<PAGE>

                                                              Indian Ridge Plaza
                                                              Mishawaka, Indiana

                                     LEASE

                                    between

                          CIRCUIT CITY STORES, INC.,

                                   as Tenant

                                      and

                FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-4

                              dated April 8, 1996

                      INDIAN RIDGE PLAZA SHOPPING CENTER
<PAGE>

                                 TABLE OF CONTENTS
                                 -----------------

                                                                            Page
                                                                            ----


1.  Leased Property.........................................................  1
     (a)    Grant of Premises...............................................  1
     (b)    Existing Phar-Mor Store.........................................  2

2.  Construction of Existing Building and Improvements......................  2

3.  Lease Term..............................................................  3

4.  Base Rent...............................................................  4
     (i)    Main Term.......................................................  5
     (ii)   Option Periods..................................................  5
     (iii)  Additional Rent.................................................  5

5.  Description of Shopping Center by Landlord..............................  6

6.  Easements and Rights of Use.............................................  7
     (a)    Construction Easements..........................................  7
     (b)    Footing and Foundation Easements................................  8
     (c)    Encroachments...................................................  8
     (d)    Utility Rights..................................................  9
     (e)    Common Area Easement............................................  9
     (f)    Non-Dedication..................................................  9

7.  Common Areas and Common Area Maintenance................................ 10
     (a)    Definition of Common Areas...................................... 10
     (b)    CAM Charges..................................................... 10
     (c)    Tenant Payments................................................. 12
     (d)    Examination of Landlord's Records............................... 14

8.  Signs and Communications Equipment...................................... 14
     (a)    Signs........................................................... 14
     (b)    Communications Equipment........................................ 15

9.  Taxes................................................................... 15
     (a)    Taxes Contemplated Hereunder.................................... 15
     (b)    Payment of Real Estate Taxes.................................... 15
     (c)    Contest of Real Estate Taxes and/or Assessed
             Valuation of Property.......................................... 17
     (d)    Payment Following Appeal........................................ 17


                                      -i-
<PAGE>

10. Maintenance, Repairs and Replacements................................... 17

11. Payment of Utility Bills................................................ 20

12. Alterations............................................................. 20

13. Mechanics' Liens........................................................ 21

14. Insurance............................................................... 22
     (a)    Property Damage................................................. 22
     (b)    Liability Insurance............................................. 23
     (c)    Workers' Compensation Insurance................................. 23
     (d)    Self-Insurance.................................................. 23
     (e)    Common Area, Additional Area and Third Party Tenant Insurance
              and Insurance During Landlord's Construction.................. 23
     (f)    Policy Provisions............................................... 25
     (g)    Waiver of Right of Recovery and Subrogation..................... 25
     (h)    Evidence of Insurance........................................... 26
     (i)    Indemnities..................................................... 26

15. Damages by Fire or Other Casualty....................................... 27
     (a)    Less Than Forty Percent (40%)................................... 27
     (b)    Forty Percent (40%) or More..................................... 28
     (c)    Common Area and Additional Area................................. 28
     (d)    Last Two (2) Years of Main Term or Option Period................ 29
     (e)    Application of Funds............................................ 30
     (f)    Disbursement.................................................... 31

16. Condemnation............................................................ 31
     (b)    Tenant's Rights Upon Taking or Substantial Taking............... 32
     (c)    Tenant's Rights Upon Less Than Substantial Taking............... 32
     (d)    Landlord's Obligations Upon Any Taking.......................... 33
     (e)    Rights Upon Temporary Taking.................................... 33
     (f)    Taking of the Pylon Sign(s)..................................... 34
     (g)    Tenant's Right Upon Condemnation................................ 34

17. Assignment and Subletting............................................... 34

18. Use..................................................................... 36

19. Warranties and Representations.......................................... 37

20. Estoppel Certificates................................................... 47

21. Subordination, Non-Disturbance and Attornment........................... 48

                                      -ii-
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22. Change of Landlord...................................................... 49

23. Tenant's Financing...................................................... 50

24. Tenant's Property and Waiver of Landlord's Lien......................... 50

25. Memorandum of Lease, Rent Commencement Date Agreement................... 51

26. Expiration of Term and Holding Over..................................... 51

27. "For Rent" Signs........................................................ 52

28. Force Majeure........................................................... 52

29. Events of Tenant's Default.............................................. 53
     (a)    Failure to Pay Rent, Breach..................................... 53
     (b)    Bankruptcy...................................................... 53

30. Landlord's Remedies..................................................... 54
     (a)    Continue Lease.................................................. 54
     (b)    Terminate Lease................................................. 55
     (c)    Reimbursement of Landlord's Costs in Exercising Remedies........ 56
     (d)    Remedies Are Cumulative......................................... 56

31. Events of Landlord's Default; Tenant's Remedies......................... 57

32. Waiver.................................................................. 58

33. Compliance with Applicable Laws......................................... 58

34. Notices................................................................. 59

35. Brokers................................................................. 60

36. Miscellaneous........................................................... 60
     (a)    Headings and Gender............................................. 60
     (b)    Construction.................................................... 61
     (c)    Waiver of Jury Trial............................................ 61
     (d)    Relationship of Landlord-Tenant................................. 61
     (e)    Entire Agreement; Merger........................................ 61
     (f)    Attorneys' Fees................................................. 61
     (g)    Partial Invalidity.............................................. 62
     (h)    Consents........................................................ 62

                                     -iii-
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     (i)    Holidays........................................................ 62
     (k)    Successors and Assigns.......................................... 62
     (l)    Counterparts.................................................... 62
     (m)    Trademarks and Trade Names...................................... 62

37. Effectiveness of Lease; Tenant's Right to Terminate..................... 63

38. Confidentiality......................................................... 65

39. Ownership of Buildings and Improvements................................. 65

40. Limitation of Right of Recovery......................................... 66

41. Survival................................................................ 66

42. Self-Help............................................................... 66

43. Adjacent Tracts......................................................... 67

                                      -iv-
<PAGE>

                                                              INDIAN RIDGE PLAZA
                                                              MISHAWAKA, INDIANA

                                     LEASE
                                     -----


          This LEASE is made as of the 8th day of April, 1996, by and between
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-4, an Illinois limited
partnership, by and through its authorized agent, EQUITY PROPERTIES AND
DEVELOPMENT LIMITED PARTNERSHIP, an Illinois limited partnership, having an
address at Two North Riverside Plaza, Suite 100, Chicago, Illinois 60606-2689
("Landlord"), and CIRCUIT CITY STORES, INC., a Virginia corporation having an
address at 9950 Mayland Drive, Richmond, Virginia 23233 ("Tenant").

                             W I T N E S S E T H:

          That for and in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

     1.   Leased Property.
          ---------------

          (a) Grant of Premises. Landlord demises and leases to Tenant and
              -----------------
Tenant leases and takes from Landlord, commencing on Landlord's delivery of the
"Premises" (as defined below) to Tenant, all those certain "Premises" consisting
of the "Existing Building" and additional "Leasehold Improvements" (both as
defined below), containing as and when same are constructed or renovated
approximately 44,428 square feet, as more particularly shown (approximately)
outlined in red on Exhibit "A" hereto (the "Site Plan"), together with exclusive
                   -----------
rights in the four (4) parking spaces labelled "Customer Pick-Up" in front of
the Existing Building as shown on the Site Plan, together with the right to use
certain Common Areas as set forth in paragraph 6 below, all located in Indian
Ridge Plaza (the "Shopping Center") which consists of that certain real property
with buildings and improvements constructed or to be constructed thereon,
located at Grape Road and the Indiana East-West Tollroad (Interstate 80/90),
lying and being in the City of Mishawaka (the "City"), County of St. Joseph,
State of Indiana (the "State"), and more particularly shown on the Site Plan and
described by metes and bounds or platted lot legal description on Exhibit "A-1"
                                                                  -------------
attached hereto and made a part hereof for all purposes. All of the Shopping
Center exclusive of the Premises is "Landlord's Premises". Landlord hereby
grants to Tenant the benefit of all of those certain easement and similar rights
granted Landlord under those three (3) reciprocal easement agreements, as
supplemented and

                                      -1-
<PAGE>

amended, described on Exhibit "F" attached hereto as Permitted Exceptions (i.e.
the Toys "R" Us, May Department Store and Vicorp REA's, hereinafter referred to
collectively as the "REA's"). Landlord agrees that it will enforce its rights
(and Tenant's beneficial rights) granted in the REA's, including, without
limitation, those relating to access, parking, restrictions and prohibitions in
the Shopping Center, and should Landlord fail to enforce same, Tenant may do so,
at Tenant's option, in accordance with the self-help remedy permitted in this
Lease, and/or may exercise any other remedies available to Tenant in connection
with Landlord's failure.

          (b) Existing Phar-Mor Store. Tenant acknowledges that the 44,428
              -----------------------
square feet of ground floor space to be leased pursuant to the terms of this
Lease consists of an existing retail building which has previously been open for
business to the public as a Phar-Mor Store (the "Existing Building"). This
existing Phar-Mor Store is more particularly shown on Exhibit "A". Tenant
                                                      -----------
acknowledges that it has inspected the Premises and is familiar with the
condition thereof. Landlord shall deliver the Premises to Tenant and Tenant
shall accept same in "as is" condition. Tenant agrees that no representations
respecting the condition of the Premises and no promises to decorate, alter,
repair or improve the Premises either before or after the execution hereof have
been made by Landlord or its agents to Tenant, except as otherwise set forth
herein. Notwithstanding the foregoing, Landlord acknowledges that it has
represented and warranted to Tenant that prior to execution of this Lease,
Landlord has terminated its lease agreement with Phar-Mor and Landlord shall
cause any memorandum of such lease, if any, to be released of record title
immediately upon execution of this Lease.

     2.   Construction of Existing Building and Improvements.  Commencing
          --------------------------------------------------
immediately upon "delivery of the Premises" (as defined in Exhibit "C" and
                                                           -----------
incorporated herein by reference for all purposes), Tenant shall have the right
to renovate and improve the Existing Building with the "Leasehold Improvements"
and "Common Area Improvements" (hereinafter defined).  The "Leasehold
Improvements" shall mean the following improvements: improvements to the
Existing Building which when completed will cause the Existing Building to
contain approximately 44,428 square feet of "Gross Leasable Area" (hereinafter
defined) initially for use as a Circuit City Superstore, all in accordance with
the "Plans and Specifications" (as defined in Exhibit "C") approved by Landlord
                                              -----------
in accordance with Exhibit "C" attached hereto.  The "Common Area Improvements"
                   -----------
shall mean the following improvements: loading ramps,

                                      -2-
<PAGE>

sidewalks, trash compactor, transformer pad, with areas for car stereo
installation facilities, delivery and four (4) customer pick-up spaces
exclusively for Tenant's use, and other appurtenances and improvements which
shall be constructed on the outside of the Existing Building (other than
Tenant's building signage and alucobond tower) all in accordance with the "Plans
and Specifications" (as defined in Exhibit "C") approved by Landlord in
                                   -----------
accordance with Exhibit "C" attached hereto. The Leasehold Improvements and the
                -----------
Common Area Improvements shall hereafter be referred to together as the
"Improvements".

     3.   Lease Term. The renovation and construction term (the "Construction
          ----------
Term") of this Lease shall commence on the date of Landlord's delivery of the
Premises to Tenant in accordance with, and in the condition specified in this
Lease, and shall end on the "Rent Commencement Date" (as defined in paragraph 4
below).  The main term (the "Main Term") of the Lease shall commence on the Rent
Commencement Date and shall end on the last day of January following the
twentieth (20th) anniversary of the Rent Commencement Date.

     In addition to the Main Term, so long as Tenant is not then in default
under this Lease beyond any applicable cure period, Tenant shall have the option
(each such right referred to herein as a "Renewal Option") to renew and extend
the Lease for two (2) consecutive five (5) year periods (each such period
referred to as an "Option Period" and collectively as the "Option Periods")
immediately following the Main Term, at the Base Rent specified below.  Tenant
shall give Landlord written notice of its election to exercise any Renewal
Option at least one hundred eighty (180) days prior to the expiration of the
Main Term or any then-current Option Period, as applicable; provided, however,
that in order to avoid any forfeiture or inadvertent lapse of such Renewal
Option, if Tenant shall fail to give any such notice within the one hundred
eighty (180) day time limit and shall not have given Landlord prior written
notice of its intent not to exercise its Renewal Option, then and as often as
the same shall occur, Tenant's right to exercise such Renewal Option shall
nevertheless continue, as shall its tenancy hereunder (under the same terms and
conditions as theretofore in effect and notwithstanding that the Main Term or
then-current Option Period shall have expired), until ten (10) business days
after Landlord shall have given Tenant a written notice of Landlord's election
to terminate the Renewal Option, during which period Tenant may exercise its
Renewal Option at any time prior to the expiration of such ten (10) business day
period.  Upon the giving of notice of renewal and extension in accordance with

                                      -3-
<PAGE>

the foregoing provisions, the Term (defined below) of this Lease shall thereupon
be renewed and extended in accordance with such notice without further act by
Landlord or Tenant, the same as if such notice had been timely given hereunder.
Any termination, expiration, cancellation or surrender of this Lease shall
terminate all Renewal Options.

     The Construction Term, Main Term and each Option Period as to which Tenant
exercises a Renewal Option are, collectively, the "Term".  The term "Lease Year"
shall mean each successive period of twelve (12) consecutive calendar months,
commencing on the first day of each February during the Term, except that the
first Lease Year shall commence on the Rent Commencement Date and shall end on
the last day of January following the first anniversary of the Rent Commencement
Date.  On the expiration, or sooner termination, of the Term, Tenant shall quit
and surrender the Premises in accordance with the terms of this Lease and in
good order, condition and repair, ordinary wear and tear excepted, free and
clear of (a) all lettings and occupancies other than a subtenant under a
sublease permitted under this Lease and (b) all agreements, easements,
encumbrances and other liens other than those to which this Lease was subject on
the date of execution hereof and those created or consented to in writing by
Landlord.  Tenant shall leave the Premises in broom clean condition and shall
deliver all keys for the Premises to the person and at the place specified by
Landlord, and inform Landlord of all combinations on locks, safes and any vaults
in the Premises.

     4.   Base Rent. During the Construction Term, Tenant shall have no rental
          ---------
obligations nor shall Tenant be responsible for any Real Estate Taxes (as
defined in paragraph 9) or CAM Charges (as defined in paragraph 7) or any
similar costs, fees, rentals or expenses, except as set forth in paragraph 11.
Tenant agrees to pay base rent ("Base Rent") for the Premises in the amounts and
in the manner specified hereunder, commencing on the earlier of (i) the date
Tenant opens for business to the public at the Premises or (ii) July 1, 1996
(the "Rent Commencement Date").

     Tenant shall pay Base Rent in advance, in equal monthly installments, in
lawful money of the United States, without any prior demand, on the first day of
each succeeding calendar month throughout the Term, with appropriate proration
of any partial calendar month or Lease Year, to the address given for Landlord
in paragraph 34 hereof, unless Landlord shall give Tenant written

                                      -4-
<PAGE>

notice of a change of address or of the party to whom such rents shall be
payable. Base Rent shall be paid pursuant to the following schedule:

               (i) Main Term. During the first five (5) Lease Years, Tenant
                   ---------
shall pay annual Base Rent in the amount of Two Hundred Eighty Eight Thousand
Seven Hundred and Eighty Two and No/100 Dollars ($288,782.00), payable in equal
monthly installments of Twenty Four Thousand Sixty Five and 17/00 Dollars
($24,065.17). If any Lease Year is other than twelve (12) months in length,
annual Base Rent during such Lease Year shall be the product of the applicable
monthly Base Rent times the number of months in such Lease Year, with
appropriate proration for any partial calendar month therein. Annual Base Rent
shall increase on the first day of the sixth (6th) and every succeeding fifth
(5th) Lease Year by the lesser of (a) Fifty Cents ($.50) per square foot of
Gross Leasable Area of the Premises or (b) two (2) times the percentage increase
in the "CPI-U" (as defined below) during the five (5) year period ending on
October 31 of the fifth (5th) (or, as applicable, any succeeding fifth (5th))
Lease Year multiplied by the annual Base Rent in effect during the five (5) year
period over which said CPI-U increase is measured. As used herein, the CPI-U
shall be the United States Department of Labor, Bureau of Labor Statistics
Consumer Price Index for All Urban Consumers, U.S. City Average. If at any time
during the Term the CPI-U shall be discontinued, Landlord and Tenant shall
mutually and reasonably agree to substitute an existing official index published
by the Bureau of Labor Statistics or its successor or another similar index most
nearly equivalent to the CPI-U.

               (ii) Option Periods. During the first Option Period, Tenant shall
                    --------------
pay annual Base Rent in the amount of Three Hundred Eighty Eight Thousand Seven
Hundred Forty Five and 00/100 Dollars ($388,745.00), payable in equal monthly
installments of Thirty Two Thousand Three Hundred Ninety Five and 42/100 Dollars
($32,395.42).  Annual Base Rent shall increase on the first (1st) day of the
second Option Period by the lesser of (a) Fifty Cents ($.50) per square foot of
Gross Leasable Area of the Premises or (b) two (2) times the percentage increase
in the CPI-U during the five (5) year period ending on October 31 of the last
Lease Year of the first Option Period multiplied by the annual Base Rent in
effect during the first Option Period.

