<PAGE>

                                                                   EXHIBIT 10.42

                          CADER LANE INDUSTRIAL PARK
                                   NET LEASE
                            BASIC LEASE INFORMATION


<TABLE>
<S>  <C>                               <C>                     <C>                        <C>

1.     Date                            September 27, 1999
     -------------------------------------------------------------------------------------------------------
2.     Landlord                        Cader Lane Associates
     -------------------------------------------------------------------------------------------------------
3.     Tenant                          Geerlings & Wade, Inc.
     -------------------------------------------------------------------------------------------------------
4.     Premises                                                                           REFERENCE
     ----------------------------------------------------------------------------------
       a.  Project                     Cader Lane Industrial Park                         Paragraph 1

       b.  Building                    1460 Cader Lane

       c.  Address                     1460 Cader Lane

       d.  Assessor's Parcel #         005-290-001

       e.  Suite                       D

       f.  Usable Sq. Ft.              10,423

       g.  Rentable Sq. Ft.            10,918
     ----------------------------------------------------------------------------------
5.     Term                                                                               Paragraph 2
     ----------------------------------------------------------------------------------
       a.  Estimated Commencement Date                         November 1, 1999

       b.  Length of Term                                      Five (5) years
     ----------------------------------------------------------------------------------
6.     Base Rent                                                                          Paragraph 3
     ----------------------------------------------------------------------------------
       a.  Monthly Base Rent                                   See Addendum

       b.  Advanced Base Rent                                  $  6,551
           (Paid Upon Lease Execution)

       c.  Adjustment Date of Monthly Base Rent                See Addendum
     ----------------------------------------------------------------------------------
7.     Property Taxes and Operating Expenses                                              Paragraph 4
     ----------------------------------------------------------------------------------
       a.  Initial Monthly Allocation per rentable Sq.Ft.      $   0.12

       b.  Premises v. Building Sq.Ft. Ratio                   10,918/48,600 = 22%

       c.  Premises v. Project Sq.Ft. Ratio                    10,918/150,092 = 7%
     ----------------------------------------------------------------------------------
8.     Security Deposit                $  6,551                                           Paragraph 16
     ----------------------------------------------------------------------------------
9.     Tenant Improvements                                                                Exhibit B
     ----------------------------------------------------------------------------------
10.    Use                             Light Industrial/Office/Wine Sales                 Paragraph 6
     ----------------------------------------------------------------------------------
11.    Tenant's Address for Notices                                                       Paragraph 20
     ----------------------------------------------------------------------------------
       Mr. David Pearce, CFO
       Geerlings & Wade, Inc.
       960 Turnpike Street
       Canton, MA  02021
     ----------------------------------------------------------------------------------
</TABLE>

                                       1
<PAGE>

                          CADER LANE INDUSTRIAL PARK

                                   NET LEASE


  THIS LEASE, dated September 27, 1999, is made and entered into by and
                    ------------
between Cader Lane Associates, a California general partnership ("Landlord"),
and Geerlings & Wade, Inc., a Massachusetts corporation, ("Tenant").

  1.   Premises.
       --------

       Landlord leases to Tenant, and Tenant hereby leases from Landlord for the
term of this Lease ("Term") and at the rent and upon the conditions set forth
below, the Premises described in the Basic Lease Information and identified on
the floor plan attached hereto as Exhibit A.  The Premises are located within
the Building described in the Basic Lease Information, and constitute part of
the Project described in the Basic Lease Information and as shown in Exhibit A-1
attached hereto, at the Cader Lane Industrial Park, located in Petaluma,
California.  All areas and facilities outside the Buildings and within the
exterior boundaries of the Project that are provided and designated by Landlord
from time to time for the general nonexclusive use and convenience of the
tenants of the Project shall be known as "Common Areas".

