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       STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE -- MODIFIED NET
                  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

                                     [LOGO]


1.   BASIC PROVISIONS ("BASIC PROVISIONS").

     1.1       PARTIES: This Lease ("LEASE"), dated for reference purposes only,
September 30, 1997 is made by and between Bank of America National Trust and
Savings Association ("LESSOR") and Pacific Sunwear of California, Inc., a
California corporation ("LESSEE"), (collectively the "PARTIES," or individually
a "PARTY").

     1.2(a)    PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 5200 East La Palma Avenue, located in
the City of Anaheim, County of Orange, State of California, with zip code 92807,
as outlined on Exhibit "A" attached hereto ("PREMISES"). The "BUILDING" is that
certain building containing the Premises and generally described as (describe
briefly the nature of the Building): the Premises constitute approximately
176,299 square feet and are a portion of an industrial building having
approximately 266,963 square feet as shown on Exhibit "A". In addition to
Lessee's rights to use and occupy the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7
below) as hereinafter specified, but shall not have any rights to the roof,
exterior walls or utility raceways of the Building or to any other buildings in
the Industrial Center. The Premises, the Building, the Common Areas, the land
upon which they are located, along with all other buildings and improvements
thereon, are herein collectively referred to as the "INDUSTRIAL CENTER." (Also
see Paragraph 2.)

     1.2(b)    PARKING: 315 unreserved vehicle parking spaces ("UNRESERVED
PARKING SPACES"); and 35 reserved vehicle parking spaces ("RESERVED PARKING
SPACES"). (Also see Paragraph 2.6.)*

     1.3       TERM: Ten (10) years and 0 months ("ORIGINAL TERM") commencing on
the Commencement Date (as defined in Paragraph 49) and ending on the Expiration
Date (as defined in Paragraph 49). 

     1.5       BASE RENT: In the amounts shown on the schedule contained in
Paragraph 53. ("BASE RENT"), payable on the first (1st) day of each month
commencing on the Commencement Date (Also see Paragraph 4.), subject to
abatement as provided in Paragraph 53.

     1.6(a)    BASE RENT PAID UPON EXECUTION: $65,230.63 as Base Rent for the
third (3rd) month of the Original Term.

     1.6(b)    LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: 66.0387 percent
("LESSEE'S SHARE") as determined by [X] prorata square footage of the Premises
as compared to the total square footage of the Building.

     1.7       SECURITY DEPOSIT: $91,800.00 ("SECURITY DEPOSIT"). (Also see
Paragraph 5.)

     1.8       PERMITTED USE: Administrative offices, manufacturing and
distribution of apparel, footwear and accessories and all activities related
thereto ("PERMITTED USE") (Also see Paragraph 6.)

     1.9       INSURING PARTY. Lessor is the "INSURING PARTY." (Also see
Paragraph 8.)

     1.10(a)   REAL ESTATE BROKERS. The following real estate broker(s)
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):

[x]  The Seeley Company represents Lessor exclusively ("LESSOR'S BROKER");
[X]  CB Commercial represents Lessee exclusively ("LESSEE'S BROKER"); or
[ ]  __________________________ represents both Lessor and Lessee ("DUAL
AGENCY"). (Also see Paragraph 15.)

     1.10(b)   PAYMENT TO BROKERS. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s).

     1.11      GUARANTOR. The obligations of the Lessee under this Lease are to
be guaranteed by N/A ("GUARANTOR"). (Also see Paragraph 37.)

     1.12      ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 84, and Exhibits A through B, all of which
constitute a part of this Lease.

2.   PREMISES, PARKING AND COMMON AREAS.

     2.1       LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Common Area Operating
Expenses, is an approximation which Lessor and Lessee agree is reasonable and
the rental and Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is
not subject to revision whether or not the actual square footage is more or
less.

     2.2       CONDITION. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the Commencement
Date. If a non-compliance with said warranty exists as of the Commencement Date,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within 90
days after the Commencement Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.

     2.3       COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)), made or to
be made by Lessee. If the Premises do not comply with said warranties, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee given within nine (9) months following the
Commencement Date and setting forth with specificity the nature and extent of
such non-compliance, take such action, at Lessor's expense, as may be reasonable
or appropriate to rectify the non-compliance. Lessor makes no warranty that the
Permitted Use in Paragraph 1.8 is permitted for the Premises under Applicable
Laws (as defined in Paragraph 2.4).

     2.4       ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it
has been advised by the Broker(s) to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and fire
sprinkler systems, security, environmental aspects, seismic and earthquake
requirements, and compliance with the Americans with Disabilities Act and
applicable zoning, municipal, county, state and federal laws, ordinances and
regulations and any covenants or restrictions of record (collectively,
"APPLICABLE LAWS") and the present and future suitability of the Premises for
Lessee's intended use; (b) that Lessee has made such investigation as it deems
necessary with reference to such matters, is satisfied with reference thereto,
and assumes all responsibility therefore as the same relate to Lessee's
occupancy of the Premises and/or the terms of this Lease; and (c) that neither
Lessor, nor any of Lessor's agents, has made any oral or written representations
or warranties with respect to said matters other than as set forth in this
Lease.

     2.5       LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the date
set forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In
such event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.

* See Addendum attached hereto and made a part hereof.

(C) American Industrial Real Estate Association 1993 

                          MULTI-TENANT -- MODIFIED NET
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 2.6     VEHICLE PARKING. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called "PERMITTED SIZE
VEHICLES." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Lessor in the Rules and Regulations (as
defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)*

                (a)     Lessee shall not permit or allow any vehicles that
belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, contractors or invitees to be loaded, unloaded, or parked
in areas other than those designated by Lessor for such activities.

                (b)     If Lessee permits or allows any of the prohibited
activities described in this Paragraph 2.6, then Lessor shall have the right
after notice, in addition to such other rights and remedies that it may have,
to remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.

                (c)     Lessor shall at the Commencement Date of this Lease,
provide the parking facilities required by Applicable Law.

        2.7     COMMON AREAS - DEFINITION. The term "COMMON AREAS" is defined
as all areas and facilities outside the Premises and within the exterior
boundary line of the Industrial Center and interior utility raceways within the
Premises that are provided and designated by the Lessor from time to time for
the general-non-exclusive use of Lessor, Lessee and other lessees of the
Industrial Center and their respective employees, suppliers, shippers,
customers, contractors and invitees, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways and landscaped areas.

        2.8     COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center. Under
no circumstances shall the right herein granted to use the Common Areas be
deemed to include the right to store any property, temporarily or permanently,
in the Common Areas, except as provided in Paragraph 57. Any such storage shall
be permitted only by the prior written consent of Lessor or Lessor's designated
agent, which consent may be revoked at any time. In the event that any
unauthorized storage shall occur then Lessor shall have the right after notice,
in addition to such other rights and remedies that it may have, to remove the
property and charge the cost to Lessee, which cost shall be immediately payable
upon demand by Lessor.

        2.9     COMMON AREAS - RULES AND REGULATIONS. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable and nondiscriminatory Rules and
Regulations with respect thereto in accordance with Paragraph 40. Lessee agrees
to abide by and conform to all such Rules and Regulations, and to cause its
employees, suppliers, shippers, customers, contractors and invitees to so abide
and conform. Lessor shall not be responsible to Lessee for the non-compliance
with said rules and regulations by other lessees of the Industrial Center.

        2.10    COMMON AREAS - CHANGES. Lessor shall have the right, in
Lessor's sole discretion, from time to time:

                (a)     To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;

                (b)     To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;

                (c)     To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;

                (d)     To add additional buildings and improvements to the
Common Areas;

                (e)     To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Industrial Center, or
any portion thereof; and

                (f)     To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Industrial Center as
Lessor may, in the exercise of sound business judgment, deem to be
appropriate.*

3.      TERM.

        3.1     TERM. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3.

        3.2     EARLY POSSESSION. If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after
the Early Possession Date but prior to the Commencement Date, the obligation to
pay Base rent shall be abated for the period of such early occupancy. All other
terms of this Lease, however (including but not limited to the obligations to
pay Lessee's Share of Common Area Operating Expenses and to carry the insurance
required by Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.

        3.3     DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall
not, except as otherwise provided herein, be obligated to pay rent or perform
any other obligation of Lessee under the terms of this Lease until Lessor
delivers possession of the Premises to Lessee.*

4.      RENT.

        4.1     BASE RENT. Lessee shall pay Base Rent and other rent or
charges, as the same may be adjusted from time to time, to Lessor in lawful
money of the United States, without offset or deduction, on or before the day
on which it is due under the terms of this Lease. Base Rent and all other rent
and charges for any period during the term hereof which is for less than one
full month shall be prorated based upon the actual number of days of the month
involved. Payment of Base Rent and other charges shall be made to Lessor at its
address stated herein or to such other persons or at such other addresses as
Lessor may from time to time designate in writing to Lessee.

        4.2     COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor
during the term hereof, in addition to the Base Rent, Lessee's Share (as
specified in Paragraph 1.6(b)) of all Common Area Operating Expenses, as
hereinafter defined, during each calendar year of the term of this Lease, in
accordance with the following provisions:

                (a)     "COMMON AREA OPERATING EXPENSES" are defined, for
purposes of this Lease, as all costs incurred by Lessor relating to the
ownership and operation of the Industrial Center, including, but not limited
to, the following:

                        (i)     The operation, repair and maintenance, in neat,
clean, good order and condition, of the following:

                                (aa)    The Common Areas, including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities, fences and gates, elevators and roof.

                                (bb)    Exterior signs and any tenant
directories.
                                
                                (cc)    Fire detection and sprinkler systems.

                        (ii)    The cost of water, gas, electricity and
telephone to service the Common Areas.

                        (iii)   Trash disposal, property management and security
services and the costs of any environmental inspections.

                        (iv)    Reserves set aside for maintenance and repair
of Common Areas.

                        (v)     Real Property Taxes (as defined in Paragraph
10.2) to be paid by Lessor for the Building and the Common Areas under
Paragraph 10 hereof.

                        (vi)    The cost of the premiums for the insurance
policies maintained by Lessor under Paragraph 8 hereof.

                        (vii)   Any deductible portion of an insured loss
concerning the Building or the Common Areas.

                        (viii)  Any other services to be provided by Lessor
that are stated elsewhere in this Lease to be a Common Area Operating Expense.

                (b)     Any Common Area Operating Expenses and Real Property
Taxes that are specifically attributable to the Building or to any other
building in the Industrial Center or to the operation, repair and maintenance
thereof, shall be allocated entirely to the Building or to such other building.
However, any Common Area Operating Expenses and Real Property Taxes that are
not specifically attributable to the Building or to any other building or to
the operation, repair and maintenance thereof, shall be equitably allocated by
Lessor to all buildings in the Industrial Center.

                (c)     The inclusion of the Improvements, facilities and
services set forth in Subparagraph 4.2(a) shall not be deemed to impose an
obligation upon Lessor to either have said improvements or facilities or to
provide those services unless the Industrial Center already has the same.
Lessor already provides the services, or Lessor has agreed elsewhere in this
Lease to provide the same or some of them.

                (d)     Lessee's Share of Common Area Operating Expenses shall
be payable by Lessee within ten (10) days after a reasonably detailed statement
of actual expenses is presented to Lessee by Lessor. At Lessor's option,
however, an amount may be estimated by Lessor from time to time of Lessee's
Share of annual Common Area Operating Expenses and the same shall be payable
monthly or quarterly, as Lessor shall designate, during each 12-month period of
the Lease term, on the same day as the Base Rent is due hereunder. Lessor shall
deliver to Lessee within sixty (60) days after the expiration of each calendar
year a reasonably detailed statement showing Lessee's Share of the actual
Common Area Operating Expenses incurred during the preceding year. If Lessee's
payments under this Paragraph 4.2(d) during said preceding year exceed Lessee's
Share as indicated on said statement, Lessee shall be credited the amount of
such over-


*See Addendum

MULTI-TENANT--MODIFIED NET
(C) American Industrial Real Estate Association 1993


                                      -2-
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payment against Lessee's Share of Common Area Operating Expenses next becoming
due: If Lessee's payments under this Paragraph 4.2(d) during said preceding
year were less than Lessee's Share as indicated on said statement, Lessee shall
pay to Lessor the amount of the deficiency within ten (10) days after delivery
by Lessor to Lessee of said statement.

5.    Security Deposit. Lessee shall deposit with Lessor upon Lessee's execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefore
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Lessor shall not be required to keep all or
any part of the Security Deposit separate from its general accounts. Lessor
shall, at the expiration or earlier termination of the term hereof and after
Lessee has vacated the Premises, return to Leases (or, at Lessor's option, to
the last assignee, if any, of Lessee's Interest herein), that portion of the
Security Deposit not used or applied by Lessor. Unless otherwise expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust, or to be prepayment for any monies to be paid by Lessee
under this Lease.*

6.    USE.

      6.1   PERMITTED USE.

            (a)   Lessee shall use and occupy the Premises only for the
Permitted Use set forth in Paragraph 1.8, or any other legal use which is
reasonably comparable thereto, and for no other purpose. Lessee shall not use
or permit the use of the Premises in a manner that is unlawful, creates waste or
a nuisance, or that disturbs owners and/or occupants of, or causes damage to
the Premises or neighboring premises or properties.

            (b)   Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants, and
by prospective assignees and subtenants of Lessee, its assignees and subtenants,
for a modification of said Permitted Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or in the Building
or the mechanical or electrical systems therein, does not conflict with uses by
other lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible pursuant to
this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within
five (5) business days after such request give a written notification of same,
which notice shall include an explanation of Lessor's reasonable objections to
the change in use.

      6.2   HAZARDOUS SUBSTANCES.

            (a)   REPORTABLE USES REQUIRE CONSENT. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, chemical
material or waste whose presence, nature; quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises; (ii) regulated or monitored by any
governmental authority; or (iii) a basis for potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof. Lessee shall not engage in any activity in or about the Premises which
constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
without the express prior written consent of Lessor and compliance in a timely
manner (at Lessee's sole cost and expense) with all Applicable Requirements (as
defined in Paragraph 6.3). "Reportable Use" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation; or disposal or a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, governmental authority, and (iii)
the presence in, on or about the Premises of a Hazardous Substance with respect
to which any Applicable Laws require that a notice be given to persons entering
or occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may, without Lessor's prior consent, but upon notice to Lessor
and in compliance with all Applicable Requirements, use any ordinary and
customary materials reasonably required to be used by Lessee in the normal
course of the Permitted Use, so long as such use is not a Reportable Use and
does not expose the Premises or neighboring properties to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may (but without any obligation to do so) condition its consent to any
Reportable Use of any Hazardous Substance by Lessee upon Lessee's giving Lessor
such additional assurances as Lessor, in its reasonable discretion, deems
necessary to protect itself, the public, the Premises and the environment
against damage, contamination or injury and/or liability therefor, including but
not limited to the installation (and, at Lessor's option, removal on or before
Lease expiration or earlier termination of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the deposit
of an additional Security Deposit Under Paragraph 5 hereof.*

            (b)   DUTY TO INFORM LESSOR.  If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance has come to be located in, on,
under or about the Premises or the Building, other than as previously consented
to by Lessor, Lessee shall immediately give Lessor written notice thereof,
together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance including but not limited to all such documents as may be involved in
any Reportable Use involving the Premises. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under or about the
Premises (including, without limitation, through the plumbing or sanitary sewer
system).

            (c)   INDEMNIFICATION. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under
Lessee's control. Lessee's obligations under this Paragraph 8.2(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee; and the
cost of investigation (including consultants' and attorneys' fees and
testing), removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved; and shall survive the expiration of earlier
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.*
      
      6.3   LESSEE'S COMPLIANCE WITH REQUIREMENTS. Lessee shall, at Lessee's
sole cost and expense, fully diligently and in a timely manner, comply with all
"Applicable Requirements," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil
and groundwater conditions, and (iii) the use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage, spill,
or release of any Hazardous Substance), now in effect or which may hereafter
come into effect. Lessee shall, within five (5) days after receipt of Lessor's
written request, provide Lessor with copies of all documents and information,
including but not limited to permits, registrations, manifests, applications,
reports and certificates, evidencing Lessee's compliance with any Applicable
Requirements specified by Lessor, and shall immediately upon receipt, notify
Lessor in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint or report pertaining to or
involving failure by Lessee or the Premises to comply with any Applicable
Requirements.

      6.4   INSPECTION; COMPLIANCE WITH LAW. Lessor, Lessor's agents,
employees, contractors and designated representatives, and the holders of any
mortgages, deeds of trust or ground leases on the Premises ("Lenders") shall
have the right to enter the Premises at any time in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition
of the Premises and for verifying compliance by Lessee with this Lease and all
Applicable Requirements (as defined in Paragraph 6.3), and Lessor shall be
entitled to employ experts and/or consultants in connection therewith to advise
Lessor with respect to Lessee's activities, including but not limited to
Lessee's installation, operation, use, monitoring, maintenance, or removal of
any Hazardous Substance on or from the Premises. The costs and expenses of any
such inspections shall be paid by the party requesting same, unless a Default
or Breach of this Lease by Lessee or a violation of Applicable Requirements or
a contamination, caused or materially contributed to by Lessee, is found to
exist or to be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In such case, Lessee shall upon request reimburse Lessor or
Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.*

7.    MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND
      ALTERATIONS.

      7.1   LESSEE'S OBLIGATIONS.

            (a)   Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment or facilities specifically serving the Premises,
such as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and skylights, but
excluding any items which are the responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all Improvements thereon or a part thereof in good order, condition
and state of repair.

            (b)   Lessee shall, at Lessee's sole cost and expense, procure and
maintain a contract, with copies to Lessor, in customary form and substance for
and with a contractor specializing and experienced in the inspection,
maintenance and service of the heating, air conditioning and ventilation system
for the Premises. However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain the contract for the heating, air conditioning and
ventilating systems, and if Lessor so elects, Lessee shall reimburse Lessor,
upon demand, for the cost thereof.*


            (c)   If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on Lessee's behalf, and put
the Premises in good order, condition and repair, in accordance with Paragraph
13.2 below.

      7.2   LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
foundations, exterior walls, structural condition of interior bearing walls,
exterior roof, fire, sprinkler, and/or standpipe and hose (if located in the
Common Areas) or other automatic fire extinguishing system including fire alarm
and/or smoke 



*See Addendum

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                                      -3-

      
<PAGE>   4
detection systems and equipment, fire hydrants; parking lots, walkways,
parkways, driveways, landscaping, fences, signs and utility systems serving the
common Areas and all parts thereof, as well as providing the services for which
there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor
shall not be obligated to paint the interior surfaces of exterior walls nor
shall Lessor be obligated to maintain, repair or replace windows, doors or
plate glass of the Premises. Lessee expressly waives the benefit of any statute
now or hereafter in effect which would otherwise afford Lessee the right to
make repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Building, Industrial Center or Common Areas in good order,
condition and repair.*

     7.3  UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.

          (a)  DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
is used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term "TRADE FIXTURES"
shall mean Lessee's machinery and equipment which can be removed without doing
material damage to the Premises. The term "ALTERATIONS" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined
as Alterations and/or Utility Installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause
to be made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises
(excluding the roof) without Lessor's consent but upon notice to Lessor, so
long as they are not visible from the outside of the Premises, do not involve
puncturing, relocating or removing the roof or any existing walls, or changing
or interfering with the fire sprinkler or fire detection systems and the cost
thereof does not exceed $20,000.

          (b)  CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities; (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon; and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor. Lessor may, (but without obligation
to do so) condition its consent to any requested Alteration or Utility
Installation that costs $20,000 or more upon Lessee's providing Lessor with a
lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation.

          (c)  LIEN PROTECTION. Lessee shall pay when due all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at
or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on, or about the Premises, and Lessor shall have
the right to post notices of non-responsibility in or on the Premises as
provided by law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense, defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises. If Lessor shall
require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in
an amount equal to one and one-half times the amount of such contested lien
claim or demand, indemnifying Lessor against liability for the same, as
required by law for the holding of the Premises free from the effect of such
lien claim. In addition, Lessor may require Lessee to pay Lessor's
attorneys' fees and costs in participating in such action if Lessor shall
decide it is to its best interest to do so.

     7.4  OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.

          (a)  OWNERSHIP. Subject to Lessor's right to require their removal
and to cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises
by Lessee shall be the property of and owned by Lessee, but considered a part
of the Premises. Lessor may, at any time and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility Installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.

          (b)  REMOVAL. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee-Owned Alterations or Utility Installations be removed by
the expiration or earlier termination of this Lease, notwithstanding that their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Alterations or Utility
Installations made without the required consent of Lessor.*

          (c)  SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination date,
clean and free of debris and in good operating order, condition and state of
repair, ordinary wear and tear excepted. Ordinary wear and tear shall not
include any damage or deterioration that would have been prevented by good
maintenance practice or by Lessee performing all of its obligations under this
Lease, Except as otherwise agreed or specified herein, the Premises, as
surrendered, shall include the Alterations and Utility Installations. The
obligation of Lessee shall include the repair of any damage occasioned by the
installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Lessee-Owned Alterations and Utility Installations, as well as
the removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or ground water contaminated
by Lessee, all as may then be required by Applicable Requirements and/or good
practice, Lessee's trade Fixtures shall remain the property of Lessee and shall
be removed by Lessee subject to its obligation to repair and restore the
Premises per this Lease.

8.   INSURANCE; INDEMNITY.

     8.1  PAYMENT OF PREMIUMS. The cost of the premiums for the insurance
policies maintained by Lessor under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date or Expiration
Date.

     8.2  LIABILITY INSURANCE.

          (a)  CARRIED BY LESSEE. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $1,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" endorsement and contain
the "Amendment of the Pollution Exclusion" endorsement for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "INSURED
CONTRACT" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance required by this Lease or as carried by
Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of
any obligation hereunder. All insurance to be carried by Lessee shall be
primary to and not contributory with any similar insurance carried by Lessor,
whose insurance shall be considered excess insurance only.

          (b)  CARRIED BY LESSOR. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall not be
named as an additional insured therein.

     8.3  PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.

          (a)  BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and to any Lender(s), insuring against loss or damage to
the Premises. Such insurance shall be for full replacement cost, as the same
shall exist from time to time, or the amount required by any Lender(s), but in
no event more than the commercially reasonable and available insurable value
thereof if, by reason of the unique nature or age of the improvements involved,
such latter amount is less than full replacement cost. Lessee-Owned Alterations
and Utility Installations, Trade Fixtures and Lessee's personal property shall
be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and
commercially appropriate, Lessor's policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood unless
required by a Lender), including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of the Building required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered loss, but not including plate glass insurance. Said
policy or policies shall also contain an agreed valuation provision in lieu of
any co-insurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located.*

          (b)  RENTAL VALUE. Lessor shall also obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and any Lender(s); insuring the loss of the full rental and
other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, Insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said Insurance may provide that
in the event the Lease is terminated by reason of an insured loss, the period
of Indemnity for such coverage shall be extended beyond the date of the
completion of repairs or replacement of the Premises, to provide for one full
year's loss of rental revenues from the date of any such loss. Said Insurance
shall contain an agreed valuation provision in lieu of any co-insurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected rental income, Real Property Taxes, insurance premium costs and other
expenses, if any, otherwise payable, for the next 12-month period. Common Area
Operating Expenses shall include any deductible amount in the event of such
loss.

          (c)  ADJACENT PREMISES. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Industrial Center if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.

          (d)  LESSEE'S IMPROVEMENTS. Since Lessor is the insuring Party,
Lessor shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become property of Lessor under
the terms of this Lease.

     8.4  LESSEE'S PROPERTY INSURANCE. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already, carried, maintain insurance coverage on all
of Lessees's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance
shall: be full replacement cost coverage with a deductible. The proceeds from
any such insurance shall be used by Lessee for the replacement of personal
property and the restoration of Trade Fixtures and Lessee-Owned Alterations and
Utility Installations. Upon request from Lessor, Lessee shall provide Lessor
with written evidence that such insurance is in force.

     8.5  INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, or such other rating as may be required by a Lender,
as set forth in the most current issue of "Best's Insurance Guide." Lessee
shall not do or permit to be done anything which shall invalidate the insurance
policies referred to in

* See Addendum.


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                                      -4-
<PAGE>   5
this Paragraph 8, Lessee shall cause to be delivered to Lessor, within seven
(7) days after the earlier of the Early Possession Date or the Commencement
Date, certified copies of, or certificates evidencing the existence and amounts
of, the Insurance required under Paragraph 8.2(a) and 8.4. No such policy shall
be cancellable or subject to modification except after thirty (30) days' prior
written notice to Lessor. Lessee shall at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"Insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand.*

     8.6  WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages (whether in contract or in tort),
against the other, for loss or damage to their property arising out of or
incident to the perils required to be insured against under Paragraph 8. The
effect of such releases and waivers of the right to recover damages shall not
be limited by the amount of insurance carried or required, or by any
deductibles applicable thereto. Lessor and Lessee agree to have their
respective insurance companies issuing property damage insurance waive any
right to subrogation that such companies may have against Lessor or Lessee, as
the case may be, so long as the insurance is not invalidated thereby. 

     8.7  INDEMNITY. Except for Lessor's negligence, or Lessor's contractors',
agents' or employees' willful misconduct, and/or breach of express warranties,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, costs, liens,
judgments, penalties, loss of permits, attorneys' and consultants' fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the occupancy of the Premises by Lessee, the conduct of Lessee's business, any
act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperative with Lessee in such defense. Lessor need not have first paid
any such claim in order to be so indemnified.

     8.8  EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property
of Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other lessee of Lessor nor from the failure by Lessor to enforce the
provisions of any other lease in the Industrial Center. Notwithstanding
Lessor's negligence or breach of this Lease, Lessor shall under no
circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.

9.   DAMAGE OR DESTRUCTION.

     9.1  DEFINITIONS.

          (a)  "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is less than fifty percent (50%)
of the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.

          (b)  "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is fifty percent (50%) or more
of the then Replacement Cost of the Premises (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures) immediately prior to
such damage or destruction. In addition, damage or destruction to the Building,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building, the cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement Cost
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building) of the Building shall, at the option
of Lessor, be deemed to be Premises Total Destruction.

          (c)  "INSURED LOSS" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a) irrespective of any deductible amounts or
coverage limits involved.

          (d)  "REPLACEMENT COST" shall mean the cost to repair or build the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto; including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.

          (e)  "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

     9.2  PREMISES PARTIAL DAMAGE - INSURED LOSS. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. In the event, however, that there is a
shortage of insurance proceeds and such shortage is due to the fact that, by
reason of the unique nature of the improvements in the Premises, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, Lessor shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If Lessor does not receive such funds or assurance within such
ten (10) day period, and if Lessor does not so elect to restore and repair, then
this Lease shall terminate sixty (60) days following the occurrence of the
damage or destruction. Unless otherwise agreed, Lessee shall in no event have
any right to reimbursement from Lessor for any funds contributed by Lessee to
repair any such damage or destruction.*

     9.3  PARTIAL DAMAGE - UNINSURED LOSS. If Premises Partial Damage that is
not an insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may at Lessor's
option, either (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) give written notice to Lessee within thirty (30) days after
receipt by Lessor of knowledge of the occurrence of such damage of Lessor's
desire to terminate this Lease as of the date sixty (60) days following the
date of such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessee's commitment to pay for the repair of such damage totally at Lessee's
expense and without reimbursement from Lessor. Lessee shall provide Lessor with
the required funds or satisfactory assurance thereof within thirty (30) days
following such commitment from Lessee. In such event this Lease shall continue
in full force and effect, and Lessor shall proceed to make such repairs as soon
as reasonably possible after the required funds are available. If Lessee does
not give such notice and provide the funds or assurance thereof within the
times specified above, this Lease shall terminate as of the date specified in
Lessor's notice of termination.

     9.4  TOTAL DESTRUCTION.  Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the
damage or destruction is an Insured Loss or was caused by a negligent or
willful act of Lessee. In the event, however, that the damage or destruction
was caused by Lessee, Lessor shall have the right to recover Lessor's damages
from Lessee except as released and waived in Paragraph 9.7.

     9.5  DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds (Or adequate assurance thereof) needed to make the
repairs on or before the earlier of (i) the date which is ten (10) days after
Lessee's receipt of Lessor's written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee
duly exercises such option during such period and provides Lessor with funds
(or adequate assurance thereof) to cover any shortage in insurance proceeds,
Lessor shall, at Lessor's expense repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect. If Lessee
fails to exercise such option and provide such funds or assurance during such
period, then this Lease shall terminate as of the date set forth in the first
sentence of this Paragraph 9.5.

     9.6  ABATEMENT OF RENT; LESSEE'S REMEDIES.

          (a)  In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base Rent,
Common Area Operating Expenses and other charges, if any, payable by Lessee
hereunder for the period during which such damage or condition, its repair,
remediation or restoration continues, shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. * Except for abatement
of Base Rent, Common Area Operating Expenses and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall be performed by
Lessee, and Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair, remediation or restoration.

          (b)  If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Lessee may, at any
time prior to the commencement of such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice of
Lessee's election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee gives such notice to Lessor
and such Lenders and such repair or restoration is not commenced within thirty
(30) days after receipt of such notice, this Lease shall terminate as of the
date specified in said notice. If Lessor or a Lender commences the repair or
restoration of the Premises within thirty (30) days after the receipt of such
notice, this Lease shall continue in full force and effect. "Commence" as used
in this Paragraph 9.6 shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever occurs first.

     9.7  HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject

* See Addendum.

MULTI-TENANT--MODIFIED NET
(C) American Industrial Real Estate Association 1993

                                      -5-
<PAGE>   6
to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor may at
Lessor's option either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $100,000 whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of
the occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount equal to twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with the funds
required of Lessee or satisfactory assurance thereof within thirty (30) days
following said commitment by Lessee. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such investigation and
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time period specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.

     9.8  TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.

     9.9  WAIVER OF STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is inconsistent
herewith.

10.  REAL PROPERTY TAXES.

     10.1 PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as defined
in Paragraph 10.2, applicable to the Industrial Center, and except as otherwise
provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions
of Paragraph 4.2.

