.

     (b)  Except as specifically provided in this lease, Landlord shall have no
obligation, either as to performance or payment of the costs thereof, to remodel
or renovate the Premises for tenant's use thereof.  All such matters shall be
the sole responsibility of Tenant pursuant to Article XVII of the lease form and
Addendum Section 17.02.

Section 17.02-17.04  Tenant's Work
-------------------  -------------

     In consideration for Landlord's execution of this Lease, Tenant agrees to
completely remodel, renovate and redecorate the Premises, including new wall and
floor coverings, a new ceiling, new fixtures and erection of a new Premises
storefront ("Tenant's Work").  Tenant's Work shall be in accordance with the
following:

     (a)  Tenant's Work shall be designed and constructed in accordance with all
applicable requirements of all governmental authorities having jurisdiction and
all applicable requirements of this lease and Exhibits "C," "E" and "F" hereto.
Without limiting the generality of the foregoing, Tenant's obligation to comply
with applicable governmental requirements shall include but not be limited to
(1) construction and equipping of any bathroom(s) required in the Premises and
(ii) compliance of Tenant's Work with the Americans With Disabilities Act,
Chapter 31A of the California Code of Regulations, the latest version of the
Uniform Building Code adopted by the City of Costa Mesa and all regulations and
other governmental pronouncements issued thereunder.  In no event shall Tenant
commence construction of Tenant's Work until and unless working drawings with
respect to such work prepared by Tenant are submitted to and approved by
Landlord.  Moreover, Tenant's Work shall include the construction of a
"flagship" quality store in the Premises with materials and design comparable in
quality to Tenant's stores in New York City, New York and the Forum Shops in Las
Vegas, Nevada.

     (b)  Tenant shall be solely responsible, for both performance and payment
of costs, for the design and construction of Tenant's Work.

     (c)  Design and construction of Tenant's Work shall be in accordance with
the following schedule:

          (i)   The PDM shall be scheduled to be held on or before June 15,
1998, and all submissions of Tenant pursuant to Section 17.02 of the lease form
shall be made at or prior to the PDM. The PDM may be held by conference
telephone call after the last of the submissions required by such Section.

          (ii)  All design work with respect to Tenant's Work shall be completed
and all required approvals with respect thereto shall be obtained on or before
the Lease Commencement Date.


                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      78
<PAGE>
 
          (iii) Tenant's Work shall be commenced promptly following the Lease
Commencement Date and after Tenant obtains the last required approvals thereof,
shall be diligently pursued and shall be completed as promptly as practicable
following commencement thereof and in any event by the Rent Commencement Date.

     (d)  By its signature hereto, Landlord agrees that Landlord will not
require Tenant to replace the existing ventilating and air conditioning system
in the Premises as a part of Tenant's Work. Tenant shall, however, as a part of
Tenant's Work, make all changes, additions or replacements to such system
required for:

          (i)   Such system to comply with all applicable governmental
requirements; and

          (ii)  Accommodation of such system to changes in the configuration
(including the interior configuration) of the Premises effected by Tenant.
 
     (e)  So long as Tenant retains, as Tenant's general contractor for Tenant's
Work, Fisher Construction or another general contractor from Landlord's approved
list, Tenant shall not be required to comply with part F of Section I of Exhibit
"E" to this lease.

Section 18.01  Supplemental Storage Areas
-------------  --------------------------

     In the event that, as of the termination of the Current Lease, Tenant holds
and occupies any storage area(s) at the Center pursuant to supplemental storage
area addenda to the Current Lease, (i) such supplemental storage area addenda
shall terminate as of the date that Tenant opens for business in the Premises
and (ii) as a part of Tenant's relocation from and surrender of the Current
Premises pursuant to Addendum Section 2.04, Tenant shall vacate and surrender to
Tenant any storage area(s) occupied by Tenant pursuant to such addenda.  Such
vacation and surrender shall be in accordance with Section 16.28 of the Current
Lease, except that such vacation and surrender shall be accomplished by the date
that Tenant opens for business in the Premises.

Section 19.01  Approval by Landlord's Lender
-------------  -----------------------------

     Landlord has advised Tenant that, due to the size of the Premises, this
lease is subject to the approval of Landlord's lender with respect to the Center
(the "Lender").  In connection with such approval, Landlord and Tenant agree as
follows:

     (a)  Promptly following the last execution of this lease, Landlord shall
submit the same to the Lender for written approval.  Landlord shall use
reasonable efforts to obtain the approval of Lender to this lease, and for that
purpose, Section 16.31 of the lease form shall apply.

     (b)  Promptly upon receipt of written approval of this lease by Lender,
Landlord shall furnish a copy of such approval to Tenant.

     (c)  If the Lender declines to approve this lease, after utilization of
Section 16.31 of the lease form if possible, Landlord shall promptly so notify
Tenant in writing.

     (d)  In the event of such notice pursuant to subsection (c) above, the
following shall pertain:

          (i)   This lease shall terminate upon the date of Tenant's receipt of
Landlord's notice.

          (ii)  Each party shall bear its own costs and fees incurred in the
preparation and negotiation of this lease and in performing its respective
obligations hereunder through the date of termination.  Notwithstanding the
foregoing, Landlord shall reimburse Tenant for up to $25,000 of out-of-pocket
costs incurred by Tenant with respect to design and construction of the
Premises.  Such reimbursement shall be made, by delivery of Landlord's check,
within ten (10) days after the last to occur of (i) termination of this lease
pursuant to this Section or (ii) delivery to Landlord of documentary evidence
reasonably satisfactory to Landlord as to the out-of-pocket costs incurred by
Tenant with respect to such design and construction.

          (iii) Neither party shall have any further rights or obligations
pursuant to this lease.

          (iv)  The Current Lease shall remain in full force and effect in
accordance with its terms.

     Pending any termination of this lease pursuant to this Section, each party
shall diligently pursue its respective obligations pursuant to this lease.

                                                          LANDLORD'S    TENANT'S
                                                           INITIALS     INITIALS
                                                          ----------    --------
                                                            J.E.S.         DD
                                                            H.T.S.

                                      79
<PAGE>
 
Section 20.01  Interpretation
-------------  --------------

     This Addendum is attached to and forms a part of a certain lease of even
date between Landlord and Tenant.  In the event of any inconsistency between the
provisions of this Addendum and any other provision of the lease, the provisions
of this Addendum shall control.

<TABLE> 
<S>                                                  <C> 
ST. JOHN KNITS, INC., a California corporation       SOUTH COAST PLAZA, a California partnership

By:     /s/ DAN DEMILLE                              By   C.J. Segerstrom & Sons, a California general
    ------------------------------------------            partnership, General Partner
Title:  Dan DeMille, its V.P.                            
        --------------------------------------            By    /s/ HENRY T. SEGERSTROM
                                                             -----------------------------------------
                                                                                               Manager
By:
    ------------------------------------------            By    /s/ JEANETTE E. SEGERSTROM
                                                             -----------------------------------------
                                                                                               Manager
Title:
        --------------------------------------                      
                    "Tenant"                                              "Landlord"

Dated:           June 9                 , 1998       Dated:           June 10                   , 1998
        --------------------------------                    ------------------------------------
</TABLE> 

                                      80
<PAGE>
 
                      [MAP OF SECOND LEVEL LEASING PLAN]
 
                                   EXHIBIT A

                              SPACE #2533 & #3011
 
                                 MAY 26, 1998

                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
<PAGE>
 
                                   EXHIBIT B

                               TENANT LEASE PLAN






[DIAGRAM OF SECOND LEVEL]                              [DIAGRAM OF THIRD LEVEL]




                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S         DD
                                                             H.T.S.
<PAGE>
 
                          [MAP OF SOUTH COAST PLAZA]


THE SIZE AND LOCATION OF THE BUILDINGS AND RELATED STRUCTURES ARE APPROXIMATE.  
THE CONFIGURATION OF THE DEVELOPMENT, THE DESIGN AND LOCATION OF BUILDINGS AND 
RELATED STRUCTURES, PARKING, VEHICULAR ACCESS, STREETS, ROADS, ENTRANCES, COMMON
AREAS AND ALL OTHER IMPROVEMENTS, AND THE IDENTITY AND LOCATION OF OTHER 
TENANTS, TO THE EXTENT DEPICTED, ARE SUBJECT TO CHANGE FOR ANY REASON DEEMED 
SUFFICIENT BY LANDLORD WITHOUT NOTICE TO TENANT.


                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.

                                  EXHIBIT B-1
<PAGE>
 
I.  LANDLORD'S WORK. The following work of construction has been performed
exclusively by Landlord at its sole expense:
    A.    Common Areas

          1.  Parking Areas, Roads and Sidewalks.  Paved, drained, landscaped
and lighted parking areas, roads, and sidewalks, together with directional signs
and markers.
          2.  Utilities.
              (a) Sanitary Sewer.  Connections for Tenant's lines have been
provided to existing sewer mains at points determined by Landlord. Any
additional connections required by Tenant will be provided by Tenant at its
cost.
              (b) Domestic Water.  Mains have been furnished to approved points
of connection as determined by Landlord. Landlord has provided meter locations
(but not meters) for Tenant. Meters shall be installed by Tenant in locations
and manners directed by Landlord and in compliance with Mesa Consolidated Water
District specifications.
              (c) Natural Gas.  Mains have been furnished to approved points of
connection as determined by Landlord.  Landlord has provided meter locations
(but not meters) for Tenant.  Meters shall be installed by Tenant in locations
and manners directed by Landlord.
              (d) Electrical Service.  120/208 volt, three phase, four wire
service. Service has been sized to allow approximately 4.5 watts per square foot
of Floor Area for lighting and power loads. Such wattage is an approximation
only, and actual power input will be determined based upon Tenant's requirements
in the Premises, but not to exceed 4.5 watts per square foot of Floor Area for
lighting and power.
              (e) Telephone Service.  A telephone terminal backboard with cable
capacity adequate for Tenant's use has been located in a common area as
determined by Landlord.
              (f) Fire Sprinkler System.  See Exhibit "E."
          3.  Interior Common Areas and Common Facilities.
              (a) Toilet Facilities.  Landlord has provided public toilet
facilities in common areas including furnishings, installation of toilet
fixtures, painting, ventilation, soap, tissue and paper towel dispensers (or
wall mounted electric hand dryer units) all in accordance with applicable
building codes.
              (b) Corridors, Stairways, Escalators and Elevators.  Have been
installed by Landlord in locations selected by Landlord and in accordance with
applicable building codes.
              (c) Truck Receiving Facilities.  Have been provided as determined
by Landlord.
              (d) Trash Removal Facilities.  Have been provided as determined
by Landlord.
              (e) Enclosed Malls and Courts.  Heated, ventilated, air
conditioned and lighted with architecture and landscaping treatment as
determined by Landlord. Ceiling is suspended acoustic or gypsum board ceiling
system. Floor finishes in the Enclosed Mall are concrete slab with decorative
finishes as selected by Landlord. Interior wall areas, other than storefronts,
are gypsum board with taped and floated joints, painted. A neutral strip above
the storefront line has been installed as selected by Landlord. Fire sprinklers
have been provided throughout the Enclosed Mall as required by applicable codes
in addition to a dry standpipe system with outlets in the Enclosed Mall as
required by the fire department. Low intensity lighting has been provided
throughout the Enclosed Mall with electrical outlets provided for seasonal
decorations, maintenance, and special promotions. A central public address and
music system with speakers in the ceiling has been provided throughout the
Enclosed Mall.
              (f) Central Cold Air Distribution System.  See Exhibit "E."
          4.  Exterior Malls and Courts.  Have been lighted, paved and drained
as determined by Landlord.
     B.   Specialty Shops Building

          1.  Building Shell
              (a) Frame-Lower and Upper Mall Levels.  See Exhibit "E."
              (b) Structural Clear Heights.  For maximum clear heights measured
from the finished floor slab to the lowest structural member, see the design
drawings pertaining to the Premises, available from Landlord's architectural
department.
              (c) Roof.  Roof is either insulated and built-up composition
roofing or as specified by Landlord.
              (d) Exterior Building Walls.  Exterior walls enclose the building
shell, except at tenant storefront areas, and are of materials having a finished
appearance and decorative quality as selected by Landlord.
          2.  Interior Finishes
              (a) Walls.  Walls or partitions separating the Premises from
common areas are either finished on both sides or exposed metal stud
construction with drywall finish on the common area side only. Exposed metal
studs only will be installed on the Premises side for new demising walls.
              (b) Doors.  Where the Premises adjoin a common area corridor,
Landlord has provided one (1) doorway (but not a door) to connect the Premises
to such common area corridor. If required by applicable building codes, Landlord
will provide a door for emergency exits to corridors or stairs.
              (c) Mall Access.  Access to the Enclosed Mall has been provided
via common area service corridors and stairways located as determined by
Landlord and in accordance with applicable building codes.

                                  Exhibit C-2
<PAGE>
 
          3.  Neutral Strips.  A vertical neutral strip has been located at the
storefront line between stores; the center of said strip coincides with the
lease line between such stores.

II.  TENANT'S WORK

     A.   Store Interior Finish Work.  All work required to complete and place
the Premises in a finished condition for opening for business over and above
that work performed by Landlord pursuant to Part I above shall be done by
Tenant, except as provided herein or in Exhibit "E" to the contrary, and shall
be at Tenant's sole expense.  All such work shall be in accordance with the
working drawings prepared by Tenant's architect in conformity with this Exhibit
"C" and Exhibit "E" and approved by Landlord as provided in Article XVII of the
lease.  Said store interior finish work shall include, but shall not be limited
to, the following:

          1.  Ventilating and Air Conditioning.  All air conditioning equipment
required within the Premises including insulated and non-insulated duct work,
zone terminal units, temperature controls, air diffusers, air grilles and other
air distribution specialties connected to Landlord's central variable volume
single duct conditioned air distribution system.  Controls shall be electronic
controls as specified by Landlord for power and control to both the zone
terminal control system and the building fire alarm systems (see Exhibit "E").
If Tenant's ceiling covers over the existing or new zone system junction boxes,
then hinged, swing open panels allowing free local access to these devices by
Landlord's maintenance staff must be provided by Tenant.  THE DESIGN FOR
TENANT'S HVAC WORK SHALL BE PREPARED BY AN AIR CONDITIONING ENGINEER APPROVED BY
LANDLORD.  SUCH WORK SHALL BE AT TENANT'S COST AND SHALL BE UNDER A DIRECT
CONTRACT BETWEEN TENANT AND SUCH ENGINEER.  THE WORK PURSUANT TO SUCH CONTRACT
SHALL INCLUDE PREPARATION OF ALL DRAWINGS AND ALL LOAD CALCULATIONS REQUIRED BY
EXHIBIT "E."  Tenant's work pursuant to this paragraph 1 and pursuant to
paragraphs 9, 10, 11, 12 and 18, as applicable, shall comply with Landlord's
"Standard Mechanical Installation Practices" issued by Landlord's Engineering
Department (the "Standards").  Tenant or its general contractor shall be
responsible to obtain the latest version of the Standards from Landlord's
Engineering Department prior to commencing design of Tenant's work.  In the
event of any conflict between the Standards, on the one hand, and this Exhibit
"C" or Exhibit "E," on the other hand, Landlord's determination shall control.
          2.  Electrical Systems, Equipment and Lighting Fixtures with Lamping.
Electrical power and distribution from Landlord's point of connection in
electrical room to and within the Premises including electrical subpanels,
conduits to Premises, outlet boxes, switch outlets, service fuses, copper
wiring, disconnect switch, meter and lighting fixtures with lamping.  This work
includes Tenant's cost responsibility for all additional electrical service
capacity required if Tenant's combined lighting and power loads exceed 4.5 watts
per square foot.  In no event shall Tenant's lighting and power loads exceed the
limitations in applicable governmental codes.  (See Landlord's Work, Section I
above).
          3.  Plumbing.  All plumbing distribution and fixtures shall be
provided by Tenant, including connection to utility and sewer mains provided by
Landlord for both employee and public restroom facilities within Premises.
Existing plumbing distribution and fixtures, if any, may be retained subject to
design requirements and applicable code and Landlord requirements.  Any removal
and replacement of the existing structural slab shall be accomplished in a
manner prescribed by Landlord prior to commencement of such removal.
          4.  Ceiling.  All finished ceilings.
          5.  Floor Coverings.  Concrete floor fill where required and all floor
coverings and floor finishes, including hardwood, tile, brick, slate, marble and
terrazzo.  Tenant's finished floor elevation shall match the Enclosed Mall
finished floor elevation.
          6.  Interior Painting.  All interior painting and decoration.
          7.  Storefront Walls and Partitions with Finishes.  All interior
partitions and walls within the Premises, storefront finishes, walls and
columns, including the wall surfacing and wall finishes required on exposed
metal or wood studs erected as part of Landlord's Work.
          8.  Doors.  All doors and hardware within the Premises.
          9.  Roof Openings.  Roof openings, including necessary curbs and
flashings to accommodate the installation of Tenant's Work.  Roof openings shall
be located only as directed by Landlord.  Reroofing of approved roof openings
will be performed by Landlord at Tenant's expense.  Tenant shall not install any
roof vents without Landlord's consent and shall install roof vents only in
locations approved by Landlord.  All roof openings and venting shall comply with
the applicable provisions of the Standards.
          10.  Public and Employee Toilet Rooms, Janitorial and Drinking
Fountain Facilities.  Furnish and install together with work customarily
incidental thereto to applicable building code requirements.
          11.  Mechanical Equipment.  All mechanical equipment, including dumb
waiters, elevators, freight elevators, conveyors and their shafts and doors
located within the Premises, including all electrical, mechanical and structural
work required for installation and operation of these items.
          12.  Food Preparation and Combustible Materials.  In the event Tenant
engages in the preparation of food or baked goods, Tenant shall, at Tenant's own
cost and expense: (i) install dry chemical extinguishing devices (such as Ansul)
approved by the local fire insurance rating organization and Landlord's
insurance carriers, and keep such devices in good working order and repair and
regularly serviced under a maintenance agreement of the type required by
Landlord or by such fire rating organization or carriers; (ii) keep and maintain
all exhaust ducts and filters in a clean condition; (iii) place and store
Tenant's garbage and refuse in closed containers which shall be kept, until
collected, in a 

                                  Exhibit C-3
<PAGE>
 
self-contained, refrigerated area within the Premises set aside for the storage
of garbage and refuse; and (iv) install grease traps if required by Landlord
and/or applicable governmental authorities. In the event Tenant engages in the
use, sale or storage of flammable or combustible materials, Tenant shall install
and maintain chemical extinguishing devices similar to those referred to in
clause (i) above. In the event gas is used in the Premises, Tenant shall install
a proper gas cut-off valve. If Tenant shall fail to install any devices required
by this paragraph and/or to provide for the servicing thereof, Landlord shall
have the right to enter upon the Premises to provide such necessary
installations and servicing and charge the cost of such installations and/or the
servicing thereof to Tenant.
          13.  Lower and Upper Mall Level Access.  Stairs, escalators, elevators
and other means of vertical transportation required by Tenant.
          14.  Telephone Facilities.  Conduits, cabinets and outlets within the
Premises as required by the utility company supplying the service requested by
Tenant and extension of conduits to central telephone backboard.
          15.  Utility Meters and Connections.
               (a) Water and Gas Meters.  Shall be located within the Premises
at a meter location determined by Landlord or in a common meter area outside of
the Premises designated by Landlord and accessible by Tenant.
               (b) Electrical Meter.  Shall be located in an electrical meter
area provided by Landlord in a common area accessible by Tenant.
               (c) Utility Connection Lines.  All water, electric, gas and sewer
lines necessary to reach the point of connection to Landlord's utility and sewer
mains.
          16.  Intercom, Annunciator, Fire, Burglar, Speaker and Music Systems.
Furnish and install as required by Tenant or applicable governmental
requirements.
          17.  Garbage and Rubbish.  Storage area for dry and/or wet rubbish
collection containers to be provided within the Premises readily accessible to
Tenant's service corridor areas.
          18.  Fire Sprinklers.  Modification or extension of primary sprinkler
system through the ceiling to conform to Tenant's merchandising and ceiling
plans.  Tenant shall, in writing, notify Landlord at least 48 hours prior to any
shut-down of Landlord's fire protection system during construction by Tenant.
With respect to any such shut-down, Tenant's contractor shall hire a security
company from Landlord's approved list of such companies.  Such security company
shall be required to notify Landlord of the shut-down and the termination
thereof and shall maintain a continuous fire watch during the shut-down for the
Premises and any other premises which are affected by such shut-down.  In
addition, Tenant shall indemnify, defend and hold harmless Landlord and its
partners, members, agents and employees from and against any and all claims,
damages, liabilities, costs and expenses (including attorneys' fees and costs of
defense) arising out of or relating to any occurrence during such shut-down and
preventable by such fire protection system but for such shutdown.
     B.   Temporary Services; Storefront Barricade and Signs.  Tenant shall be
responsible for or shall bear the cost of all temporary or interim items
relative to the construction of the Premises and the completion of Tenant's Work
with respect thereto, including but not limited to the following:

          1.  Temporary Services.  During the construction of Tenant's Work,
Tenant shall provide and pay for any new connections and meters required for
water, gas and electrical services brought to such point as Landlord shall
determine.  Tenant shall pay for all water, gas and electrical current used
during the construction of Tenant's Work at rates based upon actual usage with
respect to all services required by Tenant during construction of Tenant's Work.
All such charges shall be paid directly to the purveyors of such services.
          2.  Storefront Barricade and Store Signage.  Landlord shall erect
and/or realign and remove the temporary storefront barricade for the Premises to
reasonably accommodate the completion of Tenant's Work.  Landlord shall also
provide to Tenant a store opening sign with respect to the Premises consisting
of Tenant's logo and/or trade name in Tenant's typestyle which shall be painted
on or affixed to the storefront barricade for the Premises by Landlord.
Landlord shall also provide additional Tenant identification as follows:  rear
door signage (if the Premises have a rear door), tenant suite number installed
on storefront soffit, revisions necessary on loading dock maps to indicate
tenant location, insert strips for and any other changes required to illuminated
directories in the Center and any directional signage provided to direct
Tenant's customers to the Premises.  Tenant shall pay to Landlord as additional
rent, upon demand, an amount based on Landlord's current charge rate per lineal
foot of the storefront of the Premises for Landlord's costs incurred in
providing such storefront barricade and barricade identification.  Tenant shall
also pay to Landlord as additional rent, upon demand, amounts based upon
Landlord's current charge rates therefor for Landlord's costs of providing the
other services described herein.
     C.   Store Fixturing and Merchandising.  Tenant shall bear the entire
expense and responsibility for providing within the Premises (whether affixed to
the Premises or not) all trade fixtures and merchandise, and all other property
incidental to the business to be operated by Tenant, all meeting the criteria
set forth in Exhibit "E," including, but not limited to, the following:

          1.  Furnishing and installation of all carpets, shelving, store
fixtures, furnishings, interior decorations, graphics, exterior and interior
signs, mirrors, cornices and all other fixtures, lighting and other special
effects.
          2.  Electrical and mechanical connection of all store merchandising
fixtures and equipment with related parts, including kitchen and food service
equipment and other equipment peculiar to Tenant's occupancy.

                                  Exhibit C-4
<PAGE>
 
     D.   PURSUANT TO CALIFORNIA HEALTH AND SAFETY CODE SECTION 25915.5,
LANDLORD HEREBY NOTIFIES YOU OF THE FOLLOWING:

          1.  LANDLORD HAS HAD AN ASBESTOS SURVEY PERFORMED BY THE PICKERING
FIRM, WHICH WAS A RECOGNIZED ASBESTOS CONSULTING FIRM (THE "SURVEY").  THE
SURVEY IS AVAILABLE FOR REVIEW AND/OR PHOTOCOPYING FROM THE CENTER'S DIRECTOR OF
OPERATIONS, WHO CAN BE REACHED AT THE MANAGEMENT OFFICES, LOCATED AT 3333
BRISTOL STREET, COSTA MESA, CALIFORNIA 92626, TELEPHONE NUMBER (714) 435-2000.

          2.  ACCORDING TO THE SURVEY, ASBESTOS WAS LOCATED IN PHASE I OF THE
CENTER (THE SEARS TO ROBINSONS-MAY WING) AND WAS PREDOMINATELY LOCATED IN
FIREPROOFING MATERIAL SPRAYED ON THE STRUCTURAL STEEL.  THERE WERE ALSO A FEW
PLACES IN PHASE I WHERE THE CONCRETE SLAB FIREPROOFING, SPRAY APPLIED ACOUSTICAL
MATERIALS, CEILING TILES AND FLOOR TILES CONTAINED ASBESTOS.  THE SPECIFIC
LOCATIONS OF ASBESTOS CONTAINING MATERIALS KNOWN TO LANDLORD TO HAVE BEEN
LOCATED WITHIN THE SPACE OCCUPIED BY TENANT OR THE COMMON AREA UTILIZED BY ALL
TENANTS ARE DESCRIBED IN EXHIBIT "H" HERETO.

          3.  GENERALLY, THE MATERIALS DESCRIBED IN EXHIBIT "H" REMAIN NON-
HAZARDOUS AS LONG AS THEY ARE NOT DISTURBED.  IN ORDER TO MINIMIZE THE RISK OF
DISTURBING THE ASBESTOS-CONTAINING MATERIALS DESCRIBED IN EXHIBIT "H," LANDLORD
HAS ADOPTED THE OPERATIONS AND MAINTENANCE PLAN SUGGESTED BY THE PICKERING FIRM
(THE "O&M PLAN").  THE O&M PLAN, WHICH IS AVAILABLE FROM THE DIRECTOR OF
OPERATIONS, PROVIDES THAT SPECIAL ACTION IS TO BE TAKEN BEFORE ASBESTOS
CONTAINING MATERIALS ARE DISTURBED, AND ALL SUCH PRECAUTIONARY ASBESTOS WORK IS
TO BE PERFORMED BY OUTSIDE CONTRACTORS WHO ARE REQUIRED TO IMPLEMENT APPROPRIATE
PROCEDURES IN ORDER TO INSURE COMPLIANCE WITH THE O&M PLAN AND MINIMIZE THE RISK
OF DISTURBING THE ASBESTOS-CONTAINING MATERIALS DESCRIBED IN EXHIBIT "H."  IT IS
IMPERATIVE THAT TENANT NOTIFY THE DIRECTOR OF OPERATIONS BEFORE COMMENCEMENT OF
ANY TENANT IMPROVEMENTS, REPAIR, RENOVATION OR REMODELING ACTIVITIES THAT MIGHT
DISTURB SUCH MATERIALS AND NOTIFY LANDLORD OF ANY DETERIORATION IN SUCH
MATERIALS.  UNTIL TENANT HAS BEEN ADVISED THAT THE NECESSARY PRECAUTIONS SET
FORTH IN THE O&M PLAN HAVE BEEN COMPLETED, TENANT SHALL NOT COMMENCE ANY
ACTIVITY WHICH WILL RESULT IN DRILLING, MOVING, BORING OR OTHERWISE DISTURBING
THE CEILING SYSTEMS OR THE ASBESTOS CONTAINING CONSTRUCTION MATERIALS DESCRIBED
IN EXHIBIT "H."  LANDLORD'S RIGHT OF ENTRY PURSUANT TO SECTION 16.02 OF THE
LEASE SHALL INCLUDE THE RIGHT TO ENTER AND INSPECT THE PREMISES FOR VIOLATIONS
OF TENANT'S COVENANTS HEREIN.  UPON ANY VIOLATION OF THE FOREGOING COVENANTS,
LANDLORD SHALL BE ENTITLED TO EXERCISE ALL REMEDIES AVAILABLE TO A LANDLORD
AGAINST A DEFAULTING TENANT, INCLUDING BUT NOT LIMITED TO THOSE SET FORTH IN
ARTICLE XIII OF THE LEASE.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
TENANT EXPRESSLY AGREES THAT UPON ANY SUCH VIOLATION LANDLORD MAY, AT ITS
OPTION, IMMEDIATELY TERMINATE THIS LEASE.  NO ACTION BY LANDLORD HEREUNDER SHALL
IMPAIR THE OBLIGATIONS OF TENANT HEREUNDER.

          4.  LANDLORD COMMENCED REMOVAL OF LANDLORD INSTALLED ASBESTOS-BEARING
MATERIALS IN THE COMMON AREA AT THE CENTER DURING 1986, AND VOLUNTARILY ADOPTED
A PROGRAM TO REMOVE ALL SUCH LANDLORD INSTALLED MATERIALS OVER A SEVERAL YEAR
PERIOD.  LANDLORD ELECTED THE OPTION OF REMOVAL RATHER THAN LESS EXPENSIVE
ABATEMENT PROCEDURES SINCE REMOVAL AFFORDS THE GREATEST CERTAINTY FOR
ELIMINATING HEALTH RISKS ASSOCIATED WITH ASBESTOS.  SUBSTANTIALLY ALL ASBESTOS-
BEARING MATERIALS HAVE BEEN REMOVED FROM THE ENCLOSED MALL.  LANDLORD ALSO
UNDERTOOK A PROGRAM OF REMOVING ASBESTOS-BEARING MATERIALS FROM TENANT PREMISES
AS SUCH AREAS HAVE BECOME AVAILABLE FOR SUCH REMOVAL WORK (i.e., VACANT).
LANDLORD CONTINUES TO REMOVE LANDLORD INSTALLED ASBESTOS-BEARING MATERIALS FROM
TENANT OCCUPIED AREAS AND OTHER PORTIONS OF PHASE I AS THOSE AREAS BECOME
AVAILABLE TO LANDLORD FOR WORK.  LANDLORD PRESENTLY INTENDS TO CONTINUE ITS
REMOVAL PROGRAM UNTIL ALL LANDLORD INSTALLED ASBESTOS-BEARING MATERIALS ARE
REMOVED FROM PHASE 1.