                                      -5-
<PAGE>

               (iii) Additional Rent. In addition to Base Rent, Tenant shall pay
                     ---------------
to Landlord as "Additional Rent" all sums of money (i.e. CAM Charges, Tenant's
Pro Rata Share of Real Estate Taxes, and sums expended by Landlord in exercising
its remedies) required to be paid pursuant to this Lease, whether or not such
sums are specifically described as Additional Rent. If any such sums are not
paid when required under this Lease, they shall be collectible as Additional
Rent with the next installment of Base Rent thereafter due.

     2.   Description of Shopping Center by Landlord.  Landlord covenants that
          ------------------------------------------
the location of buildings and other tenant space in the Shopping Center is as
generally shown on the Site Plan, and the parking ratio for the Shopping Center
shall be at least as shown thereon, but in no event shall said ratio be less
than the greater of (i) four and one-half (4.5) spaces (for full-sized
automobiles) per 1,000 square feet of Gross Leasable Area of the Shopping Center
or (ii) that required by applicable zoning requirements.  All such parking is at
ground level.  Landlord shall refrain from interfering with the conduct of
Tenant's business.  Landlord shall keep and maintain or cause the "Common Areas"
(as defined in paragraph 7) in the Shopping Center to be kept and maintained in
good condition and repair and shall not operate, or permit to be operated, in
the Shopping Center any activity which constitutes a nuisance, overburdens the
available utilities, or violates any of the "Site Covenants" contained in
subparagraph 19(a)(ix) or the prohibited activities set forth in subparagraph
19(a)(viii).  Notwithstanding anything contained herein to the contrary,
references to the "Shopping Center" and to "Common Areas" as used in this Lease
with respect to the parking ratio required to be maintained by Landlord and
Landlord's maintenance and repair obligations shall mean and include the three
(3) tracts adjacent to the Landlord's Premises not currently owned by Landlord
shown on the Site Plan as the Toys "R" Us Tract, May Department Store Tract and
the Vicorp Tract (the "Adjacent Tracts"); accordingly, CAM Charges (as defined
in paragraph 7 below) shall include expenses, charges or costs incurred by
Landlord with respect to the maintenance and repair of the Common Areas on the
Adjacent Tracts to the extent the nature or type of charge incurred is permitted
by the terms of paragraph 7 to be charged as a CAM Charge, and the denominator
used in calculating Tenant's Pro Rata Share (hereinafter defined) of such
maintenance and repair costs shall include the number of square feet of
improvements on or to the Adjacent Tracts.  However, to the extent Landlord is
ever reimbursed by an owner of an Adjacent Tract an amount in excess of that

                                      -6-
<PAGE>

owner's pro rata share of common area charges (calculated in the same manner as
Tenant's Pro Rata Share), pursuant to a maintenance agreement or otherwise,
Landlord will reimburse to Tenant a portion of such reimbursement on an
equitable basis with other tenants in the Shopping Center.  Additionally,
Landlord agrees that, to the extent Landlord has control or may exercise control
through the REA's, with respect to the Adjacent Tracts, Landlord shall cause the
Adjacent Tracts to comply with the terms of this Lease, so that the rights and
protective covenants granted Tenant hereunder with respect to Landlord's
Premises shall similarly be granted with respect to the Adjacent Tracts, i.e.
Site Covenants, prohibited uses, access to Grape Road and Indian Ridge, access
to Tenant's loading dock area from the west behind the Toys "R" Us Tract,
Tenant's Preferred Area (defined below), etc.

     3.   Easements and Rights of Use. In addition to and simultaneously with
          ---------------------------
the lease of the Premises, Landlord grants to Tenant certain nonexclusive
leasehold easements over and upon, and the right to use certain areas of the
Shopping Center, as set forth below, during the Term, which rights and easements
shall expire or terminate simultaneously with this Lease, except as provided
below.

          (a) Construction Easements. During the period of Tenant's renovation
              ----------------------
of the Existing Building and construction of the Improvements, and any period of
renovation or reconstruction thereafter, Landlord grants to Tenant a
nonexclusive easement across a mutually agreeable designated route in the Common
Areas (as defined in paragraph 7 below) for the purpose of construction access
to the Premises.  In addition, Landlord grants to Tenant an exclusive easement
for a construction staging area (the "Staging Area") of approximately 10,000
square feet, in a portion of the Common Areas at a mutually agreeable location
within a reasonable distance of the Premises, the location of which is shown on
the Site Plan, for Tenant's use in storing its construction equipment,
construction vehicles, construction workers' vehicles, trailers, materials,
sheds and other items to be used by Tenant in the course of its construction,
for which items Tenant shall be solely responsible.  Once during Tenant's
construction, Landlord shall have the right by reasonable written notice to
Tenant to require Tenant to relocate the Staging Area provided such relocated
Staging Area is constructed by Landlord at its sole cost and expense and is
reasonably located in terms of access and distance to the Existing Building.

                                      -7-
<PAGE>

Tenant's construction activities in the Shopping Center shall be subject to
Landlord's reasonable control, including without limitation Landlord's right to:

          (a) specify points of delivery of construction materials to the
Shopping Center in close proximity to the Premises and convenient routes within
the Shopping Center to be used for delivery thereof to the Staging Area and/or
the Premises, and

          (b) require Tenant to maintain the Staging Area and the Premises in a
reasonably clean and neat condition at all times.  Tenant shall place a fence
around the Premises and the Staging Area during construction of the Improvements
at Tenant's sole cost and expense.  The use of such easements by Tenant shall
not result in damage or injury to the buildings or other improvements of
Landlord, and shall not unreasonably interfere with the business or construction
operations conducted by Landlord.  Tenant will indemnify and hold Landlord
harmless from such damage or injury to the buildings, roads, utilities,
landscaping or other improvements at the Shopping Center, from unreasonable
interference with the business or construction operations conducted by Landlord
or any other tenant at the Shopping Center, and from any and all claims,
liability, costs or expenses in connection with death or personal injury
resulting from Tenant's use of this easement.  After the initial construction of
the Improvements, these easements shall automatically terminate; provided,
however, Landlord agrees to grant Tenant equivalent temporary construction
easements in connection with any required, approved, or permitted
reconstruction, alteration or repairs as provided herein.

          (b) Footing and Foundation Easements. Landlord grants to Tenant, and
              --------------------------------
Tenant grants to Landlord, the right to use Landlord's Premises and the
Premises, as appropriate (i) for the construction and maintenance of
foundations, footings, supports and demising walls; (ii) to allow their
respective leased premises to abut and connect; (iii) for roof projections,
allowing the grantee to tie its building into the adjoining building by flashing
and reglets; and (iv) for encroachments which reasonably occur in the
construction of the building components set forth in subparagraphs (i) through
(iii) above.  No such attachment or connection shall be made, however, unless
detailed plans therefor shall have been timely submitted to and approved by the
party to whose building the attachment is to be made, which approval shall not
be unreasonably withheld.

                                      -8-
<PAGE>

          (c) Encroachments. Each party grants to the other a right to use, not
              -------------
to exceed twelve (12) inches in width (unless the grantor thereof approves in
advance a greater width) for the maintenance of canopies, decorative facia,
roofs and other overhangs, awnings, utility vaults, staircases, signs, lights,
pillars and other like projections and encroachments over and across Landlord's
Premises or the Premises, as applicable, to the extent that such projections and
encroachments shall exist after completion of all construction or reconstruction
(if any part is damaged or destroyed and then rebuilt), and such other
encroachments necessary for Tenant to use and operate as truck wells, trash
compactor, customer pick-up area and car stereo installation facility, as shown
in the plans and specifications.

          (d) Utility Rights. During the Term, upon prior reasonable request of
              --------------
Tenant, Landlord agrees to obtain such underground, public or private utility
easements as Tenant deems necessary, without unreasonably interfering with the
use by Landlord of the Common Areas, for the benefit of the Premises.  For the
purpose of exercising the rights granted in this subparagraph 6(c), Tenant
and/or the utility provider shall have the right to enter upon and use the
Common Areas to install the utility systems, to such extent and so long as
reasonably necessary to accomplish such purpose, subject to restoration of the
Common Areas following such installation and any other reasonable conditions and
requirements imposed by Landlord.

          (e) Common Area Easement. During the Term, Landlord grants to Tenant,
              --------------------
for the benefit of the Premises, the nonexclusive right, privilege and easement
(the "Common Area Easement") to use the Common Areas for their intended purposes
and to permit Tenant and its employees, agents, subtenants, assignees,
licensees, suppliers, customers and invitees to use the same, in common with
Landlord, its successors, assigns, employees, agents, lessees, licensees,
suppliers, customers and invitees and all other persons claiming by or through
Landlord, for the purposes (without limitation) of parking and pedestrian,
service and vehicular access, ingress and egress to, from and between the
Premises and the Shopping Center and the streets and highways abutting and
adjacent to the Shopping Center, without payment of any fee or other charge
therefor. It is specifically agreed that with respect to the parking spaces
designated on the Site Plan as Tenant's "Customer Pick-Up", notwithstanding the
fact the same are in, and constitute a part of, the "Common Areas", such parking
spaces shall be used exclusively by Tenant's customers, invitees and patrons. In
addition, Tenant shall have the right to use such

                                      -9-
<PAGE>

Common Areas as are immediately adjacent to the Premises and within the Tenant's
Preferred Area as shown on the Site Plan up to four (4) times annually for
"sidewalk sales" (lasting no longer than one (1) week each), seasonal and
promotional sales and other sales customary to Tenant's business operations.
Other than as specifically set forth herein, the Common Area Easement shall at
all times be subject to the exclusive control and management by Landlord, the
rights of Landlord and of other tenants, and such reasonable rules and
regulations as Landlord may, from time to time, impose (provided same are
uniformly enforced).

          (f) Non-Dedication. None of the rights and easements granted by the
              --------------
parties to this Lease is intended, nor shall any of them be construed, as a
dedication of any portion of the Shopping Center for public use, and the parties
will refrain from taking any action which would cause such a dedication and will
take whatever steps may be necessary to avoid any such dedication, except as may
be agreed upon in writing by the parties hereto or their respective successors
or assigns.

     4.   Common Areas and Common Area Maintenance.
          ----------------------------------------

          (a) Definition of Common Areas. The term "Common Areas" shall mean and
              --------------------------
include the parking areas, lanes, drives, entrances, automobile and truck
passageways, loading platforms, sidewalks, elevators, escalators, ramps,
stairways, landscaped and other unpaved areas, parking lot lighting, facilities
and equipment, Landlord's pylon sign(s), directional, traffic and monument sign
structure(s) and shared utility facilities servicing the Shopping Center
(including any such areas and facilities contained within outparcels and
adjacent tracts but reserved to the benefit of the Shopping Center occupants)
and intended and available for the common use of all of the tenants within the
Shopping Center (including any outparcel and other adjacent occupants which
contribute toward "CAM Charges" (as defined below) and which are not responsible
for separate maintenance of such outparcels or tracts), their subtenants,
licensees, and business invitees.  Landlord shall be responsible for operating,
maintaining and repairing the Common Areas in a manner consistent with the
highest quality and excellence of similarly well maintained shopping centers in
the metropolitan area in which the Shopping Center is located and as is
reasonably necessary and appropriate, including, but not limited to, cleaning,
maintenance of Landlord's pylon and other sign structure(s), snow removal and
ice treatment, removal of Common Area trash and garbage, lighting, repairing,
repaving and restriping the parking area,

                                      -10-
<PAGE>

and maintaining, replanting and replacing landscaping, and all insurance
applicable to Landlord's Premises as required under this Lease, all such work to
be referred to collectively as "Common Area Maintenance."

          (b) CAM Charges. For the purpose of this paragraph 7, the cost of
              -----------
Common Area Maintenance (the "CAM Charges") shall include (i) costs and expenses
incurred by Landlord in its reasonable business judgment as appropriate and for
the best interest of the Shopping Center in operating, equipping, replacing,
repairing, securing, insuring and maintaining the Common Areas consistent with
the obligation set forth in paragraph 7(a) above (and all systems related
thereto) and (ii) Landlord's overhead expenses for administering same (or in
lieu thereof a management fee) in an amount not to exceed seven percent (7%) of
the total of such costs (specifically excluding from such total the amounts paid
by Landlord and Tenant for insurance, capital expenditures, Real Estate Taxes
and separately metered utilities serving the Common Areas). Notwithstanding
anything contained in this Lease to the contrary, the following shall not be
included in the CAM Charges:

          (1) real estate taxes paid, and maintenance performed, on separately
     assessed and/or maintained outparcels or other adjacent tracts not reserved
     to the benefit of the Shopping Center occupants;

          (2) any dues or charges for a merchants' or other association of the
     tenants in the Shopping Center;

          (3) maintenance, repairs or replacements to the Common Areas (but not
     other portions of the Shopping Center) necessitated by the negligent or
     willful wrongful act of the Landlord or made to correct any construction,
     defect or condition to any buildings (including exterior walls thereof) or
     utility systems not part of the Common Areas;

          (4) repairs or replacements necessitated by any governmental entity or
     by the negligence or the willful wrongful action of Landlord or any other
     tenant or made to correct any initial construction or renovation defect or
     condition in existence prior to the Rent Commencement Date of this Lease or
     to correct damage caused by subsidence or adverse or substandard soil
     conditions during the first five (5) years of the Lease Term;

          (5) amounts paid to entities related to Landlord in excess of the cost
     of such services from any competitive source for the same quality of
     service;

                                      -11-
<PAGE>

          (6) amounts reimbursable from insurance proceeds, under warranty or by
     Tenant, any other tenant in the Shopping Center or any other third party
     other than pursuant to a Common Area expense provision similar to this
     paragraph 7;

          (7) amounts reimbursable to Landlord under any of the REA's or related
     agreements (e.g. the Maintenance Agreement dated June 12, 1987 between
     Mishawaka Retail Associates Limited Partnership and Toys "R" Us, Inc.)
     relating to the Shopping Center, e.g. cost of maintenance of the Kids "R"
     Us sign on Landlord's pylon sign in the Shopping Center;

          (8) premiums for Common Area liability insurance for coverage in
     excess of the limits established in paragraph 14(e) below;

          (9) repairs or replacements of a capital nature (whether or not
     life of such repairs or replacements and provided that repairs or
     replacements are not the direct result of initial defects in materials or
     workmanship);

          (10) replacements (other than patching and similar minor periodic
     maintenance) to the parking lot or other paved areas during the first five
     (5) "CAM Years" (as defined below);

          (11) reserves for anticipated future expenses;

          (12) interest, late charges or penalties incurred as a result of
     Landlord's failure to pay bills in a timely manner;

          (13) Landlord's personnel, overhead, home office or administrative
     expenses except as set forth in subparagraph (b)(ii) above;

          (14) amounts incurred to remediate any Hazardous Substances (as
     defined in the Construction Provisions) so long as not introduced at the
     Shopping Center by Tenant; or

          (15) other maintenance expenses not considered normal and customary
     under generally accepted accounting principles or shopping center industry
     standards.

CAM Charges shall be in an amount consistent with the costs incurred by other
landlords of similar shopping centers in the City (but not greater than as
described in this paragraph 7(b)), and in all events such charges shall be
obtained at competitive rates.