     10.2 REAL PROPERTY TAX DEFINITION. As used herein, the term, "REAL PROPERTY
TAXES" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed upon the Industrial Center by any authority having the
direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage, or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Industrial Center or any portion thereof, Lessor's
right to rent or other income therefrom, and/or Lessor's business of leasing the
Premises. The term "REAL PROPERTY TAXES" shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of events
occurring, or changes in Applicable Law taking effect, during the term of this
Lease, including but not limited to a change in the ownership of the Industrial
Center or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by
the Parties. In calculating Real Property Taxes for any calendar year, the Real
Property Taxes for any real estate tax year shall be included in the calculation
of Real Property Taxes for such calendar year based upon the number of days
which such calendar year and tax year have in common.

     10.3 ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional Improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.

     10.4 JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.

     10.5 LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency of all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center. When
possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

11.  UTILITIES. Lessee shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon. If
any such utilities or services are not separately metered to the Premises or
separately billed to the Premises, Lessee shall pay to Lessor a reasonable
proportion of all such charges jointly metered or billed with other premises in
the Building, in the manner and within the time periods set forth in Paragraph
4.2(d).

12.  ASSIGNMENT AND SUBLETTING.

     12.1 LESSOR'S CONSENT REQUIRED.

          (a)  Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.

          (b)  A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of 50% or more
of the voting control of Lessee shall constitute a change in control for this
purpose.*

          (c)  The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it exists immediately prior to said transaction or
transactions constituting such reduction shall be considered an assignment of
this Lease by Lessee to which Lessor may reasonably withhold its consent. "NET
WORTH OF LESSEE" for purposes of this Lease shall be the net worth of Lessee
(excluding any Guarantors) established under generally accepted accounting
principles consistently applied.

          (d)  An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be a
Default curable after notice per Paragraph 13.1, or a non-curable Breach without
the necessity of any notice and grace period.

          (e)  Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.

     12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

          (a)  Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.

          (b)  Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.

          (c)  The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent and such action shall not relieve such persons from
liability under this Lease or the sublease.

          (d)  In the event of any Default or Breach of Lessee's obligation
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
anyone else responsible for the performance of the Lessee's obligations under
this Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.

          (e)  Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any. Lessee agrees to provide Lessor
with such other or additional information and/or documentation as may be
reasonably requested by Lessor.

          (f)  Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.

* See Addendum

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                                      -6-
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                (g)     The occurrence of a transaction described in Paragraph
12.1(c) shall give Lessor the right (but not the obligation) to require that the
Security Deposit be increased by an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
Security Deposit increase a condition to Lessor's consent to such transaction.

        12.3    ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

                (a)     *Lessor shall not, by reason of the foregoing provision
or any other assignment of such sublease to Lessor, nor by reason of the
collection of the rent from a sublessee, be deemed liable to the sublessee for
any failure of Lessee to perform and comply with any of Lessee's obligations to
such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rent and other charges due and to become due under
the sublease. Sublessee shall rely upon such statement and request from Lessor
and shall pay such rents and other charges to Lessor without any obligation or
right to inquire as to whether such Breach exists and notwithstanding any
notice from or claim from Lessee to the contrary. Lessee shall have no right or
claim against such sublessee, or, until the Breach has been cured, against
Lessor, for any such rents and other charges so paid by said sublessee to
Lessor.

                (b)     In the event of a Breach by Lessee in the performance
of its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents
or security deposit paid by such sublessee to such sublessor or for any other
prior defaults or breaches of such sublessor under such sublease.

                (c)     Any matter or thing requiring the consent of the
sublessor under a sublease shall also require the consent of Lessor herein.

                (d)     No sublease under a sublease approved by Lessor shall
further assign or sublet all or any part of the Premises without Lessor's prior
written consent.

                (e)     Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.

13.     DEFAULT; BREACH; REMEDIES.

        13.1    DEFAULT; BREACH. A "DEFAULT" by Lessee is defined as a failure
by Lessee to observe, comply with or perform any of the terms, covenants,
conditions or rules applicable to Lessee under this Lease. A "BREACH" by Lessee
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, and shall entitle Lessor to pursue the remedies set forth in Paragraphs
13.2 and/or 13.3:

                (a)     The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises.

                (b)     Except as expressly otherwise provided in this Lease,
the failure by Lessee to make any payment of Base Rent, Lessee's Share of
Common Area Operating Expenses, or any other monetary payment required to be
made by Lessee hereunder as and when due, the failure by Lessee to provide
Lessor with reasonable evidence of insurance or surety bond required under this
Lease, or the failure of Lessee to fulfill any obligation under this Lease
which endangers or threatens life or property, where such failure continues for
a period of five (5) days following written notice thereof by or on behalf of
Lessor to Lessee.

                (c)     Except as expressly otherwise provided in this Lease,
the failure by Lessee to provide Lessor with reasonable written evidence (in
duly executed original form, if applicable) of (i) compliance with Applicable
Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service
contracts required under Paragraph 7.1(b), (iii) the rescission of an
unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination
of this Lease per Paragraph 30, (vi) the guaranty of the performance of
Lessee's obligations under this Lease if required under Paragraphs 1.11 and 37,
(vii) the execution of any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this lease, where any such failure
continues for a period of ten (10) days following written notice by or on
behalf of Lessor to Lessee.

                (d)     A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
40 hereof that are to be observed, complied with or performed by Lessee, other
than those described in Subparagraphs 13.1(a), (b) or (c), above, where such
Default continues for a period of thirty (30) days after written notice thereof
by or on behalf of Lessor to Lessee; provided, however, that if the nature of
Lessee's Default is such that more than thirty (30) days are reasonably
required for its cure, then it shall not be deemed to be a Breach of this Lease
by Lessee if Lessee commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion.

                (e)     The occurrence of any of the following events: (i) the
making by Lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section
101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where such seizure is not discharged within thirty (30) days; provided,
however, in the event that any provision of this Subparagraph 13.1(e) is
contrary to any applicable law, such provision shall be of no force or effect,
and shall not affect the validity of the remaining provisions.

                (f)      The discovery by Lessor that any financial statement
of Lessee or of any Guarantor, given to Lessor by Lessee or any guarantor, was
materially false.

                (g)     If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the
guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory breach basis, and Lessee's failure, within sixty (60) days
following written notice by or on behalf of Lessor to Lessee of any such event,
to provide Lessor with written alternative assurances of security, which, when
coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the
time of execution of this Lease.

        13.2    REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written
notice to Lessee (or in case of an emergency, without notice), Lessor may at
its option (but without obligation to do so), perform such duty or obligation
on Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee to Lessor upon invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its own option, may require all future payments for a 9-month period
to be made under this Lease by Lessee to be made only by cashier's check. In
the event of a Breach of this Lease by Lessee (as defined in Paragraph 13.1),
with or without further notice or demand, and without limiting Lessor in the
exercise of any right or remedy which Lessor may have by reason of such Breach,
Lessor may:

                (a)     Terminate Lessee's right to possession of the Premises
by any lawful means, in which case this Lease and the term hereof shall
terminate and Lessee shall immediately surrender possession of the Premises to
Lessor. in such event Lessor shall be entitled to recover from Lessee: (i) the
worth at the time of the award of the unpaid rent which had been earned at the
time of termination; (ii) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that the Lessee provides could
have been reasonably avoided; (iii) the worth at the time of award of the amount
by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee provides could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor
for all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District
in which the Premises are located at the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding the unpaid rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit for such rent and/or damages. If a notice and grace period required under
Subparagraph 13.1(b), (c) or (d) was not previously given, a notice to pay rent
or quit, or to perform or quit, as the case may be, given to Lessee under any
statute authorizing the forfeiture of leases for unlawful detainer shall also
constitute the applicable notice for grace period purposes required by
Subparagraph 13.1(b), (c) or (d). In such case, the applicable grace period
under the unlawful detainer statute shall run concurrently after the one such
statutory notice, and the failure of Lessee to cure the Default within the
greater of the two (2) such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statute.

                (b)     Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after
Lessee's Breach and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. Lessor and
Lessee agree that the limitations on assignment and subletting in this Lease
are reasonable. Acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver to protect the Lessor's interest
under this Lease, shall not constitute a termination of the Lessee's right to
possession.

                (c)     Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located.

*See Addendum

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               (d)  The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.

     13.3 *  

     13.4      LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or deed of trust covering the
Premises. Accordingly, if any Installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor's designee within ten (10) days after
such amount shall be due, then, without any requirement for notice to Lessee,
Lessee shall pay to Lessor a late charge equal to six percent (6%) of such
overdue amount. The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Lessor will incur by reason of late payment
by Lessee. Acceptance of such late charge by Lessor shall in no event constitute
a waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for six (6) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.*

     13.5      BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by any Lender(s) whose name and address shall have been furnished to
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.

14.  CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the portion of
the Common Areas designated for Lessee's parking, is taken by condemnation,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any compensation, separately awarded to Lessee for Lessee's relocation
expenses and/or loss of Lessee's Trade Fixtures. In the event that this Lease is
not terminated by reason of such condemnation, Lessor shall to the extent of its
net severance damages received, over and above Lessee's Share of the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation authority.*

15.  BROKERS' FEES.

     15.1      PROCURING CAUSE. The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.

     15.3      ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed Lessor's obligation under this Paragraph
15. Each Broker shall be an intended third party beneficiary of the provisions
of Paragraph 1.10 and of this Paragraph 15 to the extent of its interest in any
commission arising from this Lease and may enforce that right directly against
Lessor and its successors.

     15.4      REPRESENTATIONS AND WARRANTIES. Lessee and Lessor each represent
and warrant to the other that it has had no dealings with any person, firm,
broker or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm, or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the Indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.

16.  TENANCY AND FINANCIAL STATEMENTS.

     16.1      TENANCY STATEMENT. Each Party (as "RESPONDING PARTY") shall
within ten (10) days after written notice from the other Party (the "REQUESTING
PARTY") execute, acknowledge and deliver to the Requesting Party a statement in
writing in a form similar to the then most current "TENANCY STATEMENT" form
published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.

     16.2      FINANCIAL STATEMENT. If Lessor desires to finance, refinance, or
sell the Premises or the Building, or any part thereof, Lessee and all
Guarantors shall deliver to any potential lender or purchase designated by
Lessor such financial statements of Lessee and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee's financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

     17.  LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.

18.  SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

19.  INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the state in which
the Premises are located plus two percent (2%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in Paragraph 13.4.

20.  TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

21.  RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.

22.  NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.

23.  NOTICES.

     23.1      NOTICE REQUIREMENTS. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by certified or registered mail
return receipt requested or U.S. Postal Service Express Mail, with postage
prepaid, and shall be deemed sufficiently given if served in a manner specified
in this Paragraph 23. The addresses noted adjacent to a Party's signature on
this Lease shall be that Party's address for delivery or mailing of notice
purposes. Either Party may by written notice to the other specify a different
address for notice purposes, except that upon Lessee's taking possession of the
Premises, the Premises shall constitute Lessee's address for the purpose of
mailing or delivering notices to Lessee. A copy of all notices required or
permitted to be given to Lessor hereunder shall be concurrently transmitted to
such party or parties at such addresses as Lessor may from time to time
hereafter designated by written notice to Lessee.

     23.2      DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown or acceptance of delivery is
refused the postmark thereon. Notices delivered by United States Express Mail or
overnight courier that guarantees next day 

* See Addendum.

MULTI-TENANT--MODIFIED NET
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                                      -8-
<PAGE>   9
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier.  If notice is received on a
Saturday or a Sunday or a legal holiday, it shall be deemed received on the
next business day.

24.  WAIVER.  No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or any other term, covenant or condition hereof, Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provisions of this Lease requiring such consent.
Regardless of Lessor's knowledge of a Default or Breach at the time of
accepting rent, the acceptance of rent by Lessor shall not be a waiver of any
Default or Breach by Lessee of any provision hereof. Any payment given Lessor
by Lessee may be accepted by Lessor on account of moneys or damages due Lessor
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor
at or before the time of deposit of such payment. 

23.  RECORDING.  Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.

26.  NO RIGHT TO HOLDOVER.  Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to 150% of the Base Rent
applicable during the month immediately preceding such expiration or earlier
termination.  Nothing contained herein shall be construed as a consent by Lessor
to any holding over by Lessee.

27.  CUMULATIVE REMEDIES.  No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
and law or in equity.

28.  COVENANTS AND CONDITIONS.  All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions. 

29.  BINDING EFFECT; CHOICE OF LAW.  This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located.  Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30.  SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

     30.1 SUBORDINATION.  This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Lessee agrees that the Lenders holding any such Security Device shall have no
duty, liability or obligation to perform any of the obligations of Lessor under
this Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default
pursuant to Paragraph 13.5. If any Lender shall elect to have this Lease and/or
any Option granted hereby superior to the lien of its Security Device and shall
give written notice thereof to Lessee, this Lease and such Options shall be
deemed prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.*

     30.2 ATTORNMENT.    Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.

     30.3 NON-DISTURBANCE.  With respect to Security Devices entered into by
Lessor after the execution of this lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from
the Lender that Lessee's possession and this Lease, including any options to
extend he term hereof, will not be disturbed so long as Lessee is not in Breach
hereof and attorns to the record owner of the Premises.

     30.4 SELF-EXECUTING.     The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attornment and/or non-disturbance
agreement as is provided for herein.

31.  ATTORNEYS' FEES.    If any Party or Broker brings an action or proceeding
to enforce the terms hereof or declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon, shall
be entitled to reasonable attorneys' fees.  Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment.  The term "PREVAILING PARTY"
shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense.  The attorneys' fee award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorneys' fees reasonably incurred. Broker(s) shall be intended third party
beneficiaries of this Paragraph 31.

32.  LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS.   Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
Building, as Lessor may reasonably deem necessary.  Lessor may at any time
place on or about the Premises or Building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred eighty (180) days of the
term hereof place on or about the Premises any ordinary "For Lease" signs.  All
such activities of Lessor shall be without abatement of rent or liability to
Lessee.*

33.  AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent.  Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.

34.  SIGNS.    Lessee shall not place any sign upon the exterior of the
Premises or the Building, except that Lessee may, with Lessor's prior written
consent, install (but not on the roof) such signs as are reasonably required to
advertise Lessee's own business so long as such signs are in a location
designated by Lessor and comply with Applicable Requirements and the signage
criteria established for the Industrial Center by Lessor. The installation of
any sign on the Premises by or for Lessee shall be subject to the provisions of
Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures and
Alterations). Unless otherwise expressly agreed herein, Lessor reserves all
rights to the use of the roof of the Building, and the right to install
advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Lessee's business; Lessor shall be
entitled to all revenues from such advertising signs.

35.  TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for
Breach by Lessee, shall automatically terminate any sublease or leaser estate
in the Premises; provided, however, Lessor shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or
all of any existing subtenancies. Lessor's failure within ten (10) days
following any such event to make a written election to the contrary by written
notice to the holder of any such lesser interest, shall constitute Lessor's
election to have such event constitute the termination of such interest.

36.  CONSENTS.

        (a)     Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to
an act by or for the other Party, such consent shall not be unreasonably
withheld or delayed. Lessor's actual reasonable costs and expenses (including
but not limited to architects', attorneys', engineers' and other consultants'
fees) incurred in the consideration of, or response to, a request by Lessee for
any Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. In addition to the deposit
described in Paragraph 12.2(e), Lessor may, as a condition to considering any
such request by Lessee, require that Lessee deposit with Lessor an amount of
money (in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering
and responding to Lessee's request. Any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment of
this Lease or subletting of the Premises by Lessee shall not constitute an
acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent.

        (b)     All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.

37.  GUARANTOR.

     37.1   FORM OF GUARANTY. If there are to be any Guarantors of this Lease
per Paragraph 1.11, the form of the guaranty to be executed by each such
Guarantor shall be in the form most recently published by the American
Industrial Real Estate Association, and each such Guarantor shall have the same
obligations as Lessee under this lease, including but not limited to the
obligation to provide the Tenancy Statement and information required in
Paragraph 16.

     37.2   ADDITIONAL OBLIGATIONS OF GUARANTOR. It shall constitute a Default
of the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor
(and of the party signing on Guarantor's behalf) to obligate such Guarantor on
said guaranty, and resolution of its board of directors authorizing the making
of such guaranty, together with a certificate of incumbency showing the
signatures of the persons authorized to sign on its behalf, (b) current
financial statements of Guarantor as may from time to time be requested by
Lessor, (c) a Tenancy statement, or (d) written confirmation that the guaranty
is still in effect.

38.  QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises and
the performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.

*See Addendum.

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                                      -9-
<PAGE>   10
39. OPTIONS*

     39.1      DEFINITION. As used in this Lease, the word "OPTION" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease other property of Lessor; (c) the right to purchase the
Premises, or the right of first refusal to purchase the Premises, or the right
of first offer to purchase the Premises, or the right to purchase other
property of Lessor, or the right of first refusal to purchase other property of
Lessor, or the right of first offer to purchase other property of Lessor.

     39.2      OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to
Lessee in this Lease is personal to the original Lessee named in Paragraph 1.1
hereof, and cannot be voluntarily or involuntarily assigned or exercised by any
person or entity other than said original Lessee while the original Lessee is in
full and actual possession of the Premises and without the intention of
thereafter assigning or subletting. The Options, if any, herein granted to
Lessee are not assignable, either as a part of an assignment of this Lease or
separately or apart therefrom, and no Option may be separated from this Lease in
any manner, by reservation or otherwise.

     39.3      MULTIPLE OPTIONS. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later option cannot be exercised
unless the prior Options to extend or renew this Lease have been validly
exercised.

     39.4      EFFECT OF DEFAULT ON OPTIONS.

               (a)  Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary; (i)
during the period commencing with the giving of any notice of Default under
Paragraph 13.1 and continuing until the noticed Default is cured, or (ii)
during the time Lessee is in Breach of this Lease, or (iii) in the event that
Lessor has given to Lessee three (3) or more notices of separate Defaults under
Paragraph 13.1 during the twelve (12) month period immediately preceding the
exercise of the Option, whether or not the Defaults are cured.

               (b)  The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise
an Option because of the provisions of Paragraph 39.4(a)

               (c)  All rights of Lessee under the provisions of an Option
shall terminate and be of no further force or effect, notwithstanding Lessee's
due and timely exercise of the Option, if, after such exercise and during the
term of this Lease, (i) Lessor gives to Lessee three (3) or more notices of
separate Defaults under Paragraph 13.1 during any twelve (12) month period,
whether or not the Defaults are cured, or (ii) if Lessee commits a Breach of
this Lease.

40.  RULES AND REGULATIONS. Lessee agrees that it will abide by, and keep and
observe all nondiscriminatory reasonable rules and regulations ("Rules and
Regulations") which Lessor may make from time to time for the management,
safety, care, and cleanliness of the grounds, the parking and unloading of
vehicles and the preservation of good order, as well as for the convenience of
other occupants or tenants of the Building and the Industrial Center and their
invitees.

41.  SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

42.  RESERVATIONS. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way,
utility raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement
rights, dedication, map or restrictions.

43.  PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.

44.  AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.

45.  CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.

46.  OFFER. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.

47.  AMENDMENTS. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the
property of which the Premises are a part.

48.  MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.

*See Addendum

MULTI-TENANT--MODIFIED NET
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                                      -10-
<PAGE>   11
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.

        IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR
ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE
THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS,
UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY
THE REAL ESTATE BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE
LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE
OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE
SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE
STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Executed at: Los Angeles, California    Executed at:  Anaheim, California
            -------------------------               ----------------------------

on:    October 17, 1997                 on:        October 13, 1997
   ----------------------------------      -------------------------------------

By LESSOR:                              By LESSEE:

Bank of America National Trust and      Pacific Sunwear of California, Inc.
-------------------------------------   ----------------------------------------
Savings Association                     a California corporation
-------------------------------------   ----------------------------------------

By: /s/ KENT PETERS                     By: /s/ CARL WOMACK
   ----------------------------------      -------------------------------------

Name Printed: Kent Peters               Name Printed: Carl Womack
             ------------------------                ---------------------------

Title:    Vice President                Title:  CFO
      -------------------------------         ----------------------------------

By: [SIG]                               By: /s/ GREG H. WEAVER
   ----------------------------------      -------------------------------------

Name Printed: Peter Daniels             Name Printed: Greg H. Weaver
             ------------------------                ---------------------------

Title:    Vice President                Title:  Chief Executive Officer
      -------------------------------         ----------------------------------

Address: 333 S. Beaudry Avenue          Address: 5037 East Hunter Avenue
        -----------------------------           --------------------------------
21st Floor, Los Angeles, CA 90017       Anaheim, CA 92807
-------------------------------------   ----------------------------------------

Telephone: (213) 345-0425               Telephone: (714) 693-8066
                ---------------------                   ------------------------

Facsimile: (213) 345-9128               Facsimile: (714) 693-8165
                ---------------------                   ------------------------
                                        and after the Commencement Date the
                                        notice address shall be the Premises

BROKER:                                 BROKER:

Executed at:                            Executed at:
            -------------------------               ----------------------------

on:                                     on:
   ----------------------------------      -------------------------------------

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

Name Printed:                           Name Printed:
             ------------------------                ---------------------------

Title:                                  Title:
      -------------------------------         ----------------------------------

Address:                                Address:
        -----------------------------           --------------------------------

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

Telephone: (   )                        Telephone: (   )
                ---------------------                   ------------------------

Facsimile: (   )                        Facsimile: (   )
                ---------------------                   ------------------------

NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 South
Flower Street, Suite 600, Los Angeles, CA 90017. (213) 687-8777.


MULTI-TENANT--MODIFIED NET
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                                      -11-
<PAGE>   12
                   ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
                       MULTI-TENANT LEASE -- MODIFIED NET
                                 BY AND BETWEEN
       BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("LESSOR")
                                      AND
                 PACIFIC SUNWEAR OF CALIFORNIA, INC. ("LESSEE")
                            DATED SEPTEMBER 30, 1997

49.  COMMENCEMENT DATE:

     Lessor and Lessee agree that the estimated Commencement Date shall be
     December 15, 1997 ("Estimated Commencement Date"). The actual Commencement
     Date shall be the earlier of (i) the date Lessee occupies the Premises for
     its business purposes (which shall include without limitation the storage
     of inventory) or (ii) the later of (a) the Estimated Commencement Date or
     (b) the date the Base Lessee Improvements, the Lessee Improvements and the
     Additional Lessee Improvements (collectively, the "Total Lessee
     Improvements") are substantially completed; provided that such date shall
     be accelerated by one day for each day that substantial completion of the
     Total Lessee Improvements is delayed by Lessee's Delays. The term of the
     Lease shall expire on the date (the "Expiration Date") that is the last
     day of the calendar month in which the tenth anniversary of the
     Commencement Date falls, subject to extension pursuant to Paragraph 54 of
     this Lease.

50.  TERM:

     The Term of the Lease shall commence on the Commencement Date, and shall
     continue, subject to earlier termination as provided herein, until the
     Expiration Date. In the event permission is given to Lessee to enter or
     occupy all or a portion of the Premises prior to the Commencement Date,
     such occupancy shall be subject to all of the terms and conditions of this
     Lease, except that if such entry is pursuant to Paragraph 52, Lessee shall
     not be obligated to pay Base Rent and any other amount payable by Lessee
     under this Lease.

     Lessor shall use all reasonable efforts to make the Premises available on
     the Estimated Commencement Date. If for any reason, however, Lessor cannot
     deliver possession of the Premises to Lessee on said date, Lessor shall
     not be subject to any liability therefor, nor shall such failure affect
     the validity of this Lease or the obligations of Lessee hereunder or
     extend the Term hereof, but in such case, Lessee shall not be obligated to
     pay rent or perform any other obligations of Lessee under the terms of
     this Lease, except as may be otherwise provided in this Lease, until the
     Commencement Date shall have occurred. If, however, the Commencement Date
     shall not have occurred on or before February 3, 1998 for any reason,
     other than Lessee's Delays (defined below) or any reason beyond the
     reasonable control of Lessor, Lessee shall receive an offset of Base Rent
     for each day after such date that the Commencement Date shall not have
     occurred. Such date will be adjusted forward for each day that substantial
     completion of the Total Lessee Improvements is delayed by Lessee's Delays.
     For purposes of this Paragraph 50, Lessor's inability to obtain a building
     permit within 14 business days after receipt of Lessee's interior
     construction drawings shall be deemed a delay for a reason beyond the
     reasonable control of Lessor.

     If the Commencement Date shall not have occurred on or before May 1, 1998
     for any reason, other than Lessee's Delays or any reason beyond the
     reasonable control of Lessor, Lessee may, at its option, by notice in
     writing to Lessor within 10 days after that date, cancel this Lease, in
     which event the parties shall be discharged from all obligations
     hereunder; provided further, however, that if such written notice of
     Lessee is not received by Lessor within said 10-day period, Lessee's right
     to cancel this Lease hereunder shall terminate and be of no further force
     or effect.

51.  SUBSTANTIAL COMPLETION:

     The work to be performed by Lessor under this Lease shall be deemed
     substantially completed on the date on which all of the following shall
     have been satisfied: (a) all work required for an Occupancy Permit shall
     have been completed and it is legally permissible to occupy the Premises,
     (b) all work to be performed by Lessor under Paragraph 55 shall have been
     completed to the extent that the Premises can be used by Lessee without
     material interference with the operations of its business, excluding
     punchlist items or other noncritical elements of the Lessee Improvements,
     and (c) all mechanical systems in the Premises are in good operating order.

52.  EARLY ACCESS:

     Lessor shall, subject to the following terms and conditions, permit Lessee,
     and Lessee's agents, to enter the Premises during the seventy-five (85) day
     period prior to the Estimated Commencement Date:

     (a)  Lessee shall give Lessor reasonable prior written notice of such
          access to the Premises, which notice must contain or be accompanied
          by: (i) a description and schedule for the work to be performed in the
          Premises; (ii) the names and addresses of all contractors performing
          such work; (iii) copies of all contracts pertaining to the performance
          of such work; (iv) copies of all licenses and permits required in
          connection with the performance of such work; and (v) certificates of
          insurance and instruments of indemnification against all claims,
          costs, expenses, damages, suits,  

                                      -1-
<PAGE>   13
          fines, penalties, actions, causes of action, and liabilities which may
          arise in connection with such work. Each of the foregoing shall be
          subject to Lessor's approval, which approval shall not be arbitrarily
          withheld. Notwithstanding the foregoing, Lessor agrees not to
          unreasonably withhold its consent with respect to Items (i) through
          (v) of this Paragraph 52(a) related to the installation by SDI
          Industries of Lessee's material handling system in the distribution
          center portion of the Premises.

     (b)  Such early access is subject to reasonable scheduling by Lessor.

     (c)  Lessee's agents, contractors, workers, mechanics, suppliers, and
          invitees must work in harmony and not interfere with Lessor and
          Lessor's contractor in doing work in the Premises, in other premises,
          and common areas of the Building, and in the general operation of the
          Building. If at any time such entry shall cause or threaten to cause
          disharmony or interference, including labor disharmony, Lessor may
          withdraw its permission upon written notice to Lessee.

     (d)  In the event that Lessor's work in the Premises and Lessee's work in
          the Premises (pursuant to the permission granted herein) progress
          simultaneously, Lessor shall not be liable for injury to any person or
          for damage to any property of Lessee, Lessee's employees, agents,
          licensees, or invitees, from any cause whatsoever, occurring upon or
          about the Premises, and Lessee shall indemnify and save Lessor
          harmless from any and all liability and claims arising out of or
          connected with any such injury or damage. Lessee will not permit any
          lien on any part of the Building allegedly resulting from any work or
          materials furnished or obligations incurred by or for Lessee. Lessee
          will discharge any such lien of record immediately upon its filing.

     (e)  Lessee agrees that it is liable to Lessor for any damage to the
          Premises or to any portion of the work in the Premises caused by
          Lessee or any of Lessee's employees, agents, licensees, or invitees.

53.  BASE RENT:

     Commencing on the Commencement Date, the Base Rent payable by Lessee to
     Lessor during the Term of this Lease shall be as follows:

<TABLE>
<CAPTION>
     ------------------------------------------------------------------
          MONTHS          PER SQ. FT. NNN           PER MO. NNN
          ------          ---------------           -----------             
                                                 *BASED ON SQ. FT.
     ------------------------------------------------------------------
         <S>                <C>                      <C>
          1 - 2               0 cents                $     0
          3 - 30             37 cents                $65,230.63
         31 - 60             40.7 cents              $71,753.69
         61 - 90            44.77 cents              $78,929.06
         91 - 120           49.25 cents              $86,827.26
     ------------------------------------------------------------------
</TABLE>

     The obligation to pay Base Rent shall be abated for the first two (2)
     months of the Term of this Lease. All other terms of this Lease, however,
     including but not limited to the obligations to pay Lessee's Share of
     Common Area Operating Expenses, together with the insurance required by
     Paragraph 8, and the amount of any monthly amortized Additional Lessee
     Improvement Allowance, shall be in effect during such period.

54.  OPTION TO EXTEND:

     54.1 Grant of Option. Lessee shall have the right, but not the obligation,
          to extend the Term of this Lease for two (2) additional periods of
          five (5) years each (the "Extension Period"), provided that the
          following criteria are met:

          (a)  Lessee is not in default under any provision of this Lease beyond
               any applicable cure periods either (i) as of the date the
               "Extension Notice" (as defined below) is delivered to Lessor or
               (ii) as of the date of the commencement of the Extension Period;
               and

          (b)  Lessee has not assigned or subleased any portion of the Premises
               other than as permitted by Paragraph 12 of this Lease.

     54.2 Exercise of Option. Lessee may exercise its right to extend the Term
          only by delivering written notice to Lessor of Lessee's desire to so
          extend the Term no later than six (6) months nor earlier than nine (9)
          months prior to the commencement of the Extension Period ("Lessee's
          Notice"), subject to the Monthly Base Rent determination by Lessor in
          accordance with Paragraph 54.3.