  2.   Term.
       ----

       (a) The Term shall commence upon the date ("Commencement Date") which is
the earlier of:  (i) substantial completion of the Premises, as the term
"substantial completion" is defined in the Work Letter Agreement, attached
hereto as Exhibit B; or (ii) the date substantial completion would have occurred
but for Tenant Delays (as the term is defined in the Work Letter Agreement).
The Estimated Commencement Date is set forth in the Basic Lease Information,
which date may be postponed due to a delay in delivering the Premises as
provided in Paragraph 2(b) below.  A "Lease Year" is a period of twelve (12)
consecutive calendar months.  A "Lease Month" is a calendar month.  The initial
Term of this Lease shall be determined as follows:

           (1)  If the Commencement Date of this Lease occurs on the first
calendar day of a calendar month, the Term shall be for a period of Lease Years
and Months as specified in the Basic Lease Information, unless terminated sooner
as provided in this Lease.

           (2)  If the Commencement Date of this Lease occurs on other than the
first calendar day of a calendar month, the Term shall be for a period of Lease
Years and Months as specified in the Basic Lease Information, plus the number of
days remaining in the calendar month in which the Commencement Date occurs,
unless terminated sooner as provided in this Lease.

       (b) Subject to the provisions of Paragraph 22 below, in the event the
Premises are not substantially completed (in accordance with the Work Letter
Agreement) on or within three (3) months after the Estimated Commencement Date,
then Tenant may, at Tenant's option, by notice in writing to Landlord within ten
(10) days thereafter, cancel this Lease, in which event, (i) this Lease shall be
deemed null and void and have no further force or effect, (ii) all security or
other deposits made herewith shall be promptly returned to Tenant, and (iii) the
parties shall have no further obligation to each other; provided further,
however, that if such written notice of Tenant is not received by Landlord
within said 10-day period, Tenant's right to cancel this Lease hereunder shall
terminate and be of no further force or effect.

  3.   Rent.
       ----

       (a) For purposes of this Lease, the term "Rent" shall mean the Base Rent,
Advanced Base Rent, all additional rent, and all of the other monetary
obligations of Tenant under this Lease.  Upon execution of this Lease, Tenant
shall pay to Landlord the Advanced Base Rent set forth in the Basic Lease
Information.  Tenant shall pay to Landlord the Base Rent specified in the Basic
Lease Information, payable on or before the first day of each and every
successive calendar month following the Commencement Date.  If the Term
commences on other than the first day of a calendar month, the first payment of
Base Rent shall be appropriately prorated, on the basis of a 30-day month.
Tenant's payment of any Advanced Base Rent (excluding that portion specifically
attributable to last month's rent, if any) shall be credited against Tenant's
obligation to pay Base Rent beginning as of the Commencement Date.

       (b) Tenant shall pay, as additional rent, all amounts of money required
to be paid to Landlord by Tenant under this Lease in addition to monthly Base
Rent, whether or not the same be designated "additional rent."  If such amounts
are not paid at the time provided in this Lease, they shall nevertheless be
collectable as additional rent with the next installment of monthly Base Rent
thereafter falling due, but nothing herein contained shall be deemed to

                                       2
<PAGE>

suspend or delay the payment of any amount of money at the time the same becomes
due and payable hereunder, or limit any other remedy of Landlord.

       (c) Tenant acknowledges that late payment by Tenant to Landlord of Rent
after the expiration of any applicable grace period will cause Landlord 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 on
Landlord by the terms of any trust deed covering the Premises.  Accordingly, if
any installment of Rent or any other sums due from Tenant shall not be received
by Landlord when due, Tenant shall pay to Landlord, in addition to interest due
under Paragraph 3(d) and attorneys' fees a late charge equal to four percent
(4%) of such overdue amount.  The parties agree that such late charge represents
a fair and reasonable estimate of the costs Landlord will incur by reason of
late payment by Tenant.  Acceptance of such late charge by Landlord shall in no
event constitute a waiver of Tenant's default with respect to such overdue
amount, nor prevent Landlord from exercising any of the other rights and
remedies granted hereunder.