          5.  IN ORDER TO MINIMIZE THE POTENTIAL FOR RELEASE OF ASBESTOS FIBERS
PENDING THE COMPLETION OF LANDLORD'S REMOVAL PROGRAM, LANDLORD HAS UNDERTAKEN
VARIOUS PRECAUTIONS, INCLUDING MONITORING PHASE I ON A REGULAR BASIS TO VERIFY
THAT

                                  Exhibit C-5
<PAGE>
 
RELEASES ARE NOT OCCURRING.  THE PRECAUTIONS LANDLORD IS TAKING MEET OR EXCEED
ALL GOVERNMENTAL REQUIREMENTS WITH RESPECT TO ASBESTOS AND, SO FAR AS LANDLORD
IS AWARE, NO RELEASES ARE IN FACT OCCURRING.  ALTHOUGH LANDLORD HAS BEEN
INFORMED THAT

NO ONE NEED FEAR EXPOSURE TO AIRBORNE ASBESTOS AS LONG AS THE ASBESTOS-
CONTAINING MATERIALS IN PHASE I ARE NOT DISTURBED, CALIFORNIA HEALTH AND SAFETY
CODE SECTION 25915.5 REQUIRES LANDLORD TO INFORM TENANT OF THE POTENTIAL HEALTH
RISKS WHICH MAY RESULT FROM DISTURBANCE OF ASBESTOS-CONTAINING MATERIALS.  IF A
PERSON IS EXPOSED TO CERTAIN LEVELS OF ASBESTOS (WHICH LEVELS ARE THE SUBJECT OF
CONSIDERABLE DEBATE) THERE IS A RISK OF CANCER AND LUNG DISEASE.  BECAUSE
LANDLORD DOES NOT HAVE ANY SPECIAL KNOWLEDGE OF THESE HEALTH RISKS, LANDLORD
ENCOURAGES TENANT TO CONTACT ONE OF THE STATE OR FEDERAL HEALTH AGENCIES WHICH
DEAL WITH ASBESTOS IF TENANT WISHES TO OBTAIN DETAILED INFORMATION ON THE
POTENTIAL HEALTH RISKS.

PURSUANT TO SECTION 25915.5, "RECEIPT OF THIS NOTICE BY AN OWNER, LESSEE OR
OPERATOR SHALL CONSTITUTE KNOWLEDGE THAT THE BUILDING CONTAINS ASBESTOS-
CONTAINING CONSTRUCTION MATERIALS...."  CONSEQUENTLY, SECTION 25915 REQUIRES
TENANT TO GIVE A NOTICE SIMILAR TO THIS NOTICE, WITHIN FIFTEEN (15) DAYS AFTER
RECEIPT OF THIS NOTICE, TO (1) ALL OF TENANT'S EMPLOYEES WORKING WITHIN PHASE I,
(2) ANY SUBLESSEES OF TENANT'S SPACE AND (3) ANY CONTRACTORS WORKING WITHIN
TENANT'S SPACE.  SECTION 25915 ALSO REQUIRES TENANT TO GIVE SUCH A NOTICE TO ANY
NEW EMPLOYEE, CONTRACTOR OR SUBLESSEE WITHIN FIFTEEN (15) DAYS AFTER HIRING OR
SUBLEASING.

                                  Exhibit C-6
                                                         LANDLORD'S     TENANT'S
                                                          INITIALS      INITIALS
                                                         ----------     --------
                                                           J.E.S.          DD
                                                           H.T.S.         
<PAGE>
 
                               SOUTH COAST PLAZA

                                TENANT COLD AIR

                             ANNUAL CHARGE SCHEDULE
                                        
GENERAL

          Tenant's charge for cold air is calculated as an annual amount using
the rate, expressed on a per square foot basis, shown on the Base Rate Curve
Sheet attached as Schedule "A," applied against Tenant's Floor Area, with rate
adjustments as provided for in Sections II and III of this Exhibit "D."

I.   CALCULATION OF ANNUAL CHARGE

     The following procedure will be used in developing the annual charge to
Tenant:

          A.  The Floor Area of the Premises, calculated in accordance with
     Section 16.04 of the lease, shall be used to determine Tenant's annual base
     rate per square foot taken from the Base Rate Curve Sheet attached as
     Schedule "A."
          B.  The annual rate per square foot in effect at the Rent Commencement
     Date shall be the amount calculated in accordance with paragraph A above,
     modified to the extent, in any, provided for in Sections II and III of this
     Exhibit "D."
          C.  The annual rate per square foot as developed in Paragraph B above
     shall then be multiplied by the Floor Area to develop the annual charge for
     cold air to the Premises.  The annual charge will be divided into 12 equal
     installments with one such installment billed to Tenant each month.  Such
     monthly billings may include any applicable adjustments provided for in
     Sections II and III below, or Landlord may separately bill Tenant for any
     adjustment retroactive to the event causing such adjustment.

II.  CALCULATION OF ANNUAL RATE ADJUSTMENT DUE TO ADDITIONAL TENANT COLD AIR AND
VENTILATION REQUIREMENTS BEYOND THE STANDARDS SET FORTH IN EXHIBIT "E"

     A.   The annual base rate per square foot shall be increased if:
          1.  The air supply quantity required by Tenant exceeds 1.2 cfm per
     square foot of Floor Area; or
          2.  The internal sensible cooling load, including heat absorbed above
     and below the ceiling but exclusive of roof and wall transmission and the
     outside air contribution to total sensible cooling load, exceeds 19.4 BTUH
     per square foot of Floor Area; or
          3.  The amount of air exhausted to the outdoors exceeds 0.10 cfm per
     square foot of Floor Area; or
          4.  The required and optional hours of operation for the Center as a
     whole are increased above 3,700 hours annually (the Base Rate Curve Sheet
     is based upon required hours of 10:00 a.m. to 9:00 p.m. Monday through
     Friday, and 10:00 a.m. to 6:00 p.m. Saturday, and optional opening hours of
     6:00 p.m. to 9:00 p.m. Saturday and 11:00 a.m. to 6:00 p.m. Sunday); or
          5.  A tenant's hours of operation increases the hours of operation of
     the Center's air conditioning and ventilation system over those hours used
     for the Base Rate Curve Sheet attached as Schedule "A."

     B.   The adjustment to the annual base rate per square foot called for
under Paragraphs A1. and A2. above shall be computed as described under
Paragraphs B1. and B2. below.
          1.   For each 0.10 cfm per square foot of air required by Tenant above
     the 1.2 cfm per square foot design criteria, the additional annual rate per
     square foot will be determined from the Adjusted Base Rate Curve Sheet
     attached as Schedule "B."
          2.   The additional annual rate per square foot for added internal
     sensible cooling load shall be computed as follows:

     Additional      Current         [  1          Calculated Internal  ]
     Annual      =   Annual      X    -----   X   Sensible Cooling Load    -1
     Rate            Rate              19.4      -----------------------
                                                       Floor Area
     C.  The adjustment to the annual base rate per square foot under Paragraph
A3. above shall be computed as follows:  For each additional 0.10 cfm of exhaust
air per square foot above the 0.10 cfm per square foot design standard, the
additional annual rate per square foot will be $0.20 (20 cents).

     Note: This annual rate adjustment is subject to escalation using the
criteria set forth in Section III below.

                                  Exhibit D-1
<PAGE>
 
     D.  The adjustment to the annual base rate per square foot under Paragraph
A4. above shall be computed as follows:

     Additional      Current         [   Required and Optional Hours     ]
     Annual       =  Annual      X         of Operation Annually      -1
     Rate            Rate               ----------------------------
                                                   3,700
     E.  The adjusted annual rate per square foot shall be the sum of the above
separate annual rate adjustments added to the annual base rate per square foot
from Schedule "A," as escalated from time to time pursuant to Section III below.

     F.  The adjustment to the annual base rate per square foot called for under
paragraph A5. above shall be the sum of the above separate annual rate
adjustments added to the annual base rate per square foot from Schedule "A" and
computed as follows:


     Additional      Base Rate and all        [ Required, Optional and Added   ]
     Annual       =  separate annual rate  X    Hours of Operation Annually  -1
     Rate            adjustments                ----------------------------
                                                              1
 
III. CALCULATION OF ANNUAL RATE ADJUSTMENTS DUE TO COSTS AND EXPERIENCE

     A.   Tenant's annual base rate per square foot of Floor Area shall be
increased or decreased due to (1)  changes in utility costs and personnel and
other operating costs which are caused by escalations in the utility and other
rate schedules used as the criteria for establishing Schedule "A," (2) changes
based on Landlord's experience with the air conditioning system and (3) changes
in Tenant's cooling load as observed from periodic audits performed by Landlord
to determine if any Tenant alterations have been made which increase or decrease
the cooling load in the Premises (see Section 12.04 of the lease).  The Base
Rate Curve set forth on Schedule "A" is based upon the consumption criteria and
utility rate schedules and other operating cost schedules indicated below.
Published changes in these base utility rates and changes in the other base
operating cost schedules will establish the basis on which adjustments to
Tenant's base rate per square foot of Floor Area will be determined as follows:

          1.   Utility Operating Cost Adjustment
               a.   Base Criteria
                    -------------
                    (1)  Utility Base Year Consumption
                         The Base Rate Curve Sheet was established on the basis
                         of base year consumption figures calculated by
                         Landlord's system engineers for each of the following
                         utilities:
                         (a)  Electricity
                         (b)  Natural gas
                         (c)  Water and sewer
                         The base year consumption figures were calculated to
                         reflect an operating year of full occupancy in the
                         Shopping Center.

                    (2)  Utility Base Rate Schedules
                         The Base Rate Curve Sheet was established on the basis
                         of the Southern California Edison Company, Southern
                         California Gas Company and Mesa Consolidated Water
                         District rate schedules identified on Schedule "A," as
                         to electricity, natural gas and water and sewer,
                         respectively.

               b.  Method of Calculation.  For every published change in the
                   ---------------------                                    
electricity, natural gas and water and sewer utility rates, there shall be made
a utility operating cost adjustment equal to Tenant's pro rata share of the
increase or decrease in utility operating cost.  The increase or decrease in
utility operating cost shall be calculated by multiplying the published utility
rate increase by the appropriate base year consumption figure, as defined in
Paragraph A.1. above.  Tenant's pro rata share of the utility operating cost
increase or decrease shall be a fraction, the numerator of which shall be
Tenant's Floor Area and the denominator of which shall be the aggregate Floor
Area of all tenants or other occupants connected to the central cold air
distribution system at the time of adjustment.

          2.   Operating and Maintenance Personnel Cost Adjustment

               a.   Base Criteria.  The Base Rate Curve Sheet was established on
                    -------------
the basis of an average per hour base labor rate for system operating and
maintenance personnel calculated to reflect the average labor rate in effect in
the Center area labor market for equivalent type personnel at the date indicated
on Schedule `A.'

                                  Exhibit D-2
<PAGE>
 
               b.  Method of Calculation.  For each ten cent ($0.10) increase or
                   ---------------------                                        
decrease in the average base labor rate, Tenant's annual base rate per square
foot of Floor Area shall be correspondingly increased or decreased to the extent
of four-tenths of one cent ($0.004) per square foot of Tenant's Floor Area times
the number of operating and maintenance personnel employed or under contract for
the system at the time of adjustment.

          3.   Insurance and Tax Cost Adjustment

               a.   Base Criteria.  The Base Rate Curve Sheet was established on
                    -------------
the basis of the insurance and tax costs experienced as of the date indicated on
Schedule `A.'

               b.   Method of Adjustment.  Any increase or decrease in the costs
                    --------------------
used in subparagraph 3a. above shall be prorated. Tenant's pro rata share of
such insurance or tax costs increase or decrease shall be a fraction, the
numerator of which shall be Tenant's Floor Area and the denominator of which
shall be the aggregate Floor Area of all tenants or other occupants connected to
the central plant cold air distribution system at the time of adjustment.

          4.  Accounting and Administrative Personnel Cost Adjustment

              a.  Base Criteria.  The Base Rate Curve Sheet was established on
                  -------------
the basis of the average accounting and administrative personnel cost
experienced as of the date indicated on Schedule `A.'

              b.  Method of Calculation.  For each ten cent ($0.10) increase or
                  ---------------------                                        
decrease in the average per hour accounting and administrative personnel costs,
the annual base rate per square foot shall be correspondingly increased or
decreased to the extent of two-tenths of one cent ($0.002) per square foot of
Tenant's Floor Area times the number of accounting and administrative personnel
employed by Landlord at the time of adjustment.

          5.  Title 24 -- Energy Code Compliance

              a.  Base Criteria.  All new tenant spaces shall comply with Title
                  -------------
24 of the California Administrative Code, as stated in Exhibit "E," Section IV,
paragraph C-2.

              b.  Method of Enforcement.  At Landlord's discretion, periodic
                  ---------------------
audits shall be made to verify continuous compliance by Tenant with the
requirements of Title 24. If these audits identify increases in consumption from
the base criteria, then Landlord, at its discretion, may direct Tenant to modify
its electrical consumption to meet the requirements of Title 24.

          B.  Experience Adjustment

In addition to the annual base rate adjustment provided in Paragraph A of this
Section III, Landlord reserves the right to increase or decrease the annual base
rate per square foot from time to time by the issuance of a revised rate
schedule based on Landlord's accumulated experience compiled from the operation
of the central cold air distribution system, including increased costs of
materials and supplies, costs incurred for governmental impositions and to meet
governmental requirements, unusual or extraordinary costs in maintaining or
repairing the central plant equipment and distribution system, costs experienced
for purchase and installation of new equipment and renovation of existing
equipment and the distribution system and costs incurred to utilize and add to
the plant equipment and distribution system new technological features.

                                  Exhibit D-3

                                                         LANDLORD'S     TENANT'S
                                                          INITIALS      INITIALS
                                                         ----------     --------
                                                           J.E.S.          DD
                                                           H.T.S.         
<PAGE>
 
           [GRAPH OF BASE RATE CURVE SHEET @4060 HRS. - SCHEDULE A]


                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
<PAGE>
 
               [GRAPH OF ADJUSTED RATE CURVE SHEET - SCHEDULE B]


                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
<PAGE>
 
                               SOUTH COAST PLAZA

             DETAILED DESIGN CRITERIA AND STANDARDS FOR LANDLORD'S
                          WORK AND FOR TENANT'S WORK*

<TABLE>
<CAPTION>
Table of                                                              Begins on
Contents                                                             Page Number
--------                                                             -----------
<S>          <C>                                                     <C>
SECTION I    SPECIAL CONDITIONS FOR TENANT'S DESIGN AND CONSTRUCTION
               WORK..................................................    E-2
            
SECTION II   SPECIALTY SHOPS BUILDING SHELL..........................    E-4
            
SECTION III  CENTRAL STATION AIR HANDLING SYSTEM.....................    E-4
            
SECTION IV   STORE FINISHING.........................................    E-5
            
             A.  Architectural.......................................    E-5
            
             B.  Signs...............................................    E-5
            
             C.  Electrical..........................................    E-6
            
             D.  Description of Air Distribution System..............    E-7
            
             E.  Miscellaneous Tenant Responsibilities...............    E-8
            
             F.  Requirements For Tenant's Work......................    E-9
            
             G.  Landlord and Tenant Work Design Criteria for
                   Plumbing and Gas Fitting..........................    E-9
            
SECTION V    BID AND CONSTRUCTION PROCEDURES FOR TENANT'S CONTRACTOR.    E-10
</TABLE>
_______________

*    THIS EXHIBIT SETS FORTH, IN GREATER DETAIL, CERTAIN ASPECTS OF LANDLORD'S
WORK AND TENANT'S WORK SET FORTH GENERALLY IN EXHIBIT "C"' AND SHOULD BE READ IN
CONJUNCTION WITH EXHIBIT "C."  EXHIBITS "C" AND "E" ARE INTENDED, TOGETHER WITH
THE STANDARD MECHANICAL INSTALLATION PRACTICES (THE "STANDARDS") DEVELOPED BY
LANDLORD'S ENGINEERING DEPARTMENT, TO SET FORTH COMPREHENSIVE STANDARDS AND
CRITERIA WITH RESPECT TO TENANT'S WORK IN THE PREMISES.