                                      -12-
<PAGE>

          (a) Tenant Payments. Commencing on the Rent Commencement Date and
              ---------------
continuing until the expiration of the first full Lease Year, Tenant shall pay
to Landlord a fee equal to $1.12 per square foot of ground-floor Gross Leasable
Area in the Existing Building per annum (which fee shall be adjusted for years
thereafter to more accurately reflect the actual CAM Charges), payable in equal
monthly installments, as its share of CAM Charges.  Thereafter, the annual
charge shall be computed on the basis of periods of twelve (12) consecutive
calendar months, as designated by Landlord (each such period is a "CAM Year"),
and shall be paid by Tenant in equal monthly installments, in advance, on the
first day of each month during such CAM Year.  For any period within the Term
which is less than a full CAM Year, the annual charge shall be appropriately
prorated.  Within sixty (60) days after the end of the first CAM Year and each
CAM Year thereafter, Landlord will furnish to Tenant a statement showing in
detail (with such substantiating documentation as Tenant may reasonably request)
the amount of the CAM Charges for the preceding CAM Year and the then-current
number of square feet of ground-floor Gross Leasable Area in the Shopping Center
(excluding the square footage of any improvements located on any outparcels
which do not contribute towards CAM Charges and which are responsible for
separate maintenance of such outparcels).  Any necessary adjustment with respect
to amounts owed by either party for such preceding CAM Year shall thereupon be
made; and the monthly payments to be made by Tenant for the ensuing year shall
be estimated according to the Common Area maintenance budget prepared by
Landlord and delivered to Tenant.  Subject to adjustments as herein
contemplated, Tenant's share (such fraction being referred to herein as
"Tenant's Pro Rata Share") of CAM Charges after the first CAM Year shall always
be the product of the CAM Charges multiplied by a fraction, the numerator of
which is the number of square feet of the ground-floor Gross Leasable Area in
the Existing Building and the denominator of which is the number of square feet
of the Gross Leasable Area (including the area of any outside sales area
exclusive to a single occupant but excluding the square footage of any
improvements located on any outparcels which do not contribute towards CAM
Charges and which are responsible for separate maintenance of such outparcels)
in the Shopping Center.  The term "Gross Leasable Area" shall mean (a) with
respect to each building or structure in the Shopping Center, the number of
square feet of floor area at each level or story of such structure or building
lying within the exterior faces of the exterior walls (except party walls, as to
which

                                      -13-
<PAGE>

the centerline, not the exterior faces, shall be used for measurement purposes),
and (b) with respect to any outside sales area, the number of square feet of
floor area as measured from the outside of the exterior wall of any adjacent
building to the actual exterior perimeters of such outside sales area, including
any aisles, fences or walls included therein. Notwithstanding the foregoing,
Gross Leasable Area shall not include (i) penthouse or other physically
separated areas used exclusively for electrical, telephone or other mechanical
equipment, (ii) loading docks which are not heated or air conditioned, (iii)
upper levels of multi-deck stock areas, including offices at second levels
thereof, or (iv) basement area used exclusively for storage incidental to the
retail use of the premises. Changes in applicable floor areas shall result in
corresponding adjustments of Tenant's Pro Rata Share, but in no event shall the
denominator of the fraction by which Tenant's Pro Rata Share is determined be
less than the Gross Leasable Area of the Shopping Center as shown on the Site
Plan, except as the result of adjustments in said Gross Leasable Area due to an
area damaged by a casualty event or condemned as part of a permanent Taking (as
hereinafter defined) which Landlord is not required to reconstruct pursuant to
the terms hereof, which becomes part of Common Area. The remainder of CAM
Charges shall be borne by Landlord and/or other tenants.

          (b) Examination of Landlord's Records. Tenant shall have the right,
              ---------------------------------
from time to time, but not more often than once as to any CAM Year and no later
than two (2) years after the end of such CAM Year, to examine and make copies of
the records pertaining to CAM Charges for such CAM Year. Tenant's right of
examination shall be exercised during reasonable business hours at Landlord's
principal records office on at least two (2) days' prior notice to Landlord. If
such examination shall disclose any overcharge by Landlord, Landlord shall
promptly reimburse Tenant for any overpayment of Tenant's Pro Rata Share of CAM
Charges; and if such overpayment by Tenant is in excess of three percent (3%) of
the actual Tenant's Pro Rata Share of CAM Charges, Landlord shall reimburse
Tenant for the reasonable cost of such examination or audit. Tenant shall
promptly reimburse Landlord for any underpayment disclosed by such examination.

     2.   Signs and Communications Equipment.
          ----------------------------------

          (a) Signs. Tenant shall be entitled to install and utilize during the
              -----
term of this Lease a doublesided "face panel" identifying Tenant's store, in the
same position on the existing

                                      -14-
<PAGE>

pylon sign for the Shopping Center previously utilized by Phar-Mor. Attached as
a portion of Exhibit "E" are plans and specifications for Tenant's current
             -----------
prototypical face panels and for Tenant's building signage, which Landlord
hereby approves upon its execution of this Lease, including but not limited to
Tenant's "tag" signage advertising Tenant's main product lines, and a wall sign
on the rear of the Building facing the East-West Tollway. Notwithstanding the
foregoing, Tenant shall be entitled without Landlord's consent, but subject to
governmental requirements, as aforesaid, to replace any and all of its signs
with signage consistent with Tenant's then-current prototypical sign plans. In
the event of an assignment, subletting, or Transfer as a result of which Tenant
is no longer occupying any portion of the Premises, Tenant's signs may be
replaced by signs identifying the appropriate assignee or subtenant, provided
that the specific design of such signage shall be subject to Landlord's review
and approval, which shall not be unreasonably withheld, conditioned or delayed.
Nothing contained herein shall imply that Landlord warrants governmental
approval of any of Tenant's signage.

          (b) Communications Equipment. Tenant may, from time to time, install,
              ------------------------
maintain and/or replace any satellite dishes or antennas on the roof and/or
exterior walls or parapet of the Existing Building as Tenant deems necessary or
desirable, provided same shall not adversely and materially affect the roof or
the structural elements thereof.  Upon removal by Tenant of any satellite dishes
or antennas, Tenant shall repair any damage done in connection with such
removal.  All work performed by Tenant in accordance with this paragraph shall
be done without cost, expense or liability to Landlord in accordance with the
requirements of all laws, ordinances, codes, orders, rules and regulations of
all governmental and quasi-governmental authorities having jurisdiction in
conjunction with any such work, and in such a manner as to not void Landlord's
roof warranty.

     3.   Taxes.
          -----

          (a) Taxes Contemplated Hereunder. The term "Real Estate Taxes" shall
              ----------------------------
mean all general and special real estate taxes and assessments and other ad
valorem taxes, rates and levies paid upon or with respect to the Shopping
Center, including the Premises, for a calendar year or a portion thereof to any
governmental agency or authority and all charges specifically imposed in lieu of
any such taxes. Nothing contained in this Lease shall require Tenant to pay any
local, county, municipal, state or federal income, franchise, corporate, estate,
inheritance,

                                      -15-
<PAGE>

succession, capital levy, business or transfer tax of Landlord, or any local,
county, municipal, state or federal income, profits, gross receipts, sales or
renewal tax or charge upon the rent or other charges payable by Tenant under
this Lease.

          (b) Payment of Real Estate Taxes. Commencing on the Rent Commencement
              ----------------------------
Date, at such intervals as Landlord is required to pay the Real Estate Taxes,
Tenant shall pay Tenant's Pro Rata Share of Real Estate Taxes [calculated in the
same manner as Tenant's Pro Rata Share of CAM Charges in paragraph 7(c) but
excluding from the denominator the Gross Leasable Area of Separately Assessed
Tenant's (as hereinafter defined)] levied against the tax parcel or parcels
comprising the Shopping Center, excluding Real Estate Taxes levied against a
Separately Assessed Tenant (the "Tax Parcel").  Currently, Landlord estimates
Tenant's Pro Rata Share of Real Estate Taxes to be $1.46 per square foot of
Gross Leasable Area in the Premises per annum.  Tenant's Pro Rata Share of Real
Estate Taxes shall be net of any early payment discounts available at the time
Tenant's payment is due.  Tenant shall pay Tenant's Pro Rata Share of Real
Estate Taxes within thirty (30) days after Tenant's receipt of Landlord's
statement therefor, accompanied by the tax bill on the basis of which such
statement is rendered.  In the event that Tenant's payment of Tenant's Pro Rata
Share of Real Estate Taxes is not timely tendered to Landlord, Tenant shall be
liable to Landlord for its pro rata share of any discount which would have been
available to Tenant as aforesaid had Tenant made timely payment or for its pro
rata share of any penalty which would have been avoided by such timely payment,
notwithstanding the fact that Landlord may actually have made timely payment and
received the discount or avoided the penalty.  Landlord shall pay, or cause the
payment of, all Real Estate Taxes before any fine, penalty, interest or cost may
be added thereto, become due or be imposed by operation of law for the
nonpayment or late payment thereof.  In no event shall Tenant be liable for any
discount forfeited or penalty incurred as a result of late payment by another
tenant or by Landlord.  Real Estate Taxes shall be prorated as of the Rent
Commencement Date and the expiration or earlier termination of this Lease, and
Landlord shall promptly return to Tenant any overpayment made by Tenant not
attributable to the period of Tenant's possession of the Premises.  Landlord
shall remain primarily responsible for such payment notwithstanding the fact
that such payment may be made by a tenant of Landlord's Premises or other third
party pursuant to an agreement to which Tenant is not a party.  In addition,
should Landlord fail to pay such

                                      -16-
<PAGE>

Real Estate Taxes before same become delinquent, Tenant shall have the right, at
its election, to cure such failure by payment of delinquent Real Estate Taxes
and any interest and penalties due thereon and in such event Tenant may deduct
the cost thereof, plus interest at the lesser of fifteen percent (15%) per annum
or the highest rate permitted by State law (the "Default Rate"), from the next
installment(s) of Base Rent and other charges due hereunder. Tenant shall only
exercise its cure right provided immediately above, however, following Tenant's
delivery of two (2) written notices of default to Landlord at least thirty (30)
days apart, which Landlord fails to cure within thirty (30) days; provided that,
the two (2) foregoing notices and cure periods shall only be required to the
extent no further penalty would be incurred, foreclosure of a tax lien would not
occur, and Tenant would not be otherwise adversely effected as the result
thereof. Additionally, Tenant assumes the risks associated with any overpayment
of Real Estate Taxes paid by Tenant in exercising its self-help remedy granted
immediately above, whether inadvertent or as a result of a contest of the Real
Estate Taxes. The term "Separately Assessed Tenant" shall mean any tenant or
occupant whose premises within the Shopping Center are separately assessed and
included on a separate tax bill and who is obligated to pay the entire amount of
such tax bill directly to the taxing authorities or to Landlord.

          (c) Contest of Real Estate Taxes and/or Assessed Valuation of
              ---------------------------------------------------------
Property. Tenant shall have the right, at Tenant's sole expense, to contest the
--------
amount or validity, or otherwise seek an exemption or abatement, of any Real
Estate Taxes or to seek a reduction in the valuation of the Premises assessed
for Real Estate Tax purposes, by appropriate proceedings diligently conducted in
good faith, provided that Tenant shall first have notified Landlord of its
intent to do so and Landlord shall have failed to notify Tenant in writing,
within five (5) days of receipt of Tenant's notice, that Landlord intends to
contest such Real Estate Taxes or seek such a reduction. In any instance where
any such action or proceeding is being undertaken by Tenant, Landlord shall
cooperate with Tenant, execute any and all documents required in connection
therewith and, if required by any law, rule or regulation of the taxing
authority, shall join with Tenant in the prosecution thereof.

          (d) Payment Following Appeal. Upon the termination of the proceedings
              ------------------------
set forth in subparagraph (c) above (unless the taxing authority requires that
Real Estate Taxes be paid under protest prior to commencement of such
proceedings), Tenant shall pay Tenant's Pro

                                      -17-
<PAGE>

Rata Share of such Real Estate Taxes as finally determined in such proceedings,
the payment or partial payment of which may have been deferred during the
prosecution of such proceedings. Tenant shall be entitled to a refund from the
taxing authority (or if paid by the taxing authority to Landlord, then from
Landlord) of any overpayment of Real Estate Taxes relating or allocable to the
Premises, as well as a reimbursement of all costs, fees and expenses it incurs
in such protest or reassessment from an award made by the taxing authority, or
if no such refund is made by the taxing authority, then from any tax refund paid
with respect to the Shopping Center as a result of Tenant's protest.

     4.   Maintenance, Repairs and Replacements.  Except (i) for costs covered
          -------------------------------------
by the Landlord's insurance required to be maintained hereunder, (ii) for
condemnation proceeds to be received by Tenant, (iii) for obligations arising
from the negligent acts or omissions or willful misconduct of Landlord (or its
agents, employees or other tenants), or (iv) as otherwise set forth in this
Lease, Tenant shall be solely responsible for maintenance of the exterior and
interior nonstructural elements of the Existing Building and Leasehold
Improvements, including, but not limited to, the following repairs and/or
replacements which serve only the Premises:  floors (other than structural
floors); walls (other than the exterior face or service corridor walls);
ceilings; utility meters; pipes and conduits within the Premises; fixtures
within the Premises; any mechanical systems pertinent to the loading dock
servicing the Premises (including any mechanical systems pertinent to the
drainage thereof); electrical, heating, ventilating and air-conditioning
equipment and systems located inside the Premises or on the roof of the Shopping
Center which are installed by Tenant or which exclusively serve the Premises;
sprinkler equipment, fire protection equipment and other equipment within the
Premises; the storefront(s); security systems within the Premises; locks and
closing devices; window sashes, casements and frames; glass; and doors and door
frames.  During the last five (5) years of the Term of the Lease (without
consideration to the exercise of any additional Renewal Options) Tenant shall be
obligated to so install or construct alterations or incur expenditures pursuant
to this paragraph; provided, however, that if Tenant is required to expend any
sum in satisfaction of its obligations hereunder, and if the resulting
improvement to the Premises cannot be fully amortized in accordance with
generally accepted accounting principles, or the Internal Revenue Code and
Regulations, over the remainder of the Term (without consideration to the
exercise of any

                                      -18-
<PAGE>

additional Renewal Options), Tenant shall so notify Landlord and Landlord shall
either (a) direct Tenant that Landlord elects not to cause Tenant to make such
capital expenditure, and Tenant shall thereby be relieved of any liability for
such replacement obligation (unless such capital expenditure involves the HVAC
system in the Existing Building, in which event Landlord shall be deemed to have
elected (b) immediately following) or (b) direct Tenant to make such capital
expenditure in which event Tenant shall be reimbursed by Landlord at the end of
the Term by that amount of the cost associated with such replacement,
construction or alteration (but not repair costs) for the period beyond the
remainder of the Term (with consideration to the exercise of any additional
Renewal Options, it being understood that if Tenant exercises a remaining
Renewal Option, Landlord shall have no obligation to reimburse a capital
expenditure with respect to the HVAC System incurred prior to commencement of
the Renewal Period). Landlord shall maintain all structural elements of the
Premises (whether or not same serve only the Premises), including, without
limitation, the roof, roof structure, flooring system, floor slab, foundation,
load bearing walls and exterior structural walls, but shall have no other
responsibility for maintenance, repair or replacements to the Premises or any
part thereof; provided, however, this provision is in no way intended to limit
Landlord's obligation to maintain, repair and replace any and all elements, both
structural and non-structural, of the Common Areas pursuant to the terms of this
Lease. In addition to the Landlord's maintenance and repair obligations set
forth herein and otherwise set forth in this Lease, Landlord agrees to maintain
the Improvements immediately surrounding the Existing Building, including
sidewalks and landscaping. Should either party fail to perform its obligations
under this paragraph 10, the other party may, at its option, effect such
maintenance, replacements or repairs, provided that such curing party shall have
given the nonperforming party thirty (30) days' prior written notice, except in
the case of emergencies (in which event only such notice as may be reasonable
under the circumstances shall be required); but further provided that such
thirty (30) day period (or reasonable period in event of emergencies) shall be
extended in respect of any cure that cannot with reasonable diligence be
accomplished within such period so long as the party required to effect such
cure has commenced such cure within such thirty (30) day period (or reasonable
period in event of emergencies) and thereafter diligently prosecutes such cure
to completion; and further provided that, prior to the curing party affecting
the maintenance, replacement, or repair obligation of the nonperforming

                                      -19-
<PAGE>

party following expiration of the thirty (30) day period set forth above (as
same may be extended as set forth above), the curing party shall deliver a
second notice of default to the nonperforming party granting ten (10) additional
days in which the nonperforming party may cure its failure, following which
continued failure the curing party may then effect its cure. The nonperforming
party shall reimburse the other party on demand for the reasonable and actual
amount so expended (as evidenced by detailed invoice), plus interest at the
Default Rate. However, in the event of emergency repairs, no interest shall
accrue if reimbursed within thirty (30) days of request (including detailed
invoice) for reimbursement. All maintenance, repairs or replacements shall be
done by Tenant or Landlord lien-free and in a good and workmanlike manner
consistent with the quality of labor and materials used in originally
constructing the Premises and Common Areas, as applicable, and in accordance
with all applicable law. In order for Landlord and Tenant to effectively perform
their maintenance, repair and replacement obligations hereunder, Tenant and
Landlord, as applicable, shall assign to the other party any and all
manufacturers' and contractors' warranties relating to such work performed on
behalf of the other party to the party who is required to maintain same under
the Lease. Tenant agrees that Landlord, its agents, employees, servants or
contractors, may, upon 48 hours prior written notice (emergencies excepted)
enter the Premises during normal business hours for the purpose of inspecting
the condition of same, during which inspections, Landlord shall not unreasonably
disturb Tenant's conduct of business in the Premises. Nothing contained in this
Lease shall imply any duty on the part of Landlord or Tenant to do any work
which the other is required to perform, nor shall it constitute a waiver of one
another's default in failing to do the same.

     5.   Payment of Utility Bills. Commencing upon delivery of the Premises,
          ------------------------
Tenant will pay directly to the appropriate utility company or governmental
agency, when due, all bills for gas, water, sanitary sewer, electricity,
telephone and other public or private utilities used by Tenant with regard to
the Improvements.  Landlord shall pay when due all utility charges incurred in
the operation of the Common Areas and the Shopping Center.