       (d) Any amount due to Landlord, if not paid when due, shall bear interest
from the date due until paid at the rate of ten percent (10%) per annum.
Payment of interest shall not excuse or cure any default hereunder by Tenant.

       (e) All payments due from Tenant to Landlord hereunder shall be made to
Landlord without deduction or offset, in lawful money of the United States of
America at Landlord's address for notices hereunder, or to such other person or
at such other place as Landlord may from time to time designate in writing to
Tenant.

  4.   Taxes and Operating Expenses.
       ----------------------------

       (a) In addition to the Base Rent, Tenant shall pay (i) Tenant's
Percentage Share of Property Taxes (according to the percentage set forth in the
Basic Lease Information) relating to those Property Taxes (as the term is
defined under Paragraph 4(a)(1) below) which are assessed during the Term, and
(ii) Tenant's Percentage Share of Operating Expenses (according to the
percentage set forth in the Basic Lease Information) relating to those Operating
Expenses (as the term is defined under Paragraph 4(a)(2) below) which are paid
or incurred by Landlord during the Term.  The Percentage Share for Property Tax
shall be determined by the ratio of the building square footage divided by the
total square footage of the building on the tax parcel of which the building is
a part.  The Percentage Share used for calculating Tenant's share of Operating
Expenses shall vary as to how the specific Operating Expense is billed e.g., if
billed for the building it shall be 7.b. of the Basic Lease Information, if
billed for the project it shall be 7.c. of the Basic Lease Information.

           (1) "Property Taxes" shall mean all real property taxes, bonds and
assessments and governmentally imposed fees or charges (and any tax levied
wholly or partly in lieu thereof) levied, assessed, confirmed, imposed or which
have become a lien against the Building (which for the purposes of defining
"Property Taxes" shall include the tax parcel of which the Building is a part)
and Common Areas.

           (2) "Operating Expenses" shall mean the following:  (A) all costs of
management, operation, maintenance and repair of the Building and Common Areas,
including, without limitation, property management expenses, maintenance and
repair materials, supplies and equipment; (B) all costs of water, power,
electricity, refuse collection, parking lot sweeping, landscaping, and other
services relating to the Common Areas; (C) all costs of alterations or
improvements to the Building or Common Areas made to achieve compliance with
federal, state and local law including, without limitation, the Americans with
Disabilities Act (42 U.S.C. Section 12101 et seq.), which costs will be
amortized over the useful life of each alteration or improvement; (D) all costs
of public liability and casualty or other insurance maintained by Landlord with
respect to the Building and Common Areas; (E)  all costs incurred by Landlord
for making any capital improvements, structural repairs or modifications to the
Building or Common Areas or making any improvements or modifications intended to
reduce Operating Expenses, which costs will be amortized over the useful life of
each capital improvement, structural repair or modification; (F) all costs of
maintaining machinery, equipment and directional signage or other markers; and
(G) the share allocable to the Building of dues and assessments payable under
any reciprocal easement or common area maintenance agreements or declarations or
by any owners' associations affecting the Building.  That portion of the
Operating Expenses relating to the property management expenses for the Building
and Common Areas which shall be charged to Tenant shall be four percent (4%) of
both Tenant's annual Base Rent and the subtotal of Tenant's share of Operating
Expenses of the Building.  In the event that Landlord calculates Operating
Expenses based upon the Project instead of the Building, as indicated on the
Basic Lease Information, then the term "Project" shall be substituted in the
place of all references to the term "Building" in this paragraph.