                                  Exhibit E-1
<PAGE>
 
I.   SPECIAL CONDITIONS FOR TENANT'S DESIGN AND CONSTRUCTION WORK.  This Section
sets forth minimum standards of performance for Tenant's Work.

     A.  Codes and Standards.  All work shall comply in all respects with the
following:
         1.  The Uniform Building Code and/or state, county, city or other
     laws, codes, ordinances, and regulations, as each may apply according to
     rulings or determinations of governmental authorities having jurisdiction
     with respect to the Center.
         2.  Applicable standards of the National Board of Fire Underwriters,
     the National Electrical Code, the American Gas Association, and the
     American Society of Heating, Refrigerating and Air Conditioning Engineers.
         3.  Building material manufacturers' specifications.

     B.  Drawings and Specifications.
         1.  Design Plans shall include:
             (a)  Floor Plan and Merchandising Plan (1/8" or  1/4" scale)
         showing the outline of the Premises and the location and extent of
         interior partitions, sales fixtures, racks and fittings, decorative
         treatments, signs and displays, storage, shelving, racks or other
         devices, counters, and all other materials, equipment and features
         (other than merchandise) installed or placed in the Premises.
             (b)  Reflected Ceiling Plan (1/8" or 1/4" scale) showing the
         outline of the sales area and the location, type, and size of lighting
         fixtures, air diffusers, grilles, acoustical ceiling pattern or
         drywall and fire sprinkler heads.
             (c)  Storefront Elevations and Sections including sign design and
         details (minimum 1/4" scale).
             (d)  Architectural cross sections and details as required (minimum
         3/8" scale).
             (e)  All Interior Elevations (minimum 1/4" scale).
             (f)  Color and materials sample board.

         2.  Working Drawings shall be prepared by a licensed architect
     (electrical and mechanical design and construction documents must be
     prepared by a licensed, professional engineer) and shall include drawings
     and specifications and bid forms of such scope as to completely delineate
     the construction work to be performed including:
             (a)  Electrical Calculations showing:
                  1.  Number of circuits
                  2.  Connected load of each circuit
                  3.  Number of spare circuits
             (b)  Mechanical Calculations showing:
                  1.  The heating required (transmission and ventilation losses)
             in each space.
                  2.  The ventilation supply and exhaust required for each
             space and the ventilation supply and exhaust provided, if any.
                  3.  The cooling load in each space.
                  4.  The total air flow in each space.
                  5.  Mechanical systems shall utilize Center standard zone
             terminal units, control ductwork and appurtenances with no
             exceptions. The entire mechanical installation shall be performed
             in strict accordance with the guidelines presented in the
             "Standards." A copy thereof can be obtained from Landlord's tenant
             coordinator.
             (c)  Mechanical Equipment Data showing:
                  1.  Temperature Control System including control diagram and
             specification of make.
                  2.  Gas calculations as required by the gas company providing
             service.
             (d)  Engineered electrical drawings signed by an electrical
         engineer showing electrical loads in the Premises and accompanied by
         detailed electrical and mechanical calculations demonstrating
         compliance with Divisions 1-4 of Title 24 of the California
         Administrative Code.
             (e)  Any other drawings and specifications required by the current
         edition of the Standards or any governmental authority having
         jurisdiction of the Premises.

     C.  Approval of Drawings, Specifications and Contractors.  In this Exhibit
"E" any reference to "Landlord" shall mean Landlord or Landlord's tenant or
construction coordinator or other agents.  The merchandising plans and working
drawings and specifications shall comply with the provisions set forth in
Exhibit "C" and this Exhibit "E" and shall be subject to Landlord's approval.
Later additions and/or alterations must also comply with Exhibits "C" and "E"
and must be approved by Landlord.  Tenant shall use a tenant improvement general
contractor approved prior to the start of the work by Landlord to perform all
Tenant's Work.  Tenant must receive Landlord's advance approval of the day when
Tenant may commence work.


                                  Exhibit E-2
<PAGE>
 
     D.  Utilities.  Tenant shall obtain and deliver to Landlord all approvals
with respect to electrical, gas, water and telephone work as may be required by
the utility companies supplying the services.  Tenant shall obtain utility
service, including meters, from the utility companies which supply service
unless Landlord elects to supply service and/or meters.  Landlord, an
independent contractor, or an authorized utility company, as the case may be,
shall have the right, subject to Landlord's prior written approval, to run
utility lines, pipes, conduits or ductwork, where necessary or desirable,
through plenum space (i.e., above the drop ceiling), column space, partitions,
beneath the floor slab, in or through other parts of the Premises and to repair,
alter, replace or remove the same, all in a manner which does not interfere
unnecessarily with Tenant's use thereof.

     E.  Casualty and Liability Insurance Requirements.  Tenant shall cause to
be carried (i) insurance against damage by fire and other casualty to the
construction and improvements to be made by Tenant and (ii) insurance against
injury to persons and damage to the improvements and personal property of
Landlord and adjacent tenants resulting from Tenant's Work, including negligence
of Tenant contractors. Such insurance shall be in the amounts and with such
extended coverage and other endorsements as are required pursuant to Article
VIII of the lease and shall name Landlord as an additional insured. Certificates
for such insurance shall be delivered to Landlord before construction is started
or contractor's equipment is moved on the site. If during the course of Tenant's
Work any damage shall occur to the construction and improvements being made by
Tenant, or to the improvements and personal property of Landlord or adjacent
tenants, Tenant shall repair the same at Tenant's cost.

     F.  Bond.  Prior to commencement of Tenant's Work in the Premises, Tenant
shall furnish either documentary evidence that all funds necessary to complete
Tenant's work are in an escrow account satisfactory to Landlord for disbursement
only for Tenant's work or a payment bond and a performance bond, both
satisfactory to Landlord, each in the amount of the construction contract, to
ensure the prompt and faithful performance of Tenant's Work and payment
therefor.  In the event that, during the course of Tenant's Work, the amount of
the construction contract is increased, the principal amounts of such bonds
shall be increased to equal the increased contract amount.  In the event of any
increase, in the aggregate, of twenty percent (20%) or more, Tenant shall obtain
and deliver to Landlord the written consent of the surety on such bonds to such
increase in contract amount and the commitment of such surety that its liability
on such bonds covers such increased contract amount.

     G.  Landlord's Right to Perform Tenant's Work.  As described in Exhibit
"C," the design for Tenant's HVAC work shall be prepared by an air conditioning
engineer approved by Landlord, at Tenant's cost.  In addition, all HVAC
construction work shall be performed by an air conditioning contractor approved
by Landlord, at Tenant's cost.  Such design and construction shall comply with
the applicable provisions of the Standards.  Landlord shall also have the right
(but shall not be obligated) to perform by its own contractor or subcontractor,
on behalf of and for the account of Tenant, any Tenant's Work which Landlord
determines should be so performed.  Generally, such work shall be work which
affects any structural component, including but not limited to, the Specialty
Shops Buildings Shell or the general utility systems located within the
Specialty Shops Buildings Shell in which the Premises are located.

     Landlord may, at its option, by written notice given at least five (5) days
prior to the commencement of such work, enter upon the Premises and perform such
work and Landlord's cost of planning and performing such work shall become due
and payable by Tenant as additional rent upon demand.  Similarly, Landlord may,
if Tenant fails to properly perform or correct any of Tenant's Work within five
(5) days after written notice from Landlord to Tenant setting forth such failure
or deficiency, enter upon the Premises and perform such work and Landlord's cost
of planning and performing such work shall be payable by Tenant as additional
rent upon demand.

     H.  Cooperation.  Tenant's architects, engineers, and contractors will work
in harmony with each other and with those of Landlord so as to insure proper
maintenance of good labor relationships.

     I.  Coordination.  Tenant's Work shall be coordinated under Landlord's
direction with work being done by Landlord and other tenants in the Center, so
that Tenant's Work will not interfere with or delay the completion of any other
construction work in the Center.

     J.  Acceptance of Work; Completion of Punchlist Items.  Landlord's
acceptance of Tenant's Work as being complete in accordance with the approved
working drawings and Exhibits "C" and "E" shall be subject to Landlord's
inspection and subsequent written approval. Such inspection shall be a two phase
process, as follows. At least two (2) days prior to the City's "rough work"
(plumbing, electrical, framing, etc.) inspection, Tenant shall notify Landlord
of the anticipated date of such inspection. Landlord shall conduct an inspection
of such rough work concurrently with or within 24 hours prior to or subsequent
to such City inspection. Similarly, Tenant shall give Landlord prior written
notification of the anticipated completion date of Tenant's Work and shall
schedule a "walk-through" concurrently with the final City inspection or within
24 hours prior to or subsequent to such final City inspection. Such final
inspection by Landlord shall be prior to opening the Premises for business. The
rough work inspection and the walk-through shall be attended by Tenant, Tenant's
architect, Tenant's contractor and a representative of Landlord. A "punchlist"
of items to be completed and/or corrected by Tenant shall be compiled with
respect to the rough work inspection and the final walk-through. Tenant shall
promptly correct and/or complete all items on such punchlists and failure to do
so within twenty (20) days

                                  Exhibit E-3
<PAGE>
 
after the relevant inspection shall permit Landlord, without notice, to correct
and/or complete such items pursuant to Article VII of the lease. IN NO EVENT
SHALL TENANT OPEN PRIOR TO SUCH FINAL WALK-THROUGH.

     K.  Ownership of Improvements.  Notwithstanding any other provision of this
Exhibit "E," title to all of Tenant's Work under construction or completed and
all alterations, improvements and additions thereto which are of a permanent
nature and affixed to the Premises shall vest in Landlord upon expiration or any
earlier termination of the lease, except trade fixtures and furniture installed
by Tenant.

II.  SPECIALTY SHOPS BUILDINGS SHELL.  This Section sets forth detailed
specifications as to the Specialty Shops Buildings Shell as constructed by
Landlord and described generally in Exhibit "C."

     A.  Structure.

         1.  Frame.  A structural frame of steel and/or concrete with floors and
     roofs designed to carry the following allowable live loads per square foot:
             (a)     Lower Mall Level...................   75 pounds
             (b)     Upper Mall Levels..................   75 pounds
             (c)     Roof...............................   20 pounds
             (d)     Court and Malls....................  100 pounds

         2.  Walls.  The interior side of all exterior walls, interior
     partitions separating tenant premises from common corridors and stairs and
     the common area side of common corridors and stairs are AS IS as to
     materials and finishes and comply with applicable governmental
     requirements.

         3.  Exterior Finishes.  Wall finish of a suitable nature and of
     appropriate material, having a finished, high quality appearance and
     decorative quality as designed by Landlord's architect.

         4.  Interior Finishes.
             (a)  Floors for Lower Level and Upper Level Tenant areas are
         concrete with existing floor finishes and elevations.  Tenant's
         finished floor elevation shall match the adjacent Enclosed Mall
         finished floor elevation.
             (b)  Ceilings for Tenant areas shall be exposed structural steel
         and/or exposed concrete on both levels.

     B.  Utilities.

         1.  Electrical.  See Exhibit "C."

         2.  Water.  If Tenant should require water, Tenant may be individually
     supplied from Tenant's meter which will be located in a common area
     accessible to Tenant.  Tenant shall be responsible for service lines from
     connection with Landlord's main to the Premises.  If any such water service
     is supplied to Tenant by means of a common line serving Tenant and other
     tenants and without a separate meter to measure Tenant's consumption,
     Tenant shall be responsible for the service line from connection with the
     common service line to the Premises.  Tenants involved in food preparation
     shall be responsible for both the service line from connection with
     Landlord's main to the Premises and the meter at Tenant's sole expense.

         3.  Gas.  If Tenant should require gas, Tenant will be individually
     supplied from Tenant's meter which will be located in a common area
     approved by Landlord and accessible to Tenant.  Tenant shall be responsible
     for the meter and service line from connection with Landlord's main to the
     Premises.

         4.  Telephone.  See Exhibit "C."

         5.  Fire Sprinklers.  A complete system of fire sprinklers has been
     installed throughout the Specialty Shops Buildings Shell as required by
     applicable code.

III. CENTRAL STATION AIR HANDLING SYSTEM.  There is a central air conditioning
plant and distributed air handlers which serve all areas by means of ducts.  The
central plant is located in a penthouse on the roof of the Center and the air
handlers are at various locations on the roof of the Center.  The ducts
distribute air to each store.

IV.  STORE FINISHING.  This portion of this Exhibit shall govern the design and
installation of architectural finishes, signs, mechanical, plumbing and
electrical systems for store finishing.  Permission for any deviations by Tenant
from the provisions hereof must be obtained in writing from Landlord.

                                  Exhibit E-4
<PAGE>
 
     A.  Architectural.  All materials and methods of construction listed herein
are intended to indicate the minimum acceptable level of quality and
performance.  Alternate or additional materials and methods of construction are
subject to the prior written approval of Landlord.

         1.  Areas in the Specialty Shops Buildings, Upper and Lower Levels,
     accessible to customers, including but not limited to sales areas, dressing
     and fitting rooms, restrooms, office areas, etc.:
             (a)  Ceilings shall be gypsum board or non-combustible acoustic
         tile suspended on an adequate concealed spline suspension system
         supported from hanger wires. The space above the ceiling line which is
         not occupied by or allotted to Landlord's Work (structural members,
         duct work, piping, etc.) may be used for installation of suspended
         ceilings, recessed lighting fixtures, and duct work. Tenant ceiling and
         storefront design shall be such that it meets the Building Code
         requirements for smoke curtain drops.
             (b)  Interior.  All partition walls separating tenants or tenant
         areas from common areas will extend to a height of twelve feet with 1"
         x 1" wire fabric or other security methods as approved by Landlord to
         structure. Finish materials on partitions separating tenants or
         separating tenant areas from common corridors or stairs will extend to
         Tenant's finished ceiling. All such partitions shall be finished with
         five-eighths inch (5/8") type X gypsum wallboard applied to metal studs
         with mechanical fasteners in such a manner that the wall, when finished
         on both sides, will be an approved one-hour fire resistant wall. Joints
         shall be taped and floated.
             (c)  Partitions within the Premises shall meet fire resistance
         specified in the applicable building code.
             (d)  Floors.  Minimum standards for floor covering where required
         shall be resilient, vinyl tile. All raised floor areas shall be of fire
         resistant materials meeting applicable building code requirements or
         shall be serviced by sprinklers meeting applicable code requirements.
             (e)  Storefronts.  Security shall be by means of pre-finished
         roll-up grilles with solid inserts or glass/wood doors or sliding glass
         doors. The open front portion of all tenant stores having frontage on
         the Enclosed Mall shall not exceed 8 feet in width if the storefront
         width is less than 20 lineal feet and shall not exceed 10 feet in width
         if the storefront width is greater than 20 feet, except for multiple
         storefronts which will be determined on an individual basis. All
         storefronts shall be designed and engineered so as to avoid excessive
         deflection of plate glass panels. All storefront glass within sixteen
         inches (16") of floorline and within three (3) feet of entry doors
         shall be heat tempered or safety glass.
             (f)  Swinging Entrance Doors must be recessed in such a manner that
         the door when open will not project beyond the lease line defining the
         Premises. Entrance doors shall have concealed door closers. No
         storefront or any part thereof shall project beyond the lease lines
         defining the Premises. All glass in all entrance doors, and all glass
         in door sidelights, shall be heat tempered or safety glass.
             (g)  All Planters shall be self-contained with no discharge of
         water permitted and are subject to Landlord's approval.
             (h)  Structural Members.  Tenant will perform all necessary
         patching or repair work with respect to fireproofing on all monocoate
         structural members in the Premises.
             (i)  Storage in both sales areas and stock areas shall be located
         at least 3 inches above the finished floor of tenant Premises.