     6.   Alterations.  During the Term, Tenant shall have the right, at its
          -----------
discretion and its sole cost, without Landlord's consent, to make (i) any
alterations or modifications necessary or desirable in order to bring the
Premises into conformity with Tenant's then-current prototype for similarly
sized stores in the midwestern region of the United States, or if none are then
located in

                                      -20-
<PAGE>

said region, then nationally and (ii) any interior nonstructural alterations or
modifications it may desire. Tenant shall deliver to Landlord a copy of Tenant's
building, plans with respect to any such work. With Landlord's consent, which
shall not be unreasonably withheld, conditioned or delayed, Tenant shall have
the right, at its sole cost, to alter, modify or reconstruct the exterior and/or
structure of the Existing Building and/or the Improvements. Landlord's
withholding of consent as to any structural alteration or modification shall be
deemed reasonable only if same is materially inconsistent with the then-existing
architecture of any of Tenant's stores, or would impair the structural integrity
of the Premises. Tenant shall cause all such alterations to be lien-free (in
accordance with paragraph 13) and made and completed at Tenant's cost in a
workmanlike manner and in compliance with all applicable law. Should Landlord's
consent be required, conceptual plans and specifications for such work shall be
provided to Landlord prior to commencement of any such work. Landlord shall be
deemed to have consented to such work if written notice of disapproval, with
reasons specified, is not received by Tenant within seven (7) working days
following Tenant's delivery of such plans and specifications to Landlord, and
Landlord continues to fail to so respond on two (2) occasions following delivery
to Landlord of written notice of such failure, which notices shall not be given
less than seven (7) working days apart. Without cost or expense to Landlord,
Landlord shall cooperate with Tenant in the obtaining of any and all licenses,
building permits, certificates of occupancy or other governmental approvals
which may be required in connection with any such modifications or alterations,
and Landlord shall execute, acknowledge and deliver any documents reasonably
required in furtherance of such purposes. All improvements or alterations shall
be constructed without cost, expense or liability to Landlord in accordance with
the requirements of all laws, ordinances, codes, orders, rules and regulations
of all governmental and quasi-governmental authorities having jurisdiction. All
work shall be governed by the requirements set forth in Exhibit C, to the extent
                                                        ---------
applicable, and shall otherwise be in compliance with the requirements of this
Lease.

     7.   Mechanics' Liens. Landlord and Tenant covenant to each other that
          ----------------
they will not permit any lien to be filed against the Premises or the Shopping
Center (or any part thereof) as a result of nonpayment for, or disputes with
respect to, labor or materials furnished to the Premises or the Shopping Center
for or on behalf of Tenant, Landlord or any party claiming by, through,

                                      -21-
<PAGE>

or under Tenant or Landlord, nor shall either party permit any judgment, lien or
attachment to lie, as applicable, against the Premises or the Shopping Center.
Should any lien of any nature, including but not limited to the foregoing, be
filed against the Premises, or the Shopping, Center (or any part thereof), the
party on account of whose actions such lien has been filed shall, within thirty
(30) days after receipt of written notice of such lien, cause said lien to be
removed, or otherwise protected against execution during good faith contest, by
substitution of collateral, posting a bond therefor, escrowing of adequate funds
to cover the claim and related transaction costs or such other method as may be
permissible under applicable title insurance regulations and reasonably
acceptable to the other party hereto. If Tenant shall fail to cause such lien to
be so discharged or otherwise protected within thirty (30) days after notice of
filing thereof, then, in addition to any other right or remedy of Landlord,
Landlord may, but shall not be obligated to, discharge the same, by paying the
amount claimed to be due without inquiring as to the validity of any such lien,
and the amount so paid by Landlord, including reasonable attorneys' fees
incurred by Landlord in connection therewith, plus interest at the Default Rate
from the date of Tenant's receipt of notice from Landlord that Landlord has paid
same, shall be due and payable by Tenant to Landlord upon demand as Additional
Rent. Furthermore, subject to the terms of this paragraph, in the event Landlord
desires or is required to obtain current title insurance covering the Shopping
Center or any part thereof, whether such title insurance insures the interest of
Landlord, a purchaser or prospective purchaser of the Shopping Center or any
part thereof, or any present or future lender, Tenant shall, at Tenant's sole
cost and expense, take all action as may be required to induce the title
insurance company issuing such title insurance (the cost of such insurance to be
paid for by Landlord) to insure over (the cost of such endorsement or coverage
to be paid for by Tenant) any mechanic's lien relating to or arising out of the
construction of the Improvements which Tenant has allowed to remain filed of
record against the Premises or the Shopping Center (or part thereof) more than
thirty (30) days after receipt of written notice thereof. Tenant agrees to
indemnify, defend and hold Landlord harmless from and against any and all such
title exceptions, and all costs, expenses and attorneys' fees in connection with
such title exceptions.

                                      -22-
<PAGE>

     8.   Insurance.
          ---------

          (a) Property Damage.  During the Construction Term and any period of
              ---------------
Tenant's construction at the Premises, Tenant shall keep or require its general
contractor to keep, in full force and effect, a policy of builder's risk
insurance covering loss or damage to the Improvements for the full replacement
value of all such construction.  Additionally, during any time period in which
any alterations, additions, improvements, or construction are undertaken, Tenant
shall require any contractor performing work on the Premises (and, during the
initial renovation, any contractor constructing the Improvements) to carry and
maintain, at no expense to Landlord, in addition to worker's compensation
insurance as required by the jurisdiction in which the Shopping Center is
located, Commercial General Liability Insurance (including, without limitation,
Contractor's Liability coverage, Contractual Liability Coverage, Completed
Operations coverage, a broad form Property Damage coverage and Contractor's
Protective liability) written on an occurrence basis with a minimum combined
single limit of Two Million Dollars ($2,000,000) and such limit may be
accomplished by means of an umbrella policy.  During the Main Term and all
Option Periods, Landlord shall keep in full force and effect a policy of fire
and extended coverage insurance covering loss or damage to the Premises in the
amount of full replacement value of the Premises, exclusive of excavation,
footings and foundations, with a commercially reasonable deductible, for which
Landlord shall be fully responsible.  Landlord, Tenant and Landlord's first
"Mortgagee" (as defined in paragraph 21 below), shall be named in such policy or
policies as additional insureds as their respective interests may appear.
Landlord shall furnish to Tenant a duplicate certificate of insurance showing
insurance existing in such amount.  Subject to Tenant's rights of self-insurance
set forth in subparagraph (d) below, Tenant shall insure the contents of the
Premises in an amount equal to the replacement value thereof, with a
commercially reasonable deductible for which Tenant shall be fully responsible.

          (b) Liability Insurance. During the Term, Tenant shall keep in full
              -------------------
force with an insurer reasonably acceptable to Landlord a policy of commercial
general liability insurance with bodily injury and property damage coverage with
respect to the Premises and business operated by Tenant, which shall name
Landlord and Landlord's Mortgagee(s) as additional insureds as their respective
interests may appear. The limits of such commercial general liability

                                      -23-
<PAGE>

policy shall be not less than $3,000,000.00 combined single limit for bodily
injury and property damage, with a commercially reasonable deductible.

          (c) Workers' Compensation Insurance. To the extent required by law,
              -------------------------------
Landlord and Tenant shall maintain workers' compensation insurance covering
their respective employees in statutory limits, or maintain such alternate
coverages or arrangements as legally permissible.

          (d) Self-Insurance. Notwithstanding anything, to the contrary
              --------------
contained herein, Tenant shall have the right to self-insure against any of the
risks or portions thereof for which Tenant is required to provide insurance
coverage hereunder (to the extent then permitted by law), provided Tenant is
then occupying the Premises and has a reported net worth, as of the end of
Tenant's most recent quarterly reporting period, of not less than Seventy-Five
Million Dollars ($75,000,000), as computed in accordance with generally accepted
accounting principles, consistently applied, as determinable from Tenant's
public disclosures and/or regularly maintained corporate balance sheets which
are generally available to shareholders (no right of Landlord to audit or
conduct independent investigations being implied by this provision).

          (e) Common Area, Additional Area and Third Party Tenant Insurance and
              -----------------------------------------------------------------
Insurance During Landlord's Construction. During the Term, Landlord shall keep
----------------------------------------
in full force and effect, in form reasonably acceptable to Tenant, policies of
(1) commercial general liability insurance, and (2) fire and extended coverage
insurance, with respect to the Common Areas and with respect to all other areas
of the Shopping Center over which Landlord from time to time has present
possessory rights (or has the right under any lease to provide insurance
coverage because of a tenant's failure to maintain such required coverage) but
which do not constitute a portion of the Common Areas (such areas are sometimes
collectively referred to as the "Additional Areas").  The Additional Areas do
not include the buildings within the Shopping Center currently occupied by Kids
"R" Us, Baker's Square, and Venture, as shown on the Site Plan, but shall
include, without limitation: (i) as yet unconstructed portions of the Shopping
Center intended for tenant occupancy, (ii) constructed but unoccupied portions
of the Shopping Center, (iii) vacated or otherwise uninsured tenant space,
whether by reason of lease expiration, default or otherwise, and (iv)
constructed and occupied portions of the Shopping Center.  Said policies shall
name Tenant, and any lender, investor or other stakeholder which is designated
by Tenant from time to

                                      -24-
<PAGE>

time, as an additional insured to the fullest extent Tenant and such stakeholder
have insurable interests. The limits of such policies shall be the same as those
set forth in subparagraphs (a) and (b) above, as applicable. The cost of the
premiums for coverages relating to Common Areas and the Additional Areas shall
be an element of CAM Charges, provided that Tenant shall not be liable for its
pro rata share of any premium for coverage in excess of that coverage which is
customary among owners of like shopping centers in the City. Landlord shall
assure (through parallel lease provisions or otherwise) that all areas of the
Shopping Center, including the Additional Areas and areas leased to third party
tenants or sold to third party occupants, are insured with substantially similar
coverages to those required for the Premises and the Common Areas, such that in
the event of any destruction or damage to any portion of the Shopping Center
whatsoever Tenant may be assured that the Shopping Center will be reconstructed
in equal or superior condition within the time frame set forth in paragraph 15.
During, any period in which Landlord is conducting construction activities at
the Shopping Center, Landlord shall keep, or cause its general contractor to
keep, in full force and effect, with regard to the Shopping Center, in form
reasonably acceptable to Tenant, at least the minimum insurance coverages set
forth below:

     1)   Workers' Compensation - Statutory Limits; Employers Liability -
          $500,000;

     2)   Automotive Liability for all vehicles with limits of $2,000,000; and

     3)   Commercial General Liability to include premises operations and
          products/completed operations coverage with limits of $2,000,000.

Additionally, Landlord shall keep or require its general contractor to keep in
full force and effect a policy of builder's risk insurance covering loss or
damage to the Shopping Center for the full replacement value of all such
construction.  To the fullest extent Tenant has an insurable interest, such
liability policy shall name Tenant an additional insured and such builder's risk
policy shall name Tenant a loss payee.

          (a) Policy Provisions. All policies of insurance (other than self-
              -----------------
insurance) enumerated above shall be provided by insurance carriers with a Best
rating of not less than

                                      -25-
<PAGE>

B+V. Any insurance coverage enumerated above may be effected by a blanket policy
or policies of insurance or under so-called "all risk" or "multi-peril"
insurance policies, provided that the total amount of insurance available with
respect to the Premises and Tenant's or Landlord's liability hereunder shall be
at least the equivalent of separate policies in the amounts herein required, and
provided further that in other respects any such policy or policies shall comply
with the provisions of this paragraph 14. Landlord shall not be entitled to
self-insure against any of the risks recited herein, except the amount of any
commercially reasonable deductible shall be deemed to be self-insurance. An
increased coverage or "umbrella" policy may be provided and utilized by either
party to increase the coverage provided by individual or blanket policies in
lower amounts, and the aggregate coverage provided by all such policies with
respect to the Premises and Tenant's or Landlord's liability hereunder shall be
satisfactory provided that such policies otherwise comply with the provisions of
this paragraph 14. It shall not be necessary for either party to deliver the
original of any such blanket or other policy to the other, but the other party
shall be furnished with a certificate or duplicate of such policy reasonably
acceptable to such other party upon (i) commencement of the Main Tenn (as to
casualty insurance), (ii) upon delivery of the Premises (as to liability
insurance) and (iii) no less than annually thereafter.

          (b) Waiver of Right of Recovery and Subrogation. To the extent that
              -------------------------------------------
insurance proceeds are actually received in satisfaction of a loss which is
required to be covered by insurance or is self-insured hereunder (with the
deductible under any policy being deemed to be self-insured), Landlord and
Tenant hereby waive any and all rights of recovery against each other for any
loss or damage to the Premises or the contents contained therein, for loss of
income on account of fire or other casualty, or for injury sustained on the
Premises or the Common

                                      -26-
<PAGE>

Areas; and each party's aforesaid policies of insurance shall contain
appropriate provisions recognizing this mutual release and waiving all rights of
subrogation by the respective insurance carriers.

          (c) Evidence of Insurance. Subject to Tenant's right to self-insure
              ---------------------
hereunder, upon delivery of the Premises and no less than annually thereafter,
Tenant and Landlord shall cause to be issued to each other in lieu of the
original policy, a duplicate of such policy or appropriate certificates of
insurance reasonably acceptable to the other party and evidencing compliance
with the applicable covenants of this paragraph 14.  Each such certificate shall
provide that no expiration, cancellation or material change in the insurance
evidenced thereby shall be effective unless thirty (30) days' unconditional
notice of such expiration, cancellation or material change shall have been given
to the certificate-holder (and any Mortgagee, if applicable).

          (d) Indemnities. Except if arising from the negligent or willful acts
              -----------
of Landlord or its agents or employees (to the extent that paragraph 14(g) is
inapplicable thereto), Tenant hereby agrees to indemnify, defend and hold
Landlord harmless from all claims, costs, liability, damage or expense,
including attorneys' fees, for any death, damage or injury to persons or
property occurring on the Premises or Tenant's customer pick-up area or stereo
installation area resulting from Tenant's use thereof.

     Except if arising from the negligent or willful acts of Tenant or its
agents or employees (to the extent that paragraph 14(g) is inapplicable
thereto), Landlord agrees to indemnify, defend and hold Tenant harmless from any
and all claims, costs, liability, damage or expense, including attorneys' fees,
for any death, damage or injury to persons or property occurring in, on or
around the Shopping Center, exclusive of the Premises, car stereo installation
area, and customer

                                      -27-
<PAGE>

pick-up area, or other buildings within Landlord's Premises or resulting from
the use thereof by Landlord, its agents or employees.

     2.   Damages by Fire or Other Casualty.
          ---------------------------------

          (a) Less Than Forty Percent (40%). In the event of an insured fire,
              -----------------------------
earthquake or other casualty causing destruction or damage to the Premises,
Common Areas and/or Additional Areas, causing damage to the Premises which has a
repair and reconstruction cost of less than forty percent (40%) of the then-
total replacement cost of the Premises, this Lease shall not terminate except as
expressly set forth herein.  Within a reasonable time after such casualty,
subject to force majeure, applicable building codes, the procurement of building
permits and the receipt of insurance proceeds to the extent of the damage to the
Premises, Tenant shall complete reconstruction of the Premises and Landlord
shall complete reconstruction of the Common Areas and at least sixty percent
(60%) of the Additional Areas, to that condition existing immediately prior to
such casualty, in the reconstructing party's reasonable discretion, with, in the
event of any Tenant reconstruction, such alterations as may be permitted under
paragraph 12 hereof.  In the event, subject to force majeure, the Premises,
Common Areas and/or Additional Areas, as applicable, are not substantially
repaired and reconstructed in accordance with the terms hereof by the party with
repair and restoration obligations within two hundred forty (240) days after
receipt of any required governmental permits and insurance proceeds, for which
permits and insurance proceeds Landlord shall make prompt application following
such destruction or damage, then the other party, at its option, by giving
written notice to the party with repair obligations, within thirty (30) days
after the expiration of said period, may undertake completion of such
reconstruction, in which event the party with repair

                                      -28-
<PAGE>

obligations shall make available to the notifying party all applicable insurance
proceeds for such reconstruction (including any applicable deductible).

          (b) Forty Percent (40%) or More. In the event of an insured fire,
              ---------------------------
earthquake or other casualty causing destruction or damage to the Premises,
Common Areas and/or Additional Areas, causing damage to the Premises which has a
repair and reconstruction cost of forty percent (40%) or more of the then-total
reconstruction cost of the Premises, or in the event of any uninsured casualty,
Tenant shall have the option of terminating this Lease.  Tenant shall notify
Landlord of its exercise of such option within sixty (60) days following the
occurrence of such casualty.  In the event Tenant does not elect to terminate
this Lease as set forth above, then, subject to force majeure, within two
hundred forty (240) days after receipt by Landlord of insurance proceeds and the
required governmental permits for restoration, for which permits and proceeds
Landlord shall make prompt application following such destruction or damage,
Tenant shall complete reconstruction of the Premises to their condition existing
immediately prior to such damage, in Tenant's reasonable discretion, with such
alterations as may be permitted under paragraph 12, and shall restore the
Premises.  Should Tenant elect to maintain this Lease in full force and effect,
Landlord shall reconstruct all Common Areas and at least sixty percent (60%) of
the Additional Areas in the manner specified by subparagraph (a) above
regardless of the amount of damage to same.