     54.3 Monthly Base Rent for Extension Period. Within thirty (30) days of
          Lessor's receipt of Lessee's Notice, Lessor shall deliver written
          notice to Lessee which shall provide for Monthly Base Rent for the
          Extension Period equal to 95% of an amount equal to the fair market
          rental (the "Fair Market Rent") for the Premises determined by Lessor
          according to the rental then being charged

                                      -2-
<PAGE>   14
        for comparable space in comparable deals in buildings of similar size
        and construction in Anaheim, Yorba Linda and Fullerton (the "Market Rent
        Notice"). In determining comparable space, appropriate consideration
        shall be given to the level and type of improvements contained in the
        Premises and the use of the Premises as a corporate headquarters for the
        lessee. "Comparable deals" shall mean leases which are approximately as
        long, and commencing at approximately the same time, as the applicable
        Extension Period. "Comparable deals" shall not include any transactions
        where the lessor of the subject building is in default under its
        mortgage or other indebtedness, or is currently, or has within the prior
        12 months been involved in foreclosure proceedings on the applicable
        building. "Comparable deals" shall also exclude transactions which are
        subleases or whereby the lessee has some form of equity participation in
        the deal. Notwithstanding the foregoing, in no event shall the Monthly
        Base Rent for the Extension Period be less than the sum of (a) the
        Monthly Improvement Payment (as defined below) and (b) Base Rent payable
        by Lessee for the month prior to the commencement of the Extension
        Period. In the event that Lessee notifies Lessor in writing, on or
        before the 20th business day following any Market Rent Notice, that
        Lessee disagrees with the applicable determination, Lessor and Lessee
        shall negotiate in good faith to resolve such dispute within 10 business
        days thereafter (The 30th business day after any Market Rent Notice is
        referred to herein as the "Outside Agreement Date"). If not resolved by
        the Outside Agreement Date each party shall submit to the other its
        determination of Fair Market Rent and the dispute shall be submitted to
        arbitration in accordance with the following paragraph titled
        "Arbitration Procedures." Until any such dispute is resolved, any
        applicable payments due under this Lease shall correspond to Lessor's
        determination and, if Lessee's determination becomes the final
        determination, Lessor shall refund any overpayments to Lessee, within 5
        business days following the final resolution of the dispute.

54.4    Arbitration Procedures.

                (i)     Lessor and Lessee shall each appoint one arbitrator who
        shall by profession be a real estate broker who shall have been active
        over the 5-year period ending on the date of such appointment in the
        leasing of properties similar to the Premises in Anaheim, Yorba Linda
        and Fullerton. The determination of the arbitrators shall be limited
        solely to the issue of whether Lessor's or Lessee's submitted Fair
        Market rent for the Premises is the closest to the actual Fair Market
        Rent for the Premises as determined by the arbitrators, taking into
        account the requirements of this subparagraph regarding the same. Each
        such arbitrator shall be appointed within 15 days after the Outside
        Agreement Date. Lessor and Lessee may not consult with either such
        arbitrator prior to resolution.

                (ii)    The two arbitrators so appointed shall within 15 days of
        the date of the appointment of the last appointed arbitrator, meet and
        attempt to reach a decision as to whether the parties shall use Lessor's
        or Lessee's submitted Fair Market Rent, and shall notify Lessor and
        Lessee of their decision, if any.
                
                (iii)   If the two arbitrators are unable to reach a decision,
        the two arbitrators shall, within 30 days of the date of the appointment
        of the last appointed arbitrator, agree upon and appoint a 3rd
        arbitrator who shall be a broker who shall be qualified under the same
        criteria set forth hereinabove for qualification of the initial 2
        arbitrators.

                (iv)    The 3 arbitrators shall, within 30 days of the
        appointment of the 3rd arbitrator, reach a decision as to whether the
        parties shall use Lessor's or Lessee's submitted Fair Market Rent, and
        shall notify Lessor and Lessee thereof.

                (v)     The decision of the majority of the 3 arbitrators shall
        be binding upon Lessor and Lessee.

                (vi)    If either Lessor or Lessee fails to appoint an
        arbitrator within 15 days after the Outside Agreement Date, the
        arbitrator appointed by one of them shall reach a decision, notify
        Lessor and Lessee thereof, and such arbitrator's decision shall be
        binding upon Lessor and Lessee.

                (vii)   If the 2 arbitrators fail to agree upon and to appoint a
        3rd arbitrator, than the appointment of the arbitrator shall be
        dismissed, and the matter to be decided shall be forthwith submitted to
        arbitration under the provisions of the American Arbitration
        Association, but subject to the instructions set forth in this Lease.

                (viii)  The cost of arbitration shall be paid by Lessor and
        Lessee equally.

        Upon determination of the Fair Market Rent, Lessor shall prepare and
        deliver to Lessee an amendment to this Lease (the "Extension Amendment")
        which provides for the extension of the term pursuant to the provisions
        hereof with a Monthly Base Rent equal to 95% of the Fair Market Rent.

                                      -3-
<PAGE>   15
     54.5 Time of the Essence.  Time shall be of the essence regarding all the
          periods set forth above for the exercise of the option and execution
          of the Extension Amendment. The failure of Lessee to timely exercise
          the option as provided in Paragraph 54.2 and 54.3 above shall cause
          this option to automatically cease and terminate and, in such event,
          this Lease shall terminate without extension.

     54.6 Non-Transferable Option.  The option granted herein is granted solely
          to Lessee and is not assignable or transferable and any attempt to
          assign or transfer this option shall be void and of no force or
          effect; excluding, however, any permitted assignment as provided in
          Paragraph 12 of this Lease.

55.  LESSEE IMPROVEMENTS:

     55.1 Approved Plans and Schedule.  Lessor shall, at its sole cost and
          expense, construct the base Lessee Improvements and the Lessee
          Improvements and subject to reimbursement of Lessor by Lessee pursuant
          to Paragraph 55.4, the Additional Lessee Improvements, pursuant to
          interior construction drawings sufficient to permit accurate bidding
          by the contractors ("Approved Plans") prepared by Lessee and approved
          by Lessor and described on Exhibit "B." Lessor acknowledges receipt of
          Lessee's space plan on August 11, 1997, and Lessee's interior
          construction drawing on September 17, 1997, and approval thereof.
          Lessee may select its own interior architect. The Lessor and the
          Project Manager (as defined below) shall obtain bids from Oltmans
          Construction, Snyder Langston and two other qualified contractors
          selected by Lessor for construction of the work provided for under
          this Paragraph 55. The Project Manager shall provide Lessee with
          copies of the bids received from each of the contractors and will make
          reasonable efforts to consult with Lessee with respect to negotiating
          with the contractor selected by Lessor the portions of the contract
          relating to the office improvements, and during the bidding process
          and construction period.

     55.2 Base Lessee Improvements.  Lessor shall, at its sole cost and expense,
          construct the following improvements to the Premises (the "Base Lessee
          Improvements"):

          (a)  Upgrade the sprinkler system in the southwest high bay warehouse
               area of the Premises; provided, however, that in no event shall
               Lessor be required to spend in excess of $20,000, and any cost
               that exceeds such amount shall be paid by Lessee out of the
               Additional Lessee Improvement Allowance;

          (b)  Reconfigure the parking area of the Industrial Center in
               accordance with a plan prepared by Lessor and approved by Lessee
               ("Parking Plan") to provide lessee with 350 parking spaces.

          (c)  Repaint the exterior of the Building.

          (d)  Demise the Premises from the easterly, adjacent space consisting
               of approximately 90,664 square feet ("Adjacent Space") of the
               Building in accordance with Exhibit "A," provided that Lessee
               shall be responsible for the cost of any alterations to the
               existing security system resulting from demising the Building,
               and the cost of any repair or upgrades to such security system
               requested by Lessee; provided, however, that Lessor shall use
               reasonable efforts, at no additional cost to Lessor, to preserve
               intact and not damage the existing security system. Any cost of
               the alterations of the existing security system may be paid by
               Lessee out of the Additional Lessee Improvement Allowance.

          (e)  Separate the utilities servicing the Premises to function
               independently of the Adjacent Space in the Building, including
               electrical, HVAC and lighting; and

          (f)  Remove the existing racking system from the Premises no later
               than October 1, 1997, which will remain Lessor's personal
               property.

     55.3 Lessee Improvements.  Lessor shall, at its sole cost and expense,
          construct certain improvements in the Premises (the "Lessee
          Improvements") substantially in accordance with the Approved Plans and
          all applicable rules, regulations, laws or ordinances; provided,
          however, that in no event shall Lessor be required to spend in excess
          of $300,000 (the "Lessee Improvement Allowance") to build the Lessee
          Improvements. The cost of the Lessee Improvements that exceeds the
          amount of the Lessee Improvement Allowance shall be treated as a
          contribution by Lessor of a portion of the Additional Lessee
          Improvement Allowance under Paragraph 55.4. The Lessee Improvement
          Allowance may be used only for the cost of the Lessee Improvements as
          described in Paragraph 55.5 below.

     55.4 Additional Lessee Improvements.  Upon Lessee's request, Lessor shall
          construct certain additional improvements in the Premises (the
          "Additional Lessee Improvements") substantially in accordance with the
          Approved Plans, and all applicable rules, regulations, laws or
          ordinances. Lessor shall contribute up to $800,000 ("Additional Lessee
          Improvement Allowance") towards the costs of the Additional Lessee
          Improvements and any such amounts contributed will be repaid by
          Lessee, plus 10% interest per annum, in equal monthly installments
          amortized over the Term of the Lease (the

                                      -4-
<PAGE>   16
        "Monthly Improvement Payment"). Such additional payments will be made
        at the same time and in the same manner as Rent under this Lease. Lessee
        shall be required to pay any costs in excess of the Additional Lease
        Improvement Allowance within fifteen (15) days after receiving written
        notice from Lessor describing such excess costs.

55.5    Lessee Improvement Allowance. The cost of the Lessee Improvements and
        Additional Lessee Improvements shall include the cost of all labor and
        materials for the construction and installation of the Lessee
        Improvements and Additional Lessee Improvements respectively; the cost
        of all permits, licenses and fees; all amounts paid to Lessor's
        contractors under and pursuant to contracts for the construction and
        installation of the Lessee Improvements and Additional Lessee
        Improvements respectively; all architectural, engineering, space
        planning and other consultants' fees; all amounts paid for mechanical
        drawings, plans, specifications, shop drawings, designs and layouts;
        and incidental costs related to the foregoing. The cost of Lessee
        Improvements and Additional Lessee Improvements shall not include, and
        Lessor shall not charge, any fees for Lessor's profit, overhead or
        supervision. The Lessee Improvement Allowance shall not include, and
        Lessee shall be responsible for, the cost to remove or alter the excess
        mezzanine area of the Premises. Lessee, at its option, may retain,
        alter, move or remove all or any portion of the mezzanine. At the
        expiration of the term, Lessee shall remove the mezzanine at Lessor's
        sole cost and expense.

55.6    Lessee-Initiated Changes. Lessee shall be permitted to initiate changes
        in the design and construction requirements of the Lessee Improvements
        throughout the course of the construction of the Lessee Improvements.
        Said changes shall be incorporated by Lessor at actual cost, with a
        maximum fee mark-up by Lessor's general contractor limited to the
        general contract base fee percentage. Design/engineering reimbursements
        for Lessee-initiated changes shall be based upon design/engineering
        consultant actual costs including time and materials. All costs of
        Lessee-initiated changes requiring revisions, including engineering,
        estimating, coordination, layout, and printing of drawings,
        specification changes, and any other incidental expenses, shall be
        included in the cost of the Lessee Improvements and Additional Lessee
        Improvements respectively.

55.7    Lessor's Obligations. Notwithstanding Paragraph 2.3, Lessor shall have
        no obligation to Lessee for defects in design, workmanship or
        materials, but shall use its reasonable best efforts to enforce the
        contractor's obligations therefor and shall, as appropriate under the
        terms of the Lease given the allocation of maintenance responsibility
        between Lessor and Lessee, assign to Lessee any manufacturer's
        warranties with respect to the work or the Premises.

55.8    Work Done by Lessee. Any work done by Lessee in the Premises shall be
        done at Lessee's sole cost and expense in accordance with the terms of
        this Lease and only with Lessor's prior consent and in conformity with
        a valid building permit and all applicable rules, regulations, laws and
        ordinances. Any work done by Lessee shall be done in a good and
        workmanlike manner with good and sufficient materials, and shall be
        done only by contractors approved by Lessor. Lessor hereby approves of
        SDI Industries as Lessee's contractor and of SDI's subcontractors for
        the installation of a material handling system in the distribution
        center in the Premises during the early access period.

55.9    Acceptance of Lessee Improvements. Lessee shall notify Lessor in
        writing of any items that Lessee deems incomplete or incorrect in order
        for the Premises to be acceptable to Lessee within ninety (90) days
        following completion of the Lessee Improvements and Additional Lessee
        Improvements. Lessee shall be deemed to have accepted the Premises as
        improved and to have approved construction if Lessee does not deliver
        such a list to Lessor within said number of days.

55.10   Other Improvements. Lessor shall, at its sole cost and expense, be
        responsible to make any alterations to the Building (but not the
        Premises) during the Term of the Lease and any Extension Period, as and
        if required for compliance with the Americans with Disabilities Act
        ("ADA"), so long as such compliance is not a result of Lessee's specific
        use of the Building or Lessee's Alterations under Paragraph 7.3. With
        respect to the Premises, including, without limitation, the Base Lessee
        Improvements and Additional Lessee Improvements, any alterations to the
        bathroom, showers or elevator required by the ADA as interpreted and
        applied on the Commencement Date shall be made, at Lessor's sole cost
        and expense without deduction from the Lessee Improvement Allowance or
        the Additional Lessee Improvement Allowance. Any such alterations shall
        be separately itemized and priced by Lessor's contractor. Lessee shall,
        at its sole cost and expense, be responsible (a) to make any alterations
        to the Premises required due to any changes in the ADA, including
        without limitation the interpretation and application thereof, after the
        Commencement Date, or required due to Lessee's specific use of the
        Premises or due to any Alterations under Paragraph 7.3 performed by
        Lessee in the Premises after the Commencement Date, and (b) for the cost
        of any alterations to the Building required for compliance with the ADA
        arising out of Lessee's specific use of the Premises or due to any of
        Lessee's Alterations under Paragraph 7.3. The cost associated with any
        seismic retrofit of the Premises, as and if required, whether under
        current or future law, shall be the responsibility of Lessor except to
        the extent required due to the unique nature of Lessee's use, the Lessee
        
                                      -5-
<PAGE>   17
                Improvements, the Lessee Additional Improvements or Lessee's
                Alterations. Lessor's costs under this Paragraph 55.10 shall not
                be included in Lessee's Share of Common Area Expenses.

        55.11   Lessee Delays. If Lessor is delayed in substantially completing
                any work to be performed by Lessor under this Paragraph 55 as a
                result of any of the following circumstances or events ("Lessee
                Delays"), the Commencement Date shall not be deferred by reason
                of such delay:

                (a)     Lessee's failure to furnish the space plan by August 11,
                        1997;

                (b)     Lessee's failure to respond within one business day to
                        any request of Lessor for additional information or
                        approval as necessary in connection with the completion
                        of the Total Lessee Improvements;

                (c)     Lessee's failure to furnish interior construction
                        drawings by September 17, 1997;

                (d)     Lessee's request for any special, long-lead materials or
                        installations as part of the Lessee Improvements or
                        Additional Lessee Improvements; provided, however, that
                        Lessor notifies Lessee of any such materials or
                        installation within 10 days after receiving bids from
                        the general contractor;

                (e)     Lessee's changes in any drawings, plans, or
                        specifications to the Approved Plans, including without
                        limitation the time consumed at revising plans or in
                        revising the Approved Plans by reason of Lessee's
                        changes;

                (f)     Any changes initiated by Lessee by reason of Lessee's
                        disapproval of cost proposals or resulting in the
                        preparation of revised cost proposals;

                (g)     Field changes to the construction work by Lessee;

                (h)     The delivery, installation, or completion of any Lessee-
                        finish work performed by Lessee's employees or agents;
                
                (i)     The performance of any work done by Lessee, or any
                        failure to complete or delay in completion of such
                        work; or

                (j)     Any other act or omission of Lessee.

        55.12   Project Manager. The project manager for the Total Lessee
                Improvements shall be ZB Investment Company (the "Project
                Manager"). Lessee agrees to reimburse Lessor within 10 days
                after demand for Lessee's share of the cost of the Project
                Manager in the amount of $3,000.00 per month, not to exceed
                $21,000.00 in the aggregate. The Project Manager's duties shall
                include handling the bids pursuant to Paragraph 55.1,
                negotiating with the bidding contractors, assisting Lessor in
                selecting the contractor, negotiation of the terms of the
                contractor's contract, giving written notice to Lessee of
                potential Lessee Delays, and making final determinations of
                whether a Lessee Delay has occurred and of the extent of the
                Lessee Delay.

56.     FIRST RIGHT OF OFFER:

        No later than 30 days prior to commencing marketing for releasing (as
        defined below) the balance of the space in the Building that becomes
        available (as defined below) (the "Offer Space"), Lessor shall first
        offer to lease such space to Lessee by a written notice (a "First Offer
        Notice") Lessee thereupon shall have the right ("ROFO") to lease all of
        the Offer Space at the ROFO Fair Market Rent (as defined below) for the
        remaining term of the Lease (including the option to extend pursuant to
        Paragraph 54 at the Monthly Base rent as determined therein for the
        application Extension Period). The ROFO shall be exercised by Lessee
        notifying Lessor, within ten days after Lessee's receipt of the First
        Offer Notice, of Lessee's exercise of its right to lease such Offer
        Space upon the terms set forth herein. If Lessee so notifies Lessor,
        Lessor shall deliver the Offer Space to Lessee upon the date such space
        is available and shall prepare an amendment to this Lease adding the
        Offer Space to the Premises on the date of delivery on the terms set
        forth herein, which amendment shall be delivered to Lessee promptly
        after exercise and executed by Lessee within 15 days after Lessee's
        receipt of same from Lessor. For purposes of this Paragraph 56, ROFO
        Fair Market Rent shall mean the monthly Base Rent then being charged for
        comparable space and comparable deals in buildings of similar size and
        construction in Anaheim, Yorba Linda and Fullerton. In determining
        comparable space, appropriate consideration shall be given to the level
        and type of improvements contained in the Offer Space. "Comparable
        deals" shall mean leases which are approximately as long, and commencing
        at approximately the same time, as the leasing of the Offer Space
        through the end of the initial term. "Comparable deals" shall not
        include any transactions where the lessor of the subject building is in
        default under its mortgage or other indebtedness, or is currently, or
        has within the prior 12 months been involved in foreclosure proceedings
        on the applicable building. "Comparable deals" shall also exclude
        transactions which are subleases or whereby the Lessee has some form of
        equity participation in the deal. Lessor shall give Lessee notice in
        writing within 30 days after Lessee's exercise of the ROFO of the ROFO
        Fair Market Rent (the "ROFO Market Rent Notice"). In the event the
        Lessee notifies Lessor in writing, on or before the 20th business day
        following the ROFO Market Rent Notice, that Lessee disagrees with the

                                      -6-
<PAGE>   18
     applicable determination, Lessor and Lessee shall negotiate in good faith
     to resolve such dispute within 10 business days thereafter (the 30th
     business day after any ROFO Market Rent Notice is referred to herein as the
     "ROFO Outside Agreement Date.)" If not resolved by the ROFO Outside
     Agreement Date, each party shall submit to the other its determination of
     ROFO Fair Market Rent and the dispute shall be submitted to arbitration in
     accordance with Paragraph 54.4 with the following modifications: (i) the
     word "ROFO" is inserted before the words "Fair Market Rent" and "Outside
     Agreement Date" each place they appear, (ii) the words "Offer Space" are
     substituted for the word "Premises" each place it appears, and (iii) the
     last sentence of Paragraph 54.4 is deleted. Until any dispute as to ROFO
     Fair Market Rent is resolved, any applicable payments due under this Lease
     shall correspond to Lessor's determination and, if Lessee's determination
     becomes the final determination, Lessor shall refund any overpayments to
     Lessee, within 5 business days following the final resolution of the
     dispute. Lessor shall be deemed to be "releasing" any such Offer Space when
     the first lease of such Offer Space entered into within the first year
     after the Commencement Date terminates and the Offer Space becomes
     available. The Offer Space shall be deemed to be "available" as of any date
     only to the extent it has not been subject to or comprised of expansion
     option, first offer, or a lease to an existing tenant in occupancy of such
     space, unless such tenant has specified in writing that it has no interest
     in re-leasing such space. In event that Lessee does not timely accept the
     offer contained in any Offer Notice, or in the event that Lessee accepts
     any such offer but Lessee does not execute an amendment within 15 days
     after Lessee's receipt of same from Lessor which adds such Offer Space to
     the Premises, Lessor shall have the right to lease such Offer Space to any
     other person on any terms and Lessee shall have no further rights under
     this Paragraph. The provisions of Paragraph 39 are applicable to this right
     of first offer. In addition, Lessee shall have no rights to exercise its
     ROFO rights during any period in which it is not in occupancy of 100% of
     the Premises or in which an assignment of this Lease or a sublease of the
     Premises is in effect.

57.  TRAILER STORAGE; RESERVED PARKING:

     Lessee may store trailers overnight within the loading area outlined in
     Exhibit "A" next to the loading docks of the Premises, subject to Paragraph
     40. The location of the Reserved Parking Spaces shall be designated by
     Lessor, subject to Lessee's approval, which shall not be unreasonably
     withheld or delayed.

58.  CONDITIONS, COVENANTS AND RESTRICTIONS:

     Lessor shall provide Lessee a copy of any conditions, covenants and
     restrictions that may be of record in connection with the Industrial
     Center.

59.  HAZARDOUS SUBSTANCES:
     
     To the best of Lessee's current actual knowledge, without inquiry or
     investigation, there is no asbestos nor any other Hazardous Substances
     including, but not limited to, radon gas, PCBs, lead base paint, ground
     water contamination, industrial, radioactive or chemical waste,
     urea-formaldehyde insulation, and underground storage tanks on or under, or
     within the Industrial Center in violation of applicable law.

     In addition to the terms of Paragraph 6.2, Lessee shall disclose to Lessor
     in writing whether any Hazardous Substances will be used, stored or
     disposed in the Premises, which disclosure shall include an inventory of
     such substances, and provide a use, storage and disposal plan for the
     handling of such substances. Lessor may disapprove of the use, storage
     and/or disposal of such substances within the Premises at Lessor's sole
     discretion.

     Lessor shall retain the responsibility and pay for any investigations or
     remediation measures required by governmental entities having jurisdiction
     with respect to the existence of Hazardous Substances on the Premises or
     the Building which are not brought on to the Premises, Building or Common
     Areas by Lessee. Lessee shall fully cooperate in any such activities at
     the request of Lessor, including allowing Lessor and Lessor's agents to
     have reasonable access to the Premises at reasonable times in order to
     carry out Lessor's investigative and remedial responsibilities. The costs
     incurred by Lessor for such investigation and remediation shall not be
     included in Lessee's Share of Common Area Operating Expenses. Any
     liability of Lessor with respect to this covenant shall be satisfied only
     out of Lessor's interest and estate in the Premises and Building, and
     Lessor shall have no personal liability beyond such interest and estate
     with respect to such obligations. This covenant shall be of no further
     force or effect with respect to Bank of America National Trust and Savings
     Association from and after its sale of the Premises and Building.

60.  ASSIGNMENT AND SUBLETTING:

     The parties agree that it would be reasonable for Lessor to condition its
     consent to any proposed assignment or sublease on Lessee's agreement to
     pay to Lessor 50% of rent received from the assignee or sublessee by
     Lessee in excess of the rent payable by Lessee pursuant to this Lease
     after deducting any direct expenses incurred by Lessee in connection with
     such assignment or sublease including, but not limited to, any changes,
     alterations and improvements to the Premises, and any brokerage
     commissions, and on Lessee's payment to Lessor of 50% of all other
     consideration given, directly or indirectly, by the assignee or sublessee
     to Lessee in consideration of any such assignment or sublease. It is the
     intention of Lessor and 

                                      -7-
<PAGE>   19
     Lease that the foregoing provisions shall apply to any consideration
     received by Lessee from sub-sublessees or future assignees, regardless of
     the number of levels thereof. Any rent or other consideration which is to
     be paid to Lessor by Lessee pursuant to this paragraph shall be paid
     promptly upon receipt by Lessee.

61.  ADDITIONAL PERMITTED USES (PARAGRAPH 1.8):

     The Permitted Uses shall also include any other use permitted by Applicable
     Laws; provided that Permitted Uses shall exclude any use which (a) violates
     any certificate of occupancy in force for the Premises, the Building or any
     part thereof, (b) causes or is likely to cause damage to the Building or
     any part thereof or any equipment, facilities or other systems therein; (c)
     constitutes a violation of law; (d) violates a requirement or condition of
     the standard fire insurance policy issued for the Buildings, (e) impairs
     the character, reputation, image or appearance of the Building; (f) impairs
     the proper and economic maintenance, operation or repair of the Building or
     any part thereof; (g) constitutes a nuisance, annoyance or inconvenience to
     other lessees or occupants of the Building or interferes with or disrupts
     the use or occupancy of any area of the Building (other than the Premises)
     by other lessees or occupants; (h) interferes with the transmission or
     reception of microwave, television, radio or other communications signals
     by antennae located on the roof or elsewhere in the Building; (i) results
     in repeated demonstrations, bomb threats or other events which require
     evacuation of any part of the Building or otherwise disrupt the use,
     occupancy or quiet enjoyment thereof by other lessees and occupants, or (j)
     involves the use of any part of the Premises for: (1) a restaurant or bar;
     (2) the storage, manufacture or sale of food, beverages, liquor, tobacco in
     any form or drugs (except that Lessee may maintain vending machines for the
     use of its officers, employees and invitees and except that Lessee's
     officers and employees may bring food, beverages, tobacco and medicine onto
     the Premises for their personal and lawful consumption); (3) the storage,
     use, treatment, manufacture or sale of Hazardous Substances (as defined
     below); (4) the business of photocopying or offset printing (but Lessee may
     use part of the Premises for photocopying or offset printing for its own
     business); (5) medical or dental offices or laboratories; (6) a school or
     classroom; (7) the retail sale or auction of merchandise, goods or property
     of any kind; or (8) cooking (except that Lessee may maintain coffee or
     lunch rooms with coffee makers and microwave ovens for the exclusive use of
     Lessee's officers, employees and invitees), lodging or sleeping. No noise,
     vibration or odor shall be permitted to escape from the Premises.

62.  ADDITION TO END OF PARAGRAPH 2.10:

     Lessor agrees to exercise its rights under this Paragraph 2.10 in a manner
     designed to minimize to the extent reasonably possible interference with
     Lessee's business and consistent with the practices of owners of similar
     parks in the Anaheim area. No capital expenditures for changes to the
     Common Areas pursuant to Paragraphs 2.10(a), (c), (d) or (f) shall be
     included in Common Area Operating Expenses for purposes of this Lease.

63.  AUDIT RIGHT AND ADDITIONS TO PARAGRAPH 4.2:

     The following is added to the end of Paragraph 4.2:

        "(e) In the event of any dispute as to the amount of Operating Expenses
        as set forth in Lessor's statement of Operating Expenses delivered to
        Lessee, Lessee shall have the right, after reasonable notice and at
        reasonable times within one year after the final statement for such
        Operating Expenses is delivered to Lessee, to inspect and photocopy (at
        Lessee's expense) Lessor's accounting records with respect to Lessee's
        Share of Operating Expenses. If, after such inspection and photocopying,
        Lessee still disputes the amount of Operating Expenses as set forth in
        Lessor's statement, Lessee shall be entitled to retain an independent
        certified public accountant reasonably approved by Lessor to audit
        Lessor's records to determine the proper amount of such Operating
        Expenses and the proper amount payable by Lessee pursuant to this Lease.
        Lessee agrees to pay the cost of such audit, provided that Lessor shall
        pay such cost if the audit reveals that Lessor's determination of
        Operating Expenses as set forth in Lessor's statement overstated
        Operating Expenses by 5% or more. Lessor shall be required to maintain
        records of all Operating Expenses for one year after the final statement
        for such Operating Expenses. If such audit reveals an overstatement or
        understatement of Operating Expenses, the amount of the differential
        shall be promptly reimbursed to Lessee by Lessor or paid by Lessee to
        Lessor, as the case may be."

        (f) Lessor may not submit a statement to Lessee demanding increased
        rents representing increased Common Area Operating Expenses if more than
        twelve months have elapsed since the end of the calendar year in which
        the increased Common Area Operating Expenses were paid or incurred
        unless the increased Common Area Operating Expenses relate to
        adjustments in Real Property Taxes."

        (g) For the purposes of determining the amount to be included in Common
        Area Operating Expenses with respect to capital improvements, costs of
        the capital improvements shall be amortized over the useful life of such
        improvements on a straight line basis, including imputed interest at the
        prime rate charged by the largest state chartered bank in California
        plus 2% per annum."


                                      -8-
<PAGE>   20
            (h) "Lease Year" means each consecutive twelve (12) month period
            during the term of the Lease; provided that the first Lease Year
            shall commence on the Commencement Date and end on the last day of
            the eleventh month thereafter, the second and each succeeding Lease
            Year shall commence on the first day of the next calendar month and
            the last Lease Year shall end on the Expiration Date. The actual
            fees incurred by Lessor for management and administration of the
            Industrial Center shall be included in Common Area Expenses;
            provided that the maximum amount for property management that may be
            included in Common Area Operating Expenses in any Lease Year (the
            "Measurement Year") shall equal the Management Fee Cap (as defined
            below). As used in this Paragraph "Management Fee Cap" initially
            means $0.09 per square foot. On the first day of the second Lease
            Year and every succeeding Measurement Year during the term of the
            Lease the Management Fee Cap shall be increased by the lesser of (i)
            the percentage increase in the CPI (as defined below) for the first
            full calendar month of the Measurement Year as compared to the CPI
            for the first full calendar month of the prior Lease Year or (ii)
            5%. The Management Fee Cap calculated for any Lease Year pursuant to
            the foregoing shall be prorated on an actual day basis for any Lease
            Year that is less than 12 full calendar months. As used herein the
            term "CPI" means the Consumer Price Index of the Bureau of Labor
            Statistics of the U.S. Department of Labor for Urban Wage Earners
            and Clerical Workers, Los Angeles-Anaheim-Riverside, California
            (1982-1984=100), "all items". In the event the compilation and/or
            publication of the CPI shall be transferred to any other
            governmental department of bureau or agency or shall be
            discontinued, then the index most nearly the same as the CPI as
            determined by Lessor shall be used to make such calculation."