         2.  Areas not accessible to customers in the Specialty Shops Buildings
     Shell.  All areas in the Specialty Shops Buildings Shell on both mall
     levels not accessible to customers shall have no less than the following
     minimum finish:
             (a)  Ceiling Finish, Painting, Floor Covering not required.
             (b)  Interior Metal Stud Partitions separating tenants or
         separating tenant areas from common corridors or stairs shall be
         finished to structure subject to provisions for return air plenum, with
         five eighths inch (5/8") thick type X gypsum wallboard applied to metal
         studs with mechanical fasteners in such a manner that the wall when
         finished on both sides will be an approved one-hour fire resistant
         wall.
             (c)  Interior Partitions within Premises shall meet fire resistance
         specified in the applicable governmental code.
             (d)  Storage shall be in accordance with 1(i) above.

     B.  Signs

         1.  Introduction.  It is intended by these criteria that the signs for
     tenant stores be developed in an imaginative and varied manner.  The
     development of signs with various styles and materials, consistent with the
     design criteria set forth below, is encouraged.
         2.  Administration.  Landlord's written approval of Tenant prepared
     sign drawings and specifications is mandatory.  Landlord reserves the right
     to reject any sign design which in its sole opinion is not compatible with
     the aesthetics of the Center.  EXCEPTIONS TO SIGN CRITERIA WILL BE
     EXTREMELY RARE AND MUST BE IN WRITING SIGNED BY LANDLORD OR ITS ARCHITECT.

                                  Exhibit E-5
<PAGE>
 
         3.  Criteria.  Interior Signs for Tenants in Specialty Shops
     Buildings:
             (a)  All signs and identifying marks shall occur within the limits
         of demised Premises between the floor line and twelve-foot ceiling line
         except as allowed in (b) below.
             (b)  Signs shall not project beyond the line of the Premises
         bordering common areas more than two inches (2") if less than eight
         feet (8') above finished floor line or more than six inches (6") if
         above eight feet (8').
             (c)  Signs may be placed at a right angle to the storefront only
         inside the lease line of the Premises and only under special conditions
         approved by Landlord.
             (d)  The wording of signs shall be limited to the store name only.
             (e)  Corporate crests, shields or insignia are acceptable.
         Corporate crests, shields or insignia shall not exceed eighteen inches
         (18") in width or height.  The area of such items shall be included in
         the aggregate allowable area of signage.
             (f)  Multiple or repetitive signs may be allowed provided the
         aggregate area of such signs conforms to the limitations set forth
         herein.
             (g)  Paper signs and stickers shall be prohibited.
             (h)  Signs shall have no moving or flashing lights.
             (i)  Letters may be back-illuminated with lamps contained wholly
         within the depth of the letter and with maximum brightness not in
         excess of 100 foot lamberts.  Non-illuminated letters installed
         entirely within the Premises may deviate from restrictions of height
         and area only with the prior written approval of Landlord.
             (j)  Exposed neon tubing for signage will be reviewed on an
         individual basis only.  Acceptable exposed neon tubing will be at the
         sole discretion of Landlord.
             (k)  No exposed conduit, tubing, raceways, switches, ballast boxes
         or transformers will be permitted.
             (l)  Sign company names or stamps shall be concealed.
             (m)  The average height of letters shall not exceed eighteen inches
         (18").
             (n)  The signs for each facade fronting on common area (Enclosed
         Mall, side malls, and mall courts), shall be limited in total area by
         the following formula: Area* of sign (in square feet) equals foot
         frontage** of the Premises multiplied by 0.375.
                  *  The area of a sign is defined as the area of a rectangle
         surrounding all of the letters of the sign. Where upper and lower case
         letters are used, the average height of the letters shall be used to
         determine the height of the rectangle.
                  ** Foot frontage of the Premises is defined as the length of
         the facade measured along the lease line separating the Premises from
         the adjacent Enclosed Mall, side malls, or mall courts.
             (o)  Working drawings must include sign design and specifications.
             (p)  "CAN" or "BOX" signs are not permitted.

     C.  Electrical

         1.  Electrical System design and installation shall be state of the
     art and first class materials and workmanship.

         2.  Tenant's Electrical Load for lighting shall be designed to comply
     with the most current version (as approved by Landlord) of Title 24 of the
     California Administrative Code.  Tenant shall, prior to commencement of
     Tenant's Work, furnish to Landlord energy worksheets demonstrating
     compliance with Title 24 and signed by an engineer registered in the State
     of California.

         3.  Materials, Products and Equipment, including all components
     thereof, shall be new and selected from the Underwriters Laboratories List
     of Approved Items and shall meet requirements of ASTM, IESE, APCEA, NEC,
     NEMA, CMB and other recognized standards and shall be sized in conformity
     with requirements of the National Electrical Code and other applicable
     codes, whichever is most stringent.  Copper wiring will be used exclusively
     in all installations.

         4.  Lighting Panelboards shall be the 3 phase, 4 wire distributed
     phasing type.  Cabinets shall be constructed of code gauge steel, totally
     enclosed, wall mounted or free-standing.
             (a)  All breakers shall be of the bolted type.
             (b)  Lighting circuits shall be 20 ampere capacity, with connected
         load not to exceed 70% of breaker trip rating.
             (c)  Circuit breakers shall be thermal magnetic type, molded case
         with all two and three pole breakers of the common trip type.  One
         spare circuit breaker of 20 ampere capacity shall be provided for
         every five active circuits.

                                  Exhibit E-6
<PAGE>
 
          5.  Magnetic Motor Starters shall be used for integral horsepower
     motors.  Starters shall have three (3) overload elements.  Combination
     starters, when used, shall contain AB circuit breakers or fused switches
     with double element fuses.

          6.  Illumination.  Store lighting, especially as it pertains to heat
     production, should be coordinated with the air conditioning design criteria
     set forth in Paragraph D below.  Exposed fluorescent fixtures will not be
     permitted.  No exposed surface track lighting is permitted in show windows.

          7.  Installation shall be as follows:
               (a) All work shall be installed so as to be readily accessible
          for operating, servicing, maintaining and repairing.
               (b) Hangers shall include all miscellaneous steel, such as
          channels, rods, etc., necessary for the installation of work.  Hangers
          shall be fastened to steel, concrete or masonry, but not to piping,
          and the electrical work shall be installed in a manner which will not
          overload the building structure.
               (c) All conduits shall be concealed.
               (d) Conductors shall be in conduits, ducts, or approved raceways.
               (e) All wiring, including security, telephone and stereo systems
          located above the tenant drop ceiling in the return air plenum must
          either be in conduit or be city approved teflon wiring.
               (f) Any entry way electronic detection devices, security system
          or other surveillance equipment must be incorporated into the
          storefront design.  No exposed equipment, rails, suspended or
          freestanding boxes, posts or columns shall be permitted.

          8.  Grounding shall be as follows:
               (a)  Conductors in conduit.
               (b)  Connections bolted or brazed.
               (c) Connections to cold water lines for each conduit system and
          neutrals of transformer.

          9.  Maintenance and Operation
               (a) Tenant shall maintain all electrical equipment and
          distribution systems within the Premises and promptly replace faulty
          or burned-out lamps.
               (b) Tenant shall keep the Premises adequately lighted at all
          times when open for business.
               (c) All 3-phase electrical systems are to be maintained in a
          load-balanced condition at all times.

          10.  Electrical Data Tabulation.  Tenant shall submit to Landlord, for
     information and approval, two copies of an Electrical Data Tabulation Sheet
     on Landlord's form, completed with required data for determination of
     service and feeder size.

          11.  Distribution Panels shall be of the convertible type.  Circuit
     breakers shall be thermal magnetic type, molded case, with all two or three
     pole breakers of the common trip type.

     D.  Description of Air Distribution System

          1.  Ventilating and conditioned air for the Enclosed Mall, arcades and
     tenant areas will be provided from a Central Station Air Handling System.
     All Mall Phases are equipped with single duct, variable volume systems.

          2.  Main air supply ducts will be provided by Landlord and will run
     throughout each floor in the ceilings within tenant areas.  Extension of
     insulation ducts to zone terminal units and beyond to diffusers, registers
     and grilles shall be part of Tenant's Work.  Spaces above drop ceilings in
     tenant areas will be utilized as return air plenums.  Return air registers
     in tenant area ceilings, sound attenuation along with suitable free area
     openings in demising walls drywalled above the ceiling line to allow the
     air to return through other tenant areas and back to the air handling
     intake will be provided as part of Tenant's Work.

          3.  Tenant Mechanical Engineering Design Criteria (Tenant Area
     Criteria)
               1.  Design Conditions--Heating
                    (a) Inside dry bulb temperature:  70 degrees F
                    (b) Outside dry bulb temperature:  40 degrees F
                    (c)  Or as specified in the Standards

               2.  Design Conditions--Cooling
                    (a) Inside dry bulb temperature:  72 degrees F
                    (b) Maximum inside relative humidity:  50%
                    (c) Outside dry bulb temperature:  84 degrees F

                                  Exhibit E-7
<PAGE>
 
                    (d) Outside wet bulb temperature:  68 degrees F
                    (e)  Or as specified in the Standards

               3.  Information on Supply Air Quantities
                    (a) Upper and Lower Level:  Maximum of 1.20 average CFM per
               square foot over total Floor Area allowed.  Tenant cooling loads
               will be adjusted for air quantities greater than 1.20 average CFM
               per square foot.
                    (b) Outside Air:  Maximum of 0.1 CFM per square foot
               (included in item (a)).  Tenant cooling loads will be adjusted
               for air quantities greater than 0.1 CFM per square foot.
                    (c) Air quantity in CFM for tenant retail and occupied areas
               to be calculated using sensible heat gain to space and
               temperature differences shown in table below:

          MALL AREA                                TEMPERATURE DIFFERENCES
          ---------                                -----------------------

          Phase I..................................................  15 TD
          Phase II.................................................  19 TD
          Phase III................................................  19 TD
          Phase IV (Nord. Wing)....................................  17 TD

          4.  Information On Supply Air Temperatures
               (a) Design cooling load conditions.
                    (1) Cold Supply.  55 degrees F Dry Bulb minimum supply air
               temperature.
               (b) Design heating load conditions.
                    (1) Supply Air.  55 degrees F Dry Bulb minimum supply air
               temperature.

     4.  All zone terminal control systems in Phases I, II and III will be
electronic direct digital controlled ("DDC") as outlined in the Standards.
Connections to zone terminal controls, base building energy control system
wiring loop and thermostats will be part of Tenant's Work.

     5.  All zone terminal control systems in Phase IV will be DDC as outlined
in the Standards and shall be electronic with a special relay network for
overriding the terminal damper for smoke evacuation purposes.  Controls will
require 120 VAC to be furnished by the tenant at the zone terminal box control
panel.  In addition, low voltage wiring and connections between the smoke
evacuation system will have a junction box furnished by Landlord located in or
near each tenant area, at a point to be determined by Landlord.

E.  Miscellaneous Tenant Responsibilities

     1.  All odor and moisture producing areas must be exhausted by special
exhaust systems to atmosphere.  This includes employee and public toilets,
kitchens, beauty parlors and alteration rooms.  Special exhaust systems shall be
designed to prevent odors and/or moisture from entering the general air
conditioning system and from traveling beyond the Premises.  Exhaust air
quantities shall not be less than required by code or the Standards.

     2.  Special exhaust systems shall be provided complete by Tenant.  Work by
Tenant will include ductwork, fans, registers and grilles and must comply with
the Standards.  Ductwork will terminate outside of the building above the roof
in locations approved by Landlord.  Special exhaust systems shall not draw air
from the ceiling return air plenums.  In all cases, ductwork shall connect
directly to exhaust hoods in ventilated spaces or to registers or grilles
mounted in the ceiling in ventilated spaces.

     3.  Any special exhaust systems will have to be compensated by additional
outside air make-up in the central plant.  Therefore, any exhaust air will
result in additional charges in accordance with the outside air charge rate
curve.

     4.  Special cooling and heating systems such as required for refrigeration
display cases and walk-in coolers, and for alteration room steam-pressing and
blocking equipment, shall be provided complete by Tenant.  Energy and equipment
for heating or cooling shall be provided entirely by Tenant.  Any exhaust or
make-up air requirements for this service will be provided by Tenant and may not
be exhausted into the return air plenum.

     5.  The location of equipment serving special exhaust and make-up air
systems and special heating and cooling systems shall be designated and/or
approved by Landlord.  Routing of ductwork serving exhaust and make-up air
systems and routing of piping serving special heating and cooling systems shall
be designated and/or approved by Landlord.  Location and routing shall comply
with the applicable provisions, if any, of the Standards.

     6.  All Tenant Stores.  Air conditioning exhaust or special cooling or
heating systems shall be submitted to Landlord for approval in the manner
provided in Section I of this Exhibit "E."

                                  Exhibit E-8
<PAGE>
 
     7.  Maintenance shall be routinely performed by Tenant periodically
throughout the term on the mixing box and related parts of the system located in
the Premises.  Such maintenance shall be not less frequently than annually.

F.  Requirements for Tenant's Work

     1.  Design and Equipment Selection:
          (a) Refer to Tenant Area Criteria (Paragraph D.3 above) for the
     following:
               (1) Required heating and cooling design conditions.
               (2) Maximum supply air quantities provided by Landlord.
               (3) Supply air temperatures.
               (4) Supply air pressures.

     2.  Materials and Methods of Construction and Workmanship
          (a) All material shall be new and free from defects.
          (b) Installation and materials, including ductwork and fire dampers,
     shall meet the requirements of the City of Costa Mesa, the State of
     California, the Factory Insurance Association (F.I.A.), the Pacific Fire
     Rating Bureau, and the Standards, whichever is most stringent.
          (c) All ductwork shall be galvanized steel except ductwork for kitchen
     or other special equipment which shall be in accordance with applicable
     code requirements or the Standards.
          (d) Insulation on supply ductwork shall be no less than 1.5" thick 3/4
     pound duct wrap or as specified in the Standards.
          (e) All ductwork within the Premises shall be complete with diffusers,
     dampers, extractors, turning vanes, hangers and specialties.
          (f) All main and branch ductwork furnished and installed by Tenant's
     contractor shall be designed for static pressure equal to 5" water column
     maximum.
          (g) Thermostats shall be electronic, with all wiring, conduits,
     specifications and installation to comply with applicable codes and the
     Standards.

     3.  Testing and Balancing
          (a) Mechanical air balancing and set up of all zone terminal units and
     diffusers shall be provided by Tenant.  All air balancing shall be
     performed by a licensed air balancing company selected by Landlord and paid
     by Tenant.  Tenant's contractor shall cooperate with and assist with DDC
     controller and thermostat calibration.  It shall be the responsibility of
     Tenant's contractor to correct any deficiencies or deviations from the
     working drawings or Landlord's tenant design criteria which are set forth
     in the initial air balance report, and to pay for all additional air
     balance testing to verify compliance with design requirements.  All air
     balancing, testing, reporting and corrective work required to be performed
     by Tenant shall be completed within 14 days following completion of
     Tenant's Work and shall conform to the Standards.
          (b) After completion of air balancing, a typewritten report shall be
     prepared by the air balancing company and three copies shall be submitted
     to Landlord.  The report shall show actual air volume readings at all
     inlets and outlets to the air conditioning supply exhaust and makeup air
     systems.  Static pressure and air volume readings shall be shown for each
     supply and exhaust fan.  Air inlets and outlets, fans and air handling
     units shall be identified by manufacturer, type, model number and size.
     Each report shall include a summary tabulation showing the following:
               (1) Floor level and Floor Area in square feet of the Premises.
               (2) Total CFM air supplies to the Premises from the air
          conditioning system.
               (3) Total CFM air exhaust from the Premises.
               (4) Total CFM makeup air supplied to the Premises.
          (c) After completion of air balance work, the volume adjustment knobs
     or levers on all air valves and mixing boxes in the Premises shall be
     locked and the keys shall be turned over immediately to Landlord.
          (d) The method of performing all air balance work is subject to the
     prior approval of the South Coast Plaza Engineering Department.