          (c) Common Area and Additional Area. Landlord shall maintain fire and
              -------------------------------
extended coverage insurance on the Shopping Center in amounts and with reputable
insurers providing coverages sufficient to rebuild the Shopping Center in the
event of a casualty, whether or not the Premises may be damaged in connection
therewith, such that in the event of any

                                      -29-
<PAGE>

destruction or damage to any portion of the Shopping Center whatsoever, in the
event the Lease continues in force, Tenant shall be assured that the Shopping
Center as a whole (subject to the exception allowed for forty percent (40%) of
the Additional Areas) will be reconstructed in accordance with this paragraph
15. Base Rent shall be proportionately abated from the date of any casualty
damage to the Premises through the date of full repair of same, based on the
percentage of the Premises damaged or rendered unusable by the casualty event,
if Tenant's reconstruction is delayed in any manner by Landlord not complying
with the terms of this Lease, e.g., not making prompt application for insurance
proceeds, or if Landlord's actions or omissions delay payment of such proceeds
or issuance of building permits. Any of the Additional Areas not repaired or
reconstructed by Landlord in accordance with the terms of this Lease (i.e.,
forty percent (40%) which Landlord may elect to not rebuild) shall be either
sodded or paved and striped by Landlord for use as parking for the Shopping
Center, at Landlord's own expense and not subject to reimbursement as part of
CAM Charges. Any such Additional Areas not to be rebuilt must be graded to site
level and cleared of obstructions and debris within sixty (60) days following
damage thereto.

          (d) Last Two (2) Years of Main Term or Option Period. Notwithstanding
              ------------------------------------------------
the foregoing, if any such casualty damage occurs within the last two (2) years
of the Main Term or of any Option Period and has a material impact on Tenant's
ability to conduct business, as reasonably determined by Tenant, Tenant shall be
under no obligation to restore the Premises, in which case this Lease shall
terminate at Tenant's option, and Landlord shall receive the proceeds of any
insurance which may be payable with regard to such destruction or damage.
Additionally, in the event of casualty damage during the last two (2) years of
the Main Term or of an Option

                                      -30-
<PAGE>

Period following which the Lease remains in effect, Landlord shall not be
obligated to rebuild any of the Additional Areas unless Tenant agrees to
exercise the next succeeding Option Period and agrees to open for business in
the reconstructed Premises for at least one (1) day.

          (e) Application of Funds. All insurance (or self-insurance) proceeds
              --------------------
received on account of such damage or destruction, less the cost, if any, of
such recovery, shall be applied pursuant to the terms of this Lease to the
payment of the cost of such restoration, repair, replacement, rebuilding, or
alteration (the "Work"), including expenditures made for temporary repairs or
for the protection of property pending the completion of permanent restoration,
repair, replacement, rebuilding, or alteration, and, if required by any
Mortgagee, shall be held by a mutually agreeable third-party escrow agent (which
is, for these purposes, the "Escrow Agent"), in an interest-bearing account in a
federally insured financial institution or institutions such that all funds are
deposit insured (or otherwise assured in a manner acceptable to the parties), to
be paid out, as provided below, from time to time (but no more often than once
monthly), as the Work progresses, upon Tenant's written request in event of work
by Tenant, or Landlord's written request in event of work by Landlord,
accompanied by a certificate of the architect or engineer in charge of the Work
(the "Certificate"), dated not more than seven (7) days prior to such request,
stating that the sum then requested either has been paid by Tenant or Landlord,
as applicable, or is justly due to the named contractors, subcontractors,
materialmen, engineers, architects, or other persons (whose addresses shall also
be stated) who have rendered services or furnished materials for certain
portions of the Work.  The Certificate shall give a brief description of such
services and materials, shall list the several amounts so paid or owing to each
of such persons, shall state the cost of the Work at the date of the
requisition, and shall state that

                                      -31-
<PAGE>

no part of such expenditures has been or is being made the basis for any other
request for payment. The Certificate shall state also that, except for the
amounts listed therein, there is no outstanding indebtedness known to such
architect or engineer, after due inquiry, for labor, wages, materials, supplies,
or services in connection with the Work which, if unpaid, might become the basis
of a vendor's, mechanic's, laborer's, materialman's, or similar lien upon the
Work or upon the Premises or any part thereof.

          (f) Disbursement. Upon compliance with the foregoing provisions of
              ------------
paragraph 15(e), the Escrow Agent shall pay, out of the escrowed funds, to the
persons named in the Certificate the respective amounts stated to be due to them
or shall pay to Tenant, in the event of Tenant work, or Landlord, in the event
of Landlord work, the amount stated to have been paid by Tenant or Landlord, as
applicable; provided, however, that such payments shall not exceed in amount the
cost of the relevant Work as stated in the Certificate.  If the insurance
proceeds deposited with the Escrow Agent exceed the amount required to pay the
total cost of the Work after payment of all costs of the Work, such excess shall
be paid to Landlord.

     3.   Condemnation.
          ------------

          (a) Definition of Taking and Substantial Taking. For the purpose of
              -------------------------------------------
this Lease, a "Taking" shall mean any condemnation or exercise of the power of
eminent domain by any authority vested with such power or any other taking for
public use, including a private purchase in lieu of condemnation by an authority
vested with the power of eminent domain; the "Date of Taking" shall mean the
earlier of the date upon which title to the Premises, the Shopping Center or any
portion thereof so taken is vested in the condemning authority or the date upon
which possession of the Premises, the Shopping Center, or any portion thereof is
taken by

                                      -32-
<PAGE>

the condemning authority; and "Substantially All of the Premises" shall mean (i)
so much of the Improvements and/or Shopping Center and Common Areas as, when
taken, leaves the untaken portion unsuitable, in Tenant's reasonable opinion,
for the continued feasible and economic operation of the Premises by Tenant for
the same purposes as immediately prior to such Taking or as contemplated herein,
(ii) so many of the parking spaces within the Shopping Center as reduces the
parking ratio below the greater of four and one-half (4.5) spaces (for full-
sized automobiles) per 1000 square feet of ground-floor Gross Leasable Area or
that ratio which is required by the zoning ordinance applicable to the Shopping
Center, and Landlord's failure to provide substantially equivalent alternative
parking reasonably acceptable to Tenant within sixty (60) days after such
Taking, or (iii) so much of the Common Area Easement described in paragraph 6(d)
above that access to the Premises is impeded.

          (b) Tenant's Rights Upon Taking or Substantial Taking. In the event
              -------------------------------------------------
of a Taking of Substantially All of the Premises, Tenant, at its option upon
thirty (30) days' written notice to Landlord, which shall be given no later than
sixty (60) days following the Taking, shall have the right to terminate this
Lease. All Base Rent and other sums payable by Tenant hereunder shall be
apportioned and paid through and including the Date of Taking, and neither
Landlord nor Tenant shall have any rights in any compensation or damages payable
to the other in connection with such Taking.

          (c) Tenant's Rights Upon Less Than Substantial Taking. In the event
              -------------------------------------------------
of a Taking of less than Substantially All of the Premises, Base Rent and other
charges shall be reduced fairly and justly in accordance with the portion
condemned or taken, effective as of the Date of Taking, and Tenant shall make
all necessary restorations to the Premises so that the

                                      -33-
<PAGE>

portions of the Premises not taken constitute a complete architectural unit,
provided that the cost thereof to Tenant shall not exceed the proceeds of
Tenant's condemnation award (to the extent that such relates to the Premises and
not to Tenant's personal property, intangibles or out-of-pocket expenses
unrelated thereto) and the portion of Landlord's award allocable to the
Premises, which Landlord shall make available to Tenant for such restoration. If
required by a Mortgagee, such awards shall be escrowed and disbursed in
accordance with the procedure set forth in paragraphs 15(d) and (e) above. If
the Taking occurs within the last two (2) years of the Main Term or of any
Option Period and has a material impact on Tenant's ability to conduct business
as reasonably determined by Tenant, this Lease shall terminate at Tenant's
option. In the event Tenant does not so terminate the Lease, it agrees to
exercise the next succeeding Renewal Option, if any.

          (d) Landlord's Obligations Upon Any Taking. In the event of any Taking
              --------------------------------------
following which the Lease continues in effect, Landlord shall make all necessary
restorations to all portions of the Common Areas and Additional Areas such that
they each constitute a complete architectural unit and serve the function
originally intended.  Additionally, Landlord shall assure (through parallel
lease provisions or otherwise) that all areas of the Shopping Center leased to
third party tenants or sold to third party occupants are subject to
substantially similar reconstruction obligations to those of the Premises,
Common Areas and Additional Areas, such that in the event of any condemnation of
any portion of the Shopping Center whatsoever, and in the event Tenant elects to
maintain this Lease in force, Tenant shall be assured that the Shopping Center
will be reconstructed to its former condition within reasonable time.

                                      -34-
<PAGE>

          (e) Rights Upon Temporary Taking. In the event of a Taking of the
              ----------------------------
Premises, the Common Areas and/or any other area within the Shopping Center, or
any portion thereof, for temporary use (specifically one not exceeding 60 days
in duration), without the taking of the fee simple title thereto, this Lease
shall remain in full force and effect.  All awards, damages, compensation and
proceeds payable by the condemnor by reason of such Taking relating to the
Premises, or relating to the Common Areas but reasonably attributable to the
Premises, for periods prior to the expiration of the Lease shall be payable to
Tenant.  All such awards, damages, compensation and proceeds for periods after
the expiration of the Lease shall be payable to Landlord.  Anything contained
herein to the contrary notwithstanding, a temporary Taking for any period in
excess of sixty (60) days may, at Tenant's option, be deemed a permanent Taking
and shall be governed by subparagraph (b) or (c) above, as applicable.

          (f) Taking of the Pylon Sign(s). In the event of a taking, whether
              ---------------------------
permanent or temporary, of any pylon or monument sign (as contemplated by
paragraph 8) on which Tenant has installed identification panels, Landlord shall
provide a substitute site (reasonably acceptable to Tenant) therefor, with
adequate electrical power, located so as to be visible to vehicular traffic or
roadways adjacent to the Shopping Center and/or at entrances to the Shopping
Center, and Landlord shall replace and/or rebuild any of such signage so taken
at its sole cost.

          (g) Tenant's Right Upon Condemnation. In the event of a Taking
              --------------------------------
described in subparagraph (b) or (c) above, Tenant shall be entitled to claim
compensation from the condemning authority for the value of its leasehold
interest in the Premises, its unamortized leasehold improvements paid for by
Tenant, relocation expenses, loss of business, its fixtures and tangible
personal property and any other items to which Tenant is entitled under
applicable law,

                                      -35-
<PAGE>

so long as the filing of such claim by Tenant does not diminish the award which
would otherwise have been received by Landlord had Tenant not filed such a claim
and received such award.

     4.   Assignment and Subletting. Tenant shall have the right to sublet,
          -------------------------
assign, transfer reassign and grant concessions or licenses (a "Transfer") in
all or any part of the Premises and any of Tenant's rights and obligations under
this Lease during the Term, without Landlord's prior consent, so long as (i) any
transferee hereunder has proven retail experience; (ii) such transferee
subsequent to a Transfer has a net worth calculated in accordance with generally
accepted accounting principles equal to or greater than $75,000,000; (iii) the
use of the Premises by the transferee will not violate the Permitted
Encumbrances described in Exhibit "F" attached hereto; and (iv) Tenant gives
Landlord at least ninety (90) days prior notice of the Transfer.  In the event
of any Transfer, Tenant shall remain liable for all of Tenant's obligations to
Landlord arising hereunder so long as this Lease is not changed, modified or
amended in any respect by Landlord and any transferee.  Transfers to a parent
corporation or to subsidiaries, affiliates, or related parties of which a
majority of interest therein is owned by Tenant or its parent corporation or a
subsidiary, and Transfers involving beneficial ownership interests in Tenant,
shall not be deemed a Transfer hereunder and same may be effected without
Landlord's knowledge or consent.

     Notwithstanding the foregoing, in the event Tenant desires to assign or
sublease all or a portion of the Premises to an unrelated third party, Tenant
shall give Landlord written notice of such proposed assignment or sublease along
with a copy of the proposed assignment of lease document or proposed sublease
document and Landlord shall notify Tenant of its disapproval or approval of such
proposed assignment or sublease within thirty (30) days of Landlord's receipt of

                                      -36-
<PAGE>

said document. If Landlord disapproves of such transaction within such thirty
(30) day period, the Lease covering the portion of the Premises affected thereby
shall be terminated and Landlord shall recapture all or such portion of the
Premises in accordance with this paragraph 17. Landlord's full or partial
termination of this Lease pursuant to this paragraph 17 shall be effective sixty
(60) days from the date Landlord notifies Tenant of its disapproval of Tenant's
proposed assignment or sublease. Tenant shall thereafter have no liability under
this Lease with respect to the portion of the Premises recaptured by Landlord.
In the event of a partial termination of the Lease, this Lease shall be reformed
to exclude the portion of the Premises that were recaptured by the Landlord and
the Tenant's payment and other obligations hereunder shall be reformed to
reflect the remainder of the Premises still occupied by the Tenant.

     In the event Landlord exercises its option to terminate all or a portion of
this Lease as provided in this paragraph 17, Landlord shall be obligated to pay
Tenant its unamortized cost of the portion of the Improvements recaptured by
Landlord to the date of such termination, including the unamortized cost of all
renovations made by the Tenant to the applicable portion of the Building from
and after the date hereof.

     Any assignment or subletting of this Lease by Tenant shall be executed by
Tenant and the assignee or sublessee.  Each assignee or sublessee, for the
benefit of Landlord, shall agree to assume, be bound by, and perform all terms,
covenants, and conditions of this Lease to be kept and performed by Tenant.
After execution of the assignment or sublease, Tenant will forward a completed
copy thereof to Landlord.

     Tenant may grant a license to third parties to use and occupy up to ten
percent (10%) of the Gross Leasable Area of the Premises without Landlord's
consent, and up to fifty percent

                                      -37-
<PAGE>

(50%) of the Gross Leasable Area for the same purposes as licenses are granted
in a majority of Tenant's stores then operating in Indiana and Illinois. No such
licensee shall be entitled to a separate entrance or its own signage outside of
the Existing Building.

          (l) Use. Tenant shall maintain, use and operate the Premises as a
              ---
retail store for (i) the sale of consumer, office and automotive electronics
products (which include, but shall not be limited to, televisions, stereos,
speakers and video recorders and players), computer hardware and software,
entertainment software and entertainment media (which include, but shall not be
limited to, records, game cartridges, video tapes, cassettes and compact discs),
cellular telephones, household appliances (which include, but shall not be
limited to, refrigerators, freezers, stoves, microwave ovens, vacuum cleaners
and dishwashers) and related goods and the sale and installation of motor
vehicle audio, stereo and telephone systems (all of such items being herein
collectively referred to as the "Products"), and (ii) renting, servicing,
repairing and warehousing of the Products. Additionally, Tenant shall have the
right to use the Premises for such other uses as Tenant may operate its other
stores in the State of Indiana from time to time; provided, however, the
Premises shall not be used (i) for any illegal purpose, (ii) for any use
prohibited under paragraph 19(a)(viii) below, (iii) in violation of any
exclusive use restriction granted a Tenant or other occupant of the Shopping
Center pursuant to a lease or restrictive covenants executed prior to this Lease
and shown on Exhibit "F", or (iv) in violation of any other applicable provision
             -----------
of the "Permitted Encumbrances" contained in Exhibit "F". Tenant hereby
                                             -----------
covenants to open the Premises for business to the public under the trade name
"Circuit City" and operate the Premises as a Circuit City store for a period of
one (1) day, no later than eight (8) months following delivery of the Premises.
In the event that the Premises shall, at any time after

                                      -38-
<PAGE>

Tenant's opening for business at the Premises, be closed for business for a
period of one hundred eighty (180) days or more, other than as a result of
remodeling, casualty damage, condemnation, Tenant's impending subletting of the
Premises or assigning of its interest in this Lease as permitted pursuant to
paragraph 17 above (which impending subletting shall extend the 180-day period
no more than an additional sixty (60) days), then at any time thereafter
Landlord may terminate this Lease by giving Tenant written notice thereof and
delivering to Tenant in cash an amount equal to the unamortized cost of the
Improvements and any subsequent improvements made by Tenant to the Premises.
Except as may be expressly set forth in this paragraph 18, nothing contained in
this Lease shall be construed to require Tenant to operate the Premises
continuously either for the use first stated or for any other use, or shall be
construed as a continuous operating covenant.

     2.   Warranties and Representations.
          ------------------------------
          (a)  Landlord represents, warrants and covenants to Tenant that:

               (i) Quiet and Peaceful Enjoyment. Landlord and those persons
                   ----------------------------
          executing this Lease on its behalf have the right and lawful authority
          to enter into this Lease and perform Landlord's obligations hereunder,
          and Landlord warrants, represents and covenants that, so long as
          Tenant is not in default hereunder beyond any applicable cure period,
          Tenant shall have quiet and peaceful use, enjoyment and occupancy of
          the Premises.