64.   INTEREST ON SECURITY DEPOSIT UNDER PARAGRAPH 5:

      The Security Deposit held by Lessor shall bear interest during each
      calendar year for the benefit of Lessee at a rate equal to the rate paid
      from time to time on Bank of America one year certificates of deposit
      issued on the first business day of such calendar year. Lessee shall pay
      all Federal and State income taxes attributable to that interest.
      Provided no Default exists under the Lease, Lessor shall disburse to
      Lessee the accrued interest on the Security Deposit during each calendar
      year or credit Lessee's obligation to pay Base Rent in a like amount
      within 15 days after the expiration of such calendar year. The attorney's
      fees against which the Security Deposit may be applied as provided in
      Paragraph 5 of the printed portion of the Lease shall be limited to those
      attorney's fees determined by a court or admitted in writing by Lessee to
      be due and owing Lessor from Lessee.

65.   ADDITION TO SECTION 6.2:

      The following Section 6.2(d) is added to the Lease:

            "(d) Notwithstanding anything to the contrary in this Lease, Lessee
            shall not be liable to Lessor under this Lease for any cost
            associated with Hazardous Substances, if any, to the extent that
            the Hazardous Substances existed on the Premises prior to the date
            of this Lease and were not brought on to the Premises by Lessee,
            its agents, employees, contractors, subcontractors, licensees or
            invitees.

66.   NOTICE OF ENTRY:

      Notwithstanding anything to the contrary in Paragraphs 6.4 or 32, except
      in the case of emergency or during periods in which Lessee is in default
      under this Lease, Lessor shall give Lessee notice in advance of Lessor's
      intent to enter the Premises and such entry shall be made during Lessee's
      business hours.

67.   ADDITION TO END OF PARAGRAPH 7.1(b):

      The following is added at the end of Paragraph 7.1(b):

            "not to exceed the costs for those services generally charged in
            the area where the Premises are located for comparable services to
            comparable buildings."

68.   ADDITION TO END OF PARAGRAPH 7.2:

      The following is added at the end of Paragraph 7.2:

            "The cost of painting the exterior of the Building (after the
            initial exterior painting provided for in Paragraph 55) shall be a
            Common Area Operating Expenses and shall be treated as a capital
            expenditure for purposes of amortization under Paragraph 4.2(g)."

69.   LIMITATION ON PARAGRAPH 7.3:

      With respect only to the portion (the "Warehouse Area") of the Premises
      other than the office areas, Lessor's prior approval shall not be
      required with respect to any Alterations by Lessee provided that such
      Alterations (a) are not visible from the outside of the Premises, (b) do
      not involve puncturing, relocating or removing the roof or any existing
      walls, or changing or interfering with the fire sprinkler or fire
      detection systems, (c) do not involve the plumbing, electrical or HVAC
      systems in the Premises, and (d) do not involve the 

                                      -9-
<PAGE>   21
      structural elements of the Building. Notwithstanding the last sentence of
      Paragraph 7.3(b), Lessor agrees not to require a lien and completion bond
      unless Lessor believes it is reasonably necessary to protect Lessor given
      the cost, nature and extent of the work and the parties responsible for
      the performance and payment therefor.

70.   ADDITION TO PARAGRAPH 7.4(b):
      
      The following is added at the end of Paragraph 7.4(b):

            "Prior to commencing any addition, alteration or improvement, Lessee
            may request that Lessor waive Lessee's obligation to remove such
            addition, alteration or improvement at the end of the term. Any such
            waiver must be in writing and shall only apply to the additions,
            alterations or improvements described therein. Notwithstanding
            anything to the contrary in Paragraph 7.4, (a) Lessee shall not be
            required to remove any of the improvements to the office area of the
            Premises made by Lessor at the commencement of the term, and (b)
            Lessee shall remove all Alterations and Table Fixtures from the
            Warehouse Area at the expiration or earlier termination of this
            Lease."

71.   ADDITION TO END OF PARAGRAPH 8.3(a):
  
      The following is added at the end of Paragraph 8.3(a):      
    
            "The Lessor may, but shall not be obligated to, maintain earthquake
            insurance. In the event Lessor maintains earthquake insurance, the
            cost of that insurance shall be included as a Common Area Operating
            Expense; provided that the maximum amount of earthquake insurance
            premiums that may be included in the Common Area Operating Expenses
            in any Lease Year shall be $0.26 per square foot. The maximum amount
            calculated for any Lease year pursuant to the foregoing shall be
            prorated on an actual day basis for any Lease Year that is less than
            12 full calendar months."

72.   ADDITION TO END OF PARAGRAPH 8.5:

      The following is added at the end of Paragraph 8.5:

            "Lessee shall be permitted to provide the insurance required under
            this Lease by obtaining a blanket policy or policies to be
            maintained by Lessee. The coverages afforded to Lessee and Lessee
            and Lessee's Lenders under this Lease shall in no way be limited,
            diminished or reduced under such blanket policy or policies."

73.   ADDITION TO PARAGRAPH 9.2:

      The following is added at the end of Paragraph 9.2:

            "Premises Partial Damage due to flood or earthquake shall be subject
            to Paragraph 9.3 rather than Paragraph 9.2 in the event there is any
            shortage of insurance proceeds."

74.   ADDITION TO PARAGRAPH 9.6.(a):

      The following is added after the first sentence of Paragraph 9.6(a):

            "The period of abatement shall continue after the completion of
            Lessor's repairs and restoration for the reasonable period for
            Lessee to repair or replace Lessee's trade fixtures, alterations and
            utility installations, but not to exceed 30 days from the completion
            of Lessor's repair and restoration; provided, however, the 30-day
            period after completion of Lessor's work may be extended up to an
            additional 30 days to the extent the abatement does not exceed the
            proceeds from insurance required to be carried under Paragraph
            8.3(b) applicable to, and received by Lessor with respect to, that
            additional 30-day period."

75.   ADDITION TO PARAGRAPH 12.1(b):

      The following is added to Paragraph 12.1(b):

            "If Lessee is a public corporation whose stock is regularly traded
            on a national stock exchange, or is regularly traded in the
            over-the-counter market and quoted on NASDAQ, the provisions of this
            Paragraph 12.1(b) shall not apply to transfers of stock on those
            exchanges or markets."

                                      -10-




   
<PAGE>   22
76.   SUBSTITUTION FOR PARAGRAPH 13.3:

      The following is substituted for Paragraph 13.3:

            "Upon the occurrence of a Breach (as defined in Paragraph 13.1) of
            this Lease by Lessee, an amount shall be due and payable by Lessee
            to Lessor equal to (A) (a) the sum of (i) the Lessee Improvement
            Allowance, (ii) the value of free Base Rent (i.e., the Base Rent
            stated in Paragraph 53 to be abated) multiplied by (b) a fraction
            the numerator of which is the number of months remaining in the
            initial term of the Lease on the date of the termination of the
            Lease and the denominator of which is 120, plus (B) the unamortized
            portion of the Additional Lessee Improvement Allowance then
            remaining unpaid with such amortization being made in the same
            manner as the Monthly Improvement Payment has been calculated under
            Paragraph 55.4 of this Lease."

77.   NOTICE BEFORE LATE CHARGE UNDER PARAGRAPH 13.3:

            Notwithstanding the provisions of 13.4, the 6% late charge described
            in Paragraph 13.4 shall not be imposed with respect to the first
            late payment in any calendar year unless the applicable payment due
            from Lessee is not received by Lessor or Lessor's designee within 10
            days following written notice from Lessor that such payment was not
            received when due. Following the first such written notice from
            Lessor in any calendar year (and regardless of whether such payment
            is then received within such 10-day), a late charge will be imposed
            without notice (as set forth in Paragraph 13.4) for any subsequent
            payment due to Lessor during such calendar year which is not
            received within 10 days of its due date.

78.   ADDITION TO PARAGRAPH 14:

      The following is added at the end of Paragraph:

            "If the amounts available to Lessor or restoration under the
            preceding sentence are inadequate to repair such damage to the
            Premises, Lessee may elect to contribute the amount of the
            shortfall. In the event Lessee does not elect to contribute the
            amount of the shortfall, Lessor may elect either to (a) fund the
            shortfall itself, in which event Lessor shall proceed with the
            repair and restoration, or (b) terminate this Lease."

79.   SUBSTITUTION FOR PARAGRAPH 15.2:

      The following is substituted for Paragraph 15.2:

                  "ADDITIONAL TERMS. Unless Lessor and Lessee's Broker have
            otherwise agreed in writing, Lessor agrees that if Lessee's Broker
            is a procuring cause of any Lease of other space in the Building
            other than the Premises and Lessee's Broker provides Lessor with the
            written agreement of Lessee and Lessee's Broker designating Lessee's
            Broker as the exclusive representative and agent of Lessee with
            respect to the lease of that expansion space, then Lessor shall pay
            Lessee's Broker a brokerage fee in connection with that expansion
            equal to 2 1/2% of the Base Rent payable during the first five years
            of the initial term of that expansion and 1 1/2% of the Base Rent
            payable with respect to the second five years of the initial term of
            that expansion. No commission or other fee shall be payable to
            Lessee's Broker with respect to any extension of the term of this
            Lease or the extension of any term of any Lease for other space in
            the Building. Notwithstanding the foregoing in the event that any
            other broker claims to be entitled to a broker's fee or commission
            with respect to that expansion by reason of any dealings with
            Lessee, then Lessee's Broker shall have no rights under this
            Paragraph 15.2 to any fees or commission with respect to that
            expansion."

80.   ADDITION TO PARAGRAPH 30.1:

      The following is added to the end of Paragraph 30.1:

            "Lessor hereby represents to Lessee that there are no Lenders
            holding any Security Device with respect to the Premises of the date
            of the execution of this Lease."

81.   SIGNS UNDER PARAGRAPH 34:

            Lessor hereby approves Lessee's proposed signage as shown on the
            Signage Exhibit attached to this Lease.

82.   HVAC UNIT REPLACEMENT:

            Lessor agrees that with respect to the 4 HVAC units described below
            (each an "Old Unit"), Lessor shall replace each Old Unit at Lessor's
            sole cost and expense promptly after such Old Unit ceases to
            operate. As used herein, "ceases to operate" means any one of the
            following elements of an Old Unit requires replacement: (a) heat
            exchanger, (b) evaporation coils, (c) condenser coils, or (d)
            compressor. The

                                      -11-




            
<PAGE>   23
replacement of Old Units, when made shall be with comparable new HVAC units of
at least the same tonnage. The Old Units are as follows:

     Manufacture    Model #        Serial #    Tonnage    Location
     AC-1 Carrier   50DD024-600    RO 96371    20         N.W. corner
     AC-2 Carrier   50DD028-600    SO 98824    25         S.W. corner
     AC-3 Carrier   50DP012-600    OO 96215    10         S.E. corner
     AC-4 Carrier   50DD024-600    RO 96370    20         N.E. corner

83.  ACCESS BY BANK OF AMERICA.  Lessee hereby agrees that Bank of America,
     National Trust and Savings Association ("BofA") and any entity which
     controls, is under common control with or its controlled by BofA
     (collectively, the "BofA Parties") shall have use of and access to the
     following portions of the Premises):

     (a)  restrooms;
     (b)  loading doors 8 and 9;
     (c)  forklift room for recharging of BofA Parties' forklifts at night;
     (d)  forklift recharging equipment;
     (e)  portions of the Premises necessary for access to the areas described
          in (a)-(d) above, including ingress and egress of trucks, forklifts
          and personnel to and from the Adjacent Space.

     BofA's rights of access under this Paragraph shall terminate at 11:59 p.m.
     on December 31, 1997, and shall be exercised by BofA so as to not
     unreasonably interfere with the construction of the Total Lessee
     Improvements. During the period of BofA's access under this Paragraph,
     Lessee shall not be liable for injury to any person or for damage to any
     property of BofA employees, agents, contractors, licensees, or invitees,
     from any cause whatsoever, occurring upon or about the Premises, and BofA
     shall indemnify and save Lessee harmless from any and all liability and
     claims arising out of or connected with any such injury or damage.

84.  COMMISSIONS.  The commissions payable to the Brokers with respect to this
     Lease are as follows: $158,159.63 payable to Lessor's Broker and
     $239,886.53 payable to Lessee's Broker.

                                      -12-
<PAGE>   24





                       [MAP OF PACIFIC SUNWEAR PREMISES]




                                  EXHIBIT "A"
<PAGE>   25

                                                                     EXHIBIT "B"

                                 APPROVED PLANS

     The following plans prepared by H. Hendy Associates dated September 16,
1997 for Job No. 785:

                                 ARCHITECTURAL

          T         Title sheet

          T-2       Key Plan

          A-1.1     First Floor Partition Plan

          A-1.2     Second Floor Partition Plan

          A-2.1     First Floor Reflected Ceiling Plan

          A-2.2     Second Floor Reflected Ceiling Plan

          A-3.1     First Floor Telephone & Electrical Plan

          A-3.2     Second Floor Telephone & Electrical Plan

          A-4.1     First Floor Finish Plan

          A-4.2     Second Floor Finish Plan
          
          A-5       Door Schedule & Details
          
          A-6       Restroom Plans & Details

          A-7       Millwork

          A-8       Millwork

          A-9       Stair Plans and Finish Elevations


                                   ELECTRICAL

          E-1       Symbols, Schedules & Title 24 Calculations

          E-2       First Floor Electrical Lighting Plan

          E-3       First Floor Electrical Power Plan

          E-4       Second Floor Electrical Lighting Plan

          E-5       Second Floor Electrical Lighting Plan

          E-6       Single Line Diagram & Specifications

          E-7       Panel Schedules



                                      -1-


<PAGE>   26

                                   MECHANICAL

                M0-1    Schedules, Notes and Title 24 Calculations

                M1-1    First Floor Reflected Ceiling Plan

                M1-2    Second Floor Reflected Ceiling Plan

                M2-1    HVAC Details and Controls


                                    PLUMBING

                P0-1    Schedules, Notes, and Title 24 Calculations

                P1-1    First Floor Demolition Plan

                P1-2    Second Floor Demolition Plan
        
                P2-1    First Floor Plumbing Plan

                P2-2    Second Floor Plumbing Plan


                                      -2-
<PAGE>   27


                            [SIGNAGE EXHIBIT GRAPH]
<PAGE>   28

                             RULES AND REGULATIONS


1.      All shipping pallets shall be stored within the Premises and not outside
        of the Building.

2.      Tenants shall deposit all trash and rubbish in their own container in
        such a manner that styrofoam packing and other materials are not 
        scattered throughout the complex by wind.

3.      Tenant shall cooperate with the other tenants within the complex as to
        truck parking and/or "spotting" to insure all tenants have easy access
        to their respective loading areas.


                                  Page 1 of 1
<PAGE>   29
       STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE -- MODIFIED NET
                  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

                                     [LOGO]


1.   BASIC PROVISIONS ("BASIC PROVISIONS").

     1.1       PARTIES: This Lease ("LEASE"), dated for reference purposes only,
January 12, 1998 is made by and between The Realty Associates Fund IV, L.P., a
Delaware limited partnership ("LESSOR") and Pacific Sunwear of California, Inc.,
a California corporation ("LESSEE"), (collectively the "PARTIES," or
individually a "PARTY").

     1.2(a)    PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 5200 East La Palma Avenue, located in
the City of Anaheim, County of Orange, State of California, with zip code 92807,
as outlined on Exhibit A attached hereto ("PREMISES"). The "BUILDING" is that
certain building containing the Premises and generally described as (describe
briefly the nature of the Building): the Premises constitute approximately
90,664 square feet and are a portion of an industrial building having
approximately 266,963 square feet as shown on Exhibit A. In addition to Lessee's
rights to use and occupy the Premises as hereinafter specified, Lessee shall
have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7
below) as hereinafter specified, but shall not have any rights to the roof,
exterior walls or utility raceways of the Building or to any other buildings in
the Industrial Center. The Premises, the Building, the Common Areas, the land
upon which they are located, along with all other buildings and improvements
thereon, are herein collectively referred to as the "INDUSTRIAL CENTER." (Also
see Paragraph 2.)

     1.2(b)    PARKING: 112 unreserved vehicle parking spaces ("UNRESERVED
PARKING SPACES"); and 17 reserved vehicle parking spaces ("RESERVED PARKING
SPACES"). (Also see Paragraph 2.6.)

     1.3       TERM: See Paragraph 50.

     1.5       BASE RENT: $ See Par. 53 per month ("BASE RENT"), payable on the
first (1st) day of each month commencing on the Commencement Date (Also see
Paragraph 4.)

     1.6(a)    BASE RENT PAID UPON EXECUTION: $32,639.04 as Base Rent for the
first (1st) month of the Original Term.

     1.6(b)    LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: 33.9613 percent
("LESSEE'S SHARE") as determined by [X] prorata square footage of the Premises
as compared to the total square footage of the Building.

     1.7       SECURITY DEPOSIT: $32,639.04 ("SECURITY DEPOSIT"). (Also see
Paragraph 5.)

     1.8       PERMITTED USE: Administrative offices, manufacturing and
distribution of apparel, footwear and accessories and all activities related
thereto ("PERMITTED USE") (Also see Paragraph 6.)

     1.9       INSURING PARTY. Lessor is the "INSURING PARTY." (Also see
Paragraph 8.)

     1.10(a)   REAL ESTATE BROKERS. The following real estate broker(s)
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):

[x]  None represents Lessor exclusively ("LESSOR'S BROKER");
[X]  CB Commercial represents Lessee exclusively ("LESSEE'S BROKER"); or
[ ]  __________________________ represents both Lessor and Lessee ("DUAL
AGENCY"). (Also see Paragraph 15.)

     1.10(b)   PAYMENT TO BROKERS. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s).

     1.11      GUARANTOR. The obligations of the Lessee under this Lease are to
be guaranteed by N/A ("GUARANTOR"). (Also see Paragraph 37.)

     1.12      ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 75, and Exhibits A through B, all of which
constitute a part of this Lease.

2.   PREMISES, PARKING AND COMMON AREAS.

     2.1       LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Common Area Operating
Expenses, is an approximation which Lessor and Lessee agree is reasonable and
the rental and Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is
not subject to revision whether or not the actual square footage is more or
less.

     2.2       CONDITION. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the Commencement
Date. If a non-compliance with said warranty exists as of the Commencement Date,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within
ninety (90) days after the Commencement Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee's sole cost and expense.

     2.3       COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)), made or to
be made by Lessee. If the Premises do not comply with said warranties, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee given within nine (9) months following the
Commencement Date and setting forth with specificity the nature and extent of
such non-compliance, take such action, at Lessor's expense, as may be reasonable
or appropriate to rectify the non-compliance. Lessor makes no warranty that the
Permitted Use in Paragraph 1.8 is permitted for the Premises under Applicable
Laws (as defined in Paragraph 2.4).

     2.4       ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it
has been advised by the Broker(s) to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and fire
sprinkler systems, security, environmental aspects, seismic and earthquake
requirements, and compliance with the Americans with Disabilities Act and
applicable zoning, municipal, county, state and federal laws, ordinances and
regulations and any covenants or restrictions of record (collectively,
"APPLICABLE LAWS") and the present and future suitability of the Premises for
Lessee's intended use; (b) that Lessee has made such investigation as it deems
necessary with reference to such matters, is satisfied with reference thereto,
and assumes all responsibility therefore as the same relate to Lessee's
occupancy of the Premises and/or the terms of this Lease; and (c) that neither
Lessor, nor any of Lessor's agents, has made any oral or written representations
or warranties with respect to said matters other than as set forth in this
Lease.

     2.5       LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the date
set forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In
such event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.

(C) American Industrial Real Estate Association 1993 

                          MULTI-TENANT -- MODIFIED NET
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     2.6     VEHICLE PARKING. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called "PERMITTED SIZE
VEHICLES." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Lessor in the Rules and Regulations (as
defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)

                (a)     Lessee shall not permit or allow any vehicles that
belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, contractors or invitees to be loaded, unloaded, or parked
in areas other than those designated by Lessor for such activities.

                (b)     If Lessee permits or allows any of the prohibited
activities described in this Paragraph 2.6, then Lessor shall have the right
after notice, in addition to such other rights and remedies that it may have,
to remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.

                (c)     Lessor shall at the Commencement Date of this Lease,
provide the parking facilities required by Applicable Law.

        2.7     COMMON AREAS - DEFINITION. The term "COMMON AREAS" is defined
as all areas and facilities outside the Premises and within the exterior
boundary line of the Industrial Center and interior utility raceways within the
Premises that are provided and designated by the Lessor from time to time for
the general-non-exclusive use of Lessor, Lessee and other lessees of the
Industrial Center and their respective employees, suppliers, shippers,
customers, contractors and invitees, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways and landscaped areas.

        2.8     COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center. Under
no circumstances shall the right herein granted to use the Common Areas be
deemed to include the right to store any property, temporarily or permanently,
in the Common Areas, except as provided in Paragraph 57. Any such storage shall
be permitted only by the prior written consent of Lessor or Lessor's designated
agent, which consent may be revoked at any time. In the event that any
unauthorized storage shall occur then Lessor shall have the right after notice,
in addition to such other rights and remedies that it may have, to remove the
property and charge the cost to Lessee, which cost shall be immediately payable
upon demand by Lessor.

        2.9     COMMON AREAS - RULES AND REGULATIONS. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable and nondiscriminatory Rules and
Regulations with respect thereto in accordance with Paragraph 40. Lessee agrees
to abide by and conform to all such Rules and Regulations, and to cause its
employees, suppliers, shippers, customers, contractors and invitees to so abide
and conform. Lessor shall not be responsible to Lessee for the non-compliance
with said rules and regulations by other lessees of the Industrial Center.

        2.10    COMMON AREAS - CHANGES. Lessor shall have the right, in
Lessor's sole discretion, from time to time:

                (a)     To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;

                (b)     To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;

                (c)     To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;

                (d)     To add additional buildings and improvements to the
Common Areas;

                (e)     To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Industrial Center, or
any portion thereof; and

                (f)     To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Industrial Center as
Lessor may, in the exercise of sound business judgment, deem to be
appropriate.*

3.      TERM.

        3.1     TERM. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3.

        3.2     EARLY POSSESSION. If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after
the Early Possession Date but prior to the Commencement Date, the obligation to
pay Base rent shall be abated for the period of such early occupancy. All other
terms of this Lease, however (including but not limited to the obligations to
pay Lessee's Share of Common Area Operating Expenses and to carry the insurance
required by Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.

        3.3     DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall
not, except as otherwise provided herein, be obligated to pay rent or perform
any other obligation of Lessee under the terms of this Lease until Lessor
delivers possession of the Premises to Lessee.*

4.      RENT.

        4.1     BASE RENT. Lessee shall pay Base Rent and other rent or
charges, as the same may be adjusted from time to time, to Lessor in lawful
money of the United States, without offset or deduction, on or before the day
on which it is due under the terms of this Lease. Base Rent and all other rent
and charges for any period during the term hereof which is for less than one
full month shall be prorated based upon the actual number of days of the month
involved. Payment of Base Rent and other charges shall be made to Lessor at its
address stated herein or to such other persons or at such other addresses as
Lessor may from time to time designate in writing to Lessee.

        4.2     COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor
during the term hereof, in addition to the Base Rent, Lessee's Share (as
specified in Paragraph 1.6(b)) of all Common Area Operating Expenses, as
hereinafter defined, during each calendar year of the term of this Lease, in
accordance with the following provisions:

                (a)     "COMMON AREA OPERATING EXPENSES" are defined, for
purposes of this Lease, as all costs incurred by Lessor relating to the
ownership and operation of the Industrial Center, including, but not limited
to, the following:

                        (i)     The operation, repair and maintenance, in neat,
clean, good order and condition, of the following:

                                (aa)    The Common Areas, including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities, fences and gates, elevators and roof.

                                (bb)    Exterior signs and any tenant
directories.
                                
                                (cc)    Fire detection and sprinkler systems.

                        (ii)    The cost of water, gas, electricity and
telephone to service the Common Areas.

                        (iii)   Trash disposal, property management and security
services and the costs of any environmental inspections.

                        (iv)    Reserves set aside for maintenance and repair
of Common Areas.

                        (v)     Real Property Taxes (as defined in Paragraph
10.2) to be paid by Lessor for the Building and the Common Areas under
Paragraph 10 hereof.

                        (vi)    The cost of the premiums for the insurance
policies maintained by Lessor under Paragraph 8 hereof.

                        (vii)   Any deductible portion of an insured loss
concerning the Building or the Common Areas.

                        (viii)  Any other services to be provided by Lessor
that are stated elsewhere in this Lease to be a Common Area Operating Expense.

                (b)     Any Common Area Operating Expenses and Real Property
Taxes that are specifically attributable to the Building or to any other
building in the Industrial Center or to the operation, repair and maintenance
thereof, shall be allocated entirely to the Building or to such other building.
However, any Common Area Operating Expenses and Real Property Taxes that are
not specifically attributable to the Building or to any other building or to
the operation, repair and maintenance thereof, shall be equitably allocated by
Lessor to all buildings in the Industrial Center.

                (c)     The inclusion of the Improvements, facilities and
services set forth in Subparagraph 4.2(a) shall not be deemed to impose an
obligation upon Lessor to either have said improvements or facilities or to
provide those services unless the Industrial Center already has the same.
Lessor already provides the services, or Lessor has agreed elsewhere in this
Lease to provide the same or some of them.

                (d)     Lessee's Share of Common Area Operating Expenses shall
be payable by Lessee within ten (10) days after a reasonably detailed statement
of actual expenses is presented to Lessee by Lessor. At Lessor's option,
however, an amount may be estimated by Lessor from time to time of Lessee's
Share of annual Common Area Operating Expenses and the same shall be payable
monthly or quarterly, as Lessor shall designate, during each 12-month period of
the Lease term, on the same day as the Base Rent is due hereunder. Lessor shall
deliver to Lessee within sixty (60) days after the expiration of each calendar
year a reasonably detailed statement showing Lessee's Share of the actual
Common Area Operating Expenses incurred during the preceding year. If Lessee's
payments under this Paragraph 4.2(d) during said preceding year exceed Lessee's
Share as indicated on said statement, Lessee shall be credited the amount of
such over-


*See Addendum

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(C) American Industrial Real Estate Association 1993


                                      -2-
<PAGE>   31
payment against Lessee's Share of Common Area Operating Expenses next becoming
due: If Lessee's payments under this Paragraph 4.2(d) during said preceding
year were less than Lessee's Share as indicated on said statement, Lessee shall
pay to Lessor the amount of the deficiency within ten (10) days after delivery
by Lessor to Lessee of said statement.

5.    Security Deposit. Lessee shall deposit with Lessor upon Lessee's execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefore
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Lessor shall not be required to keep all or
any part of the Security Deposit separate from its general accounts. Lessor
shall, at the expiration or earlier termination of the term hereof and after
Lessee has vacated the Premises, return to Leases (or, at Lessor's option, to
the last assignee, if any, of Lessee's Interest herein), that portion of the
Security Deposit not used or applied by Lessor. Unless otherwise expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust, or to be prepayment for any monies to be paid by Lessee
under this Lease.*

6.    USE.

      6.1   PERMITTED USE.

            (a)   Lessee shall use and occupy the Premises only for the
Permitted Use set forth in Paragraph 1.8, or any other legal use which is
reasonably comparable thereto, and for no other purpose. Lessee shall not use
or permit the use of the Premises in a manner that is unlawful, creates waste or
a nuisance, or that disturbs owners and/or occupants of, or causes damage to
the Premises or neighboring premises or properties.

            (b)   Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants, and
by prospective assignees and subtenants of Lessee, its assignees and subtenants,
for a modification of said Permitted Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or in the Building
or the mechanical or electrical systems therein, does not conflict with uses by
other lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible pursuant to
this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within
five (5) business days after such request give a written notification of same,
which notice shall include an explanation of Lessor's reasonable objections to
the change in use.

      6.2   HAZARDOUS SUBSTANCES.

            (a)   REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product, substance, chemical
material or waste whose presence, nature; quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises; (ii) regulated or monitored by any
governmental authority; or (iii) a basis for potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof. Lessee shall not engage in any activity in or about the Premises which
constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
without the express prior written consent of Lessor and compliance in a timely
manner (at Lessee's sole cost and expense) with all Applicable Requirements (as
defined in Paragraph 6.3). "REPORTABLE USE" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation; or disposal or a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, governmental authority, and (iii)
the presence in, on or about the Premises of a Hazardous Substance with respect
to which any Applicable Laws require that a notice be given to persons entering
or occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may, without Lessor's prior consent, but upon notice to Lessor
and in compliance with all Applicable Requirements, use any ordinary and
customary materials reasonably required to be used by Lessee in the normal
course of the Permitted Use, so long as such use is not a Reportable Use and
does not expose the Premises or neighboring properties to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may (but without any obligation to do so) condition its consent to any
Reportable Use of any Hazardous Substance by Lessee upon Lessee's giving Lessor
such additional assurances as Lessor, in its reasonable discretion, deems
necessary to protect itself, the public, the Premises and the environment
against damage, contamination or injury and/or liability therefor, including but
not limited to the installation (and, at Lessor's option, removal on or before
Lease expiration or earlier termination of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the deposit
of an additional Security Deposit Under Paragraph 5 hereof.*

            (b)   DUTY TO INFORM LESSOR.  If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance has come to be located in, on,
under or about the Premises or the Building, other than as previously consented
to by Lessor, Lessee shall immediately give Lessor written notice thereof,
together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance including but not limited to all such documents as may be involved in
any Reportable Use involving the Premises. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under or about the
Premises (including, without limitation, through the plumbing or sanitary sewer
system).