                                       3
<PAGE>

       (b) The Property Taxes to be paid by Tenant shall be determined by
multiplying the total amount of the Property Taxes by Tenant's Percentage Share
of Property Taxes (which percentage is determined by multiplying 100% by a
fraction, the numerator of which is the rentable area of the Premises and the
denominator of which is the total rentable area of all improvements located
within the tax parcel of which the Premises are a part).  Landlord may cause the
Common Areas of the Project to be separately assessed from other areas and
buildings of the Project.  In such case, Tenant's Percentage Share of Property
Taxes attributable to the Common Areas shall be determined by the ratio that the
total rentable square feet in the Premises bears to the total number of square
feet of rentable area which is included in the property subject to the
assessment.

       (c) Operating Expenses for each calendar year shall be adjusted to equal
Landlord's reasonable estimate of Operating Expenses as though ninety-five
percent (95%) of the total rentable area of the Building had been occupied.
When the Building is one hundred percent (100%) occupied, the Operating Expenses
shall be adjusted to reflect a 100% occupied building.  The Operating Expenses
to be paid by Tenant shall be determined by multiplying the total amount of the
Operating Expenses as adjusted above by Tenant's Percentage Share of Operating
Expenses (which percentage is determined by multiplying 100% by a fraction, the
numerator of which is the rentable area of the Premises and the denominator of
which is the total rentable area located within the Building, if the Operating
Expenses are calculated for the Building, or within the Project, if the
Operating Expenses are calculated for the Project).

       (d) Tenant shall pay to Landlord each month at the same time and in the
same manner as monthly Base Rent one-twelfth (1/12th) of Landlord's estimate of
the amount of Property Taxes and one-twelfth (1/12th) of Landlord's estimate of
Operating Expenses payable by Tenant for the then-current calendar year.  The
initial monthly amount shall be as set forth in the Basic Lease Information.
Within one hundred twenty (120) days after the close of each calendar year, or
as soon after such 120-day period as practicable, Landlord shall deliver to
Tenant a statement in reasonable detail of the actual amount of Property Taxes
and Operating Expenses payable by Tenant in accordance with this Paragraph 4 for
such calendar year.  Tenant may request further information if desired.
Landlord's failure to provide such statement to Tenant within the 120-day period
shall not act as a waiver and shall not excuse Tenant or Landlord from making
the adjustments to reflect actual costs as provided herein.  If on the basis of
such statement Tenant owes an amount that is less than the estimated payments
for such calendar year previously made by Tenant, Landlord shall credit such
excess to Tenant against future additional rent due under this Paragraph 4.  If
on the basis of such statement Tenant owes an amount that is more than the
estimated payments for such calendar year previously made by Tenant, Tenant
shall pay the deficiency to Landlord within fifteen (15) days after delivery of
the statement.  The obligations of Landlord and Tenant under this Paragraph 4(d)
with respect to the reconciliation between the estimated and actual amounts of
Property Taxes and Operating Expenses payable by Tenant for the last year of the
Term shall survive the termination of the Lease.  When the final determination
is made of the actual amounts of Property Taxes and Operating Expenses payable
by Tenant for the year in which this Lease terminates, Tenant shall immediately
pay any increase due over the estimated payments and, conversely, any
overpayment made by Tenant shall be credited to any other amounts then due from
Tenant, and any balance shall be immediately reimbursed to Tenant by Landlord.

  5.   Other Taxes.
       -----------

       In addition to Tenant's obligations under Paragraph 4 above, Tenant shall
pay or reimburse Landlord for (i) any taxes upon, measured by or reasonably
attributable to the cost or value of Tenant's equipment, furniture, fixtures,
and other personal property located in the Premises or leasehold improvements
made in or to the Premises at Tenant's expense, (ii) for taxes, if any, measured
by or reasonably attributable to tenant improvements paid for by Tenant, and
(iii) for any taxes, assessments, fees, or charges imposed by any public
authority or private community maintenance association upon or by reason of the
development, possession, use or occupancy of the Premises or the parking
facilities used by Tenant in connection with the Premises.  On request by
Landlord, Tenant shall furnish Landlord with satisfactory evidence of payment of
Tenant's business personal property taxes and deliver copies of such business
personal property tax bills to Landlord.