               (ii) Title. As of the date of execution of this Lease,
                    -----
          Landlord's fee simple interest in the Shopping Center is free and
          clear of any mortgages, deeds, encumbrances, declarations, easements,
          agreements, leases, tenancies or

                                      -39-
<PAGE>

          restrictions, or any other encumbrances which would restrict Tenant's
          use of the Premises for the sale of Products or would restrict in any
          respect the right of Tenant, its employees, customers and invitees to
          use the Common Areas in accordance with the terms of this Lease.
          Except for those matters set forth on Exhibit "F" attached hereto and
                                                -----------
          entitled "Permitted Encumbrances," and existing leases to Tenants as
          shown on the Site Plan, Landlord is not aware of any matters affecting
          title to the Shopping Center. Nothing, contained in this Lease,
          including the Permitted Encumbrances and other matters disclosed on
          Exhibit "F", shall restrict Tenant's rights under this Lease,
          -----------
          including but not limited to the right to operate its business in the
          Premises. Landlord specifically covenants and warrants that Landlord,
          nor any predecessor-in-interest of Landlord of the Shopping Center,
          has granted any third party, including but not limited to any other
          occupant of the Shopping Center, the right to object to Tenant's
          tenancy hereunder, to prohibit the selling, renting, servicing,
          repairing or warehousing of the Products, or to consent to any feature
          of the Improvements or Tenant's signage, and Landlord knows of no
          other reason or right or claim which would interfere with, limit or
          prohibit Tenant's tenancy or rights with respect to the Products, the
          Improvements, or Tenant's signage. This representation and warranty is
          a material inducement to the Tenant's execution of this Lease.

               (iii) Certificate of Authority. Landlord covenants that it is a
                     ------------------------
          duly constituted limited partnership under the laws of the State of
          Illinois, and that its authorized agent who is acting as signatory to
          this Lease is duly authorized and

                                      -40-
<PAGE>

          empowered to act for and on behalf of said limited partnership.
          Landlord has furnished Tenant prior hereto with evidence of (a) the
          existence of the limited partnership which constitutes Landlord, and
          that which constitutes Landlord's agent acting as signatory to this
          Lease, and (b) the existence and authority of Landlord and said agent,
          and the agent's general partner to bind the agent and the limited
          partnership as contemplated herein.

               (iv) No Litigation.  To the best of Landlord's knowledge, there
                    -------------
          are no judicial, quasi-judicial, administrative or other orders,
          injunctions, moratoria or pending proceedings against Landlord or the
          Shopping Center which preclude or interfere with, or would preclude or
          interfere with, the renovation or construction contemplated in
          paragraph 2 hereof or the occupancy and use of the Premises for the
          purposes herein contemplated.

               (v)  Hazardous or Toxic Materials. Landlord has not used,
                    ----------------------------
          generated, discharged, dumped, spilled or stored any toxic or
          hazardous substances, asbestos or any other chemicals or substances in
          amounts exceeding standards for public health or welfare as
          established and regulated by any local governmental authority, the
          State or the United States government ("Hazardous Substances") or in
          violation of any applicable laws on or about the Shopping Center,
          whether accidentally or intentionally, legally or illegally, and has
          received no notice and has no knowledge that any such condition exists
          at the Shopping Center.  If any claim is ever made against Tenant
          relating to Hazardous Substances present at or around the Shopping
          Center, whether or not such substances are present as of the


                                      -41-
<PAGE>

          date hereof, or any Hazardous Substances are hereafter discovered at
          the Shopping Center (unless introduced by Tenant, its agents,
          employees or invitees), all costs of removal incurred by, all
          liability imposed upon, or damages suffered by, Tenant because of the
          same shall be borne by Landlord, and Landlord hereby indemnifies and
          agrees to defend and hold Tenant harmless from and against all such
          costs, losses, liabilities and damages, including, without limitation,
          all third-party claims (including sums paid in settlement thereof,
          with or without legal proceedings) for personal injury or property
          damage and other claims, actions, administrative proceedings,
          judgments, compensatory and punitive damages, lost profits, penalties,
          fines, costs, losses, attorneys' fees and expenses (through all levels
          of proceedings), consultants or experts fees and all costs incurred in
          enforcing this indemnity, except that, with respect to Hazardous
          Substances introduced to the Shopping Center after the date of this
          Lease by a third party not a tenant or owner of any portion of the
          Shopping Center, and not an employee, agent, contractor, customer,
          licensee or invitee of any such tenant or owner, Landlord shall not be
          liable to Tenant for any lost profits otherwise indemnified against
          under this paragraph. The representation, warranty and indemnity of
          Landlord described in this paragraph 19(a)(v) shall survive the
          termination or expiration of this Lease.

               (vi) Tenant's Exclusive Use. So long as the Premises are used
                    ----------------------
          for the initial uses set forth in paragraph 18, no other Tenant or
          occupant of the Shopping Center shall be entitled to use more than the
          lesser of ten percent (10%) or 500

                                      -42-
<PAGE>

          square feet of its Premises for the sale or rental of any of the
          Products (except used compact discs), subject only to use rights
          granted or reserved any such Tenants under leases in existence as of
          the date of this Lease and described on Exhibit "F".
                                                  -----------

               (vii) Zoning and Subdivision.  To the best of Landlord's
                     ----------------------
          knowledge, the Premises and the Shopping Center are presently properly
          subdivided, in conformity with all applicable laws and zoned so as to
          permit (A) the operation of the Premises and the Shopping Center in
          accordance with the provisions of this Lease; and (B) the use of the
          Premises described in paragraph 18 of this Lease.

               (viii) Prohibited Activities. Landlord shall not operate or lease
                      ---------------------
          (or permit to be operated or leased) any building or tenant space in
          the Shopping Center for use as:

               (A) a bar, pub, nightclub, music hall or disco in which less than
          fifty percent (50%) of its space or revenue is devoted to and derived
          from food service;

               (B)  a bowling alley;

               (C)  a billiard or bingo parlor;

               (D)  a flea market;

               (E)  a massage parlor;

               (F)  a funeral home;

               (G) a facility for the sale of paraphernalia for use with illicit
          drugs;

               (H) a facility for the sale or display of pornographic material
          (as determined by community standards for the area in which the
          Shopping Center is located);

               (I)  an off-track betting parlor;

                                      -43-
<PAGE>

               (J) a carnival, amusement park or circus;

               (K) a gas station, car wash or auto repair or body shop (the
          parties specifically acknowledging that Tenant's car stereo
          installation facility is not included in this prohibition (K));

               (L) a facility for the sale of new or used motor vehicles,
          trailers or mobile homes;

               (M) a facility for any use which is illegal or dangerous,
          constitutes a nuisance or is inconsistent with an integrated,
          community-oriented retail and commercial shopping center;

               (N)  a skating rink;

               (O) an arcade, pinball or computer gameroom (provided that retail
          facilities in the Shopping Center may operate no more than four (4)
          such electronic games incidentally to their primary operations);

               (P) restaurants or food-related uses, service-oriented offices
          (such as, by way of example, medical or employment offices, travel
          agencies, real estate agencies or dry cleaning establishments) or
          other nonretail uses, except for offices and storage facilities
          incidental to a primary retail operation, in any location in the
          Center west of the East building line of the building area currently
          occupied by Shoe Carnival as shown on the Site Plan; except that a
          service-oriented or food-related use shall be allowed in the
          approximately 1,472 square foot area shown on the Site Plan adjacent
          to and immediately east of JoAnn Fabrics formerly occupied by Sunset
          Mattress and the existing Imperial Palace restaurant shown on the Site
          Plan may continue in operation as currently located;

               (Q) a banquet hall, auditorium or other place of public assembly;

               (R) a training or educational facility (including, without
          limitation, a beauty school, barber college, reading room, school or
          other facility catering primarily to students or trainees rather than
          customers);

               (S)  a theater of any kind; or

               (T) a gymnasium, sport or health club or spa.

     In addition, no auction, fire or going-out-of-business sale shall be
conducted in the Shopping Center.

                                      -44-
<PAGE>

               (i) Site Covenants. With regard to the development of the
                   --------------
     Shopping Center and the uses and operations of the Common Areas, Landlord
     makes the following representations and warranties (the "Site Covenants"):

               (A) Existing Building Height and Location.  No building adjacent
                   -------------------------------------
          to the Premises shall exceed twenty-eight (28) feet in height above
          finished grade, nor shall it be positioned so as to project beyond the
          portion of the front wall of the Existing Building immediately
          adjacent thereto.  No outparcels, barriers, buildings, kiosks or other
          structures, either temporary or permanent, shall be located within
          Tenant's Preferred Area, and no building located on an outparcel
          elsewhere in the Shopping Center shall exceed one story (twenty (20)
          feet in height for the outparcel shown on the site Plan east of the
          Vicorp Tract, and twenty-two (22) feet in height for the Vicorp
          Tract).  No development shall occur within the Shopping Center except
          as shown on the Site Plan.

               (B) Construction and Alterations.  Following the end of the first
                   ----------------------------
          Lease Year, no construction shall be permitted in the Shopping Center
          during the months of October, November and December, except for
          interior alterations not affecting the operations of any other
          occupant of the Shopping Center and except for emergency repairs.  In
          the event of any construction within the Shopping Center, Landlord
          shall designate a construction access route, staging and parking areas
          located so as to minimize interference with customers or the
          operations of other occupants of the Shopping Center and shall require
          erection of safety barriers as necessary and an opaque wall around the
          site of such construction of a size

                                      -45-
<PAGE>

          necessary to screen such construction from ground level view. With
          regard to any construction on Landlord's Premises, Landlord shall be
          solely responsible for any governmentally imposed impact fees, hook-
          up, connection, installation or tap-in fees and other, similar
          construction-related charges. Landlord shall make no changes in the
          Common Areas (including, without limitation, changes in the location
          of curbcuts, drive aisles, roadways, sidewalks or parking spaces or
          reduction of the parking ratio specified in paragraph 5) without
          Tenant's express written consent, which Tenant may, in its sole
          discretion, withhold.

               (C) Prohibited Uses in Common Areas.  Landlord covenants that it
                   -------------------------------
          shall not, without Tenant's express written consent, permit the
          following uses or activities to occur in the Common Areas:  (1)
          advertisements or signs except for the pylon and/or monument signs
          described in paragraph 8, the "for rent" signs described in paragraph
          27 and traffic control signs; (2) display or sale of merchandise; (3)
          operation of loudspeakers or other sound electronically amplified so
          as to be heard in the Common Areas; or (4) imposition of a charge for
          parking.  Landlord neither covenants that it will not seek, nor permit
          any other occupant of the Shopping Center to seek (to the extent
          Landlord may exercise control over other occupants), a variance or
          waiver from the minimum parking requirements applicable to the
          Shopping Center under the zoning code or other applicable ordinance
          establishing the ratio of parking spaces to building area or otherwise
          mandating the number of parking spaces required for the Shopping
          Center and the uses contained therein.  Parking by employees of
          Tenant, Landlord and other

                                      -46-
<PAGE>

          occupants of the Shopping Center shall be in designated "employee
          parking" areas, the location of which shall be agreed upon by Landlord
          and Tenant.

               (D) Easements.  Landlord shall not subdivide, parcel or otherwise
                   ---------
          divide the Shopping Center without burdening the subdivided parcel
          with the provisions of this Lease, or create any access or parking
          easements in the Common Areas without Tenant's prior written consent.
          All other easements granted by Landlord in the Common Areas shall be
          subject to Tenant's prior written approval (which shall not be
          unreasonably withheld) and shall be subject to the terms of this
          Lease.

               (i) Interference with Tenant's Reception/Transmission. Landlord
                   -------------------------------------------------
     shall not install or permit to be installed by Landlord, any other tenant
     or other person anywhere in the Shopping Center, any radio or other
     transmitting equipment which would cause any interference with satellite,
     radio or television reception or transmission in or from the Premises.

               (ii) Notices Affecting the Premises. Landlord shall promptly
                    ------------------------------
     forward to Tenant any notice or other communication affecting the Premises
     or Tenant's use thereof, directly or indirectly, received by Landlord from
     any owner of property adjoining, adjacent or nearby to the Premises or the
     Shopping Center or from any municipal or governmental authority, in
     connection with any hearing or other administrative procedure relating to
     the use or occupancy of the Premises, Shopping Center or any such
     neighboring property.

                                      -47-
<PAGE>

               (iii)  Constructive Trust. Landlord covenants that all sums paid
                      ------------------
     by Tenant to Landlord and intended for payment by Landlord to a third party
     (e.g. Real Estate Taxes and certain elements of CAM Charges) are given to
     Landlord in trust and shall be applied only for such third-party payments,
     as and when due.

               (iv)   Structural Integrity. The Existing Building is
                      --------------------
     structurally sound, and to the best of Landlord's knowledge, no defects or
     other conditions exist which impair or limit the structural integrity of
     the Existing Building.

          (b)  Tenant represents, warrants and covenants to Landlord that:

               (i)    Tenant's Authority. Tenant is a duly constituted
                      ------------------
     corporation organized under the laws of the Commonwealth of Virginia; it
     has the power to enter into this Lease and perform Tenant's obligations
     hereunder; Tenant is qualified to do business in Indiana; Tenant's
     franchise and corporate taxes have been paid to date; all future forms
     reports, fees and other documents necessary for Tenant to comply with
     applicable laws will be filed by Tenant when due and the Vice President
     executing this Lease on Tenant's behalf has the right and lawful authority
     to do so.

               (ii)   Tenant's Warranty as to Hazardous or Toxic Materials. As
                      ----------------------------------------------------
     to Tenant's use and occupancy of the Premises and use of the Common Areas,
     Tenant will not introduce, discharge, dump, spill or store within the
     Premises or the Shopping Center any Hazardous Substances; and Tenant
     indemnifies and agrees to hold Landlord harmless from and against all
     costs, liability and damages as a result thereof, to the same extent that
     Landlord indemnifies and holds Tenant harmless in subparagraph (a)(v)
     above. The

                                      -48-
<PAGE>

     warranty and indemnity of Tenant described in this paragraph 19(b)(ii)
     shall survive the termination of this Lease.

          (c)   In the event there is a condition at variance with the foregoing
representations and warranties of Landlord with respect to the Premises or the
Shopping Center which prevents or in any material way inhibits the use of the
Premises or any part thereof or the Common Areas for their intended purposes by
Tenant or Tenant's employees, licensees, agents, suppliers, customers or
invitees, or if Landlord shall default in the observance or performance of any
of the foregoing representations and warranties, then, in addition to such other
remedies as may be accorded Tenant at law, in equity or under the terms of this
Lease, Tenant may, in addition to its other remedies under this Lease, after
thirty (30) days' notice to Landlord, obtain an injunction or writ of specific
performance to enforce such term or covenant, the parties hereby acknowledging
the inadequacy of Tenant's legal remedy and the irreparable harm which would be
caused to Tenant by any such variance or default.  In addition, in the event
that any of the representations, warranties and covenants set forth in this
paragraph 19 are untrue or incorrect, or in the event that Tenant suffers any
loss, cost, liability or damage as a result of the breach of any of such
covenants, representations and warranties, Landlord shall defend, indemnify and
hold Tenant harmless from any of such loss, costs, liability or damage incurred
as a result of Landlord's breach hereunder.

     2.   Estoppel Certificates. Without charge, at any time and from time to
          ---------------------
time hereafter, within thirty (30) days after receipt of written request by
either party, the other party shall certify, by written and duly executed
instrument, to any other entity ("Person") specified in such request: (a) as to
whether this Lease has been supplemented or amended, and, if so, the

                                      -49-
<PAGE>

substance and manner of such supplement or amendment; (b) as to the validity,
force and effect of this Lease, to the certifying party's best knowledge; (c) as
to the existence of any default hereunder, to the certifying party's best
knowledge; (d) as to the existence of any offsets, counterclaims, or defenses
hereto on the part of such other party, to the certifying party's best
knowledge; (e) as to the commencement and expiration dates of the Term; and (f)
as to any other matters which may reasonably be so requested. In addition,
without charge, at any time and from time to time hereafter, within thirty (30)
days after receipt of written request of Tenant, Landlord shall deliver an
estoppel certificate to Tenant's assignee or subtenant permitted under the terms
of this Lease that states in the event Tenant defaults under any of its
obligations under this Lease following the date of any assignment or subletting
hereunder, Landlord will permit such assignee or subtenant to satisfy the
obligations of Tenant hereunder, including but not limited to the direct payment
of rentals to Landlord. Any such certificate may be relied upon by the party
requesting it and any Person to whom the same may be exhibited or delivered, and
the contents of such certificate shall be binding on the party executing same.