            (c)   INDEMNIFICATION. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under
Lessee's control. Lessee's obligations under this Paragraph 8.2(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee; and the
cost of investigation (including consultants' and attorneys' fees and
testing), removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved; and shall survive the expiration of earlier
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.*
      
      6.3   LESSEE'S COMPLIANCE WITH REQUIREMENTS. Lessee shall, at Lessee's
sole cost and expense, fully diligently and in a timely manner, comply with all
"APPLICABLE REQUIREMENTS," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil
and groundwater conditions, and (iii) the use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage, spill,
or release of any Hazardous Substance), now in effect or which may hereafter
come into effect. Lessee shall, within five (5) days after receipt of Lessor's
written request, provide Lessor with copies of all documents and information,
including but not limited to permits, registrations, manifests, applications,
reports and certificates, evidencing Lessee's compliance with any Applicable
Requirements specified by Lessor, and shall immediately upon receipt, notify
Lessor in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint or report pertaining to or
involving failure by Lessee or the Premises to comply with any Applicable
Requirements.

      6.4   INSPECTION; COMPLIANCE WITH LAW. Lessor, Lessor's agents,
employees, contractors and designated representatives, and the holders of any
mortgages, deeds of trust or ground leases on the Premises ("LENDERS") shall
have the right to enter the Premises at any time in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition
of the Premises and for verifying compliance by Lessee with this Lease and all
Applicable Requirements (as defined in Paragraph 6.3), and Lessor shall be
entitled to employ experts and/or consultants in connection therewith to advise
Lessor with respect to Lessee's activities, including but not limited to
Lessee's installation, operation, use, monitoring, maintenance, or removal of
any Hazardous Substance on or from the Premises. The costs and expenses of any
such inspections shall be paid by the party requesting same, unless a Default
or Breach of this Lease by Lessee or a violation of Applicable Requirements or
a contamination, caused or materially contributed to by Lessee, is found to
exist or to be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In such case, Lessee shall upon request reimburse Lessor or
Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.*

7.    MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND
      ALTERATIONS.

      7.1   LESSEE'S OBLIGATIONS.

            (a)   Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment or facilities specifically serving the Premises,
such as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and skylights, but
excluding any items which are the responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all Improvements thereon or a part thereof in good order, condition
and state of repair.

            (b)   Lessee shall, at Lessee's sole cost and expense, procure and
maintain a contract, with copies to Lessor, in customary form and substance for
and with a contractor specializing and experienced in the inspection,
maintenance and service of the heating, air conditioning and ventilation system
for the Premises. However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain the contract for the heating, air conditioning and
ventilating systems, and if Lessor so elects, Lessee shall reimburse Lessor,
upon demand, for the cost thereof.


            (c)   If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on Lessee's behalf, and put
the Premises in good order, condition and repair, in accordance with Paragraph
13.2 below.

      7.2   LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
foundations, exterior walls, structural condition of interior bearing walls,
exterior roof, fire, sprinkler, and/or standpipe and hose (if located in the
Common Areas) or other automatic fire extinguishing system including fire alarm
and/or smoke 

*See Addendum

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                                      -3-

      
<PAGE>   32
detection systems and equipment, fire hydrants; parking lots, walkways,
parkways, driveways, landscaping, fences, signs and utility systems serving the
common Areas and all parts thereof, as well as providing the services for which
there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor
shall not be obligated to paint the interior surfaces of exterior walls nor
shall Lessor be obligated to maintain, repair or replace windows, doors or
plate glass of the Premises. Lessee expressly waives the benefit of any statute
now or hereafter in effect which would otherwise afford Lessee the right to
make repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Building, Industrial Center or Common Areas in good order,
condition and repair.*

     7.3  UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.

          (a)  DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
is used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term "TRADE FIXTURES"
shall mean Lessee's machinery and equipment which can be removed without doing
material damage to the Premises. The term "ALTERATIONS" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined
as Alterations and/or Utility Installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause
to be made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises
(excluding the roof) without Lessor's consent but upon notice to Lessor, so
long as they are not visible from the outside of the Premises, do not involve
puncturing, relocating or removing the roof or any existing walls, or changing
or interfering with the fire sprinkler or fire detection systems and the cost
thereof does not exceed $20,000.

          (b)  CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities; (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon; and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor. Lessor may, (but without obligation
to do so) condition its consent to any requested Alteration or Utility
Installation that costs $20,000 or more upon Lessee's providing Lessor with a
lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation.

          (c)  LIEN PROTECTION. Lessee shall pay when due all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at
or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on, or about the Premises, and Lessor shall have
the right to post notices of non-responsibility in or on the Premises as
provided by law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense, defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises. If Lessor shall
require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in
an amount equal to one and one-half times the amount of such contested lien
claim or demand, indemnifying Lessor against liability for the same, as
required by law for the holding of the Premises free from the effect of such
lien claim. In addition, Lessor may require Lessee to pay Lessor's
attorneys' fees and costs in participating in such action if Lessor shall
decide it is to its best interest to do so.

     7.4  OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.

          (a)  OWNERSHIP. Subject to Lessor's right to require their removal
and to cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises
by Lessee shall be the property of and owned by Lessee, but considered a part
of the Premises. Lessor may, at any time and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility Installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.

          (b)  REMOVAL. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee-Owned Alterations or Utility Installations be removed by
the expiration or earlier termination of this Lease, notwithstanding that their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Alterations or Utility
Installations made without the required consent of Lessor.*

          (c)  SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination date,
clean and free of debris and in good operating order, condition and state of
repair, ordinary wear and tear excepted. Ordinary wear and tear shall not
include any damage or deterioration that would have been prevented by good
maintenance practice or by Lessee performing all of its obligations under this
Lease, Except as otherwise agreed or specified herein, the Premises, as
surrendered, shall include the Alterations and Utility Installations. The
obligation of Lessee shall include the repair of any damage occasioned by the
installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Lessee-Owned Alterations and Utility Installations, as well as
the removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or ground water contaminated
by Lessee, all as may then be required by Applicable Requirements and/or good
practice, Lessee's trade Fixtures shall remain the property of Lessee and shall
be removed by Lessee subject to its obligation to repair and restore the
Premises per this Lease.

8.   INSURANCE; INDEMNITY.

     8.1  PAYMENT OF PREMIUMS. The cost of the premiums for the insurance
policies maintained by Lessor under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date or Expiration
Date.

     8.2  LIABILITY INSURANCE.

          (a)  CARRIED BY LESSEE. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $1,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" endorsement and contain
the "Amendment of the Pollution Exclusion" endorsement for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "INSURED
CONTRACT" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance required by this Lease or as carried by
Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of
any obligation hereunder. All insurance to be carried by Lessee shall be
primary to and not contributory with any similar insurance carried by Lessor,
whose insurance shall be considered excess insurance only.

          (b)  CARRIED BY LESSOR. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall not be
named as an additional insured therein.

     8.3  PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.

          (a)  BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and to any Lender(s), insuring against loss or damage to
the Premises. Such insurance shall be for full replacement cost, as the same
shall exist from time to time, or the amount required by any Lender(s), but in
no event more than the commercially reasonable and available insurable value
thereof if, by reason of the unique nature or age of the improvements involved,
such latter amount is less than full replacement cost. Lessee-Owned Alterations
and Utility Installations, Trade Fixtures and Lessee's personal property shall
be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and
commercially appropriate, Lessor's policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood unless
required by a Lender), including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of the Building required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered loss, but not including plate glass insurance. Said
policy or policies shall also contain an agreed valuation provision in lieu of
any co-insurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located.*

          (b)  RENTAL VALUE. Lessor shall also obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and any Lender(s); insuring the loss of the full rental and
other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, Insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said Insurance may provide that
in the event the Lease is terminated by reason of an insured loss, the period
of Indemnity for such coverage shall be extended beyond the date of the
completion of repairs or replacement of the Premises, to provide for one full
year's loss of rental revenues from the date of any such loss. Said Insurance
shall contain an agreed valuation provision in lieu of any co-insurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected rental income, Real Property Taxes, insurance premium costs and other
expenses, if any, otherwise payable, for the next 12-month period. Common Area
Operating Expenses shall include any deductible amount in the event of such
loss.

          (c)  ADJACENT PREMISES. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Industrial Center if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.

          (d)  LESSEE'S IMPROVEMENTS. Since Lessor is the insuring Party,
Lessor shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become property of Lessor under
the terms of this Lease.

     8.4  LESSEE'S PROPERTY INSURANCE. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already, carried, maintain insurance coverage on all
of Lessees's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance
shall: be full replacement cost coverage with a deductible. The proceeds from
any such insurance shall be used by Lessee for the replacement of personal
property and the restoration of Trade Fixtures and Lessee-Owned Alterations and
Utility Installations. Upon request from Lessor, Lessee shall provide Lessor
with written evidence that such insurance is in force.

     8.5  INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, or such other rating as may be required by a Lender,
as set forth in the most current issue of "Best's Insurance Guide." Lessee
shall not do or permit to be done anything which shall invalidate the insurance
policies referred to in

* See Addendum.


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                                      -4-
<PAGE>   33
this Paragraph 8, Lessee shall cause to be delivered to Lessor, within seven
(7) days after the earlier of the Early Possession Date or the Commencement
Date, certified copies of, or certificates evidencing the existence and amounts
of, the Insurance required under Paragraph 8.2(a) and 8.4. No such policy shall
be cancellable or subject to modification except after thirty (30) days' prior
written notice to Lessor. Lessee shall at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"Insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand.*

     8.6  WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages (whether in contract or in tort),
against the other, for loss or damage to their property arising out of or
incident to the perils required to be insured against under Paragraph 8. The
effect of such releases and waivers of the right to recover damages shall not
be limited by the amount of insurance carried or required, or by any
deductibles applicable thereto. Lessor and Lessee agree to have their
respective insurance companies issuing property damage insurance waive any
right to subrogation that such companies may have against Lessor or Lessee, as
the case may be, so long as the insurance is not invalidated thereby. 

     8.7  INDEMNITY. Except for Lessor's negligence, or Lessor's contractors',
agents' or employees' willful misconduct, and/or breach of express warranties,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, costs, liens,
judgments, penalties, loss of permits, attorneys' and consultants' fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the occupancy of the Premises by Lessee, the conduct of Lessee's business, any
act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperative with Lessee in such defense. Lessor need not have first paid
any such claim in order to be so indemnified.

     8.8  EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property
of Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other lessee of Lessor nor from the failure by Lessor to enforce the
provisions of any other lease in the Industrial Center. Notwithstanding
Lessor's negligence or breach of this Lease, Lessor shall under no
circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.

9.   DAMAGE OR DESTRUCTION.

     9.1  DEFINITIONS.

          (a)  "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is less than fifty percent (50%)
of the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.

          (b)  "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is fifty percent (50%) or more
of the then Replacement Cost of the Premises (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures) immediately prior to
such damage or destruction. In addition, damage or destruction to the Building,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building, the cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement Cost
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building) of the Building shall, at the option
of Lessor, be deemed to be Premises Total Destruction.

          (c)  "INSURED LOSS" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a) irrespective of any deductible amounts or
coverage limits involved.

          (d)  "REPLACEMENT COST" shall mean the cost to repair or build the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto; including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.

          (e)  "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

     9.2  PREMISES PARTIAL DAMAGE - INSURED LOSS. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. In the event, however, that there is a
shortage of insurance proceeds and such shortage is due to the fact that, by
reason of the unique nature of the improvements in the Premises, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, Lessor shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If Lessor does not receive such funds or assurance within such
ten (10) day period, and if Lessor does not so elect to restore and repair, then
this Lease shall terminate sixty (60) days following the occurrence of the
damage or destruction. Unless otherwise agreed, Lessee shall in no event have
any right to reimbursement from Lessor for any funds contributed by Lessee to
repair any such damage or destruction.*

     9.3  PARTIAL DAMAGE - UNINSURED LOSS. If Premises Partial Damage that is
not an insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may at Lessor's
option, either (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) give written notice to Lessee within thirty (30) days after
receipt by Lessor of knowledge of the occurrence of such damage of Lessor's
desire to terminate this Lease as of the date sixty (60) days following the
date of such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessee's commitment to pay for the repair of such damage totally at Lessee's
expense and without reimbursement from Lessor. Lessee shall provide Lessor with
the required funds or satisfactory assurance thereof within thirty (30) days
following such commitment from Lessee. In such event this Lease shall continue
in full force and effect, and Lessor shall proceed to make such repairs as soon
as reasonably possible after the required funds are available. If Lessee does
not give such notice and provide the funds or assurance thereof within the
times specified above, this Lease shall terminate as of the date specified in
Lessor's notice of termination.

     9.4  TOTAL DESTRUCTION.  Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the
damage or destruction is an Insured Loss or was caused by a negligent or
willful act of Lessee. In the event, however, that the damage or destruction
was caused by Lessee, Lessor shall have the right to recover Lessor's damages
from Lessee except as released and waived in Paragraph 9.7.

     9.5  DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds (Or adequate assurance thereof) needed to make the
repairs on or before the earlier of (i) the date which is ten (10) days after
Lessee's receipt of Lessor's written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee
duly exercises such option during such period and provides Lessor with funds
(or adequate assurance thereof) to cover any shortage in insurance proceeds,
Lessor shall, at Lessor's expense repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect. If Lessee
fails to exercise such option and provide such funds or assurance during such
period, then this Lease shall terminate as of the date set forth in the first
sentence of this Paragraph 9.5.

     9.6  ABATEMENT OF RENT; LESSEE'S REMEDIES.

          (a)  In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base Rent,
Common Area Operating Expenses and other charges, if any, payable by Lessee
hereunder for the period during which such damage or condition, its repair,
remediation or restoration continues, shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. * Except for abatement
of Base Rent, Common Area Operating Expenses and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall be performed by
Lessee, and Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair, remediation or restoration.

          (b)  If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Lessee may, at any
time prior to the commencement of such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice of
Lessee's election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee gives such notice to Lessor
and such Lenders and such repair or restoration is not commenced within thirty
(30) days after receipt of such notice, this Lease shall terminate as of the
date specified in said notice. If Lessor or a Lender commences the repair or
restoration of the Premises within thirty (30) days after the receipt of such
notice, this Lease shall continue in full force and effect. "Commence" as used
in this Paragraph 9.6 shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever occurs first.

     9.7  HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject

* See Addendum.

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                                      -5-
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to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor may at
Lessor's option either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $100,000 whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of
the occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount equal to twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with the funds
required of Lessee or satisfactory assurance thereof within thirty (30) days
following said commitment by Lessee. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such investigation and
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time period specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.

     9.8  TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.

     9.9  WAIVER OF STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is inconsistent
herewith.

10.  REAL PROPERTY TAXES.

     10.1 PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as defined
in Paragraph 10.2, applicable to the Industrial Center, and except as otherwise
provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions
of Paragraph 4.2.

     10.2 REAL PROPERTY TAX DEFINITION. As used herein, the term, "REAL PROPERTY
TAXES" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed upon the Industrial Center by any authority having the
direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage, or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Industrial Center or any portion thereof, Lessor's
right to rent or other income therefrom, and/or Lessor's business of leasing the
Premises. The term "REAL PROPERTY TAXES" shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of events
occurring, or changes in Applicable Law taking effect, during the term of this
Lease, including but not limited to a change in the ownership of the Industrial
Center or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by
the Parties. In calculating Real Property Taxes for any calendar year, the Real
Property Taxes for any real estate tax year shall be included in the calculation
of Real Property Taxes for such calendar year based upon the number of days
which such calendar year and tax year have in common.

     10.3 ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional Improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.

     10.4 JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.

     10.5 LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency of all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center. When
possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

11.  UTILITIES. Lessee shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon. If
any such utilities or services are not separately metered to the Premises or
separately billed to the Premises, Lessee shall pay to Lessor a reasonable
proportion of all such charges jointly metered or billed with other premises in
the Building, in the manner and within the time periods set forth in Paragraph
4.2(d).

12.  ASSIGNMENT AND SUBLETTING.

     12.1 LESSOR'S CONSENT REQUIRED.

          (a)  Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.

          (b)  A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of fifty
percent (50%) or more of the voting control of Lessee shall constitute a change
in control for this purpose.

          (c)  The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee shall be considered an assignment of this Lease by Lessee to
which Lessor may reasonably withhold its consent. "NET WORTH OF LESSEE" for
purposes of this Lease shall be the net worth of Lessee (excluding any
Guarantors) established under generally accepted accounting principles
consistently applied.

          (d)  An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be a
Default curable after notice per Paragraph 13.1, or a non-curable Breach without
the necessity of any notice and grace period.

          (e)  Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.

     12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

          (a)  Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.

          (b)  Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.

          (c)  The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent and such action shall not relieve such persons from
liability under this Lease or the sublease.

          (d)  In the event of any Default or Breach of Lessee's obligation
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
anyone else responsible for the performance of the Lessee's obligations under
this Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.

          (e)  Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any. Lessee agrees to provide Lessor
with such other or additional information and/or documentation as may be
reasonably requested by Lessor.

          (f)  Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.

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                (g)     The occurrence of a transaction described in Paragraph
12.1(c) shall give Lessor the right (but not the obligation) to require that the
Security Deposit be increased by an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
Security Deposit increase a condition to Lessor's consent to such transaction.

        12.3    ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

                (a)     *Lessor shall not, by reason of the foregoing provision
or any other assignment of such sublease to Lessor, nor by reason of the
collection of the rent from a sublessee, be deemed liable to the sublessee for
any failure of Lessee to perform and comply with any of Lessee's obligations to
such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rent and other charges due and to become due under
the sublease. Sublessee shall rely upon such statement and request from Lessor
and shall pay such rents and other charges to Lessor without any obligation or
right to inquire as to whether such Breach exists and notwithstanding any
notice from or claim from Lessee to the contrary. Lessee shall have no right or
claim against such sublessee, or, until the Breach has been cured, against
Lessor, for any such rents and other charges so paid by said sublessee to
Lessor.

                (b)     In the event of a Breach by Lessee in the performance
of its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents
or security deposit paid by such sublessee to such sublessor or for any other
prior defaults or breaches of such sublessor under such sublease.

                (c)     Any matter or thing requiring the consent of the
sublessor under a sublease shall also require the consent of Lessor herein.

                (d)     No sublease under a sublease approved by Lessor shall
further assign or sublet all or any part of the Premises without Lessor's prior
written consent.

                (e)     Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.

13.     DEFAULT; BREACH; REMEDIES.

        13.1    DEFAULT; BREACH. A "DEFAULT" by Lessee is defined as a failure
by Lessee to observe, comply with or perform any of the terms, covenants,
conditions or rules applicable to Lessee under this Lease. A "BREACH" by Lessee
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, and shall entitle Lessor to pursue the remedies set forth in Paragraphs
13.2 and/or 13.3:

                (a)     The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises.

                (b)     Except as expressly otherwise provided in this Lease,
the failure by Lessee to make any payment of Base Rent, Lessee's Share of
Common Area Operating Expenses, or any other monetary payment required to be
made by Lessee hereunder as and when due, the failure by Lessee to provide
Lessor with reasonable evidence of insurance or surety bond required under this
Lease, or the failure of Lessee to fulfill any obligation under this Lease
which endangers or threatens life or property, where such failure continues for
a period of five (5) days following written notice thereof by or on behalf of
Lessor to Lessee.

                (c)     Except as expressly otherwise provided in this Lease,
the failure by Lessee to provide Lessor with reasonable written evidence (in
duly executed original form, if applicable) of (i) compliance with Applicable
Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service
contracts required under Paragraph 7.1(b), (iii) the rescission of an
unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination
of this Lease per Paragraph 30, (vi) the guaranty of the performance of
Lessee's obligations under this Lease if required under Paragraphs 1.11 and 37,
(vii) the execution of any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this lease, where any such failure
continues for a period of ten (10) days following written notice by or on
behalf of Lessor to Lessee.

                (d)     A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
40 hereof that are to be observed, complied with or performed by Lessee, other
than those described in Subparagraphs 13.1(a), (b) or (c), above, where such
Default continues for a period of thirty (30) days after written notice thereof
by or on behalf of Lessor to Lessee; provided, however, that if the nature of
Lessee's Default is such that more than thirty (30) days are reasonably
required for its cure, then it shall not be deemed to be a Breach of this Lease
by Lessee if Lessee commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion.

                (e)     The occurrence of any of the following events: (i) the
making by Lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section
101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where such seizure is not discharged within thirty (30) days; provided,
however, in the event that any provision of this Subparagraph 13.1(e) is
contrary to any applicable law, such provision shall be of no force or effect,
and shall not affect the validity of the remaining provisions.

                (f)      The discovery by Lessor that any financial statement
of Lessee or of any Guarantor, given to Lessor by Lessee or any guarantor, was
materially false.

                (g)     If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the
guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory breach basis, and Lessee's failure, within sixty (60) days
following written notice by or on behalf of Lessor to Lessee of any such event,
to provide Lessor with written alternative assurances of security, which, when
coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the
time of execution of this Lease.

        13.2    REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written
notice to Lessee (or in case of an emergency, without notice), Lessor may at
its option (but without obligation to do so), perform such duty or obligation
on Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee to Lessor upon invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its own option, may require all future payments for a 9-month period
to be made under this Lease by Lessee to be made only by cashier's check. In
the event of a Breach of this Lease by Lessee (as defined in Paragraph 13.1),
with or without further notice or demand, and without limiting Lessor in the
exercise of any right or remedy which Lessor may have by reason of such Breach,
Lessor may:

                (a)     Terminate Lessee's right to possession of the Premises
by any lawful means, in which case this Lease and the term hereof shall
terminate and Lessee shall immediately surrender possession of the Premises to
Lessor. in such event Lessor shall be entitled to recover from Lessee: (i) the
worth at the time of the award of the unpaid rent which had been earned at the
time of termination; (ii) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that the Lessee provides could
have been reasonably avoided; (iii) the worth at the time of award of the amount
by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee provides could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor
for all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District
in which the Premises are located at the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding the unpaid rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit for such rent and/or damages. If a notice and grace period required under
Subparagraph 13.1(b), (c) or (d) was not previously given, a notice to pay rent
or quit, or to perform or quit, as the case may be, given to Lessee under any
statute authorizing the forfeiture of leases for unlawful detainer shall also
constitute the applicable notice for grace period purposes required by
Subparagraph 13.1(b), (c) or (d). In such case, the applicable grace period
under the unlawful detainer statute shall run concurrently after the one such
statutory notice, and the failure of Lessee to cure the Default within the
greater of the two (2) such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statute.

                (b)     Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after
Lessee's Breach and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. Lessor and
Lessee agree that the limitations on assignment and subletting in this Lease
are reasonable. Acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver to protect the Lessor's interest
under this Lease, shall not constitute a termination of the Lessee's right to
possession.

                (c)     Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located.

*See Addendum

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               (d)  The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.

     13.3      [DELETED]

     13.4      LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or deed of trust covering the
Premises. Accordingly, if any Installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor's designee within ten (10) days after
such amount shall be due, then, without any requirement for notice to Lessee,
Lessee shall pay to Lessor a late charge equal to six percent (6%) of such
overdue amount. The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Lessor will incur by reason of late payment
by Lessee. Acceptance of such late charge by Lessor shall in no event constitute
a waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for six (6) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.*

     13.5      BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by any Lender(s) whose name and address shall have been furnished to
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.

14.  CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the portion of
the Common Areas designated for Lessee's parking, is taken by condemnation,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any compensation, separately awarded to Lessee for Lessee's relocation
expenses and/or loss of Lessee's Trade Fixtures. In the event that this Lease is
not terminated by reason of such condemnation, Lessor shall to the extent of its
net severance damages received, over and above Lessee's Share of the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation authority.*

15.  BROKERS' FEES.

     15.1      PROCURING CAUSE. The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.

     15.3      ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed Lessor's obligation under this Paragraph
15. Each Broker shall be an intended third party beneficiary of the provisions
of Paragraph 1.10 and of this Paragraph 15 to the extent of its interest in any
commission arising from this Lease and may enforce that right directly against
Lessor and its successors.

     15.4      REPRESENTATIONS AND WARRANTIES. Lessee and Lessor each represent
and warrant to the other that it has had no dealings with any person, firm,
broker or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm, or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the Indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.

16.  TENANCY AND FINANCIAL STATEMENTS.

     16.1      TENANCY STATEMENT. Each Party (as "RESPONDING PARTY") shall
within ten (10) days after written notice from the other Party (the "REQUESTING
PARTY") execute, acknowledge and deliver to the Requesting Party a statement in
writing in a form similar to the then most current "TENANCY STATEMENT" form
published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.

     16.2      FINANCIAL STATEMENT. If Lessor desires to finance, refinance, or
sell the Premises or the Building, or any part thereof, Lessee and all
Guarantors shall deliver to any potential lender or purchase designated by
Lessor such financial statements of Lessee and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee's financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

     17.  LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.

18.  SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

19.  INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the state in which
the Premises are located plus two percent (2%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in Paragraph 13.4.

20.  TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

21.  RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.

22.  NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.

23.  NOTICES.

     23.1      NOTICE REQUIREMENTS. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by certified or registered mail
return receipt requested or U.S. Postal Service Express Mail, with postage
prepaid, and shall be deemed sufficiently given if served in a manner specified
in this Paragraph 23. The addresses noted adjacent to a Party's signature on
this Lease shall be that Party's address for delivery or mailing of notice
purposes. Either Party may by written notice to the other specify a different
address for notice purposes, except that upon Lessee's taking possession of the
Premises, the Premises shall constitute Lessee's address for the purpose of
mailing or delivering notices to Lessee. A copy of all notices required or
permitted to be given to Lessor hereunder shall be concurrently transmitted to
such party or parties at such addresses as Lessor may from time to time
hereafter designated by written notice to Lessee.

     23.2      DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown or acceptance of delivery is
refused the postmark thereon. Notices delivered by United States Express Mail or
overnight courier that guarantees next day 

* See Addendum.

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delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier.  If notice is received on a
Saturday or a Sunday or a legal holiday, it shall be deemed received on the
next business day.

24.  WAIVER.  No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or any other term, covenant or condition hereof, Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provisions of this Lease requiring such consent.
Regardless of Lessor's knowledge of a Default or Breach at the time of
accepting rent, the acceptance of rent by Lessor shall not be a waiver of any
Default or Breach by Lessee of any provision hereof. Any payment given Lessor
by Lessee may be accepted by Lessor on account of moneys or damages due Lessor
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor
at or before the time of deposit of such payment. 

23.  RECORDING.  Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.

26.  NO RIGHT TO HOLDOVER.  Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to one hundred fifty
percent (150%) of the Base Rent applicable during the month immediately
preceding such expiration or earlier termination.  Nothing contained herein
shall be construed as a consent by Lessor to any holding over by Lessee.

27.  CUMULATIVE REMEDIES.  No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
and law or in equity.

28.  COVENANTS AND CONDITIONS.  All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions. 

29.  BINDING EFFECT; CHOICE OF LAW.  This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located.  Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30.  SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

     30.1 SUBORDINATION.  This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Lessee agrees that the Lenders holding any such Security Device shall have no
duty, liability or obligation to perform any of the obligations of Lessor under
this Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default
pursuant to Paragraph 13.5. If any Lender shall elect to have this Lease and/or
any Option granted hereby superior to the lien of its Security Device and shall
give written notice thereof to Lessee, this Lease and such Options shall be
deemed prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.*

     30.2 ATTORNMENT.  Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.

     30.3 NON-DISTURBANCE.  With respect to Security Devices entered into by
Lessor after the execution of this lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from
the Lender that Lessee's possession and this Lease, including any options to
extend he term hereof, will not be disturbed so long as Lessee is not in Breach
hereof and attorns to the record owner of the Premises.

     30.4 SELF-EXECUTING.  The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attornment and/or non-disturbance
agreement as is provided for herein.

31.  ATTORNEYS' FEES.  If any Party or Broker brings an action or proceeding
to enforce the terms hereof or declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon, shall
be entitled to reasonable attorneys' fees.  Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment.  The term "PREVAILING PARTY"
shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense.  The attorneys' fee award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorneys' fees reasonably incurred. Broker(s) shall be intended third party
beneficiaries of this Paragraph 31.

32.  LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS.  Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
Building, as Lessor may reasonably deem necessary.  Lessor may at any time
place on or about the Premises or Building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred eighty (180) days of the
term hereof place on or about the Premises any ordinary "For Lease" signs.  All
such activities of Lessor shall be without abatement of rent or liability to
Lessee.*

33.  AUCTIONS.  Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent.  Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.

34.  SIGNS.  Lessee shall not place any sign upon the exterior of the
Premises or the Building, except that Lessee may, with Lessor's prior written
consent, install (but not on the roof) such signs as are reasonably required to
advertise Lessee's own business so long as such signs are in a location
designated by Lessor and comply with Applicable Requirements and the signage
criteria established for the Industrial Center by Lessor. The installation of
any sign on the Premises by or for Lessee shall be subject to the provisions of
Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures and
Alterations). Unless otherwise expressly agreed herein, Lessor reserves all
rights to the use of the roof of the Building, and the right to install
advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Lessee's business; Lessor shall be
entitled to all revenues from such advertising signs.

35.  TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for
Breach by Lessee, shall automatically terminate any sublease or leaser estate
in the Premises; provided, however, Lessor shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or
all of any existing subtenancies. Lessor's failure within ten (10) days
following any such event to make a written election to the contrary by written
notice to the holder of any such lesser interest, shall constitute Lessor's
election to have such event constitute the termination of such interest.

36.  CONSENTS.

        (a)     Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withheld
or delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' and other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. Lessor shall not be entitled to
be reimbursed for more than One Thousand Five Hundred Dollars ($1,500) of
attorney's fees with respect to any single assignment or sublease request by
Lessee. In addition to the deposit described in Paragraph 12.2(e), Lessor may,
as a condition to considering any such request by Lessee, require that Lessee
deposit with Lessor an amount of money (in addition to the Security Deposit held
under Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor
will incur in considering and responding to Lessee's request. Any unused portion
of said deposit shall be refunded to Lessee without interest. Lessor's consent
to any act, assignment of this Lease or subletting of the Premises by Lessee
shall not constitute an acknowledgment that no Default or Breach by Lessee of
this Lease exists, nor shall such consent be deemed a waiver of any then
existing Default or Breach, except as may be otherwise specifically stated in
writing by Lessor at the time of such consent.