G.  Landlord and Tenant Work Design Criteria for Plumbing and Gas Fittings.

     1.  All plumbing shall be constructed in conformance with all applicable
codes and ordinances.

     2.  During the term of the lease, Tenant shall maintain all plumbing
facilities in conformance with all ordinances.  Tenant shall also maintain,
including periodic flushing, Tenant's sewer line to Landlord's main.

     3.  If supplementary plumbing facilities are installed, service piping for
such facilities shall be concealed in accessible service chases.  Water closets,
urinals, lavatories, janitor sinks, and drinking fountains shall be of good
standard manufacture.  All urinals will require automatic electronic flush
valves.  If a hot water tank(s) is provided by Tenant for its domestic hot water
requirements, then hot water tanks shall be less than 80 gallons capacity, shall
be electric automatic, and shall have all necessary safety controls.

                                  Exhibit E-9
<PAGE>
 
     4.  If food is prepared on the Premises, Health Department requirements may
include (a) enlargement of the sewer line from the Premises to the main sewer
line and (b) installation of a grease trap in any kitchen.  Such installations,
and cleaning and maintenance thereof, in accordance with Landlord and Health
Department requirements, shall be Tenant's sole responsibility, both as to
payment of costs and performance.

V.  CONSTRUCTION PROCEDURES FOR TENANT'S CONTRACTOR.  When requesting bids or
contracts with respect to any Tenant's Work, Tenant shall comply with the
following procedures:

     A.  Procedures Regarding Bids and Contracts

          1.  Each contractor shall review the plans, drawings, specifications
     and other descriptive material regarding Tenant's Work and direct any
     questions regarding these materials to Tenant's architect or Landlord's
     tenant coordinator prior to submitting a bid or contract proposal.

          2.  Each contractor shall review the lease exhibits which pertain to
     Tenant's Work and become familiar with them.

          3.  Each contractor shall state in his bid or contract proposal the
     number of days required to complete Tenant's Work.

          4.  Each contractor shall state in his bid or contract proposal all
     items of work that deviate from the approved plans, drawings or
     specifications and shall set forth clearly the alternates which he
     proposes.

          5.  Each contractor shall include in his bid or contract proposal a
     provision that he will guarantee that Tenant's Work shall be free from any
     defects in workmanship and materials for a period of not less than one (1)
     year from the date of completion thereof.  Such contractor shall be
     responsible for the replacement or repair, without additional charge, of
     all work done or furnished in accordance with his contract which shall
     become defective within one (1) year after substantial completion of the
     work.  The correction of such work shall include, without additional
     charge, all additional expenses or damages in connection with such removal
     or replacement of all or any part of Tenant's Work, the Specialty Shops
     Building shell and/or the common area improvements which may be damaged or
     disturbed thereby.  Such warranties or guaranties as to materials or
     workmanship of or with respect to tenant's Work shall be contained in the
     contract and shall be so written that such guaranties or warranties shall
     inure to the benefit of both Landlord and Tenant, as their respective
     interests may appear, and can be directly enforced by either.  Upon
     completion of Tenant's Work, the contractor and/or architect shall furnish
     to Landlord two (2) copies approved by the contractor of all warranties,
     guaranties and operating manuals relating to the equipment installed as a
     part of Tenant's Work.

     B.  Procedures Prior to Commencement of Tenant's Work

     1.  Tenant's contractors will review Landlord's drawings with respect to
the Center to become familiar with existing conditions relating to sewers, water
lines, sprinkler lines, concrete slabs and structural members.  Landlord does
not warrant the accuracy of any such drawings.

     2.  Tenant's contractor will visit the Premises and the Center to determine
the location of existing "temporary" power and will arrange for temporary
electrical service and other temporary utilities as necessary for the Premises
to meet all O.S.H.A. codes.  The costs of bringing such temporary services to
the Premises, and the costs of such services, shall be Tenant's responsibility
as provided in Section II.B of Exhibit "C."  Such contractor shall review with
Landlord's tenant coordinator the location of electrical and other services and
be aware of the distance and requirements to bring these services to the
Premises.

     3.  Tenant's contractor shall submit to Landlord's tenant coordinator for
approval a list of proposed subcontractors, and a bar chart progress schedule
listing suppliers, major items and any key sub-items.

     4.  Tenant's contractor shall hold a pre-construction meeting with
Landlord's tenant coordinator to review and schedule Tenant's Work and to
discuss any unusual aspects thereof or problems anticipated in connection
therewith.

     5.  Tenant's contractor shall select only subcontractors who have a proven
history of diligently performing their work in a timely manner and producing
good quality work.

     6.  Tenant's contractor shall obtain and pay for all necessary permits with
respect to Tenant's Work, unless otherwise instructed by Landlord.

     7.  Tenant's contractor shall obtain from each subcontractor a written
guaranty or warranty of the type set forth in A.5 above, covering the portion(s)
of Tenant's Work for which such subcontractor is responsible.

     C.  Procedures During Construction of Tenant's Work

     1.  Tenant's contractor shall do or cause to be done all demolition work
such as jackhammer work, concrete saw cutting, wrecking, removal of trash and
any other activities generating loud noises in a manner that does not create

                                 Exhibit E-10
<PAGE>
 
noise, dust and interference with the operations of the Center.  All jackhammer
and similar work shall stop at 9:30 a.m. each morning, unless approval to
continue past such hour is obtained in advance from Landlord's tenant
coordinator.

     2.  Tenant's contractor and any subcontractor participating in Tenant's
Work shall obtain approval from Landlord for any space outside of the Premises
within the Center, including all exterior areas, which such contractor or
subcontractor desires to use for storage, handling and moving of materials and
equipment, as well as for the location of any field office and/or facilities for
personnel.

     3.  Tenant's contractor shall maintain a clean, safe and orderly job site
and shall not use the trash removal system for the Center to remove trash from
the Premises.  Tenant's contractor and all subcontractors participating in
Tenant's Work shall remove and dispose of, at least once a week and more
frequently as Landlord may direct, all debris and rubbish caused by or resulting
from demolition or the construction of Tenant's Work and, upon completion,
remove all temporary structures, surplus materials, debris and rubbish of
whatever kind remaining in the Premises or within the Center which had been
brought in or created by the contractor and subcontractors performing Tenant's
Work.  Clean up shall also comply with all specific requirements in the
Standards.  If any such contractor shall neglect, refuse, or fail to remove any
such debris, rubbish, surplus material or temporary structures within two (2)
days after notice to Tenant's contractor from Landlord, Landlord may cause the
same to be removed by contract or otherwise as Landlord may determine expedient
and charge the cost thereof, after exhausting any clean-up deposits, to Tenant.

     4.  If the Premises have service doors, Tenant's contractor shall arrange
for all employees, tools, equipment and supervisory personnel to enter and exit
the Premises through such service doors.  Tenant's contractor shall be
responsible to clean up any dust, dirt, or tracks which result from entry or
exit through any other doors or entrances to the Center.  When size and shape of
materials or equipment makes impossible the use of the service doors, permission
for access through other entrances will be granted by the tenant coordinator,
but only prior to 10:00 A.M. Where the Premises do not have service doors,
Tenant's contractor shall cause materials and major items to be delivered prior
to 10:00 A.M. Tenant's contractor shall also maintain proper cleanup and dust
removal during the course of the working day in accordance with the Standards.

     5.  Prior to the installation of floor fill which is applied over the
concrete sub-floor, a method of adhesion to the sub-floor shall be submitted for
approval by Landlord's tenant coordinator.  Landlord's tenant coordinator shall
inspect the area to receive floor fill prior to filling and approve the method
of adhesion.

     6.  Tenant's contractor will be responsible for advising his subcontractor
doing fire protection work of Landlord's requirements for reporting "shutdown"
of Landlord's fire protection system to Landlord prior to the start of any work
of this type.  In addition, Tenant's contractor shall be aware of the monocoate
fire protection on structural steel and shall be held responsible for the
protection and repair of same.  Any such shutdown shall comply with the specific
requirements of the Standards.

     7.  Tenant's contractor shall provide to Landlord's tenant coordinator, for
informational purposes, copies of all schedules and the like with respect to
tenant's Work and all significant changes thereto.

     D.  Miscellaneous Procedures

     1.  Tenant's Work and all portions thereof shall be performed in a first
class and workmanlike manner in conformity with the working drawings approved by
Landlord.  Any matters of design criteria or work which are not in conformity
with the working drawings and the procedures set forth in this Exhibit "E," in
Exhibit "C" and the Standards shall be promptly reported to Landlord's tenant
coordinator.  Upon completion of Tenant's Work, the Premises shall be in good,
clean and usable condition.

     2.  Tenant's contractor shall provide full time, on-the-job supervision
when subcontractors or employees are working in the Premises.  The supervisor
for Tenant's contractor shall be responsible for conformance to all Center
regulations regarding tenant construction.  All Tenant's Work shall be performed
by Tenant's contractor or persons or firms under subcontract to Tenant's general
contractor to allow him to maintain control of the work in progress.  In the
case of restaurant or other tenants with a separate equipment supplier, the
Tenant shall require its general contractor to supervise all trades until the
completion and opening of the Premises for business and such supplier shall be a
subcontractor to Tenant's general contractor.

     3.  Tenant's contractor shall maintain and require all subcontractors to
maintain worker's compensation insurance covering all of their respective
employees and shall also carry public liability insurance, including property
damage, with limits and on forms and in companies approved by Landlord, and the
policies therefor shall insure Landlord and Tenant as well as the contractor.
Certificates for all of the foregoing insurance shall be delivered to Landlord
before construction is started or contractor's equipment is moved onto the site.

                                 Exhibit E-11
<PAGE>
 
     4.  Tenant's contractor shall cooperate with and coordinate scheduling of
construction with Landlord's tenant coordinator to avoid interference with other
construction work in and about the Center or interference with the operations of
the Center and its tenants.

     5.  Upon completion of Tenant's Work, Tenant's contractor or Tenant's
architect shall furnish to Landlord one (1) complete set of as-built,
reproducible drawings depicting the improvements constructed as Tenant's Work.
As-built drawings shall clearly show by means of notes, clouding and dates all
changes to the construction documents.

     E.  Approved List of Contractors

         Notwithstanding anything contained in this Exhibit "E" or elsewhere in
this lease, Landlord has established an "approved list" of tenant improvement
general contractors who are available for work of the same type as Tenant's
Work, who have a reputation for good quality work and with whom Landlord or its
affiliates have had satisfactory tenant improvement work experience.  Tenant may
select its general contractor for Tenant's Work from the approved list.  A copy
of such approved list will be furnished by Landlord's tenant coordinator upon
request by Tenant.  If Tenant selects a general contractor from such approved
list, Landlord will waive the cash escrow and bond requirements set forth in
part I.F. of this Exhibit "E."


                                 Exhibit E-12

                                                 LANDLORD'S       TENANT'S
                                                  INITIALS        INITIALS
                                                 ----------       --------
                                                   J.E.S.            DD
                                                   H.T.S.
<PAGE>
 
                              [STORE FLOOR PLANS]


                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.

                                   EXHIBIT E
<PAGE>
 
                           [DRAWING OF STORE FRONTS]


                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.

                                   EXHIBIT E
<PAGE>
 
                   ACCELERATED BUILDING PLAN REVIEW AGREEMENT

          THIS AGREEMENT, dated ___________________, is made by the CITY OF
COSTA MESA, a municipal corporation (CITY), and
__________________________________ (DEVELOPER) and _____________________
(ENGINEER) in Costa Mesa, California.

                              W I T N E S S E T H

          WHEREAS, the CITY has established a procedure whereby a DEVELOPER may
retain the services of a qualified independent ENGINEER to perform the building
plan review normally conducted by the CITY or its private contractors; and

          WHEREAS, DEVELOPER proposes to utilize the accelerated plan review
process in connection with the proposed development of property located at
___________________________ in the city of Costa Mesa; and

          WHEREAS, ENGINEER represents that he is duly licensed by the State of
California, and that he shall meet all minimum qualifications and
responsibilities required by CITY as hereinafter stated; and

          WHEREAS, DEVELOPER understands and agrees that no building permit
shall be issued until all requirements and conditions of this agreement have
been satisfied; and

          WHEREAS, ENGINEER represents that he has that degree of specialized
expertise contemplated within California Government Code Section 37103 and holds
all necessary licenses to practice and perform the services herein contemplated;
and

          WHEREAS, no official or employee of CITY has a financial interest in
the subject matter of this Agreement contemplated within the provisions of
California Government Code, Sections 1090-1092; and

          WHEREAS, ENGINEER declares that he shall perform the services herein
contemplated in compliance with the Federal and California Laws related to
minimum hours and wages (40 U.S.C. 276A, et. seq., and California Labor Code
Section 6300, et. seq., and California Labor Code, Section 1410, et. seq.), to
the extent same are applicable herein.

          NOW THEREFORE, in consideration of the mutual promises of the parties,
and other good and sufficient consideration, the parties agree to the following:

I.  BUILDING PLAN REVIEW SERVICES

          A.  CITY does hereby agree to accept ENGINEER to perform building plan
review in accordance with the terms and conditions herein set forth.

          B.  ENGINEER shall review plans for compliance with pertinent City and
State regulations falling within the purview of the building official of the
City of Costa Mesa.


II.  FEES FOR BUILDING PLAN REVIEW SERVICE

          A.  Fees for performing the building plan review shall be negotiated
between DEVELOPER and the ENGINEER and said fees shall be paid to ENGINEER by
DEVELOPER.  The CITY shall not be responsible to ENGINEER to any extent for the
fee owed by DEVELOPER.  CITY shall not be called upon to assume any liability
for the direct or indirect payment of the fee owed by DEVELOPER or of any
salary, wage or compensation of any person employed by ENGINEER.

          B.  At the time the building permit is issued, an administrative fee
equal to 25 percent of what would normally have been the plan check fee, had the
plans been checked by the CITY, will be charged and collected by the CITY.  This
fee will be in addition to the building permit fee.


III.  LIABILITY EXPOSURE AND COVERAGE

          A.  All officers, agents, employees, and subcontractors, and their
agents, officers and employees who are hired by or engaged by ENGINEER in the
performance of the building plan review, shall be deemed officers, agents, and
employees and subcontractors of ENGINEER only and CITY shall not be liable for
their acts or omissions nor responsible to them for anything whatsoever.

          B.  ENGINEER and DEVELOPER shall each separately indemnify and save
harmless CITY, its officers and its employees from and against any and all
damages to property or injuries to, or death of any person or 

                                  Exhibit F-1
<PAGE>
 
persons, including property and employees of CITY, and shall defend, save
harmless, and indemnify CITY, its officers and its employees from and against
any and all claims, demands, liabilities, suits, actions, proceedings or
judgments therefor, resulting from or arising out of their own negligent acts or
omissions or the negligent acts or omissions of their respective employees or
subcontractors; except that neither ENGINEER nor DEVELOPER shall hereby incur
any such obligation for the negligent acts or omissions of the other.