     3.   Subordination, Non-Disturbance and Attornment. Simultaneously with
          ---------------------------------------------
the execution hereof, Landlord shall deliver to Tenant with regard to any and
all Mortgages (as defined below) encumbering the Premises and placed thereon by
Landlord, a non-disturbance and attornment agreement in the form of Exhibit "G"
hereto attached, executed by the holder of such Mortgage ("Mortgagee"), as
applicable.  In addition, throughout the term, Landlord shall deliver to Tenant
a non-disturbance and attornment agreement in the form of Exhibit "G" executed
by Mortgagee (as applicable) with regard to all future Mortgages and with regard
to all renewals, modifications, replacements and extensions of such Mortgages.
Upon Tenant's receipt of the

                                      -50-
<PAGE>

non-disturbance and attornment agreement, this Lease shall be subordinate to the
corresponding Mortgage.

     In the event of a foreclosure of any Mortgage, Tenant shall attorn to a
Mortgagee or any purchaser at a foreclosure sale (any such foreclosure, or deed
in lieu thereof, shall be referred to as a "Foreclosure") of a Mortgage only if
such Mortgagee or purchaser executes a writing in favor of Tenant which states
the following (provided Tenant is not in uncured material default beyond the
expiration of any applicable grace periods): (i) this Lease shall not terminate
by reason of such Foreclosure, (ii) Tenant's possession of the Premises shall
not be disturbed, (iii) the Mortgagee or purchaser upon such Foreclosure shall
recognize Tenant and all its rights hereunder and shall be obligated to fully
and completely perform Landlord's duties and obligations under the Lease arising
from and after the date of such Foreclosure, including but not limited to an
obligation to make all payments to Tenant and satisfy all construction
obligations set forth in this Lease, subject to the terms of any non-disturbance
and attornment agreement executed by said Mortgagee and Tenant, (iv) Tenant
shall not be named as a party in any action for foreclosure, and (v) the
Mortgagee, whether or not the Mortgage is foreclosed, shall make all proceeds
arising from a casualty or condemnation loss to the Premises available to Tenant
for restoration of the Premises in accordance with the terms hereof.

     Landlord shall cause any present or future Mortgagee to deliver a non-
disturbance and attornment agreement in accordance with this paragraph 21 at or
prior to the time which the lien of the Mortgage is filed against record title
to the Premises, as set forth in paragraph 37(b) below.  As used in this
paragraph 21, the term "Mortgage" shall mean any mortgage, deed to

                                      -51-
<PAGE>

secure debt, deed of trust, trust deed or other collateral conveyance of, or
lien or encumbrance against, the Premises.

     4.   Change of Landlord. Subject to paragraph 21 above, in the event
          ------------------
Landlord's interest in the Premises passes to a successor (the "Successor") by
sale, lease, Foreclosure or in any other manner, Tenant shall be bound to the
Successor under all of the terms of this Lease for the balance of the Term with
the same force and effect as if the Successor were the landlord under the Lease,
and Tenant hereby agrees to attorn to the Successor as its Landlord, such
attornment to be effective upon written notice thereof given by Landlord to
Tenant.  In the event that Landlord's interest in the Premises passes to a
Successor and such Successor is bound unto Tenant as set forth above, Landlord
shall be released from all obligations to Tenant hereunder arising after the
date Landlord's interest so passes, except that Landlord agrees to indemnify,
defend and hold Tenant harmless from and against all costs, claims, loss,
liability or damage suffered by Tenant as a result of Landlord's transfer of its
interests hereunder and/or Landlord's failure to provide Tenant with notice of
such Successor.

     5.   Tenant's Financing. Tenant may, from time to time, provided that
          ------------------
Tenant is not then in default hereunder beyond the applicable cure period,
secure financing or general credit lines and grant the lenders thereof, as
security therefor, a security interest in Tenant's fixtures, personalty,
inventory and equipment (collectively, "Personalty"), and the right to enter the
Premises to realize upon any Personalty so pledged.  Any such security interest
shall expressly terminate upon the expiration of, or earlier termination of, the
Term, and the holder of the security interest shall grant to the Landlord the
right to cure Tenant's defaults.  If Tenant is not then in default hereunder
beyond the applicable cure period, Landlord agrees, upon written

                                      -52-
<PAGE>

request by Tenant, to evidence Landlord's consent in writing to such security
interest and agreement and to give such lenders the same notice and opportunity
to cure any default of Tenant as provided Tenant hereunder (and the right of
entry to the Premises in order to exercise its remedies, so long as Landlord is
held harmless with respect to any liability therefor). In addition, Landlord
agrees to cause any Mortgagee specifically to acknowledge the rights of Tenant's
lenders described herein and in paragraph 24 below.

     6.   Tenant's Property and Waiver of Landlord's Lien. All of the
          -----------------------------------------------
Personalty shall be and remain the personal property of Tenant.  Landlord
expressly waives its statutory or common law landlord's liens (as same may be
enacted or may exist from time to time) and any and all rights granted under any
present or future laws to levy or distrain for rent (whether in arrears or in
advance) against the aforesaid property of Tenant on the Premises and further
agrees to execute any reasonable instruments evidencing such waiver, at any time
or times hereafter upon Tenant's request.

     7.   Memorandum of Lease, Rent Commencement Date Agreement. Landlord and
          -----------------------------------------------------
Tenant agree, at the other's request and at the sole expense of the requesting
party, to execute a Memorandum of Lease in recordable form, substantially
similar to that attached hereto as Exhibit "H", setting forth such provisions
hereof as may be required by State law.  In addition, Landlord and Tenant shall
execute a Rent Commencement Date Agreement in the form attached hereto as
Exhibit "I", once the Rent Commencement Date has been established.  Recording
costs for either or both documents shall be borne by the party requesting
recordation of the same.  The provisions of this Lease shall control, however,
with regard to any omissions from, or provisions

                                      -53-
<PAGE>

hereof which may be in conflict with, the Memorandum of Lease or Rent
Commencement Date Agreement.

     8.   Expiration of Term and Holding Over. All of the Personalty shall be
          -----------------------------------
removable by Tenant any time prior to, or within thirty (30) days after, the
expiration or earlier termination of this Lease and shall be so removed by
Tenant at the request of Landlord within thirty (30) days after the expiration
or termination of this Lease.  In the event Tenant fails to remove any or all of
its Personalty within the said thirty (30) day period, Landlord may remove such
Personalty, or the balance thereof, cause such Personalty to be placed into
storage and thereafter charge Tenant the cost of such removal and storage,
together with interest thereon at the Default Rate.  Those improvements that are
integrated into the physical structure of the Existing Building, except any of
Tenant's trade fixtures, shall not be removed and shall become the property of
Landlord.  (A nonexclusive list of Tenant's removable trade fixtures is attached
hereto as Exhibit "D".)  Tenant agrees promptly to repair any damage to the
Premises occasioned by the removal of Tenant's trade fixtures, furnishings and
equipment (except for small holes caused by nails, fasteners and the like) and
to surrender the Premises broom clean, in as good condition as on the date of
Tenant's opening for business therein, ordinary wear and tear, casualty and
condemnation excepted.  Tenant agrees that at the expiration of this Lease it
will deliver to Landlord peaceable possession of the Premises.  No holding over
by Tenant nor acceptance of Base Rent or other charges by Landlord shall operate
as a renewal or extension of the Lease without the written consent of Landlord
and Tenant.  Should Tenant hold over without the consent of Landlord, this Lease
shall continue in force from month to month, subject to all of the provisions
hereof and at the monthly Base Rent Tenant had been paying during the preceding
Lease Year, except that,

                                      -54-
<PAGE>

should Tenant holdover more than thirty (30) days following the expiration of
this Lease, Base Rent shall thereafter be one-hundred fifty percent (150%) of
that payable by Tenant during the preceding Lease Year.

     9.   "For Rent" Signs. Tenant hereby permits Landlord during the last
          ----------------
ninety (90) days of the Main Term or of any Option Period, as the case may be
(provided that no applicable Renewal Option has been exercised or deemed
exercised), to place one (1) "For Rent" or "For Sale" sign, not exceeding four
(4) feet by four (4) feet in size, on the parking lot of the Shopping Center.
Tenant will also allow Landlord or its agents, upon prior written notice and
accompanied by a representative of Tenant designated by Tenant, to show the
Premises, exterior and interior, to prospective tenants, purchasers, or
mortgagees during reasonable business hours by prior appointment, provided same
does not interfere with the conduct of Tenant's business.

     10.  Force Majeure. Except as otherwise specifically contemplated in this
          -------------
Lease or in paragraph 4 of Exhibit "C", in the event that Landlord or Tenant
                           -----------
shall be delayed or hindered in, or prevented from, the performance of any act
required hereunder by reason of strikes, lockouts, labor troubles, inability to
procure materials, delay by the other party, failure of power or unavailability
of utilities, riots, insurrection, war or other reason of a like nature not the
fault of such party or not within its control, then performance of such act
shall be excused for the period of delay, and the period for the performance of
any such act shall be extended for a period equivalent to the period of such
delay; provided, however, that in connection with the construction of the
Improvements, the consequences of delays by the other party shall be governed by
paragraph 4 of the Construction Provisions.

                                      -55-
<PAGE>

     11.  Events of Tenant's Default. Any of the following occurrences,
          --------------------------
conditions or acts by Tenant shall constitute an "Event of Default" under this
Lease:

          (a)  Failure to Pay Rent, Breach. (i) Tenant's failure to make any
               ---------------------------
payment of money required by this Lease (including without limitation Base Rent,
CAM Charges or Real Estate Taxes) (subject to Tenant's right of good faith
contest with respect to Real Estate Taxes), within ten (10) days after the
receipt of written notice from Landlord to Tenant that same is overdue (provided
Landlord shall not be obligated to provide more than three (3) monetary default
notices in any Lease Year); or (ii) Tenant's failure to observe or perform any
other material provision of this Lease within thirty (30) days after receipt of
written notice from Landlord to Tenant specifying such default and demanding
that the same be cured; provided that, if such default cannot with due diligence
be wholly cured within such thirty (30) day period, Tenant shall have such
longer period as is reasonably necessary to cure the default, so long as Tenant
proceeds promptly to commence the cure of same within such thirty (30) day
period and diligently prosecutes the cure to completion and provided further
that in the case of an emergency, Landlord shall be required to give only such
notice as is reasonable under the circumstances.

          (b)  Bankruptcy. Tenant's adjudication as bankrupt or insolvent, or
               ----------
the appointment of a receiver, trustee in involuntary bankruptcy or other,
similar officer to take charge of any substantial part of Tenant's property,
which proceeding is not dismissed within ninety (90) days after it is begun; or
Tenant's voluntary filing a petition in bankruptcy or for reorganization under
any existing or future provisions of the Bankruptcy Code, providing a plan for a
debtor to settle, satisfy or extend the time for the payment of debts; or
Tenant's voluntary

                                      -56-
<PAGE>

assignment for the benefit of its creditors; if , as a result of any of the
foregoing occurrences, the covenants to be performed by Tenant under this Lease
(including the covenant to pay rent) are not being performed by Tenant or a
party claiming through Tenant.

     12.  Landlord's Remedies. After the occurrence of an Event of Default by
          -------------------
Tenant, Landlord shall have the right to exercise the following remedies:

          (a)  Continue Lease. Landlord may, at its option, continue this Lease
               --------------
in full force and effect, without terminating Tenant's right to possession of
the Premises, in which event Landlord shall have the right to collect Base Rent
and other charges when due, including any sums due for any Option Period for
which a Renewal Option has been exercised. In the alternative, Landlord shall
have the right to peaceably re-enter the Premises on the terms set forth in
subparagraph (b) below, without such re-entry being deemed a termination of the
Lease or an acceptance by Landlord of a surrender thereof. Landlord shall also
have the right, at its option, from time to time, without terminating this
Lease, to relet the Premises, or any part thereof, with or without legal
process, as the agent, and for the account, of Tenant upon such terms and
conditions as Landlord may deem advisable, in which event the rents received on
such reletting shall be applied (i) first to the reasonable and actual expenses
of such reletting and collection, including without limitation necessary
renovation and alterations of the Premises, reasonable and actual attorneys'
fees and any reasonable and actual real estate commissions paid, and (ii)
thereafter toward payment of all sums due or to become due Landlord hereunder.
If a sufficient amount to pay such expenses and sums shall not be realized or
secured, in Landlord's exercise of reasonable efforts to mitigate its damages
(which Landlord hereby agrees to make), then Tenant shall pay Landlord any such
deficiency monthly, and Landlord may bring an action therefor as

                                      -57-
<PAGE>

such monthly deficiency shall arise or may consolidate all such deficiency
claims in one or more actions. The parties agree that nothing contained herein
shall be construed to require Landlord to re-enter and relet in any event,
provided that Landlord agrees to act reasonably in mitigating its damages.
Landlord shall not, in any event, be required to pay Tenant any sums received by
Landlord on a reletting of the Premises in excess of the rent provided in this
Lease, but such excess shall reduce any accrued present or future obligations of
Tenant hereunder. Landlord's re-entry and reletting of the Premises without
termination of this Lease shall not preclude Landlord from subsequently
terminating this Lease as set forth below.

          (b)  Terminate Lease. Landlord may terminate this Lease by written
               ---------------
notice to Tenant specifying a date therefor, which shall be no sooner than
thirty (30) days following receipt of such notice by Tenant, and this Lease
shall then terminate on the date so specified as if such date had been
originally fixed as the expiration date of the Term; provided that Landlord
shall have previously delivered to Tenant a notice of the occurrence of an Event
of Default and Tenant has failed to cure said default within thirty (30) days
following receipt of said notice. In the event of such termination, Landlord
shall be entitled to recover from Tenant all of the following:

               (i)    The "worth at the time of the award" (defined below) of
     any obligation which has accrued prior to the date of termination; and

               (ii)   The "worth at the time of the award" of the amount by
     which the unpaid Base Rent and all other charges which would have accrued
     after termination until the time of award exceeds the amount of any sums
     which Landlord has (or Tenant proves that Landlord could have upon
     reasonable diligence) received in mitigation.

                                      -58-
<PAGE>

     As used in this paragraph 30(b), the term, "worth at the time of the
award", shall be computed by allowing simple interest at the Default Rate for
past due obligations, and a discount rate to net present value of eight percent
(8%) on anticipated future obligations, on the amount of the obligations payable
on the date of such calculation.  In the event this Lease shall be terminated as
provided above, by summary proceedings or otherwise, Landlord, its agents,
servants or representatives may immediately or at any time thereafter peaceably
re-enter and resume possession of the Premises and remove all persons and
property therefrom, by summary dispossession proceedings.  Landlord shall never
be entitled to dispossess the Tenant of the Premises pursuant to any "lock-out"
or other nonjudicial remedy.  In addition to Landlord's remedies provided above
in this paragraph 30, Landlord may seek any equitable relief to which Landlord
may be entitled as a result of any Event of Default by Tenant under this Lease,
except as specifically limited by this Lease.

          (c)  Reimbursement of Landlord's Costs in Exercising Remedies.
               --------------------------------------------------------
Landlord may recover from Tenant, and Tenant shall pay to Landlord upon demand,
such reasonable and actual expenses as Landlord may incur in recovering
possession of the Premises, placing the same in good order and condition and
repairing the same for reletting, and all other reasonable and actual expenses,
commissions and charges incurred by Landlord in exercising any remedy provided
herein or as a result of any Event of Default by Tenant hereunder (including
without limitation attorneys' fees), provided that in no event shall Tenant be
obligated to compensate Landlord for any speculative or consequential damages
caused by Tenant's failure to perform its obligations under this Lease.

                                      -59-
<PAGE>

          (d)  Remedies Are Cumulative. The various rights and remedies reserved
               -----------------------
to Landlord herein, are cumulative, and Landlord may pursue any and all such
rights and remedies (but no others), whether at the same time or otherwise (to
the extent not inconsistent with specific provisions of this Lease).
Notwithstanding anything herein to the contrary, Landlord expressly waives its
right to forcibly dispossess Tenant from the Premises, whether peaceably or
otherwise, without judicial process, such that Landlord shall not be entitled to
any "commercial lockout" or any other provisions of applicable law which permit
landlords to dispossess Tenants from commercial properties without the benefit
of judicial review.

     13.  Events of Landlord's Default; Tenant's Remedies. Any of the following
          -----------------------------------------------
occurrences, conditions or acts by Landlord shall constitute an "Event of
Default": (a) Landlord's failure to make any payments of money due Tenant
hereunder within ten (10) days after the receipt of written notice from Tenant
that same is overdue (in which event the delinquent amount shall accrue interest
at the Default Rate); or (b) Landlord's failure to perform any nonmonetary
obligation of Landlord hereunder within thirty (30) days after receipt of
written notice from Tenant to Landlord specifying such default and demanding
that the same be cured; provided that, if such default cannot with due diligence
be wholly cured within such thirty (30) day period, Landlord shall have such
longer period as may be reasonably necessary to cure the default, so long as
Landlord proceeds promptly to commence the cure of same within such thirty (30)
day period and diligently prosecutes the cure to completion and provided further
that in the case of an emergency, Tenant shall be required to give only such
notice as is reasonable under the circumstances.