        (b)     All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.

37.  GUARANTOR.

     37.1   FORM OF GUARANTY. If there are to be any Guarantors of this Lease
per Paragraph 1.11, the form of the guaranty to be executed by each such
Guarantor shall be in the form most recently published by the American
Industrial Real Estate Association, and each such Guarantor shall have the same
obligations as Lessee under this lease, including but not limited to the
obligation to provide the Tenancy Statement and information required in
Paragraph 16.

     37.2   ADDITIONAL OBLIGATIONS OF GUARANTOR. It shall constitute a Default
of the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor
(and of the party signing on Guarantor's behalf) to obligate such Guarantor on
said guaranty, and resolution of its board of directors authorizing the making
of such guaranty, together with a certificate of incumbency showing the
signatures of the persons authorized to sign on its behalf, (b) current
financial statements of Guarantor as may from time to time be requested by
Lessor, (c) a Tenancy statement, or (d) written confirmation that the guaranty
is still in effect.

38.  QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises and
the performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.

*See Addendum.

MULTI-TENANT--MODIFIED NET
(C) American Industrial Real Estate Association 1993

                                      -9-
<PAGE>   38
39. OPTIONS*

     39.1      DEFINITION. As used in this Lease, the word "OPTION" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease other property of Lessor; (c) the right to purchase the
Premises, or the right of first refusal to purchase the Premises, or the right
of first offer to purchase the Premises, or the right to purchase other
property of Lessor, or the right of first refusal to purchase other property of
Lessor, or the right of first offer to purchase other property of Lessor.

     39.2      OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to
Lessee in this Lease is personal to the original Lessee named in Paragraph 1.1
hereof, and cannot be voluntarily or involuntarily assigned or exercised by any
person or entity other than said original Lessee while the original Lessee is in
full and actual possession of the Premises and without the intention of
thereafter assigning or subletting. The Options, if any, herein granted to
Lessee are not assignable, either as a part of an assignment of this Lease or
separately or apart therefrom, and no Option may be separated from this Lease in
any manner, by reservation or otherwise.

     39.3      MULTIPLE OPTIONS. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later option cannot be exercised
unless the prior Options to extend or renew this Lease have been validly
exercised.

     39.4      EFFECT OF DEFAULT ON OPTIONS.

               (a)  Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary; (i)
during the period commencing with the giving of any notice of Default under
Paragraph 13.1 and continuing until the noticed Default is cured, or (ii)
during the time Lessee is in Breach of this Lease, or (iii) in the event that
Lessor has given to Lessee three (3) or more notices of separate Defaults under
Paragraph 13.1 during the twelve (12) month period immediately preceding the
exercise of the Option, whether or not the Defaults are cured.

               (b)  The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise
an Option because of the provisions of Paragraph 39.4(a)

               (c)  All rights of Lessee under the provisions of an Option
shall terminate and be of no further force or effect, notwithstanding Lessee's
due and timely exercise of the Option, if, after such exercise and during the
term of this Lease, (i) Lessor gives to Lessee three (3) or more notices of
separate Defaults under Paragraph 13.1 during any twelve (12) month period,
whether or not the Defaults are cured, or (ii) if Lessee commits a Breach of
this Lease.

40.  RULES AND REGULATIONS. Lessee agrees that it will abide by, and keep and
observe all nondiscriminatory reasonable rules and regulations ("Rules and
Regulations") which Lessor may make from time to time for the management,
safety, care, and cleanliness of the grounds, the parking and unloading of
vehicles and the preservation of good order, as well as for the convenience of
other occupants or tenants of the Building and the Industrial Center and their
invitees.

41.  SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

42.  RESERVATIONS. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way,
utility raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement
rights, dedication, map or restrictions.

43.  PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.

44.  AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.

45.  CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.

46.  OFFER. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.

47.  AMENDMENTS. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the
property of which the Premises are a part.

48.  MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.

*See Addendum

MULTI-TENANT--MODIFIED NET
(C) American Industrial Real Estate Association 1993

                                      -10-
<PAGE>   39
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.

        IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR
ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE
THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS,
UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY
THE REAL ESTATE BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE
LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE
OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE
SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE
STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Executed at:                            Executed at:  Anaheim, California
            -------------------------               ----------------------------

on:                                     on:           1/15/98
   ----------------------------------      -------------------------------------

By LESSOR:                              By LESSEE:

The Realty Associates Fund IV, L.P.     Pacific Sunwear of California, Inc.
-------------------------------------   ----------------------------------------
By: Realty Associates Fund IV, LLC      a California corporation
-------------------------------------   ----------------------------------------
    Its General Partner
    ---------------------------------   By: /s/ CARL WOMACK
                                            ------------------------------------
By: TA Realty Corporation               Name Printed: Carl Womack
   ----------------------------------                ---------------------------
    Manager                                    
    ---------------------------------   Title: CFO
By:  [SIG]                                    ----------------------------------
    ---------------------------------  
Name Printed:  [ILLEGIBLE]              By: Greg H. Weaver
             ------------------------      -------------------------------------
Title:  SVP                      
      -------------------------------   Name Printed: /s/ GREG H. WEAVER
Address: c/o TA Associates Realty          -------------------------------------
         45 Milk Street  
         Boston, MA 02109               Title: Chairman - CEO
         Attn: Henry G. Brauer                ----------------------------------
         ----------------------------
Telephone: (617) 338-4309               Address: 5037 East Hunter Avenue
           --------------------------         ----------------------------------
Facsimile: (617) 338-5054                        Anaheim, CA 92807
           --------------------------   ----------------------------------------
                                        Telephone: (714) 693-8066
                                                         -----------------------
                                        ----------------------------------------
                                        Facsimile: (714) 693-8165
                                                        ------------------------

And after the Commencement Date the notice address shall be the premises under
that certain lease dated September 30, 1997, between Bank of America and Lessee
for 5200 East La Palma Avenue, Anaheim, California (hereinafter referred to s
the "9/30/97 Lease").

MULTI-TENANT--MODIFIED NET
(C) American Industrial Real Estate Association 1993

                                      -11-
<PAGE>   40
                   ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
                MULTI-TENANT LEASE - MODIFIED NET BY AND BETWEEN
       THE REALTY ASSOCIATES FUND IV, L.P., A DELAWARE LIMITED PARTNERSHIP
                                       AND
                 PACIFIC SUNWEAR OF CALIFORNIA, INC. ("LESSEE")
                             DATED JANUARY 12, 1998

        49. Commencement Date. Lessor and Lessee agree that the estimated
Commencement Date shall be June 1, 1998 ("Estimated Commencement Date"). The
actual Commencement Date shall be the later of (a) the Estimated Commencement
Date or (b) the date which is sixty 60) days after the improvements to the
Premises described on Exhibit B attached hereto (the "Base Improvements") are
substantially completed by Lessor; provided that such date shall not be earlier
than the Commencement Date of the 9/30/97 Lease. The Actual Commencement Date
shall be accelerated by one (1) day for each day that substantial completion of
the Base Improvements is delayed by Lessee's Delays. The term of the Lease shall
expire on the last day of the calendar month in which the tenth (10th)
anniversary of the 9/30/97 Lease Commencement Date falls, subject to extension
pursuant to paragraph 54 of this Lease ("Expiration Date").

        50. Term. The Term of the Lease shall commence on the Commencement Date
and shall continue, subject to earlier termination as provided herein, until the
Expiration Date (the "Original Term"). In the event permission is given to
Lessee to enter or occupy all or a portion of the Premises prior to the
Commencement Date, such occupancy shall be subject to all of the terms and
conditions of this Lease, except that if such entry is pursuant to Paragraph 52,
Lessee shall not be obligated to pay Base Rent and any other amount payable by
Lessee under this Lease.

        Lessor shall use all reasonable efforts to make the Premises available
on the Estimated Commencement Date. If for any reason, however, Lessor cannot
deliver possession of the Premises to Lessee on said date, Lessor shall not be
subject to any liability therefor, nor shall such failure affect the validity of
this Lease or the obligations of Lessee hereunder or extend the Term hereof; but
in such case, Lessee shall not be obligated to pay rent or perform any other
obligations of Lessee under the terms of this Lease, except as may be otherwise
provided in this Lease, until the Commencement Date shall have occurred. If,
however, the Commencement Date shall not have occurred on or before June 1,
1998, for any reason, other than Lessee's Delays (defined below) or any reason
beyond the reasonable control of Lessor, Lessee shall receive an offset of Base
Rent for each day after such date that the Commencement Date shall not have
occurred. Such date will be adjusted forward for each day that substantial
completion of the Base Improvements is delayed by Lessee's Delays.

        If the Commencement Date shall not have occurred on or before August 1,
1998, for any reason, other than Lessee's Delays or any reason beyond the
reasonable control of Lessor, Lessee may, at its option, by notice in writing to
Lessor within ten (10) days after that date, cancel this Lease, in which event
the parties shall be discharged from all obligations hereunder; provided
further, however, that if such written notice of Lessee is not received by
Lessor within said 10-day period, Lessee's right to cancel this Lease hereunder
shall terminate and be of no further force or effect.

        51. Substantial Completion. The work to be performed by Lessor under
this Lease shall be deemed substantially completed on the date on which all of
the following shall have been satisfied: (a) all work required for an occupancy
permit for the Premises shall have been completed and it is legally permissible
to occupy the Premises, (b) Lessor shall have substantially completed the Base
Improvements and all punch list items shall have been certified by the Architect
as being complete, and (c) all mechanical systems in the Premises are in good
operating order.

        52. Early Access. Lessor shall, subject to the following terms and
conditions, permit Lessee, and Lessee's agents, to enter the Premises during the
sixty (60) day period prior to the Estimated Commencement Date:


                                        1
<PAGE>   41
               (a) Lessee shall give Lessor reasonable prior written notice of
        such access to the Premises, which notice must contain or be accompanied
        by (i) a description and schedule for the work to be performed in the
        Premises; (ii) the names and addresses of all contractors performing
        such work; (iii) copies of all contracts pertaining to the performance
        of such work (iv) copies of all licenses and permits required in
        connection with the performance of such work; and (v) certificates of
        insurance and instruments of indemnification against all claims, costs,
        expenses, damages, suits, fines, penalties, actions, causes of action
        and liabilities which may arise in connection with such work. Each of
        the foregoing shall be subject to Lessor's approval, which approval
        shall not be arbitrarily withheld.

               (b) Such early access is subject to reasonable scheduling by
        Lessor.

               (c) Lessee's agents, contractors, workers, mechanics, suppliers
        and invitees must work in harmony and not interfere with Lessor and
        Lessor's contractors in doing work in the Premises, in other premises,
        common areas of the Building, and in the general operation of the
        Building. If at any time such entry shall cause or threaten to cause
        disharmony or interference, including labor disharmony, Lessor may
        withdraw its permission upon written notice to Lessee.

               (d) In the event that Lessor's work in the Premises and Lessee's
        work in the Premises (pursuant to the permission granted herein)
        progress simultaneously, Lessor shall not be liable for injury to any
        person or for damage to any property of Lessee, Lessee's employees,
        agents, licensees or invitees, from any cause whatsoever, occurring upon
        or about the Premises, and Lessee shall indemnify and save Lessor
        harmless from any and all liability and claims arising out of or
        connected with any such injury or damage. Lessee will not permit any
        lien on any part of the Building allegedly resulting from any work or
        materials furnished or obligations incurred by or for Lessee. Lessee
        will discharge any such lien of record immediately upon filing.

               (e) Lessee agrees that it is liable to Lessor for any damage to
        the Premises or to any portion of the work in the Premises caused by
        Lessee or any of Lessee's employees, agents, licensees or invitees.

        53. Base Rent. Commencing on the Commencement Date, the Base Rent
payable by Lessee to Lessor during the Term of this Lease shall be as follows:

<TABLE>
<CAPTION>
          Months         Per Sq. Ft. NNN       Per Mo. NNN
          ------         ---------------       -----------
<S>                      <C>                 <C>
                                             *Based on Sq. Ft.

          1-30              36(cent)            $32,639.04

         31-60              39(cent)            $35,358.96

         61-90              42(cent)            $38,078.88

     91-Exp. Date           45(cent)            $40,798.80
</TABLE>

        54.    Option to Extend.

               54.1 Grant of Option. Lessee shall have the right, but not the
obligation, to extend the Term of this Lease for two (2) additional periods of
five (5) years each (the "Extension Period"), provided that the following
criteria are met:

               (a) Lessee is not in default under any provision of this Lease
        beyond any applicable cure periods either (i) as of the date the
        "Extension Notice" (as defined

                                        2
<PAGE>   42
        below) is delivered to Lessor or (ii) as of the date of the commencement
        of the Extension Period; and

               (b) Lessee has not assigned or subleased any portion of the
        Premises other than as permitted by Paragraph 12 of this Lease.

               54.2 Exercise of Option. Lessee may exercise its right to extend
the Term only by delivering written notice to Lessor of Lessee's desire to so
extend the Term no later than six (6) months nor earlier than nine (9) months
prior to the commencement of the Extension Period ("Lessee's Notice"), subject
to the Monthly Base Rent determination by Lessor in accordance with Paragraph
54.3.

               54.3 Monthly Base Rent for Extension Period. Within thirty (30)
days of Lessor's receipt of Lessee's Notice, Lessor shall deliver written notice
to Lessee which shall provide for Monthly Base Rent for the Extension Period
equal to Ninety-five percent (95%) of an amount equal to the fair market rental
(the "Fair Market Rent") for the Premises determined by Lessor according to the
rental then being charged for comparable space in comparable deals in buildings
of similar size and construction in Anaheim, Yorba Linda and Fullerton (the
"Market Rent Notice"). In determining comparable space, appropriate
consideration shall be given to the level and type of improvements contained in
the Premises and the use of the Premises as a corporate headquarters for the
Lessee. "Comparable Deals" shall mean leases which are approximately as long and
commencing at approximately the same time as the applicable Extension Period.
Comparable Deals shall not include any transactions where the lessor of the
subject building is in default under its mortgage or other indebtedness, or is
currently, or has within the prior twelve (12) months been involved in
foreclosure proceedings on the applicable building. Comparable Deals shall also
exclude transactions which are subleases or whereby the lessee has some form of
equity participation in the deal. Notwithstanding the foregoing, in no event
shall the Monthly Base Rent for the Extension Period be less than the Base Rent
payable by Lessee for the month prior to the commencement of the Extension
Period. In the event that Lessee notices Lessor in writing, on or before the
twentieth (20th) business day following any Market Rent Notice, that Lessee
disagrees with the applicable determination, Lessor and Lessee shall negotiate
in good faith to resolve such dispute within ten (10) business days thereafter.
(The thirtieth (30th) business day after any Market rent Notice is referred to
herein as the "Outside Agreement Date.") If not resolved by the Outside
Agreement Date, each party shall submit to the other its determination of Fair
Market Rent, and the dispute shall be submitted to arbitration in accordance
with the following paragraph titled "Arbitration Procedures." Until any such
dispute is resolved, any applicable payments due under this Lease shall
correspond to Lessor's determination and, if Lessee's determination becomes the
final determination, Lessor shall refund any overpayments to Lessee, within five
(5) business days following the final resolution of the dispute.

               54.4   Arbitration Procedures.

               (a) Lessor and Lessee shall each appoint one arbitrator who shall
        by profession be a real estate broker who shall have been active over
        the five (5) year period ending on the date of such appointment in the
        leasing of properties similar to the Premises in Anaheim, Yorba Linda
        and Fullerton. The determination of the arbitrators shall be limited
        solely to the issue of whether Lessor's or Lessee's submitted Fair
        Market Rent for the Premises is the closest to the actual Fair Market
        Rent for the Premises as determined by the arbitrators, taking into
        account the requirements of this subparagraph regarding the same. Each
        such arbitrator shall be appointed within fifteen (15) days after the
        Outside Agreement Date. Lessor and Lessee may not consult with either
        such arbitrator prior to resolution.

               (b) The two arbitrators so appointed shall within fifteen (15)
        days of the date of the appointment of the last-appointed arbitrator
        meet and attempt to reach a decision as to whether the parties shall use
        Lessor's or Lessee's submitted Fair Market Rent and shall notify Lessor
        and Lessee of their decision, if any.

                                        3
<PAGE>   43
               (c) If the two arbitrators are unable to reach a decision, the
        two arbitrators shall, within thirty (30) days of the date of the
        appointment of the last-appointed arbitrator, agree upon and appoint a
        third arbitrator who shall be a broker who shall be qualified under the
        same criteria set forth hereinabove for qualification of the initial two
        arbitrators.

               (d) The three arbitrators shall, within thirty (30) days of the
        appointment of the third arbitrator, reach a decision as to whether the
        parties shall use Lessor's or Lessee's submitted Fair Market Rent and
        shall notify Lessor and Lessee thereof.

               (e) The decision of the majority of the three arbitrators shall
        be binding upon Lessor and Lessee.

               (f) If either Lessor or Lessee fails to appoint an arbitrator
        within fifteen (15) days after the Outside Agreement Date, the
        arbitrator appointed by one of them shall reach a decision, notify
        Lessor and Lessee thereof, and such arbitrator's decision shall be
        binding upon Lessor and Lessee.

               (g) If the two arbitrators fail to agree upon and to appoint a
        third arbitrator, then the appointment of the third arbitrator shall be
        dismissed, and the matter to be decided shall be forthwith submitted to
        arbitration under the provisions of the American Arbitration
        Association, but subject to the instructions set forth in this Lease.

               (h) The cost of arbitration shall be paid by Lessor and Lessee
        equally.

               Upon determination of the Fair Market Rent, Lessor shall prepare
and deliver to Lessee an amendment to this Lease (the "Extension Amendment")
which provides for the extension of the Term pursuant to the provisions hereof
with a Monthly Base Rent equal to Ninety-five percent (95%) of the Fair Market
Rent.

               54.5 Time of the Essence. Time shall be of the essence regarding
all the periods set forth above for the exercise of the option and execution of
the Extension Amendment. The failure of Lessee to timely exercise the option as
provided in Paragraphs 54.2 and 54.3 above shall cause this option to
automatically cease and terminate and, in such event, this Lease shall terminate
without extension.

               54.6 Nontransferable Option. The option granted herein is granted
solely to Lessee and is not assignable or transferable, and any attempt to
assign or transfer this option shall be void and of no force or effect;
excluding, however, any permitted assignment as provided in Paragraph 12 of this
Lease.

        55.    Base Improvements.

               55.1 Approved Plans and Schedule. Lessor shall, at its sole cost
and expense, construct the Base Improvements.

               55.2 Lessor's Obligations. Notwithstanding Paragraph 2.3, Lessor
shall have no obligation to Lessee for defects in design, workmanship or
materials, but shall use its reasonable best efforts to enforce the contractor's
obligations therefor and shall, as appropriate under the terms of the Lease
given the allocation of maintenance responsibility between Lessor and Lessee,
assign to Lessee any manufacturer's warranties with respect to the work or the
Premises.

               55.3 Work Done by Lessee. Any work done by Lessee in the Premises
shall be done at Lessee's sole cost and expense in accordance with the terms of
this Lease and only with Lessor's prior consent and in conformity with a valid
building permit and all applicable rules, regulations, laws and ordinances. Any
work done by Lessee shall be done in a good and

                                        4
<PAGE>   44
workmanlike manner with good and sufficient materials and shall be done only by
contractors approved by Lessor.

               55.4 Acceptance of Improvements. Lessee shall notify Lessor in
writing of any items that Lessee deems incomplete or incorrect in order for
Premises to be acceptable to Lessee within ninety (90) days following completion
of the Base Improvements. Lessee shall be deemed to have accepted the Premises
as improved and to have approved construction if Lessee does not deliver such a
list to Lessor within said number of days.

               55.5 Other Improvements. Lessor shall, at its sole cost and
expense, be responsible to make any alterations to the Building (but not the
Premises) during the Term of the Lease and any Extension Period, as and if
required for compliance with the Americans with Disabilities Act ("ADA"), so
long as such compliance is not a result of Lessee's specific use of the Building
or Lessee's Alterations under Paragraph 7.3. With respect to the Premises,
including, without limitation, the Base Improvements, any alterations to any
bathroom required by the ADA as interpreted and applied on the Commencement Date
shall be made, at Lessor's sole cost and expense. Lessee shall, at its sole cost
and expense, be responsible (a) to make any alterations to the Premises required
due to any changes in the ADA, including without limitation the interpretation
and application thereof, after the Commencement Date, or required due to
Lessee's specific use of the Premises or due to any Alterations under Paragraph
7.3 performed by Lessee in the Premises after the Commencement Date, and (b) for
the cost of any alterations to the Building required for compliance with the ADA
arising out of Lessee's specific use of the Premises or due to any of Lessee's
Alterations under Paragraph 7.3. The cost associated with any seismic retrofit
of the Premises, as and if required, whether under current or future law, shall
be the responsibility of Lessor except to the extent required due to the unique
nature of Lessee's use. Lessor's costs under this Paragraph 55.5 shall not be
included in Lessee's Share of Common Area Expenses.

               55.6 Lessee's Delays. If Lessor is delayed in substantially
completing any work to be performed by Lessor under this Paragraph 55 as a
result of any act or omission of Lessee's agents, contractors, assignees or
subtenants ("Lessee Delays"), the Commencement Date shall not be deferred by
reason of such delay. The Project Manager (as defined in the 9/30/97 Lease)
shall give written notice to Lessee of potential Lessee Delays and make the
final determination of whether a Lessee Delay has occurred and the extent of the
Lessee Delay.

               55.7 Trailer Storage; Reserved Parking. Lessee may store trailers
overnight within the loading area outlined in Exhibit "A" next to the loading
docks of the Premises, subject to paragraph 40. The location of the reserved
parking spaces shall be designated by Lessor, subject to Lessee's approval,
which shall not be unreasonably withheld or delayed.

        56. Hazardous Substances. To the best of Lessor's current actual
knowledge, without inquiry or investigation, there is no asbestos nor any other
Hazardous Substances including, but not limited to, radon gas, PCB's, lead-base
paint, ground water contamination, industrial, radioactive or chemical waste,
urea-formaldehyde insulation and underground storage tanks on or under, or
within the Industrial Center in violation of applicable law.

        In addition to the terms of Paragraph 6.2, Lessee shall disclose to
Lessor in writing whether any Hazardous Substances will be used, stored or
disposed of in the Premises, which disclosure shall include an inventory of such
substances and provide a use, storage and disposal plan for the handling of such
substances. Lessor may disapprove of the use, storage and/or disposal of such
substances within the Premises at Lessor's sole discretion.

        Lessor shall retain the responsibility and pay for any investigations or
remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises or the Building
which are not brought to the Premises, Building or Common Areas by Lessee.
Lessee shall fully cooperate in any such activities at the request of Lessor,
including allowing Lessor and Lessor's agents to have reasonable access to the
Premises at reasonable times in order to carry out Lessor's investigative and
remedial responsibilities. The costs

                                        5
<PAGE>   45
incurred by Lessor for such investigation and remediation shall not be included
in Lessee's Share of Common Area Operating Expenses. Any liability of Lessor
with respect to this covenant shall be satisfied only out of Lessor's interest
and estate in the Premises and Building, and Lessor shall have no personal
liability beyond such interest and estate with respect to such obligations.

        57. Assignment and Subletting. Notwithstanding anything to the contrary
contained in this Lease, Lessor shall provide Lessee with written notice of its
approval or disapproval of an assignment or sublease within five (5) days after
receiving from Lessee (a) a written request for approval or disapproval of an
assignment or sublease and (b) a copy of the proposed assignment or sublease.
Lessor's failure to give Lessee written disapproval of an assignment or sublease
within such five (5) day period shall constitute Lessor's approval of the
assignment or sublease. Lessee shall retain all rent and other consideration
received by Lessee from an assignee or sublessee.

        58. Additional Permitted Uses (Paragraph 1.8). The Permitted Uses shall
also include any other use permitted by Applicable Laws; provided that Permitted
Uses shall exclude any use which (a) violates any certificate of occupancy in
force for the Premises, the Building or any part thereof; (b) causes or is
likely to cause damage to the Building or any part thereof or any equipment,
facilities or other systems therein; (c) constitutes a violation of law; (d)
violates a requirement or condition of the standard fire insurance policy issued
for the Buildings; (e) impairs the character, reputation, image or appearance of
the Building; (f) impairs the proper and economic maintenance, operation or
repair of the Building or any part thereof; (g) constitutes a nuisance,
annoyance or inconvenience to other lessees or occupants of the Building or
interferes with or disrupts the use or occupancy of any area of the Building
(other than the Premises) by other lessees or occupants; (h) interferes with the
transmission or reception of microwave, television, radio or other
communications signals by antennae located on the roof or elsewhere in the
Building; (i) results in repeated demonstrations, bomb threats or other events
which require evacuation of any part of the Building or otherwise disrupt the
use, occupancy or quiet enjoyment thereof by other lessees and occupants; or (j)
involves the use of any part of the Premises for : (1) a restaurant or bar; (2)
the storage, manufacture or sale of food, beverages, liquor, tobacco in any form
or drugs (except that Lessee may maintain vending machines for the use of its
officers, employees and invitees and except that Lessee's officers and employees
may bring food, beverages, tobacco and medicine onto the Premises for their
personal and lawful consumption); (3) the storage, use, treatment, manufacture
or sale of Hazardous Substances (as defined below); (4) the business of
photocopying or offset printing (but Lessee may use part of the Premises for
photocopying or offset printing for its own business); (5) medical or dental
offices or laboratories; (6) a school or classroom; (7) the retail sale or
auction of merchandise, goods or property of any kind; or (8) cooking (except
that Lessee may maintain coffee or lunch rooms with coffee makers and microwave
ovens for the exclusive use of Lessee's officers, employees and invitees),
lodging or sleeping. No noise, vibration or odor shall be permitted to escape
from the Premises.

        59. Addition to End of Paragraph 2.10. Lessor agrees to exercise its
rights under this Paragraph 2.10 in a manner designed to minimize to the extent
reasonably possible interference with Lessee's business and consistent with the
practices of owners of similar parks in the Anaheim area. No capital
expenditures for changes to the Common Areas pursuant to Paragraphs 2.10(a),
(c), (d) or (f) shall be included in Common Area Operating Expenses for purposes
of this Lease.

        60. Audit Right and Additions to Paragraph 4.2. The following is added
to the end of Paragraph 4.2:

               "(e) In the event of any dispute as to the amount of Operating
        Expenses as set forth in Lessor's statement of Operating Expenses
        delivered to Lessee, Lessee shall have the right, after reasonable
        notice and at reasonable times within one year after the final statement
        for such Operating Expenses is delivered to Lessee, to inspect and
        photocopy (at Lessee's expense) Lessor's accounting records with respect
        to Lessee's share of Operating Expenses. If after such inspection and
        photocopying Lessee still disputes the amount of Operating Expenses as
        set forth in Lessor's statement, Lessee shall be entitled to retain an
        independent certified public

                                        6
<PAGE>   46
        accountant reasonably approved by Lessor to audit Lessor's records to
        determine the proper amount of such Operating Expenses and the proper
        amount payable to Lessee pursuant to this Lease. Lessee agrees to pay
        the cost of such audit, provided that Lessor shall pay such costs if the
        audit reveals that Lessor's determination of Operating Expenses as set
        forth in Lessor's statement overstated Operating Expense by five percent
        (5%) or more. Lessor shall be required to maintain records of all
        Operating Expenses for one year after the final statement for such
        Operating Expenses. If such audit reveals an overstatement or
        understatement of Operating Expenses, the amount of the differential
        shall be promptly reimbursed to Lessee by Lessor or paid by Lessee to
        Lessor, as the case may be.

               (f) Lessor may not submit a statement to Lessee demanding
        increased rents representing increased Common Area Operating Expenses if
        more than twelve (12) months have elapsed since the end of the calendar
        year in which the increased Common Area Operating Expenses were paid or
        incurred unless the increased Common Area Operating Expenses relate to
        adjustments in Real Property Taxes.

               (g) For the purposes of determining the amount to be included in
        Common Area Operating Expenses with respect to capital improvements,
        costs of the capital improvements shall be amortized over the useful
        life of such improvements on a straight-line basis, including imputed
        interest at the prime rate charged by the largest state-chartered bank
        in California plus two percent (2%) per annum.

               (h) "Lease Year" means each consecutive twelve (12) month period
        during the term of the Lease; provided that the first Lease Year shall
        commence on the Commencement Date and end on the last day of the
        eleventh (11th) month thereafter, the second and each succeeding Lease
        Year shall commence on the first day of the next calendar month, and the
        last Lease Year shall end on the Expiration Date. The actual fees
        incurred by Lessor for management and administration of the Industrial
        Center shall be included in Common Area Expenses; provided that the
        maximum amount for property management that may be included in Common
        Area Operating Expenses in any Lease Year (the "Measurement Year") shall
        equal the Management Fee Cap (as defined below). As used in this
        Paragraph, "Management Fee Cap" initially means $0.09 per square foot.
        On the first day of the second Lease Year and every succeeding
        Measurement Year during the term of the Lease, the Management Fee Cap
        shall be increased by lesser of (i) the percentage increase in the CPI
        (as defined below) for the first full calendar month of the Measurement
        Year as compared to the CPI for the first full calendar month of the
        prior Lease Year or (ii) five percent (5%). The Management Fee Cap
        calculated for any Lease Year pursuant to the foregoing shall be
        prorated on an actual-day basis for any Lease Year that is less than
        twelve (12) full calendar months. As used herein, the term "CPI" means
        the Consumer Price Index of the Bureau of Labor Statistics of the U.S.
        Department or Labor for Urban Wage Earners and Clerical Workers, Los
        Angeles-Anaheim-Riverside, California (1982-1984=100), "all items." In
        the event the compilation and/or publication of the CPI shall be
        transferred to any other governmental department or bureau or agency or
        shall be discontinued, then the index most nearly the same as the CPI as
        determined by Lessor shall be used to make such calculation."