          C.  ENGINEER shall obtain and maintain the following insurance
coverage:


               1.   COMMERCIAL GENERAL LIABILITY coverage with policy limits of
                    not less than $1,000,000 combined single limit per
                    occurrence, with CITY as additional insured, and with an
                    endorsement that the insurance provided the CITY as
                    additional insured shall be deemed primary and
                    noncontributing with any other insurance of CITY.
               2.   PROFESSIONAL LIABILITY coverage for $ 1,000,000 with a
                    contractual liability provision sufficient to insure
                    Paragraph III.B. above.
               3.   WORKERS' COMPENSATION INSURANCE in statutory amount.
               4.   The general and professional liability insurance shall
                    provide continued coverage for at least 12 months following
                    completion of construction of the project and shall not be
                    cancelled, modified or reduced without first giving CITY
                    thirty (30) days written notice.

          D.  ENGINEER shall provide CITY certificates of insurance acceptable
to the City Attorney showing the above coverage and policy endorsements prior to
commencement of any plan check services.


IV.  GENERAL CONDITIONS

     A.   The ENGINEER shall comply with all the provisions of the Worker's
          Compensation Insurance and Safety Acts of the State of California, the
          applicable provisions of Divisions 4 and 5 of the California Labor
          Code, and all amendments thereto, and regulations adopted pursuant
          thereto by the State Department of Labor and similar State or Federal
          acts or laws applicable.

     B.   ENGINEER shall certify in a form and manner acceptable to CITY that
          the plans he has checked comply with all applicable codes, ordinances,
          and laws relating to the particular type of development proposed and
          that permits may be issued for the construction of same.

     C.   If omissions or errors in the plans are discovered during the course
          of construction, corrections shall be made at no cost to CITY, and all
          work performed shall be required to comply with the codes and
          ordinances of CITY prior to final building inspection.

     D.   DEVELOPER shall, prior to or concurrently with the building plan
          review by ENGINEER, contact the Planning Division, Fire Marshal,
          and/or Public Services Department of CITY, the Costa Mesa Sanitary
          District and/or the Mesa Consolidated Water District to determine any
          conditions or special requirements which may be administered by those
          departments.  Failure to do so may delay issuance of building permits.

     E.   The licensed architect, registered engineer, or other authorized
          person, entity, or corporation who prepared or supervised preparation
          of the project plans, specifications, and/or engineering calculations
          being reviewed, shall not be associated in any way with ENGINEER.


V.  RESPONSIBILITIES OF ENGINEER

     ENGINEER shall review plans for compliance with pertinent CITY and State
     regulations falling within the purview of the building official of the
     CITY.  More specifically, the services to be performed by ENGINEER shall
     consist of but not be limited to:

     PLAN CHECK

     a.  Classify the building and verify compliance for the following:
          1)  Occupancy group
          2)  Type of construction
          3)  Location on property
          4)  Floor Area
          5)  Height and number of stories
          6)  Occupant load

                                  Exhibit F-2
<PAGE>
 
     b.  Verify compliance of the building with detailed occupancy requirements.
     c.  Verify compliance of the building with detailed type of construction
requirements.
     d.  Verify compliance of the building with exit requirements.
     e.  Verify compliance of the building with detailed Code regulations.
     f.  Verify compliance of building with engineering regulations and
requirements for materials of construction.
     g.  Verify compliance with California Title 24 by reviewing mechanical and
electrical plan schedules and work sheets for thermal insulation.
     h.  Verify compliance with California Title 25 and Section 13-144 of the
Costa Mesa Municipal Ordinances by reviewing mechanical, electrical, and
plumbing plans, details, calculations, and any required Acoustical Engineer's
report.
     i.  Provide the following:
         1)  Coordinate with City Engineering personnel for grades determination
         2)  Provide drainage review by CITY Ordinance
         3)  Check drainage flow "Q" calculations
     j.  Review plumbing, electrical, and heating drawings.
     k.  Provide for review and verification of all of the above items until all
corrections are made and all data are in compliance with all codes, ordinances,
and State and Federal Laws.

VI.  CERTIFICATION

     The following certification statement shall appear on each page of the
     drawings submitted and shall be signed and dated by the registered
     architect or ENGINEER:

                      ARCHITECT OR ENGINEER CERTIFICATION

I hereby certify that the work proposed to be done on these plans is in
conformance with all Codes and Ordinances of the City of Costa Mesa and further,
if omissions or errors are discovered, I understand that the work performed will
be required to comply with the Codes and Ordinances of the City of Costa Mesa
prior to final building inspection.



------------------------   --------------------    ---------------------------
Signature                  Date                    State License

VII.  PERMIT ISSUANCE

      Building permits shall be issued by CITY upon completion of all
      requirements specified above and upon completion of all requirements of
      any other affected department of CITY or other governmental agency.

VIII. ACKNOWLEDGEMENTS

      DEVELOPER and ENGINEER acknowledge that they have read and understand the
      above statement of conditions, requirements, and directions and agree to
      perform accordingly. Furthermore, they understand that no building permits
      shall be issued for any project until these requirements have been
      satisfied, and they certify that no work has been undertaken by the
      ENGINEER involving plan check services nor to submittal of the required
      certificates of insurance and prior to approval of same by the Costa Mesa
      City Attorney.

IX.   SIGNATURES

      A.   The Director of Development Services or his designee is authorized to
           execute this agreement on behalf of the City of Costa Mesa when the
           parties meet the conditions listed herein.

      B.   The DEVELOPER is defined as the fee title property owner or the
           tenant for which the improvements are being constructed. If the fee
           title property owner or tenant is a corporation or general
           partnership, an officer of the corporation or a general partner shall
           execute this agreement.

                                  Exhibit F-3
<PAGE>
 
     C.   If the ENGINEER is a corporation or general partnership, an officer of
          the corporation or a general partner shall execute this agreement.

  IN WITNESS WHEREOF the parties have signed below.


 
-------------------------------------   ---------------------------------------
              DEVELOPER                                ENGINEER

By                                      By
  -----------------------------------     -------------------------------------

-------------------------------------   ---------------------------------------
                 TITLE                                   TITLE 
(If Developer is a corporation, officer (If Engineer is a corporation, officer
of corporation must sign; if            of corporation must sign; if 
Partnership, general partner must sign) Partnership, general partner must sign) 


-------------------------------------    --------------------------------------
               ADDRESS                                   ADDRESS

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

-------------------------------------    --------------------------------------
              TELEPHONE                                  TELEPHONE

                           CITY OF COSTA MESA
 
 
 
                           By
                             ---------------------------
                             Assistant Development
                             Services Director/Building


                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
                                  Exhibit F-4
<PAGE>
 
           RULES AND REGULATIONS FOR SOUTH COAST PLAZA RETAIL CENTER
                      WHICH CONSTITUTE A PART OF THE LEASE

          1.  No tenant or its agents or employees shall loiter in the Enclosed
Mall areas or other common areas of the Center, nor shall they in any way
obstruct the sidewalks, entry passageways, driveways, entrances and exits to the
Center, and they shall use the same only as passageways to and from their
respective premises.  Each tenant and its employees shall comply with all
regulations with respect to the common areas, including but not by way of
limitation, posted speed limits, directional markings and parking stall
markings.  Landlord reserves the right to exclude or expel from the Center any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of the
rules and regulations of the Center.

          2.  No doors, windows, lights and skylights that reflect or admit
light into the common areas of the Center shall be covered or obstructed by any
tenant, and doors leading into the common areas (other than the Enclosed Mall)
from tenant premises shall not be left open by any tenant.

          3.  Water closets and urinals shall not be used for any purpose other
than those for which they were constructed and no rubbish, newspapers or other
substances of any kind shall be thrown into them.  No tenant or such tenant's
agents and employees shall throw or discard cigar or cigarette butts or other
substances or litter of any kind in or about the Center, except in receptacles
placed therein for such purposes by Landlord or governmental authorities.  All
garbage, including wet garbage, refuse and trash shall be placed by each tenant
in the receptacles provided by Landlord for that purpose.  No tenant shall place
in any trash receptacle of the Center any material which cannot be disposed of
in the ordinary and customary manner of trash and garbage disposal.  All garbage
and refuse disposal shall be made in accordance with directions issued from time
to time by Landlord.

          4.  All trash, refuse and waste materials shall be regularly removed
from the premises of each tenant of the Center, and until removal shall be
stored (a) in adequate containers, which such containers shall be located so as
not to be visible to the general public shopping in the Center, and (b) so as
not to constitute any health or fire hazard or nuisance to any occupant of the
Center.

          5.  No tenant shall place or allow anything to be placed against or
near any glass doors or windows which may, in Landlord's opinion, appear
unsightly from outside the Premises.

          6.  No tenant shall do anything in any premises, or bring or keep
anything therein, which will in any way increase or tend to increase the risk of
fire or the rate of fire insurance or which shall conflict with applicable laws,
rules or regulations established by any governmental body or official having
jurisdiction, the regulations of the fire department or the provisions or
requirements of any insurance policy on such premises or any part thereof.  No
tenant shall use any machinery in its premises, even though the installation may
have been originally permitted, which may cause any unreasonable noise or jar,
or tremor to the floors or walls, or which by its weight might injure the walls
or floors of such premises or any other portion of the Center.  No tenant shall
use any method of heating or air conditioning other than that supplied by
Landlord.

          7.  No tenant shall place a load upon any floor which exceeds the load
per square foot which such floor was designed to carry and which is allowed by
law.  Landlord shall have the right to prescribe the weight, size and position
of all equipment, materials, furniture and other property brought into any
premises.  Heavy objects shall stand on such platforms as are determined by
Landlord to be necessary to properly distribute the weight, and each tenant
shall pay the cost of any structural bracing required by Landlord to accommodate
the same.  Business machines and mechanical equipment belonging to any tenant
which cause noise or vibration that may be transmitted to the structure of any
tenant's store or to any space therein to such a degree as to be objectionable
to Landlord or to any tenants shall be placed and maintained by such tenant, at
such tenant's expense, on vibration elimination or other devices sufficient to
eliminate noise or vibration.  The persons employed to move such equipment in or
out of any tenant's store must be acceptable to Landlord.  Landlord shall not be
responsible for loss of, or damage to, any such equipment or other property from
any cause, and all damage done to any building or the common areas of the Center
by maintaining or moving such equipment or other property shall be repaired at
the expense of the tenant causing the same.

          8.  No tenant or its agents or employees shall make or permit any
loud, unusual or improper noises in the Center, nor interfere in any way with
other tenants or those having business with them, nor bring into nor keep within
the Center any animal or bird, or any bicycle or other vehicle, except such
vehicles as tenants are permitted to park in the Center parking lot, and Tenant
and its agents and employees shall park only in the areas designated from time
to time for employee parking generally.

          9.  No tenant shall install any radio or television antenna,
loudspeaker, satellite dish antenna or other device on the roof or exterior
walls of such tenant's store.  No tenant shall interfere with radio or
television broadcasting or reception from or in the Center or elsewhere.  No
tenant shall install, maintain or operate upon any premises or in any common
areas under the exclusive control of Landlord any vending machines or video
games without Landlord's prior written consent.  If any tenant requires
telegraphic, telephonic, burglar alarm or similar services, it shall first
obtain, and comply with, Landlord's instructions concerning their installation.
The location of such equipment and all call boxes shall be subject to the prior
written approval of Landlord.  No tenant shall engage in the sale of tickets or
coupons for any lottery or other games of chance.

          10.  No portion of the Center shall be used for lodging purposes.

          11.  All freight must be moved into, within and out of tenant premises
only during such hours and according to such regulations as may be established
from time to time by the General Manager of the Center.  No person 

                                  Exhibit G-1
<PAGE>
 
shall use any utility area, truck and trash facility or other area reserved for
use in connection with the conduct of business, except for the specific purposes
for which intended.

          12.  Tenants are required to observe all fire and security regulations
issued by Landlord and to comply with instructions and/or directions of the
security personnel for the protection of the Center.  Tenant shall provide
Landlord with the name and telephone number of a designated employee to
represent Tenant in all matters pertaining to fire and security regulations.
Access by any tenant to such tenant's premises or the Center before or after
hours of operation of the Center shall be subject to clearance by the security
personnel of the Center and to compliance with such procedures as may be imposed
by such personnel, including presentation of identification satisfactory to such
personnel.

          13.  No tenant and no employee or invitee of any tenant shall go upon
the roof of the Center without the prior approval of Landlord.

          14.  No person shall use any roadway, walkway or mall, except as a
means of egress from or ingress to any store and automobile parking area within
the Center, or adjacent public streets.  Such use shall be in an orderly manner,
in accordance with the directional or other signs or guides.  Roadways shall not
be used at a speed in excess of twenty (20) miles per hour and shall not be used
for parking or stopping, except for the immediate loading or unloading of
passengers.  No walkway or the Enclosed Mall shall be used for other than
pedestrian travel.

          15.  No person shall use any automobile parking area except for the
parking of motor vehicles during the period of time such person or the occupants
of such vehicle are customers or business invitees of the retail, service and
restaurant establishments within the Center.  All motor vehicles shall be parked
in an orderly manner within the painted lines defining the individual parking
places.  During peak periods of business activity, limitations may be imposed as
to the length of time for parking use.  Such limitations may be made in
specified areas.

          16.  No person, without the prior written consent of Landlord, shall
in or on any part of the common area:
          (a) Vend, peddle or solicit orders for sale or distribution of any
merchandise, device, service, periodical, book, pamphlet or other matter
whatsoever.
          (b) Exhibit any sign, placard, banner, notice or other written
material.
          (c) Distribute any circular, booklet, handbill, placard or other
material.
          (d) Solicit membership in any organization, group or association or
any contribution for any purpose.
          (e) Parade, rally, patrol, picket, demonstrate or engage in any
conduct that might tend to interfere with or impede the use of any of the common
areas by any permittee, create a disturbance, attract attention or harass,
annoy, disparage or be detrimental to the interest of any of the retail, service
or restaurant establishments within the Center.
          (f) Use any common area for any purpose when none of the
establishments within the Center is open for business or employment.
          (g) Throw, discard or deposit any paper, glass or extraneous matter of
any kind, except in designated receptacles, or create litter or hazards of any
kind.
          (h) Use any sound-making device of any kind or create or produce in
any manner noise or sound that is annoying, unpleasant, or distasteful to
occupants or permittees of the Center.
          (i) Deface, damage or demolish any sign, light standard or fixture,
landscaping material or other improvement within the Center, or the property of
customers, business invitees or employees situated within the Center.
          Landlord's prior written approval with respect to any of the foregoing
activities may be given or withheld in Landlord's sole discretion.

          17.  Smoking or carrying lighted cigars, cigarettes or pipes in the
Enclosed Mall or in any other enclosed common area of the Center is strictly
forbidden.

          18.  The requirements of any tenant will be attended to only upon
written application to Landlord at the Management Offices of the Center, and
employees of Landlord shall not perform any work or do anything outside of their
regular duties except upon instructions from Landlord.

          19.  Landlord may waive any one or more of these rules for the benefit
of any particular tenant or tenants, but no such waiver by Landlord shall be
construed as a waiver of such rules in favor of any other tenant or tenants, nor
prevent Landlord from thereafter enforcing any such rules against any or all of
the tenants of the Center.  No waiver of any rule or regulation by Landlord
shall be effective unless in writing and signed by Landlord.