                                      -60-
<PAGE>

     Upon the occurrence of an Event of Default by Landlord, at Tenant's option,
in addition to any and all other remedies which it may have at law and/or in
equity, and without its actions being deemed an election of remedies or a cure
of Landlord's default, Tenant may do all or any of the following: (i) pay or
perform such obligations and offset Tenant's reasonable and actual cost of
performance, including any and all transaction costs and attorneys' fees, plus
interest at the Default Rate, against the Base Rent, CAM Charges and any and all
other amounts and charges due Landlord hereunder; provided that, prior to such
offset, Tenant has been the prevailing party in an adjudicated proceeding or
arbitration (if Landlord has not consented to the offset), with the prevailing
party under either such proceeding to be reimbursed its reasonable attorneys'
fees and costs incurred in connection with such proceeding; or (ii) sue for
damages, including interest, transaction costs and attorneys' fees as specified
in subsection (i) above.  In the event Landlord actually or constructively
evicts Tenant by its actions hereunder constituting an Event of Default, Tenant
may, in addition to its other remedies hereunder, seek a termination of this
Lease; provided that, prior to any such termination, Tenant shall have delivered
to Landlord notice of the occurrence of an Event of Default and Landlord has
failed to cure said Event of Default within thirty (30) days following receipt
of said notice.  As to a breach of the warranties and representations contained
in paragraph 19, Tenant shall be entitled to the remedies provided therein, in
addition to those remedies provided herein.  All amounts, including interest,
transaction costs and attorneys' fees, arising out of uncured defaults of
Landlord shall constitute liens against Landlord's interest in the Shopping
Center, which may be enforced by non-judicial means available under State law,
or any other applicable proceedings.  The various rights and

                                      -61-
<PAGE>

remedies reserved to Tenant herein are cumulative, and Tenant may pursue any and
all rights and remedies, whether at the same time or otherwise.

     14.  Waiver. If either Landlord or Tenant fails to insist on the strict
          ------
observance by the other of any provisions of this Lease, neither shall thereby
be precluded from enforcing nor be held to have waived any of the obligations,
past, present or future, of this Lease.  Either party may accept late payment or
performance by the other without waiving any Event of Default which may then
have accrued.

     15.  Compliance with Applicable Laws. During the Term, Landlord (with
          -------------------------------
respect to the Shopping Center) and Tenant (with respect to Tenant's use and
occupancy of the Premises) shall comply with all lawful requirements of the
local, county and state health boards, police and fire departments, municipal,
state and federal authorities and any other governmental authorities with
jurisdiction over the Shopping Center, and of the board of fire underwriters.
Tenant shall be responsible for compliance of the Leasehold Improvements with
the American Disabilities Act of 1990 (the "ADA") and Landlord shall be
responsible for compliance with the ADA of the remainder of the Shopping Center.
In the event that Tenant, within thirty (30) prior days' written notice (except
in the case of an emergency, in which event only such notice as is reasonable
under the circumstances shall be required) from Landlord or any such authority
ordering performance of any such work which Tenant is required to perform in
order to remain in, or come into, compliance with any such requirement, fails to
perform or diligently commence performance of same with reasonable promptness,
Landlord may perform said work and collect the reasonable cost thereof plus
interest at the Default Rate from Tenant with the next installment or
installments of Base Rent.  In the event that Landlord, within thirty (30) prior
days' written

                                      -62-
<PAGE>

notice (except in the case of an emergency, in which event only such notice as
is reasonable under the circumstances shall be required) from Tenant or any such
authority ordering performance of any such work which Landlord is required to
perform in order to remain in, or come into, compliance with any such
requirement, fails to perform or diligently commence performance of same with
reasonable promptness, Tenant may perform said work and deduct the reasonable
cost thereof plus interest at the Default Rate from Landlord with the next
installment or installments of Base Rent.

     16.  Notices. Any notice permitted or required to be given pursuant to
          -------
this Lease shall be deemed to have been given three (3) business days after
mailing a written notice by certified mail, postage prepaid, return receipt
requested, or one (1) business day after sending by Federal Express or other
comparable overnight express courier service (with proof of receipt available),
addressed to the parties as follows:

     If to Tenant:    CIRCUIT CITY STORES, INC.
                      9950 Mayland Drive
                      Richmond, Virginia 23233
                      Attention:  Corporate Secretary

     with a copy to:  CIRCUIT CITY STORES, INC.
                      9950 Mayland Drive
                      Richmond, Virginia 23233
                      Attention:  Vice President of Real Estate

     If to Landlord:  EQUITY PROPERTIES AND DEVELOPMENT LIMITED PARTNERSHIP
                      Two North Riverside Plaza, Suite 1000
                      Chicago, Illinois 60606-2689
                      Attention:  George Touras

or to such other addressees as any party hereto shall from time to time give
notice to the other party in accordance with this paragraph.

                                      -63-
<PAGE>

     1.   Brokers.  Landlord and Tenant each covenant that they have not dealt
          -------
with any real estate broker or finder with respect to this Lease, except for
Koll Management Services, Inc., which shall be paid a commission by Landlord
pursuant to a separate written agreement.  Except for the foregoing, each party
shall hold the other party harmless from all damages, claims, liabilities or
expenses, including reasonable and actual attorneys' fees (through all levels of
proceedings), resulting from any claims that may be asserted against the other
party by any real estate broker or finder with whom the indemnifying party
either has or is purported to have dealt.

     2.   Miscellaneous.
          -------------

          (a)  Headings and Gender. All paragraph headings, titles or captions
               -------------------
contained in this Lease are for convenience only and shall not be deemed a part
of this Lease and shall not in any way limit or amplify the terms and provisions
of this Lease.  The masculine, feminine or neuter gender and the singular or
plural number shall be deemed to include the others whenever the context so
requires or indicates.

          (b)  Construction. The parties hereto agree that all the provisions
               ------------
hereof are to be construed as covenants and agreements as though the words
importing such covenants and agreements were used in each separate paragraph
hereof.

          (c)  Waiver of Jury Trial. In the event of any court action arising
               --------------------
out of this Lease, each party hereby expressly waives its right to trial by
jury.

          (d)  Relationship of Landlord-Tenant. Nothing contained in this Lease
               -------------------------------
shall be deemed or construed by the parties hereto or by any third person to
create the relationship of

                                      -64-
<PAGE>

principal and agent, partnership, joint venture, or any other association
between Landlord and Tenant other than the landlord-tenant relationship
described herein.

          (e)  Entire Agreement; Merger. This Lease, including all exhibits
               ------------------------
hereto (which are hereby incorporated herein by reference for all purposes),
contains the full and final agreement of every kind and nature whatsoever
between the parties hereto concerning the subject matter of this Lease, and all
preliminary negotiations and agreements of whatsoever kind or nature between
Landlord and Tenant are merged herein. This Lease cannot be changed or modified
in any manner other than by a written amendment or modification executed by
Landlord and Tenant.

          (f)  Attorneys' Fees. In the event either party shall be required to
               ---------------
commence or defend any action or proceeding against any other party by reason of
any breach or claimed breach of any provision of this Lease, to commence or
defend any action or proceeding in any way connected with this Lease or to seek
a judicial declaration of rights under this Lease, the party prevailing in such
action or proceeding shall be entitled to recover from or to be reimbursed by
the other party for the prevailing party's reasonable and actual attorneys' fees
and costs through all levels of proceedings.

          (g)  Partial Invalidity. If any provision of this Lease or the
               ------------------
application thereof to any person or circumstance shall be deemed invalid or
unenforceable, the remainder of this Lease and its application to other persons
or circumstances shall not be affected by such partial invalidity but shall be
enforced to the fullest extent permitted by law as though such invalid or
unenforceable provision was never a part hereof.

                                      -65-
<PAGE>

          (h)  Consents. Any consent or approval granted by either party
               --------
hereunder shall be deemed a consent only as to the matter on which such consent
was requested and shall not waive the consenting party's right to give or
withhold consent to any subsequent matter.

          (i)  Holidays. If the day on which rent or any other payment due
               --------
hereunder is payable falls on a Sunday or on a legal holiday, it shall be
payable on the following business day.

          (j)  Applicable Law. This Lease shall be construed in accordance with
               --------------
the laws of the State, and the parties agree that jurisdiction for all actions
hereunder shall lie therein.

          (k)  Successors and Assigns. All rights, obligations and liabilities
               ----------------------
herein given to or imposed upon any party hereto shall extend to the permitted
successors and assigns of such party.

          (l)  Counterparts. This Lease may be executed in one or more identical
               ------------
counterparts, and as so executed by all parties hereto shall constitute a single
instrument for purposes of the effectiveness of this Lease.

          (m)  Trademarks and Trade Names. All trademarks, trade names, service
               --------------------------
marks, sings and all other marks of identification used by Tenant in its
business shall at all times remain the exclusive property of Tenant, and
Landlord shall have no right, interest in, or title to any of Tenant's
trademarks, trade names, service marks, signs or other marks of identification.

     3.   Effectiveness of Lease; Tenant's Right to Terminate.
          ---------------------------------------------------

Notwithstanding the execution of this Lease or any provision hereof to the
contrary, the parties hereto agree that the effectiveness of this Lease is
expressly conditioned upon the complete satisfaction (or waiver) of each and all
of the following conditions:

                                      -66-
<PAGE>

          (a) Tenant's receipt, simultaneously with or prior to the execution
hereof, of an executed "Vendor's Affidavit" and Release of the Phar-Mor
Financing Statement of record against the Premises required by Lawyer's Title
Insurance Corporation to issue to Tenant a leasehold policy of title insurance
for the Shopping Center acceptable to Tenant;

          (b) Receipt by Tenant from Landlord of amendments to the REA's
containing terms satisfactory to Tenant, fully execute by the necessary and
appropriate parties, in recordable form, upon execution of this Lease. Landlord
agrees to use diligent efforts to cause the REA's to be amended in form and
substance acceptable to Tenant to modify the building height restriction to
allow Tenant's intended construction as shown on the Site Plan (including the
elevations attached as part of the Site Plan), delete regulations regarding
loading and unloading of trucks and other vehicles and use of loading areas,
approve and permit Tenant's signage, and permit construction by Tenant within
the Shopping Center during April 1995 and permit construction of exterior
signage (including Tenant's alucobond tower) by Tenant on August 5-8, 1996.
Tenant agrees to use diligent efforts to (i) complete exterior construction by
July 31, 1996 and (ii) limit construction of exterior signage (including
Tenant's alucobond tower) to August 5-9, 1996.

          (c) Landlord's delivery of the Premises in the condition specified in
this Lease.

          (d) Landlord's representations, warranties and covenants, including
but not limited to those set forth in paragraph 19 herein, being true and
accurate as of the date of delivery of the Premises.

                                      -67-
<PAGE>

     The existence of the foregoing conditions is solely for the benefit of
Tenant, and Tenant may waive any such condition at its sole discretion by
delivering to Landlord a written notice signed by Tenant which specifically
states the condition(s) being waived by Tenant.

     Notwithstanding any other provision in this Lease to the contrary, in the
event any of the foregoing conditions shall not be met, satisfied or waived, the
parties hereto expressly agree that Tenant shall have the right to terminate
this Lease in its sole and absolute discretion at anytime prior to the
satisfaction or waiver of any such condition by delivering to Landlord a written
notice signed by Tenant which states that Tenant is terminating this Lease on
account of the failure of one or more of the foregoing conditions; provided,
however, that if Landlord does not receive a written notice from Tenant that it
is terminating this Lease on account of the failure of one or more of the
foregoing conditions on or before June 1, 1996, then Tenant shall be deemed to
have waived its right to terminate this Lease pursuant to this paragraph and
this paragraph shall be of no further force and effect.  In the event of any
such termination, the rights and obligations of the parties shall be of no
further force and effect and the parties shall have no further liability one to
the other (except that the indemnifications set forth in paragraphs 14(i),
19(a)(v) and 19(b)(ii) hereof shall survive such termination) upon Tenant's
delivery of said notice to Landlord.

     The delivery of this executed lease by Tenant to Landlord constitutes the
offer of the Tenant to the Landlord to bind Landlord and Tenant to the
provisions of this Lease, subject to the conditions set forth in this paragraph
37.  It is a further condition to the effectiveness of this Lease that upon
receipt of the executed Lease from Tenant, the Landlord, without delay, execute
and return same to the Tenant in accordance with any instructions delivered by
Tenant or its legal

                                      -68-
<PAGE>

counsel. In the event the Landlord fails to immediately execute and return the
Lease, the Tenant may at any time after delivery of the Lease provide written
notice to the Landlord that Tenant revokes its delivery of the executed Lease
and thereupon the Landlord shall be immediately obligated to return to the
Tenant all executed original counterparts as well as any copies of this Lease in
the possession of the Landlord, and this Lease shall thereafter be null and
void.

     1.   Confidentiality. The parties hereto, including, but not limited to,
          ---------------
their heirs, successors, assigns and legal representatives, agree that this
Lease may not be recorded and that all such parties hereby agree to use their
best reasonable efforts to preserve the confidentiality of this transaction.
This confidentiality agreement extends to any developers, bankers, lawyers,
accountants, employees, agents or any other persons acting on behalf of the
parties hereto.  The parties hereto agree to use their best reasonable efforts
to avoid discussing with, or disclosing to, any third parties (except those
parties listed above) any of the terms, conditions or particulars in connection
with this transaction.  It is specifically agreed by way of illustration, but
not by limitation, that the covenant of confidentiality set forth herein shall
not be breached if such information is disclosed in connection with or due to
any governmental law or ordinance, but this covenant of confidentiality shall be
breached if Landlord, or any of Landlord's developers, bankers, accountants,
agents, lenders, lawyers or other similar parties, discloses the content of, or
delivers a copy of this Lease to, any third party without the express written
consent of all parties to this Lease.  Any breach of this confidentiality
agreement shall constitute an Event of Default under the terms and provisions of
this Lease.

     2.   Ownership of Buildings and Improvements. Throughout the Term of this
          ---------------------------------------
Lease, Landlord shall own and have the right to depreciate the Existing Building
and Tenant shall have

                                      -69-
<PAGE>

the right to amortize its costs in constructing the Improvements, and the
Building and Improvements shall remain the property of Landlord upon the
expiration or sooner termination of the Term of the Lease, excluding only trade
fixtures, and furnishings which are movable without significant damage.

     3.   Limitation of Right of Recovery. It is specifically understood and
          -------------------------------
agreed that there shall be no personal liability of Landlord (nor Landlord's
beneficiaries, principals, agents, employees, etc.) with respect to any of the
covenants, conditions or provisions of this Lease.  In the event of a breach or
default by Landlord of any of its obligations under this Lease, Tenant shall
look solely to the equity (including all rents, profits and proceeds) of
Landlord in the Shopping Center for the satisfaction of Tenant's remedies.

     4.   Survival. Notwithstanding anything to the contrary contained in this
          --------
Lease, the expiration of the Term of the Lease, whether by lapse of time or
otherwise, shall not relieve either party from its obligations accruing prior to
the expiration of the Term.

     5.   Self-Help. In addition to each party's rights of self help set forth
          ---------
elsewhere in this Lease or as provided by law or in equity, if the other party
at any time fails to perform any of its obligations under this Lease in a manner
satisfactory to the non-defaulting party, then the non-defaulting party shall
have the right, but not the obligation, to perform or cause to be performed such
obligations on behalf and at the expense of the defaulting party (with prior
notice to the defaulting party) and to take all such action the non-defaulting
party deems appropriate (in its reasonable discretion) to perform such
obligations.  In such event, the non-defaulting party's reasonable costs and
expenses incurred with respect thereto shall, upon demand, be paid for by

                                      -70-
<PAGE>

the defaulting party. The performance by the non-defaulting party of any such
obligation shall not constitute a release or waiver of any of the defaulting
party's obligations under this Lease.

     6.   Adjacent Tracts. Landlord hereby agrees and covenants that should it
          ---------------
or any entity, person or party affiliated or related to Landlord, or in which
Landlord owns an interest or any party owning an interest in Landlord owns an
interest (collectively hereinafter a "related entity"), ever own, lease or
otherwise exercise any control over all or part of the land and/or improvements
in the Adjacent Tracts, it shall cause the Adjacent Tracts and all occupants or
tenants thereof to comply with the terms of this Lease relative to the Shopping
Center, including, without limitation, the exclusive use granted to Tenant
hereunder and prohibited uses set forth herein, and Landlord further agrees that
the definition of "Shopping Center" as used herein shall, upon the vesting of
any such interest in the Adjacent Tracts in Landlord or a related entity,
thereafter mean and include the Adjacent Tracts.

                                      -71-
<PAGE>

     WITNESS the following signatures and seals:

                                LANDLORD
                                --------


                                FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-4,
                                by and through its authorized agent, Equity
                                Properties and Development Limited Partnership,
                                an Illinois limited partnership

ATTEST (WITNESS):


------------------------------  By:------------------------------

                                Name:  Sanford Shkolnik

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



                                TENANT
                                ------

                                CIRCUIT CITY STORES, INC., a Virginia
                                corporation

ATTEST:

------------------------------  By:------------------------------
                                   Benjamin B. Cummings, Jr.
                                   Vice President

                                      -72-