        61. Interest on Security Deposit Under Paragraph 5. The Security Deposit
held by Lessor shall bear interest during each calendar year for the benefit of
Lessee at a rate equal to the rate paid from time to time on Bank of America
one-year certificates of deposit issued on the first business day of such
calendar year. Lessee shall pay all federal and state income taxes attributable
to that interest. Provided no Default exists under the Lease, Lessor shall
disburse to Lessee the accrued interest on the Security Deposit during each
calendar year or credit Lessee's obligation to pay Base Rent in a like amount
within fifteen (15) days after the expiration of such calendar year. The
attorneys' fees against which the Security Deposit may be applied as provided in
Paragraph 5 of the

                                        7



<PAGE>   47
printed portion of the Lease shall be limited to those attorneys' fees
determined by a court or admitted in writing by Lessee to be due and owing
Lessor from Lessee.

        62. Addition to Section 6.2. The following Section 6.2(d) is added to
the Lease:

               "(d) Notwithstanding anything to the contrary in this Lease,
        Lessee shall not be liable to Lessor under this Lease for any cost
        associated with Hazardous Substances, if any, to the extent that the
        Hazardous Substances existed on the Premises prior to the date of this
        Lease and were not brought on to the Premises by Lessee, its agents,
        employees, contractors, subcontractors, licensees or invitees."

        63. Notice of Entry. Notwithstanding anything to the contrary in
Paragraphs 6.4 or 32, except in the case of emergency or during periods in which
Lessee is in default under this Lease, Lessor shall give Lessee notice in
advance of Lessor's intent to enter the Premises, and such entry shall be made
during Lessee's business hours.

        64. Addition to End of Paragraph 7.1(b). The following is added at the
end of Paragraph 7.1(b):

        "not to exceed the costs for those services generally charged in the
        area where the Premises are located for comparable services to
        comparable buildings."

        65. Addition to End of Paragraph 7.2. The following is added at the end
of Paragraph 7.2:

        "The cost of painting the exterior of the Building (after the initial
        exterior painting provided for in Paragraph 55) shall be a Common Area
        Operating Expense and shall be treated as a capital expenditure for
        purposes of amortization under Paragraph 4.2(g)."

        66. Limitation on Paragraph 7.3. With respect only to the portion (the
"Warehouse Area") of the Premises other than the office area, Lessor's prior
approval shall not be required with respect to any Alterations by Lessee
provided that such Alterations (a) are not visible from the outside of the
Premises, (b) do not involve puncturing, relocating or removing the roof or any
existing walls, or changing or interfering with the fire sprinkler or fire
detection systems, (c) do not involve the plumbing, electrical or HVAC systems
in the Premises, and (d) do not involve the structural elements of the Building.
Notwithstanding the last sentence of Paragraph 7.3(b), Lessor agrees not to
require a lien and completion bond unless Lessor believes it is reasonably
necessary to protect Lessor given the cost, nature and extent of the work and
the parties responsible for the performance and payment therefor.

        67. Addition to Paragraph 7.4(b). The following is added at the end of
Paragraph 7.4(b):

        "Prior to commencing any addition, alteration or improvement, Lessee may
        request that Lessor waive Lessee's obligation to remove such addition,
        alteration or improvement at the end of the term. Any such waiver must
        be in writing and shall only apply to the additions, alterations or
        improvements described therein. Notwithstanding anything to the contrary
        in Paragraph 7.4, (a) Lessee shall not be required to remove any of the
        improvements to the office area of the Premises made by Lessor at the
        commencement of the term, and (b) Lessee shall remove all Alterations
        and Trade Fixtures from the Warehouse Area at the expiration or earlier
        termination of this Lease."

        68. Addition to End of Paragraph 8.3(a). The following is added at the
end of Paragraph 8.3(a):


                                        8
<PAGE>   48
        "The Lessor may, but shall not be obligated to, maintain earthquake
        insurance. In the event Lessor maintains earthquake insurance, the cost
        of that insurance shall be included as a Common Area Operating Expense;
        provided that the maximum amount of earthquake insurance premiums that
        may be included in the common Area Operating Expenses in any Lease Year
        shall be $0.26 per square foot. The maximum amount calculated for any
        Lease Year pursuant to the foregoing shall be prorated on an actual-day
        basis for any Lease Year that is less than twelve (12) full calendar
        months.

        69. Addition to End of Paragraph 8.5. The following is added at the end
of Paragraph 8.5:

        "Lessee shall be permitted to provide the insurance required under this
        Lease by obtaining a blanket policy or policies to be maintained by
        Lessee. The coverages afforded to Lessee and Lessee's Lenders under this
        Lease shall in no way be limited, diminished or reduced under such
        blanket policy or policies."

        70. Addition to Paragraph 9.2. The following is added at the end of
Paragraph 9.2:

        "Premises Partial Damage due to flood or earthquake shall be subject to
        Paragraph 9.3 rather than Paragraph 9.2 in the event there is any
        shortage of insurance proceeds."

        71. Addition to Paragraph 9.6(a). The following is added after the first
sentence of Paragraph 9.6(a):

        "The period of abatement shall continue after the completion of Lessor's
        repairs and restoration for the reasonable period for Lessee to repair
        or replace Lessee's trade fixtures, alterations and utility
        installations, but not to exceed thirty (30) days from the completion of
        Lessor's repair and restoration; provided, however, the thirty (30) day
        period after completion of Lessor's work may be extended up to an
        addition thirty (30) days to the extent the abatement does not exceed
        the proceeds from insurance required to be carried under Paragraph
        8.3(b) applicable to, and received by Lessor with respect to, that
        additional thirty (30) day period."

        72. Addition to Paragraph 12.1(b). The following is added to Paragraph
12.1(b):

        "If Lessee is a public corporation whose stock is regularly traded on a
        national stock exchange, or is regularly traded in the over-the-counter
        market and quoted on NASDAQ, the provisions of this Paragraph 12.1(b)
        shall not apply to transfers of stock on those exchanges or markets."

        72. Notice before Late Charge Under Paragraph 13.4. Notwithstanding the
provisions of 13.4, the six percent (6%) late charge described in Paragraph 13.4
shall not be imposed with respect to the first late payment in any calendar year
unless the applicable payment due from Lessee is not received by Lessor or
Lessor's designee within ten (10) days following written notice from Lessor that
such payment was not received when due. Following the first such written notice
from Lessor in any calendar year (and regardless of whether such payment is then
received within such ten (10) day period), a late charge will be imposed without
notice (as set forth in Paragraph 13.4) for any subsequent payment due to Lessor
during such calendar year which is not received within ten (10) days of its due
date.

        73. Addition to Paragraph 14. The following is added at the end of
Paragraph 14:

        "If the amounts available to Lessor for restoration under the preceding
        sentence are inadequate to repair such damage to the Premises, Lessee
        may elect to contribute the amount of the shortfall. In the event Lessee
        does not elect to contribute the amount

                                        9
<PAGE>   49
        of the shortfall, Lessor may elect either to (a) fund the shortfall
        itself, in which event Lessor shall proceed with the repair and
        restoration, or (b) terminate this Lease."

        74. Addition to Paragraph 30.1. The following is added to the end of
Paragraph 30.1:

        "Lessor hereby represents to Lessee that there are no Lenders holding
        any Security Device with respect to the Premises as of the date of the
        execution of this Lease."

        75.    Option to Terminate.

               75.1 Termination Date. Lessee shall have the option (the
"Termination Option") to terminate this Lease as of the last day of the sixtieth
(60th) full calendar month of the initial Term (the "Termination Date"). This
Termination Option is granted subject to the following terms and conditions:

               (a) Notice. Lessee shall give Lessor not less than two hundred
        seventy (270) days advance written notice of its election to exercise
        the Termination Option (i.e., notice must be given not later than the
        two hundred seventieth (270th) day prior to the Termination Date), time
        being of the essence; and

               (b) Termination Fee. Lessee pays to Lessor on or before the
        Termination Date, a cash termination payment (the "Termination Payment")
        in the amount of Seventy Thousand Seven Hundred Seventeen and 92/100
        Dollars ($70,717.92); provided, however, (i) if on or before the
        Termination Date Lessor has leased the Premises to a new tenant, (ii)
        the new tenant leases the Premises from Lessor for the first and/or
        second month following the Terminate Date and (iii) Lessor receives rent
        from the new tenant applicable to the first and/or second month
        following the Termination Date Lessor shall refund to Lessee the New
        Tenant Rent (as defined below). The New Tenant Rent shall equal the rent
        Lessor receives from the new tenant that is applicable to the first
        and/or second month after the Termination Date. In no event shall the
        refund to Lessee exceed the amount of the Termination Payment.
        Notwithstanding the foregoing, if the new tenant is an assignee or
        sublessee of Lessee, no Termination Payment shall be payable by Lessee
        to Lessor.

               75.2 Terms. If Lessee timely and properly exercises the
Termination Option, all rent payable under this Lease shall be paid through and
apportioned as of the Termination Date (in addition to payment by Lessee of the
Termination Payment); neither party shall have any rights, liabilities, or
obligations under this Lease for the period accruing after the Termination Date,
except those which, by the provisions of this Lease, expressly survive the
expiration or termination of the term of this Lease; Lessee shall surrender and
vacate the Premises and deliver possession thereof to Lessor on or before the
Termination Date in the condition required under this Lease for surrender of the
Premises (except Lessor shall accept the Premises in "as is" condition if the
new tenant was an assignee or sublessee of Lessee); and at Lessor's option,
Lessee shall enter into a written agreement reflecting the termination of this
Lease upon the terms provided for herein, which agreement shall be executed
within thirty (30) days after Lessee exercises the Termination Option.

                                       10
<PAGE>   50
                   ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
                       MULTI-TENANT LEASE -- MODIFIED NET
                                 BY AND BETWEEN
        BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("LESSOR")
                                       AND
                 PACIFIC SUNWEAR OF CALIFORNIA, INC. ("LESSEE")
                            DATED SEPTEMBER 30, 1997


49.     COMMENCEMENT DATE:

        Lessor and Lessee agree that the estimated Commencement Date shall be
        December 15, 1997 ("Estimated Commencement Date"). The actual
        Commencement Date shall be the earlier of (i) the date Lessee occupies
        the Premises for its business purposes (which shall include without
        limitation the storage of inventory) or (ii) the later of (a) the
        Estimated Commencement Date or (b) the date the Base Lessee
        Improvements, the Lessee Improvements and the Additional Lessee
        Improvements (collectively, the "Total Lessee Improvements") are
        substantially completed; provided that such date shall be accelerated by
        one day for each day that substantial completion of the Total Lessee
        Improvements is delayed by Lessee's Delays. The term of the Lease shall
        expire on the date (the "Expiration Date") that is the last day of the
        calendar month in which the tenth anniversary of the Commencement Date
        falls, subject to extension pursuant to Paragraph 54 of this Lease.

50.     TERM:

        The Term of the Lease shall commence on the Commencement Date, and shall
        continue, subject to earlier termination as provided herein, until the
        Expiration Date. In the event permission is given to Lessee to enter or
        occupy all or a portion of the Premises prior to the Commencement Date,
        such occupancy shall be subject to all of the terms and conditions of
        this Lease, except that if such entry is pursuant to Paragraph 52,
        Lessee shall not be obligated to pay Base Rent and any other amount
        payable by Lessee under this Lease.

        Lessor shall use all reasonable efforts to make the Premises available
        on the Estimated Commencement Date. If for any reason, however, Lessor
        cannot deliver possession of the Premises to Lessee on said date, Lessor
        shall not be subject to any liability therefor, nor shall such failure
        affect the validity of this Lease or the obligations of Lessee hereunder
        or extend the Term hereof; but in such case, Lessee shall not be
        obligated to pay rent or perform any other obligations of Lessee under
        the terms of this Lease, except as may be otherwise provided in this
        Lease, until the Commencement Date shall have occurred. If, however, the
        Commencement Date shall not have occurred on or before February 3, 1998
        for any reason, other than Lessee's Delays (defined below) or any reason
        beyond the reasonable control of Lessor, Lessee shall receive an offset
        of Base Rent for each day after such date that the Commencement Date
        shall not have occurred. Such date will be adjusted forward for each day
        that substantial completion of the Total Lessee Improvements is delayed
        by Lessee's Delays. For purposes of this Paragraph 50, Lessor's
        inability to obtain a building permit within 14 business days after
        receipt of Lessee's interior construction drawings shall be deemed a
        delay for a reason beyond the reasonable control of Lessor.

        If the Commencement Date shall not have occurred on or before May 1,
        1998 for any reason, other than Lessee's Delays or any reason beyond the
        reasonable control of Lessor, Lessee may, at its option, by notice in
        writing to Lessor within 10 days after that date, cancel this Lease, in
        which event the parties shall be discharged from all obligations
        hereunder; provided further, however, that if such written notice of
        Lessee is not received by Lessor within said 10-day period, Lessee's
        right to cancel this Lease hereunder shall terminate and be of no
        further force or effect.

51.     SUBSTANTIAL COMPLETION:

        The work to be performed by Lessor under this Lease shall be deemed
        substantially completed on the date on which all of the following shall
        have been satisfied: (a) all work required for an Occupancy Permit shall
        have been completed and it is legally permissible to occupy the
        Premises, (b) all work to be performed by Lessor under Paragraph 55
        shall have been completed to the extent that the Premises can be used by
        Lessee without material interference with the operations of its
        business, excluding punchlist items or other noncritical elements of the
        Lessee Improvements, and (c) all mechanical systems in the Premises are
        in good operating order.

52.     EARLY ACCESS:

        Lessor shall, subject to the following terms and conditions, permit
        Lessee, and Lessee's agents, to enter the Premises during the
        seventy-five (75) day period prior to the Estimated Commencement Date:

        (a)    Lessee shall give Lessor reasonable prior written notice of such
               access to the Premises, which notice must contain or be
               accompanied by: (i) a description and schedule for the work to be
               performed in the Premises; (ii) the names and addresses of all
               contractors performing such work; (iii) copies of all contracts
               pertaining to the performance of such work; (iv) copies of all
               licenses and permits required in connection with the performance
               of such work; and (v) certificates of insurance and instruments
               of indemnification against all claims, costs, expenses, damages,
               suits,




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<PAGE>   51
               fines, penalties, actions, causes of action, and liabilities
               which may arise in connection with such work. Each of the
               foregoing shall be subject to Lessor's approval, which approval
               shall not be arbitrarily withheld. Notwithstanding the foregoing,
               Lessor agrees not to unreasonably withhold its consent with
               respect to Items (i) through (v) of this Paragraph 52(a) related
               to the installation by SDI Industries of Lessee's material
               handling system in the distribution center portion of the
               Premises.

        (b)    Such early access is subject to reasonable scheduling by Lessor.

        (c)    Lessee's agents, contractors, workers, mechanics, suppliers, and
               invitees must work in harmony and not interfere with Lessor and
               Lessor's contractor in doing work in the Premises, in other
               premises, and common areas of the Building, and in the general
               operation of the Building. If at any time such entry shall cause
               or threaten to cause disharmony or interference, including labor
               disharmony, Lessor may withdraw its permission upon written
               notice to Lessee.

        (d)    In the event that Lessor's work in the Premises and Lessee's work
               in the Premises (pursuant to the permission granted herein)
               progress simultaneously, Lessor shall not be liable for injury to
               any person or for damage to any property of Lessee, Lessee's
               employees, agents, licensees, or invitees, from any cause
               whatsoever, occurring upon or about the Premises, and Lessee
               shall indemnify and save Lessor harmless from any and all
               liability and claims arising out of or connected with any such
               injury or damage. Lessee will not permit any lien on any part of
               the Building allegedly resulting from any work or materials
               furnished or obligations incurred by or for Lessee. Lessee will
               discharge any such lien of record immediately upon its filing.

        (e)    Lessee agrees that it is liable to Lessor for any damage to the
               Premises or to any portion of the work in the Premises caused by
               Lessee or any of Lessee's employees, agents, licensees, or
               invitees.


53.     BASE RENT:

        Commencing on the Commencement Date, the Base Rent payable by Lessee to
        Lessor during the Term of this Lease shall be as follows:

================================================================================
         MONTHS               PER SQ. FT. NNN                PER MO. NNN
         ------               ---------------                -----------
                                                          *BASED ON SQ. FT.
        -------------------------------------------------------------------
         1 - 2                       0(cent)                     $ 0
         3 - 30                     37(cent)                  $65,230.63
        31 - 60                    40.7(cent)                 $71,753.69
        61 - 90                    44.77(cent)                $78,929.06
        91 - 120                   49.25(cent)                $86,827.26
================================================================================

        The obligation to pay Base Rent shall be abated for the first two (2)
        months of the Term of this Lease. All other terms of this Lease,
        however, including but not limited to the obligations to pay Lessee's
        Share of Common Area Operating Expenses, together with the insurance
        required by Paragraph 8, and the amount of any monthly amortized
        Additional Lessee Improvement Allowance, shall be in effect during such
        period.

54.     OPTION TO EXTEND:

        54.1   Grant of Option. Lessee shall have the right, but not the
               obligation, to extend the Term of this Lease for two (2)
               additional periods of five (5) years each (the "Extension
               Period"), provided that the following criteria are met:

               (a)    Lessee is not in default under any provision of this Lease
                      beyond any applicable cure periods either (i) as of the
                      date the "Extension Notice" (as defined below) is
                      delivered to Lessor or (ii) as of the date of the
                      commencement of the Extension Period; and

               (b)    Lessee has not assigned or subleased any portion of the
                      Premises other than as permitted by Paragraph 12 of this
                      Lease.

        54.2   Exercise of Option. Lessee may exercise its right to extend the
               Term only by delivering written notice to Lessor of Lessee's
               desire to so extend the Term no later than six (6) months nor
               earlier than nine (9) months prior to the commencement of the
               Extension Period ("Lessee's Notice"), subject to the Monthly Base
               Rent determination by Lessor in accordance with Paragraph 54.3.

        54.3   Monthly Base Rent for Extension Period. Within thirty (30) days
               of Lessor's receipt of Lessee's Notice, Lessor shall deliver
               written notice to Lessee which shall provide for Monthly Base
               Rent for the Extension Period equal to 95% of an amount equal to
               the fair market rental (the "Fair Market Rent") for the Premises
               determined by Lessor according to the rental then being charged




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               for comparable space in comparable deals in buildings of similar
               size and construction in Anaheim, Yorba Linda and Fullerton (the
               "Market Rent Notice"). In determining comparable space,
               appropriate consideration shall be given to the level and type of
               improvements contained in the Premises and the use of the
               Premises as a corporate headquarters for the lessee. "Comparable
               deals" shall mean leases which are approximately as long, and
               commencing at approximately the same time, as the applicable
               Extension Period. "Comparable deals" shall not include any
               transactions where the lessor of the subject building is in
               default under its mortgage or other indebtedness, or is
               currently, or has within the prior 12 months been involved in
               foreclosure proceedings on the applicable building. "Comparable
               deals" shall also exclude transactions which are subleases or
               whereby the lessee has some form of equity participation in the
               deal. Notwithstanding the foregoing, in no event shall the
               Monthly Base Rent for the Extension Period be less than the sum
               of (a) the Monthly Improvement Payment (as defined below) and (b)
               Base Rent payable by Lessee for the month prior to the
               commencement of the Extension Period. In the event that Lessee
               notifies Lessor in writing, on or before the 20th business day
               following any Market Rent Notice, that Lessee disagrees with the
               applicable determination, Lessor and Lessee shall negotiate in
               good faith to resolve such dispute within 10 business days
               thereafter (The 30th business day after any Market Rent Notice is
               referred to herein as the "Outside Agreement Date.") If not
               resolved by the Outside Agreement Date each party shall submit to
               the other its determination of Fair Market Rent and the dispute
               shall be submitted to arbitration in accordance with the
               following paragraph titled "Arbitration Procedures." Until any
               such dispute is resolved, any applicable payments due under this
               Lease shall correspond to Lessor's determination and, if Lessee's
               determination becomes the final determination, Lessor shall
               refund any overpayments to Lessee, within 5 business days
               following the final resolution of the dispute.

        54.4   Arbitration Procedures.

                             (i) Lessor and Lessee shall each appoint one
               arbitrator who shall by profession be a real estate broker who
               shall have been active over the 5-year period ending on the date
               of such appointment in the leasing of properties similar to the
               Premises in Anaheim, Yorba Linda and Fullerton. The determination
               of the arbitrators shall be limited solely to the issue of
               whether Lessor's or Lessee's submitted Fair Market Rent for the
               Premises is the closest to the actual Fair Market Rent for the
               Premises as determined by the arbitrators, taking into account
               the requirements of this subparagraph regarding the same. Each
               such arbitrator shall be appointed within 15 days after the
               Outside Agreement Date. Lessor and Lessee may not consult with
               either such arbitrator prior to resolution.

                            (ii) The two arbitrators so appointed shall within
               15 days of the date of the appointment of the last appointed
               arbitrator, meet and attempt to reach a decision as to whether
               the parties shall use Lessor's or Lessee's submitted Fair Market
               Rent, and shall notify Lessor and Lessee of their decision, if
               any.

                           (iii) If the two arbitrators are unable to reach a
               decision, the two arbitrators shall, within 30 days of the date
               of the appointment of the last appointed arbitrator, agree upon
               and appoint a 3rd arbitrator who shall be a broker who shall be
               qualified under the same criteria set forth hereinabove for
               qualification of the initial 2 arbitrators.

                            (iv) The 3 arbitrators shall, within 30 days of the
               appointment of the 3rd arbitrator, reach a decision as to whether
               the parties shall use Lessor's or Lessee's submitted Fair Market
               Rent, and shall notify Lessor and Lessee thereof.

                             (v)  The decision of the majority of the 3 
               arbitrators shall be binding upon Lessor and Lessee.

                            (vi) If either Lessor or Lessee fails to appoint an
               arbitrator within 15 days after the Outside Agreement Date, the
               arbitrator appointed by one of them shall reach a decision,
               notify Lessor and Lessee thereof, and such arbitrator's decision
               shall be binding upon Lessor and Lessee.

                           (vii) If the 2 arbitrators fail to agree upon and to
               appoint a 3rd arbitrator, then the appointment of the 3rd
               arbitrator shall be dismissed, and the matter to be decided shall
               be forthwith submitted to arbitration under the provisions of the
               American Arbitration Association, but subject to the instructions
               set forth in this Lease.

                          (viii) The cost of arbitration shall be paid by Lessor
               and Lessee equally.

               Upon determination of the Fair Market Rent, Lessor shall prepare
               and deliver to Lessee an amendment to this Lease (the "Extension
               Amendment") which provides for the extension of the Term pursuant
               to the provisions hereof with a Monthly Base Rent equal to 95% of
               the Fair Market Rent.





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        54.5   Time of the Essence. Time shall be of the essence regarding all
               the periods set forth above for the exercise of the option and
               execution of the Extension Amendment. The failure of Lessee to
               timely exercise the option as provided in Paragraph 54.2 and 54.3
               above shall cause this option to automatically cease and
               terminate and, in such event, this Lease shall terminate without
               extension.

        54.6   Non-Transferable Option. The option granted herein is granted
               solely to Lessee and is not assignable or transferable and any
               attempt to assign or transfer this option shall be void and of no
               force or effect; excluding, however, any permitted assignment as
               provided in Paragraph 12 of this Lease.

55.     LESSEE IMPROVEMENTS:

        55.1   Approved Plans and Schedule. Lessor shall, at its sole cost and
               expense, construct the Base Lessee Improvements and the Lessee
               Improvements and subject to reimbursement of Lessor by Lessee
               pursuant to Paragraph 55.4, the Additional Lessee Improvements,
               pursuant to interior construction drawings sufficient to permit
               accurate bidding by the contractors ("Approved Plans") prepared
               by Lessee and approved by Lessor and described on Exhibit "B."
               Lessor acknowledges receipt of Lessee's space plan on August 11,
               1997, and Lessee's interior construction drawing on September 17,
               1997, and approval thereof. Lessee may select its own interior
               architect. The Lessor and the Project Manager (as defined below)
               shall obtain bids from Oltmans Construction, Snyder Langston and
               two other qualified contractors selected by Lessor for
               construction of the work provided for under this Paragraph 55.
               The Project Manager shall provide Lessee with copies of the bids
               received from each of the contractors and will make reasonable
               efforts to consult with Lessee with respect to negotiating with
               the contractor selected by Lessor the portions of the contract
               relating to the office improvements, and during the bidding
               process and construction period.

        55.2   Base Lessee Improvements. Lessor shall, at its sole cost and
               expense, construct the following improvements to the Premises
               (the "Base Lessee Improvements"):

               (a)    Upgrade the sprinkler system in the southwest high bay
                      warehouse area of the Premises; provided, however, that in
                      no event shall Lessor be required to spend in excess of
                      $20,000, and any cost that exceeds such amount shall be
                      paid by Lessee out of the Additional Lessee Improvement
                      Allowance;

               (b)    Reconfigure the parking area of the Industrial Center in
                      accordance with a plan prepared by Lessor and approved by
                      Lessee ("Parking Plan") to provide Lessee with 350 parking
                      spaces.

               (c)    Repaint the exterior of the Building.

               (d)    Demise the Premises from the easterly, adjacent space
                      consisting of approximately 90,664 square feet ("Adjacent
                      Space") of the Building in accordance with Exhibit "A,"
                      provided that Lessee shall be responsible for the cost of
                      any alterations to the existing security system resulting
                      from demising the Building, and the cost of any repair or
                      upgrades to such security system requested by Lessee;
                      provided, however, that Lessor shall use reasonable
                      efforts, at no additional cost to Lessor, to preserve
                      intact and not damage the existing security system. Any
                      cost of the alterations of the existing security system
                      may be paid by Lessee out of the Additional Lessee
                      Improvement Allowance.

               (e)    Separate the utilities servicing the Premises to function
                      independently of the Adjacent Space in the Building,
                      including electrical, HVAC and lighting; and

               (f)    Remove the existing racking system from the Premises no
                      later than October 1, 1997, which shall remain Lessor's
                      personal property.

        55.3   Lessee Improvements. Lessor shall, at its sole cost and expense,
               construct certain improvements in the Premises (the "Lessee
               Improvements") substantially in accordance with the Approved
               Plans and all applicable rules, regulations, laws or ordinances;
               provided, however, that in no event shall Lessor be required to
               spend in excess of $300,000 (the "Lessee Improvement Allowance")
               to build the Lessee Improvements. The cost of the Lessee
               Improvements that exceeds the amount of the Lessee Improvement
               Allowance shall be treated as a contribution by Lessor of a
               portion of the Additional Lessee Improvement Allowance under
               Paragraph 55.4. The Lessee Improvement Allowance may be used only
               for the cost of the Lessee Improvements as described in Paragraph
               55.5 below.

        55.4   Additional Lessee Improvements. Upon Lessee's request, Lessor
               shall construct certain additional improvements in the Premises
               (the "Additional Lessee Improvements") substantially in
               accordance with the Approved Plans, and all applicable rules,
               regulations, laws or ordinances. Lessor shall contribute up to
               $800,000 ("Additional Lessee Improvement Allowance") towards the
               costs of the Additional Lessee Improvements and any such amounts
               contributed will be repaid by Lessee, plus 10% interest per
               annum, in equal monthly installments amortized over the Term of
               the Lease (the




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               "Monthly Improvement Payment"). Such additional payments will be
               made at the same time and in the same manner as Rent under this
               Lease. Lessee shall be required to pay any costs in excess of the
               Additional Lessee Improvement Allowance within fifteen (15) days
               after receiving written notice from Lessor describing such excess
               costs.

        55.5   Lessee Improvement Allowance. The cost of the Lessee Improvements
               and Additional Lessee Improvements shall include the cost of all
               labor and materials for the construction and installation of the
               Lessee Improvements and Additional Lessee Improvements
               respectively; the cost of all permits, licenses and fees; all
               amounts paid to Lessor's contractors under and pursuant to
               contracts for the construction and installation of the Lessee
               Improvements and Additional Lessee Improvements respectively; all
               architectural, engineering, space planning and other consultants'
               fees; all amounts paid for mechanical drawings, plans,
               specifications, shop drawings, designs and layouts; and
               incidental costs related to the foregoing. The cost of Lessee
               Improvements and Additional Lessee Improvements shall not
               include, and Lessor shall not charge, any fees for Lessor's
               profit, overhead or supervision. The Lessee Improvement Allowance
               shall not include, and Lessee shall be responsible for, the cost
               to remove or alter the excess mezzanine area of the Premises.
               Lessee, at its option, may retain, alter, move or remove all or
               any portion of the mezzanine. At the expiration of the term,
               Lessee shall remove the mezzanine at Lessee's sole cost and
               expense.

        55.6   Lessee-Initiated Changes. Lessee shall be permitted to initiate
               changes in the design and construction requirements of the Lessee
               Improvements throughout the course of the construction of the
               Lessee Improvements. Said changes shall be incorporated by Lessor
               at actual cost, with a maximum fee mark-up by Lessor's general
               contractor limited to the general contract base fee percentage.
               Design/engineering reimbursements for Lessee-initiated changes
               shall be based upon design/engineering consultant actual costs
               including time and materials. All costs of Lessee-initiated
               changes requiring revisions, including engineering, estimating,
               coordination, layout, and printing of drawings, specification
               changes, and any other incidental expenses, shall be included in
               the cost of the Lessee Improvements and Additional Lessee
               Improvements respectively.

        55.7   Lessor's Obligations. Notwithstanding Paragraph 2.3, Lessor shall
               have no obligation to Lessee for defects in design, workmanship
               or materials, but shall use its reasonable best efforts to
               enforce the contractor's obligations therefor and shall, as
               appropriate under the terms of the Lease given the allocation of
               maintenance responsibility between Lessor and Lessee, assign to
               Lessee any manufacturer's warranties with respect to the work or
               the Premises.

        55.8   Work Done by Lessee. Any work done by Lessee in the Premises
               shall be done at Lessee's sole cost and expense in accordance
               with the terms of this Lease and only with Lessor's prior consent
               and in conformity with a valid building permit and all applicable
               rules, regulations, laws and ordinances. Any work done by Lessee
               shall be done in a good and workmanlike manner with good and
               sufficient materials, and shall be done only by contractors
               approved by Lessor. Lessor hereby approves of SDI Industries as
               Lessee's contractor and of SDI's subcontractors for the
               installation of a material handling system in the distribution
               center in the Premises during the early access period.