          20.  Landlord reserves the right to close and keep locked any and all
entrances and exit doors of the Center and gates or doors closing the parking
areas thereof during such hours as Landlord may deem to be advisable for the
adequate protection of the Center.

          21.  Landlord reserves the right, at any time, to change or rescind
any one or more of these rules and regulations or to make such other and further
reasonable rules and regulations as in Landlord's judgment may from time to time
be necessary for the management, safety, care and cleanliness of the Center, for
the preservation of good order therein and for the convenience of tenants of and
visitors to the Center.  Any such amendments, deletions or additions to these
rules and regulations shall be effective immediately upon delivery of written
notice thereof to tenants.

          22.  Each tenant shall abide by any additional rules or regulations
which are ordered or requested by any governmental or military authority.  Each
tenant shall be responsible for the observance of these rules and any such rules
by its employees, agents, clients, customers, invitees and guests.

                                  Exhibit G-2
<PAGE>
 
          23.  Landlord shall not be responsible to any tenant or to any other
person for the non-observance or violation of these rules and regulations by any
other tenant or other person.

          24.  A copy of these rules and regulations shall be attached to and
form a part of each tenant lease at the Center.  Each tenant who executes a
lease of space at the Center shall be deemed to have read these rules and
regulations and to have agreed to abide by them as a condition to its occupancy
of space at the Center.  In the event of any conflict between these rules and
regulations, or any amendments or additions thereto, and the provisions of any
tenant's lease, such lease provisions shall control.

                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
                                  Exhibit G-3
<PAGE>
 
                      KNOWN LOCATIONS OF ASBESTOS-BEARING
                             CONSTRUCTION MATERIALS
                                        
          Pursuant to the survey performed by The Pickering Firm, asbestos is
predominately located in fire-proofing material sprayed on the structural steel
supporting the roofs of the buildings comprising Phase 1.  Such asbestos-bearing
fire-proofing material has been located on the structural steel supporting the
roof of the Enclosed Mall of Phase 1, and has also been found on the structural
steel supporting the roofs of tenant premises on the second level of Phase 1.
In addition, asbestos has been found in the fire-proofing material on the
structural steel supporting the roof of the service corridors on the second
level of Phase 1 and in the fire-proofing material on the steel studs in the
ceilings of a few service corridors and tenant premises on the first level of
Phase 1.  Further, products containing an asbestos ingredient have been located
in a few places in Phase 1 in the concrete slab fireproofing, spray applied
acoustical materials, ceiling tiles, floor tiles and the adhesives used for
floor and wall coverings.  Finally, products containing an asbestos ingredient
have been located in Phase 1 and elsewhere in the Center in tenant installed
floor tiles, demising walls and in the adhesives used for wall and floor
coverings.

          With respect to asbestos-bearing fire-proofing material on the
structural steel of the roof of the Enclosed Mall in Phase 1, Landlord completed
removal of all such material during 1989.  With respect to Landlord installed
asbestos-bearing materials within tenant premises and service corridors in Phase
1 and elsewhere in the Center, Landlord is abating such materials as and when
such areas become available to Landlord to conduct such abatement.

          THE FOREGOING IS SIMPLY A SUMMARY OF THE LOCATIONS KNOWN TO LANDLORD
IN WHICH ASBESTOS BEARING CONSTRUCTION MATERIALS ARE PRESENT AT THE CENTER.  A
MORE COMPLETE DISCUSSION OF SUCH SUBJECT IS SET FORTH IN THE PICKERING REPORT,
AND A COPY OF SUCH REPORT MAY BE OBTAINED FROM THE CENTER'S DIRECTOR OF
OPERATIONS AT THE MANAGEMENT OFFICES OF THE CENTER.  IN ADDITION, THE FOREGOING
SUMMARY DOES NOT ADDRESS ASBESTOS WHICH MAY BE IN CONSTRUCTION MATERIALS
INSTALLED IN TENANT OWNED BUILDINGS AT THE CENTER OR WHICH MAY BE PRESENT IN
CONSTRUCTION MATERIALS INSTALLED BY TENANTS WITHIN THEIR PREMISES ELSEWHERE IN
THE CENTER.

                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
                                   Exhibit H
<PAGE>
 
                           LEASE ESTOPPEL CERTIFICATE
                           --------------------------

Landlord: SOUTH COAST PLAZA
--------                   

Tenant:   ST. JOHN KNITS, INC.
------                        

Tenant Trade Name:  ST. JOHN KNITS
-----------------                 

Premises:     Suites 2533 and 3011
--------                          

Floor Area: 15,384 Sq. Ft.                    Lease Date:  June 5, 1998
----------                                                             

The undersigned Tenant of the above-referenced lease (the "Lease") hereby
ratifies the Lease and certifies to New York State Teachers' Retirement System (
referred to as "Lender") as the beneficiary of a deed of trust encumbering the
Real Property of which the premises demised under the Lease (the "Premises") is
a part, as follows:

     1.   That the term of the Lease commenced on _____________, ____ and the
          Tenant is in full and complete possession of the Premises demised
          under the Lease and has commenced full occupancy and use of the
          Premises, such possession having been delivered by the original
          landlord and having been accepted by the Tenant.

     2.   That the Lease calls for, and the Tenant is currently paying monthly
          installments of, Minimum Rent of $_____________ and of additional rent
          of $_______________.  Minimum Rent and Additional Rent commenced to
          accrue on the _________ day of _____________, ____.  The Lease
          currently provides for percentage rent in the amount of 6% of annual
          sales over $15,384,000.

     3.   That no advance rental or other payment has been made in connection
          with the Lease, except rental for the current month, there is no "free
          rent" or other concession under the remaining term of the Lease,
          except as expressly set forth in the Lease, and the rent has been paid
          to and including ________________, ____.

     4.   That a security deposit in the amount $19,993.34 is being held by
          Landlord, which amount is not subject to any set-off or reduction or
          to any increase for interest or other credit due to Tenant.

     5.   That all obligations and conditions under said Lease to be performed
          to date by Landlord or Tenant have been satisfied, free of defenses
          and set-offs, including all construction work in the Premises.

     6.   That the Lease attached hereto as Exhibit "A" is a true and correct
          copy of the Lease and all amendments, modifications and supplements
          thereto.  The Lease is a valid lease and in full force and effect and
          represents the entire agreement between the Tenant and the Landlord;
          that there is no existing default on the part of the Landlord or the
          Tenant in any of the terms and conditions thereof and no event has
          occurred which, with the passing of time or giving of notice or both,
          would constitute an event of default; and that said Lease has:
          (initial one)

          [X]  not been amended, modified, supplemented, extended, renewed or
               ---                                                           
               assigned.

          [_]  been amended, modified, supplemented, extended, renewed or
               assigned only as provided in the attached Exhibit "B."

     7.   That the Lease provides for a primary term commencing
          ___________________ and expires on the 31st day of January, 2014 and
          that:
          (initial one)

          [X]  neither the Lease nor any of the documents listed above in
               Paragraph 6, (if any), contain an option for any additional term
               or terms.

          [_]  the Lease and/or the documents listed above in Paragraph 6
               contain an option for _____________ additional term(s) of
               _______________ lease year(s) and (each) at a rent to be
               determined as follows:

     8.   That Landlord, except as provided in the Lease or an amendment
          included in Exhibit "B," has not rebated, reduced or waived any
          amounts due from Tenant under the Lease, either orally or in writing,
          nor has Landlord, except as expressly provided in the Lease or an
          amendment included in Exhibit "B," provided financing for, made loans
          or advances to, or invested in the business of Tenant.

     9.   That, to the best of Tenant's knowledge, there is no apparent or
          likely contamination of the Real Property or the Premises by hazardous
          materials, and Tenant does not use, nor has Tenant disposed of,
          hazardous materials in violation of environmental laws on the Real
          Property or the Premises.

     10.  That there are no actions, voluntary or involuntary, pending against
          the Tenant under the bankruptcy laws of the United States or any state
          thereof.

                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
                                  Exhibit I-1
<PAGE>
 
     11.  That this certification is made knowing that Lender is relying upon
          the representations herein made.


Date ______________________, ____   ST. JOHN KNITS, INC., a California
                                    corporation


                                    By
                                      ------------------------------------
                                    Typed Name:
                                               ---------------------------
                                    Title:
                                          --------------------------------
                                    Attest:
                                           -------------------------------
                                    Typed Name:
                                               ---------------------------
                                    Title:
                                          --------------------------------



                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
                                  Exhibit I-2
<PAGE>
 
                       _________________________________

                               SOUTH COAST PLAZA

                       _________________________________

                                 P.O. BOX 1486
                         COSTA MESA, CALIFORNIA 92626


                                 SALES REPORT


Name of Tenant _________________________________________________________________

Sales for the Period from ____________ to _____________ (exclusive of sales tax)

Amount _______________________________

Submitted by ___________________________________________________________________
                                     (signature and title)

Date _________________________________


PLEASE MAIL THIS REPORT WITH
PERCENTAGE RENT (IF APPLICABLE) TO:
                                                          SOUTH COAST PLAZA
                                                          P.O. BOX 1486
                                                          COSTA MESA, CALIFORNIA
                                                                           92626

                                   EXHIBIT J


                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
<PAGE>
 
therefor first approved by the other Parties hereto, which approvals shall not 
be unreasonably withheld. Provided, however, that the foregoing obligations 
shall extend only to such construction as is required by the failure of a Party 
to rebuild its Store, and shall not extend to reconstruction of any portion of 
the Enclosed Mall occasioned by damage to or destruction of all or a portion of 
the Enclosed Mall. Nothing herein contained shall be deemed to abrogate or 
diminish the obligations of May set forth in paragraph 11.

10.  INDEMNIFICATION AND PUBLIC LIABILITY INSURANCE
     ----------------------------------------------

     (a)  Segerstrom, Sears, May, Federated and Saks each covenants and agrees 
to indemnify and hold harmless the other Parties respectively, from and against 
any and all claims, costs, expenses (including attorneys' fees and/or court 
costs) and liabilities arising from or in respect of:

          (i)   The death of or any accident, injury, loss or damage whatsoever 
caused to any Person or to the property of any Person, as shall occur in or on 
the Tract of such indemnifying Party and, as to Segerstrom (and to the extent 
provided in the last unnumbered paragraph of paragraph 3(k), Sears), Parking 
Structure 3, during the period from the date of this Agreement to and including 
the Termination Date (except to the extent such claims, costs, expenses and 
liabilities shall arise from or in respect of negligence or fault of the Party 
or Parties so indemnified, or their respective agents, employees, servants, 
tenants, or concessionaires);

          (ii)  Any act or omission whatsoever, to the extent such act or 
omission involves negligence, of the indemnifying Party and/or its respective 
agents, servants, employees and/or tenants, or subtenants and/or the agents, 
servants or employees of such subtenants with respect to Tracts of such other 
Parties respectively, and any part or parts thereof and any improvement or 
improvements located thereon (including, to the extent provided in paragraph 
3(k), Segerstrom and Sears with respect to Parking Structure 3); and

          (iii) Any activity undertaken by any such indemnifying Party pursuant 
to the provisions of paragraphs 2(b), 2(c), 3(h), 3(l), 3(m), 7, 8 and 9 hereof.

     (b)  Each Party shall at all times prior to the Termination Date maintain 
in force and effect the following insurance covering its Tract and all 
Improvements located thereon and, in the case of Segerstrom, Parking Structure 
3:

          (i)   Comprehensive public liability insurance in the amount of at 
least Two Million Dollars ($2,000,000) for each occurrence, non-aggregate, 
resulting in personal injury to or death of one Person, and consequential 
damages arising therefrom, and in the amount of at least Five Million Dollars 
($5,000,000) for each occurrence, non-aggregate resulting in personal injury to 
or the death of more than one Person and consequential damages arising 
therefrom;

          (ii)  Comprehensive property damage liability insurance in the amount 
of at least One Million Dollars ($1,000,000) per occurrence, non-aggregate; and

          (iii) Insurance, in the same liability amounts set forth in causes (i)
and (ii) above, covering the indemnification obligations of each Party to the 
other Parties contained in clauses (i),

                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
10(b)                                 38

                                   EXHIBIT K
<PAGE>
 
(ii) and (iii) of paragraph 10(a) above (i.e., contractual liability insurance).

     (c)  All of the insurance required to be maintained by the Parties pursuant
to subparagraph (b) of this paragraph 10 shall: 

          (i)   Be effected pursuant to a valid and enforceable policy or 
policies or contract or contracts of insurance issued by an insurer or insurers 
of recognized responsibility as to which policies all premiums thereon are paid 
in full and all other obligations of the policyholder thereunder are fully 
performed; provided, however, that nothing contained in this section (i) shall 
be deemed to prohibit the obtaining of policies or contracts of insurance which 
may cover any other property or properties real and/or personal of any 
Person(s), including Segerstrom, Sears, May, Federated or Saks as the case may 
be, in addition to the property covered pursuant to subparagraph (b) of this 
paragraph 10, and any other liabilities of any Person(s), including Segerstrom, 
Sears, May, Federated or Saks, as the case may be, in addition to the 
liabilities covered pursuant to subparagraph (b) of this paragraph 10, provided 
that there shall be allocation of premiums, reserves and coverage sufficient to 
satisfy all requirements of this paragraph 10 with respect to the Tract so 
insured;

          (ii)  Name the other Parties, respectively, as additional insureds;

          (iii) Contain a severability of interests endorsement; and

          (iv)  Contain an agreement by such insurer or insurers that it shall 
give at least thirty (30) days' prior written notice to the other Parties (with 
respect to the property and liability insurance required to be carried 
hereunder) in the event of (A) any change in the scope or coverage provided by 
such insurance, (B) cancellation or non-renewal by the carrier of such insurance
or (C) any reduction in the liability amount provided below the amounts of 
coverage required hereunder.

     (d)  Each Party shall, on request and promptly after the date of receipt of
the written request therefor by any Party, furnish each of the other Parties 
with a certificate or certificates (with an endorsement of premium payment 
thereon) evidencing all such insurance coverage (and any renewals thereof) 
required to be maintained by such Party pursuant to subparagraph (b) of this 
paragraph 10 and compliance with the requirements contained in clauses (ii) 
through (iv) of paragraph 10(c) above.

     (e) Notwithstanding anything contained to the contrary in subparagraphs 
(b), (c) and (d) of this paragraph 10, the insurance required under subparagraph
(b) may be carried under any plan of self-insurance from time to time maintained
by Segerstrom, Sears, May, Federated and Saks, respectively (but not by any 
successor or assignee of Segerstrom, Sears, May, Federated or Saks other than a 
wholly-owned subsidiary or a successor by merger, consolidation or transfer of 
substantially all assets, provided that such successor or subsidiary first 
covenants, in writing, to be bound by the insurance and indemnity obligations of
the Party whose insurance is so provided, for the benefit of all other Parties),
provided that the Party so self-insuring has, and continues to maintain, 
adequate reserves or resources for the risks so self-insured against and the 
Party so self-insuring furnishes to the other Parties hereto reasonable evidence
of the adequacy of such reserves or resources. Any Party with a 

                                                           LANDLORD'S   TENANT'S
                                                            INITIALS    INITIALS
                                                           ----------   --------
                                                             J.E.S.        DD
                                                             H.T.S.
10(e)                                 39

                                   EXHIBIT K