        55.9   Acceptance of Lessee Improvements. Lessee shall notify Lessor in
               writing of any items that Lessee deems incomplete or incorrect in
               order for the Premises to be acceptable to Lessee within ninety
               (90) days following completion of the Lessee Improvements and
               Additional Lessee Improvements. Lessee shall be deemed to have
               accepted the Premises as improved and to have approved
               construction if Lessee does not deliver such a list to Lessor
               within said number of days.

        55.10  Other Improvements. Lessor shall, at its sole cost and expense,
               be responsible to make any alterations to the Building (but not
               the Premises) during the Term of the Lease and any Extension
               Period, as and if required for compliance with the Americans with
               Disabilities Act ("ADA"), so long as such compliance is not a
               result of Lessee's specific use of the Building or Lessee's
               Alterations under Paragraph 7.3. With respect to the Premises,
               including, without limitation, the Base Lessee Improvements, the
               Lessee Improvements and Additional Lessee Improvements, any
               alterations to the bathroom, showers or elevator required by the
               ADA as interpreted and applied on the Commencement Date shall be
               made, at Lessor's sole cost and expense without deduction from
               the Lessee Improvement Allowance or the Additional Lessee
               Improvement Allowance. Any such alterations shall be separately
               itemized and priced by Lessor's contractor. Lessee shall, at its
               sole cost and expense, be responsible (a) to make any alterations
               to the Premises required due to any changes in the ADA, including
               without limitation the interpretation and application thereof,
               after the Commencement Date, or required due to Lessee's specific
               use of the Premises or due to any Alterations under Paragraph 7.3
               performed by Lessee in the Premises after the Commencement Date,
               and (b) for the cost of any alterations to the Building required
               for compliance with the ADA arising out of Lessee's specific use
               of the Premises or due to any of Lessee's Alterations under
               Paragraph 7.3. The cost associated with any seismic retrofit of
               the Premises, as and if required, whether under current or future
               law, shall be the responsibility of Lessor except to the extent
               required due to the unique nature of Lessee's use, the Lessee




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<PAGE>   55
               Improvements, the Lessee Additional Improvements or Lessee's
               Alterations. Lessor's costs under this Paragraph 55.10 shall not
               be included in Lessee's Share of Common Area Expenses.

        55.11  Lessee Delays. If Lessor is delayed in substantially completing
               any work to be performed by Lessor under this Paragraph 55 as a
               result of any of the following circumstances or events ("Lessee
               Delays"), the Commencement Date shall not be deferred by reason
               of such delay:

               (a)    Lessee's failure to furnish the space plan by August 11,
                      1997;

               (b)    Lessee's failure to respond within one business day to any
                      request of Lessor for additional information or approval
                      as necessary in connection with the completion of the
                      Total Lessee Improvements;

               (c)    Lessee's failure to furnish interior construction drawings
                      by September 17, 1997;

               (d)    Lessee's request for any special, long-lead materials or
                      installations as part of the Lessee Improvements or
                      Additional Lessee Improvements; provided, however, that
                      Lessor notifies Lessee of any such materials or
                      installation within 10 days after receiving bids from the
                      general contractor;

               (e)    Lessee's changes in any drawings, plans, or specifications
                      to the Approved Plans, including without limitation the
                      time consumed at revising plans or in revising the
                      Approved Plans by reason of Lessee's changes;

               (f)    Any changes initiated by Lessee by reason of Lessee's
                      disapproval of cost proposals or resulting in the
                      preparation of revised cost proposals;

               (g)    Field changes to the construction work by Lessee;

               (h)    The delivery, installation, or completion of any
                      Lessee-finish work performed by Lessee's employees or
                      agents;

               (i)    The performance of any work done by Lessee, or any failure
                      to complete or delay in completion of such work; or

               (j)    Any other act or omission of Lessee.

        55.12  Project Manager. The project manager for the Total Lessee
               Improvements shall be ZB Investment Company (the "Project
               Manager"). Lessee agrees to reimburse Lessor within 10 days after
               demand for Lessee's share of the cost of the Project Manager in
               the amount of $3,000.00 per month, not to exceed $21,000.00 in
               the aggregate. The Project Manager's duties shall include
               handling the bids pursuant to Paragraph 55.1, negotiating with
               the bidding contractors, assisting Lessor in selecting the
               contractor, negotiation of the terms of the contractor's
               contract, giving written notice to Lessee of potential Lessee
               Delays, and making final determinations of whether a Lessee Delay
               has occurred and of the extent of the Lessee Delay.

56.     FIRST RIGHT OF OFFER:

        No later than 30 days prior to commencing marketing for releasing (as
        defined below) the balance of the space in the Building that becomes
        available (as defined below) (the "Offer Space"), Lessor shall first
        offer to lease such space to Lessee by a written notice (a "First Offer
        Notice") Lessee thereupon shall have the right ("ROFO") to lease all of
        the Offer Space at the ROFO Fair Market Rent (as defined below) for the
        remaining term of the Lease (including the option to extend pursuant to
        Paragraph 54 at the Monthly Base Rent as determined therein for the
        applicable Extension Period). The ROFO shall be exercised by Lessee
        notifying Lessor, within ten days after Lessee's receipt of the First
        Offer Notice, of Lessee's exercise of its right to lease such Offer
        Space upon the terms set forth herein. If Lessee so notifies Lessor,
        Lessor shall deliver the Offer Space to Lessee upon the date such space
        is available and shall prepare an amendment to this Lease adding the
        Offer Space to the Premises on the date of delivery on the terms set
        forth herein, which amendment shall be delivered to Lessee promptly
        after exercise and executed by Lessee within 15 days after Lessee's
        receipt of same from Lessor. For purposes of this Paragraph 56, ROFO
        Fair Market Rent shall mean the monthly Base Rent then being charged for
        comparable space and comparable deals in buildings of similar size and
        construction in Anaheim, Yorba Linda and Fullerton. In determining
        comparable space, appropriate consideration shall be given to the level
        and type of improvements contained in the Offer Space. "Comparable
        deals" shall mean leases which are approximately as long, and commencing
        at approximately the same time, as the leasing of the Offer Space
        through the end of the initial term. "Comparable deals" shall not
        include any transactions where the lessor of the subject building is in
        default under its mortgage or other indebtedness, or is currently, or
        has within the prior 12 months been involved in foreclosure proceedings
        on the applicable building. "Comparable deals" shall also exclude
        transactions which are subleases or whereby the Lessee has some form of
        equity participation in the deal. Lessor shall give Lessee notice in
        writing within 30 days after Lessee's exercise of the ROFO of the ROFO
        Fair Market Rent (the "ROFO Market Rent Notice"). In the event the
        Lessee notifies Lessor in writing, on or before the 20th business day
        following the ROFO Market Rent Notice, that Lessee disagrees with the




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<PAGE>   56
        applicable determination, Lessor and Lessee shall negotiate in good
        faith to resolve such dispute within 10 business days thereafter (the
        30th business day after any ROFO Market Rent Notice is referred to
        herein as the "ROFO Outside Agreement Date.)" If not resolved by the
        ROFO Outside Agreement Date, each party shall submit to the other its
        determination of ROFO Fair Market Rent and the dispute shall be
        submitted to arbitration in accordance with Paragraph 54.4 with the
        following modifications: (i) the word "ROFO" is inserted before the
        words "Fair Market Rent" and "Outside Agreement Date" each place they
        appear, (ii) the words "Offer Space" are substituted for the word
        "Premises" each place it appears, and (iii) the last sentence of
        Paragraph 54.4 is deleted. Until any dispute as to ROFO Fair Market Rent
        is resolved, any applicable payments due under this Lease shall
        correspond to Lessor's determination and, if Lessee's determination
        becomes the final determination, Lessor shall refund any overpayments to
        Lessee, within 5 business days following the final resolution of the
        dispute. Lessor shall be deemed to be "releasing" any such Offer Space
        when the first lease of such Offer Space entered into within the first
        year after the Commencement Date terminates and the Offer Space becomes
        available. The Offer Space shall be deemed to be "available" as of any
        date only to the extent it has not been subject to or comprised of
        expansion option, first offer, or a lease to an existing tenant in
        occupancy of such space, unless such tenant has specified in writing
        that it has no interest in re-leasing such space. In event that Lessee
        does not timely accept the offer contained in any Offer Notice, or in
        the event that Lessee accepts any such offer but Lessee does not execute
        an amendment within 15 days after Lessee's receipt of same from Lessor
        which adds such Offer Space to the Premises, Lessor shall have the right
        to lease such Offer Space to any other person on any terms and Lessee
        shall have no further rights under this Paragraph. The provisions of
        Paragraph 39 are applicable to this right of first offer. In addition,
        Lessee shall have no rights to exercise its ROFO rights during any
        period in which it is not in occupancy of 100% of the Premises or in
        which an assignment of this Lease or a sublease of the Premises is in
        effect.

57.     TRAILER STORAGE; RESERVED PARKING:

        Lessee may store trailers overnight within the loading area outlined in
        Exhibit "A" next to the loading docks of the Premises, subject to
        Paragraph 40. The location of the Reserved Parking Spaces shall be
        designated by Lessor, subject to Lessee's approval, which shall not be
        unreasonably withheld or delayed.


58.     CONDITIONS, COVENANTS AND RESTRICTIONS:

        Lessor shall provide Lessee a copy of any conditions, covenants and
        restrictions that may be of record in connection with the Industrial
        Center.


59.     HAZARDOUS SUBSTANCES:

        To the best of Lessor's current actual knowledge, without inquiry or
        investigation, there is no asbestos nor any other Hazardous Substances
        including, but not limited to, radon gas, PCBs, lead base paint, ground
        water contamination, industrial, radioactive or chemical waste,
        urea-formaldehyde insulation, and underground storage tanks on or under,
        or within the Industrial Center in violation of applicable law.

        In addition to the terms of Paragraph 6.2, Lessee shall disclose to
        Lessor in writing whether any Hazardous Substances will be used, stored
        or disposed in the Premises, which disclosure shall include an inventory
        of such substances, and provide a use, storage and disposal plan for the
        handling of such substances. Lessor may disapprove of the use, storage
        and/or disposal of such substances within the Premises at Lessor's sole
        discretion.


        Lessor shall retain the responsibility and pay for any investigations or
        remediation measures required by governmental entities having
        jurisdiction with respect to the existence of Hazardous Substances on
        the Premises or the Building which are not brought on to the Premises,
        Building or Common Areas by Lessee. Lessee shall fully cooperate in any
        such activities at the request of Lessor, including allowing Lessor and
        Lessor's agents to have reasonable access to the Premises at reasonable
        times in order to carry out Lessor's investigative and remedial
        responsibilities. The costs incurred by Lessor for such investigation
        and remediation shall not be included in Lessee's Share of Common Area
        Operating Expenses. Any liability of Lessor with respect to this
        covenant shall be satisfied only out of Lessor's interest and estate in
        the Premises and Building, and Lessor shall have no personal liability
        beyond such interest and estate with respect to such obligations. This
        covenant shall be of no further force or effect with respect to Bank of
        America National Trust and Savings Association from and after its sale
        of the Premises and Building.

60.     ASSIGNMENT AND SUBLETTING:

        The parties agree that it would be reasonable for Lessor to condition
        its consent to any proposed assignment or sublease on Lessee's agreement
        to pay to Lessor 50% of rent received from the assignee or sublessee by
        Lessee in excess of the rent payable by Lessee pursuant to this Lease
        after deducting any direct expenses incurred by Lessee in connection
        with such assignment or sublease including, but not limited to, any
        changes, alterations and improvements to the Premises, and any brokerage
        commissions, and on Lessee's payment to Lessor of 50% of all other
        consideration given, directly or indirectly, by the assignee or
        sublessee to Lessee in consideration of any such assignment or sublease.
        It is the intention of Lessor and




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        Lessee that the foregoing provisions shall apply to any consideration
        received by Lessee from sub- sublessees or future assignees, regardless
        of the number of levels thereof. Any rent or other consideration which
        is to be paid to Lessor by Lessee pursuant to this paragraph shall be
        paid promptly upon receipt by Lessee.

61.     ADDITIONAL PERMITTED USES (PARAGRAPH 1.8):

        The Permitted Uses shall also include any other use permitted by
        Applicable Laws; provided that Permitted Uses shall exclude any use
        which (a) violates any certificate of occupancy in force for the
        Premises, the Building or any part thereof, (b) causes or is likely to
        cause damage to the Building or any part thereof or any equipment,
        facilities or other systems therein; (c) constitutes a violation of law;
        (d) violates a requirement or condition of the standard fire insurance
        policy issued for the Buildings, (e) impairs the character, reputation,
        image or appearance of the Building; (f) impairs the proper and economic
        maintenance, operation or repair of the Building or any part thereof;
        (g) constitutes a nuisance, annoyance or inconvenience to other lessees
        or occupants of the Building or interferes with or disrupts the use or
        occupancy of any area of the Building (other than the Premises) by other
        lessees or occupants; (h) interferes with the transmission or reception
        of microwave, television, radio or other communications signals by
        antennae located on the roof or elsewhere in the Building; (i) results
        in repeated demonstrations, bomb threats or other events which require
        evacuation of any part of the Building or otherwise disrupt the use,
        occupancy or quiet enjoyment thereof by other lessees and occupants, or
        (j) involves the use of any part of the Premises for: (1) a restaurant
        or bar; (2) the storage, manufacture or sale of food, beverages, liquor,
        tobacco in any form or drugs (except that Lessee may maintain vending
        machines for the use of its officers, employees and invitees and except
        that Lessee's officers and employees may bring food, beverages, tobacco
        and medicine onto the Premises for their personal and lawful
        consumption); (3) the storage, use, treatment, manufacture or sale of
        Hazardous Substances (as defined below); (4) the business of
        photocopying or offset printing (but Lessee may use part of the Premises
        for photocopying or offset printing for its own business); (5) medical
        or dental offices or laboratories; (6) a school or classroom; (7) the
        retail sale or auction of merchandise, goods or property of any kind; or
        (8) cooking (except that Lessee may maintain coffee or lunch rooms with
        coffee makers and microwave ovens for the exclusive use of Lessee's
        officers, employees and invitees), lodging or sleeping. No noise,
        vibration or odor shall be permitted to escape from the Premises.

62.     ADDITION TO END OF PARAGRAPH 2.10:

        Lessor agrees to exercise its rights under this Paragraph 2.10 in a
        manner designed to minimize to the extent reasonably possible
        interference with Lessee's business and consistent with the practices of
        owners of similar parks in the Anaheim area. No capital expenditures for
        changes to the Common Areas pursuant to Paragraphs 2.10(a), (c), (d) or
        (f) shall be included in Common Area Operating Expenses for purposes of
        this Lease.

63.     AUDIT RIGHT AND ADDITIONS TO PARAGRAPH 4.2:

        The following is added to the end of Paragraph 4.2:

               "(e) In the event of any dispute as to the amount of Operating
               Expenses as set forth in Lessor's statement of Operating Expenses
               delivered to Lessee, Lessee shall have the right, after
               reasonable notice and at reasonable times within one year after
               the final statement for such Operating Expenses is delivered to
               Lessee, to inspect and photocopy (at Lessee's expense) Lessor's
               accounting records with respect to Lessee's Share of Operating
               Expenses. If, after such inspection and photocopying, Lessee
               still disputes the amount of Operating Expenses as set forth in
               Lessor's statement, Lessee shall be entitled to retain an
               independent certified public accountant reasonably approved by
               Lessor to audit Lessor's records to determine the proper amount
               of such Operating Expenses and the proper amount payable by
               Lessee pursuant to this Lease. Lessee agrees to pay the cost of
               such audit, provided that Lessor shall pay such cost if the audit
               reveals that Lessor's determination of Operating Expenses as set
               forth in Lessor's statement overstated Operating Expenses by 5%
               or more. Lessor shall be required to maintain records of all
               Operating Expenses for one year after the final statement for
               such Operating Expenses. If such audit reveals an overstatement
               or understatement of Operating Expenses, the amount of the
               differential shall be promptly reimbursed to Lessee by Lessor or
               paid by Lessee to Lessor, as the case may be."

               (f) Lessor may not submit a statement to Lessee demanding
               increased rents representing increased Common Area Operating
               Expenses if more than twelve months have elapsed since the end of
               the calendar year in which the increased Common Area Operating
               Expenses were paid or incurred unless the increased Common Area
               Operating Expenses relate to adjustments in Real Property Taxes."

               (g) For the purposes of determining the amount to be included in
               Common Area Operating Expenses with respect to capital
               improvements, costs of the capital improvements shall be
               amortized over the useful life of such improvements on a straight
               line basis, including imputed interest at the prime rate charged
               by the largest state chartered bank in California plus 2% per
               annum."





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               (h) "Lease Year" means each consecutive twelve (12) month period
               during the term of the Lease; provided that the first Lease Year
               shall commence on the Commencement Date and end on the last day
               of the eleventh month thereafter, the second and each succeeding
               Lease Year shall commence on the first day of the next calendar
               month and the last Lease Year shall end on the Expiration Date.
               The actual fees incurred by Lessor for management and
               administration of the Industrial Center shall be included in
               Common Area Expenses; provided that the maximum amount for
               property management that may be included in Common Area Operating
               Expenses in any Lease Year (the "Measurement Year") shall equal
               the Management Fee Cap (as defined below). As used in this
               Paragraph "Management Fee Cap" initially means $0.09 per square
               foot. On the first day of the second Lease Year and every
               succeeding Measurement Year during the term of the Lease the
               Management Fee Cap shall be increased by the lesser of (i) the
               percentage increase in the CPI (as defined below) for the first
               full calendar month of the Measurement Year as compared to the
               CPI for the first full calendar month of the prior Lease Year or
               (ii) 5%. The Management Fee Cap calculated for any Lease Year
               pursuant to the foregoing shall be prorated on an actual day
               basis for any Lease Year that is less than 12 full calendar
               months. As used herein the term "CPI" means the Consumer Price
               Index of the Bureau of Labor Statistics of the U.S. Department of
               Labor for Urban Wage Earners and Clerical Workers, Los
               Angeles-Anaheim-Riverside, California (1982- 1984=100), "all
               items". In the event the compilation and/or publication of the
               CPI shall be transferred to any other governmental department of
               bureau or agency or shall be discontinued, then the index most
               nearly the same as the CPI as determined by Lessor shall be used
               to make such calculation."

64.     INTEREST ON SECURITY DEPOSIT UNDER PARAGRAPH 5:

        The Security Deposit held by Lessor shall bear interest during each
        calendar year for the benefit of Lessee at a rate equal to the rate paid
        from time to time on Bank of America one year certificates of deposit
        issued on the first business day of such calendar year. Lessee shall pay
        all Federal and State income taxes attributable to that interest.
        Provided no Default exists under the Lease, Lessor shall disburse to
        Lessee the accrued interest on the Security Deposit during each calendar
        year or credit Lessee's obligation to pay Base Rent in a like amount
        within 15 days after the expiration of such calendar year. The
        attorneys' fees against which the Security Deposit may be applied as
        provided in Paragraph 5 of the printed portion of the Lease shall be
        limited to those attorneys' fees determined by a court or admitted in
        writing by Lessee to be due and owing Lessor from Lessee.

65.     ADDITION TO SECTION 6.2:

        The following Section 6.2(d) is added to the Lease:

               "(d) Notwithstanding anything to the contrary in this Lease,
               Lessee shall not be liable to Lessor under this Lease for any
               cost associated with Hazardous Substances, if any, to the extent
               that the Hazardous Substances existed on the Premises prior to
               the date of this Lease and were not brought on to the Premises by
               Lessee, its agents, employees, contractors, subcontractors,
               licensees or invitees.

66.     NOTICE OF ENTRY:

        Notwithstanding anything to the contrary in Paragraphs 6.4 or 32, except
        in the case of emergency or during periods in which Lessee is in default
        under this Lease, Lessor shall give Lessee notice in advance of Lessor's
        intent to enter the Premises and such entry shall be made during
        Lessee's business hours.

67.     ADDITION TO END OF PARAGRAPH 7.1(B):

        The following is added at the end of Paragraph 7.1(b):

               "not to exceed the costs for those services generally charged in
               the area where the Premises are located for comparable services
               to comparable buildings."

68.     ADDITION TO END OF PARAGRAPH 7.2:

        The following is added at the end of Paragraph 7.2:

               "The cost of painting the exterior of the Building (after the
               initial exterior painting provided for in Paragraph 55) shall be
               a Common Area Operating Expense and shall be treated as a capital
               expenditure for purposes of amortization under Paragraph 4.2(g)."

69.     LIMITATION ON PARAGRAPH 7.3:

        With respect only to the portion (the "Warehouse Area") of the Premises
        other than the office areas, Lessor's prior approval shall not be
        required with respect to any Alterations by Lessee provided that such
        Alterations (a) are not visible from the outside of the Premises, (b) do
        not involve puncturing, relocating or removing the roof or any existing
        walls, or changing or interfering with the fire sprinkler or fire
        detection systems, (c) do not involve the plumbing, electrical or HVAC
        systems in the Premises, and (d) do not involve the




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        structural elements of the Building. Notwithstanding the last sentence
        of Paragraph 7.3(b), Lessor agrees not to require a lien and completion
        bond unless Lessor believes it is reasonably necessary to protect Lessor
        given the cost, nature and extent of the work and the parties
        responsible for the performance and payment therefor.

70.     ADDITION TO PARAGRAPH 7.4(B):

        The following is added at the end of Paragraph 7.4(b):

               "Prior to commencing any addition, alteration or improvement,
               Lessee may request that Lessor waive Lessee's obligation to
               remove such addition, alteration or improvement at the end of the
               term. Any such waiver must be in writing and shall only apply to
               the additions, alterations or improvements described therein.
               Notwithstanding anything to the contrary in Paragraph 7.4, (a)
               Lessee shall not be required to remove any of the improvements to
               the office area of the Premises made by Lessor at the
               commencement of the term, and (b) Lessee shall remove all
               Alterations and Trade Fixtures from the Warehouse Area at the
               expiration or earlier termination of this Lease."

71.     ADDITION TO END OF PARAGRAPH 8.3(A):

        The following is added at the end of Paragraph 8.3(a):

               "The Lessor may, but shall not be obligated to, maintain
               earthquake insurance. In the event Lessor maintains earthquake
               insurance, the cost of that insurance shall be included as a
               Common Area Operating Expense; provided that the maximum amount
               of earthquake insurance premiums that may be included in the
               Common Area Operating Expenses in any Lease Year shall be $0.26
               per square foot. The maximum amount calculated for any Lease Year
               pursuant to the foregoing shall be prorated on an actual day
               basis for any Lease Year that is less than 12 full calendar
               months. "

72.     ADDITION TO END OF PARAGRAPH 8.5:

        The following is added at the end of Paragraph 8.5:

               "Lessee shall be permitted to provide the insurance required
               under this Lease by obtaining a blanket policy or policies to be
               maintained by Lessee. The coverages afforded to Lessee and
               Lessee's Lenders under this Lease shall in no way be limited,
               diminished or reduced under such blanket policy or policies."

73.     ADDITION TO PARAGRAPH 9.2:

        The following is added at the end of Paragraph 9.2:

               "Premises Partial Damage due to flood or earthquake shall be
               subject to Paragraph 9.3 rather than Paragraph 9.2 in the event
               there is any shortage of insurance proceeds."

74.     ADDITION TO PARAGRAPH 9.6.(A):

        The following is added after the first sentence of Paragraph 9.6(a):

               "The period of abatement shall continue after the completion of
               Lessor's repairs and restoration for the reasonable period for
               Lessee to repair or replace Lessee's trade fixtures, alterations
               and utility installations, but not to exceed 30 days from the
               completion of Lessor's repair and restoration; provided, however,
               the 30-day period after completion of Lessor's work may be
               extended up to an additional 30 days to the extent the abatement
               does not exceed the proceeds from insurance required to be
               carried under Paragraph 8.3(b) applicable to, and received by
               Lessor with respect to, that additional 30-day period."

75.     ADDITION TO PARAGRAPH 12.1(B):

        The following is added to Paragraph 12.1(b):

               "If Lessee is a public corporation whose stock is regularly
               traded on a national stock exchange, or is regularly traded in
               the over-the-counter market and quoted on NASDAQ, the provisions
               of this Paragraph 12.1(b) shall not apply to transfers of stock
               on those exchanges or markets."





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76.     SUBSTITUTION FOR PARAGRAPH 13.3:

        The following is substituted for Paragraph 13.3:

               "Upon the occurrence of a Breach (as defined in Paragraph 13.1)
               of this Lease by Lessee, an amount shall be due and payable by
               Lessee to Lessor equal to (A) (a) the sum of (i) the Lessee
               Improvement Allowance, (ii) the value of free Base Rent (i.e.,
               the Base Rent stated in Paragraph 53 to be abated) multiplied by
               (b) a fraction the numerator of which is the number of months
               remaining in the initial term of the Lease on the date of the
               termination of the Lease and the denominator of which is 120,
               plus (B) the unamortized portion of the Additional Lessee
               Improvement Allowance then remaining unpaid, with such
               amortization being made in the same manner as the Monthly
               Improvement Payment has been calculated under Paragraph 55.4 of
               this Lease."

77.     NOTICE BEFORE LATE CHARGE UNDER PARAGRAPH 13.4:

        Notwithstanding the provisions of 13.4, the 6% late charge described in
        Paragraph 13.4 shall not be imposed with respect to the first late
        payment in any calendar year unless the applicable payment due from
        Lessee is not received by Lessor or Lessor's designee within 10 days
        following written notice from Lessor that such payment was not received
        when due. Following the first such written notice from Lessor in any
        calendar year (and regardless of whether such payment is then received
        within such 10-day), a late charge will be imposed without notice (as
        set forth in Paragraph 13.4) for any subsequent payment due to Lessor
        during such calendar year which is not received within 10 days of its
        due date.

78.     ADDITION TO PARAGRAPH 14:

        The following is added at the end of Paragraph 14:

               "If the amounts available to Lessor for restoration under the
               preceding sentence are inadequate to repair such damage to the
               Premises, Lessee may elect to contribute the amount of the
               shortfall. In the event Lessee does not elect to contribute the
               amount of the shortfall, Lessor may elect either to (a) fund the
               shortfall itself, in which event Lessor shall proceed with the
               repair and restoration, or (b) terminate this Lease."

79.     SUBSTITUTION FOR PARAGRAPH 15.2:

        The following is substituted for Paragraph 15.2:

                      "Additional Terms. Unless Lessor and Lessee's Broker have
               otherwise agreed in writing, Lessor agrees that if Lessee's
               Broker is a procuring cause of any Lease of other space in the
               Building other than the Premises and Lessee's Broker provides
               Lessor with the written agreement of Lessee and Lessee's Broker
               designating Lessee's Broker as the exclusive representative and
               agent of Lessee with respect to the lease of that expansion
               space, then Lessor shall pay Lessee's Broker a brokerage fee in
               connection with that expansion equal to 2 1/2% of the Base Rent
               payable during the first five years of the initial term of that
               expansion and 1 1/2% of the Base Rent payable with respect to the
               second five years of the initial term of that expansion. No
               commission or other fee shall be payable to Lessee's Broker with
               respect to any extension of the term of this Lease or the
               extension of any term of any Lease for other space in the
               Building. Notwithstanding the foregoing, in the event that any
               other broker claims to be entitled to a broker's fee or
               commission with respect to that expansion by reason of any
               dealings with Lessee, then Lessee's Broker shall have no rights
               under this Paragraph 15.2 to any fees or commission with respect
               to that expansion."

80.     ADDITION TO PARAGRAPH 30.1:

        The following is added to the end of Paragraph 30.1:

               "Lessor hereby represents to Lessee that there are no Lenders
               holding any Security Device with respect to the Premises as of
               the date of the execution of this Lease."

81.     SIGNS UNDER PARAGRAPH 34:

        Lessor hereby approves Lessee's proposed signage as shown on the Signage
        Exhibit attached to this Lease.

82.     HVAC UNIT REPLACEMENT

        Lessor agrees that with respect to the 4 HVAC units described below
        (each an "Old Unit"), Lessor shall replace each Old Unit at Lessor's
        sole cost and expense promptly after such Old Unit ceases to operate. As
        used herein, "ceases to operate" means any one of the following elements
        of an Old Unit requires replacement: (a) heat exchanger, (b) evaporation
        coils, (c) condenser coils, or (d) compressor. The




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        replacement of Old Units, when made, shall be with comparable new HVAC
        units of at least the same tonnage. The Old Units are as follows:

        Manufacture   Model #      Serial       Tonnage    Location

        AC-1 Carrier  50DD024-600   RO 96371       20     N.W. corner
        AC-2 Carrier  50DD028-600   SO 99824       25     S.W. corner
        AC-3 Carrier  50DP012-600   OO 96215       10     S.E. corner
        AC-4 Carrier  50DD024-600   RO 96370       20     N.E. corner

83.     ACCESS BY BANK OF AMERICA. Lessee hereby agrees that Bank of America,
        National Trust and Savings Association ("BofA") and any entity which
        controls, is under common control with or is controlled by, BofA
        (collectively, the "BofA Parties") shall have use of and access to the
        following portions of the Premises):

        (a)    restrooms;
        (b)    loading doors 8 and 9;
        (c)    forklift room for recharging of BofA Parties' forklifts at night;
        (d)    forklift recharging equipment;
        (e)    portions of the Premises necessary for access to the areas
               described in (a)-(d) above, including ingress and egress of
               trucks, forklifts and personnel to and from the Adjacent Space.

        BofA's rights of access under this Paragraph shall terminate at 11:59
        p.m. on December 31, 1997, and shall be exercised by BofA so as to not
        unreasonably interfere with the construction of the Total Lessee
        Improvements. During the period of BofA's access under this Paragraph,
        Lessee shall not be liable for injury to any person or for damage to any
        property of BofA employees, agents, contractors, licensees, or invitees,
        from any cause whatsoever, occurring upon or about the Premises, and
        BofA shall indemnify and save Lessee harmless from any and all liability
        and claims arising out of or connected with any such injury or damage.

84.     COMMISSIONS. The commissions payable to the Brokers with respect to this
        Lease are as follows: $158,159.63 payable to Lessor's Broker and
        $239,886.53 payable to Lessee's Broker.





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                                      -12-