  6.   Use.
       ---

       6.1  Prohibited Uses.
            ---------------

            (a)  The Premises shall be used and occupied by Tenant solely for
the use set forth in the Basic Lease Information. Tenant shall, at Tenant's
expense, comply promptly with all applicable federal, state and local laws,
regulations, ordinances, rules, orders, and requirements in effect during the
Term relating to the condition, use or occupancy of the Premises. Tenant shall
not use or permit the use of the Premises in any manner that will tend to create
waste or a nuisance, or that unreasonably disturbs other tenants of the Building
or Project,

                                       4
<PAGE>

nor shall Tenant place or maintain any signs, antennas, awnings, lighting or
plumbing fixtures, loudspeakers, exterior decoration or similar devises on or
visible from the exterior of the Premises, without Landlord's prior written
consent, which may be withheld in Landlord's sole discretion. Tenant shall not
use any corridors, sidewalks, stairs, elevators, or other areas outside of the
Premises for storage or any purpose other than access to the Premises. Tenant
shall not use, keep, or permit to be used or kept on the Premises any foul or
noxious gas or substance, nor shall Tenant do or permit to be done anything in
and about the Premises, either in connection with activities hereunder expressly
permitted or otherwise, which would cause an increase in premiums for or a
cancellation of any policy of insurance (including fire insurance) maintained by
Landlord in connection with the Premises or the Building or which would violate
the terms of any covenants, conditions, or restrictions, or the design
guidelines, or the sign guidelines affecting the Building or the land on which
it is located, or the Rules (as the term is defined under Paragraph 6.3(b)
below).

            (b) Tenant shall not attach any signage to or on any part of the
outside of the Premises, the Building or the Project, or in the halls, lobbies,
windows or elevator banks of the Building without Landlord's prior written
consent, which consent may be withheld in Landlord's sole discretion.  Any
signage so permitted shall be subject to prior approval of and conformance with
the requirements of the design review committee of the Project and the design
review agency of the city.  At Tenant's expense, Tenant shall (i) maintain all
permitted signage, and (ii) upon the expiration or termination of this Lease,
remove such signage and repair any damage caused by their removal.  If Tenant
fails to do so, Landlord may maintain, repair or remove such signage without
notice to Tenant and at Tenant's expense, the cost of which shall be payable by
Tenant as additional rent in accordance with Paragraph 14(b)(2) below.

       6.2  Suitability.  Tenant acknowledges that neither Landlord nor any
            -----------
agent of Landlord has made any representation or warranty with respect to the
Premises or the Building or with respect to the suitability or fitness of either
for the conduct of Tenant's business or for any other purpose.  Nor has Landlord
agreed to undertake any modification, alteration or improvement to the Premises
except as provided in this Lease.

       6.3  Use of Common Areas.
            -------------------

            (a) Landlord gives Tenant and its authorized employees, agents,
customers, representatives, and invitees the nonexclusive right to use the
Common Areas, with others who are entitled to use the Common Areas, subject to
Landlord's rights as set forth in this Paragraph 6.3.

          (b) All Common Areas shall be subject to the exclusive control and
management of Landlord and Landlord shall have the right to establish, modify,
amend, and enforce reasonable rules and regulations with respect to the Common
Areas.  Tenant acknowledges receipt of a copy of the current rules and
regulations, attached hereto as Exhibit C, and agrees that they may, from time
to time, be modified or amended by Landlord in a commercially reasonable manner
(the "Rules").  Tenant agrees to abide by and conform with such Rules; to cause
its concessionaires and its and their employees and agents to abide by such
Rules; and to use its best efforts to cause its customers, invitees, and
licensees to abide by such Rules.

            (c) Landlord shall have the right to close temporarily any portion
of the Common Areas for the purpose of discouraging use by parties who are not
tenants or customers of tenants; to use portions of the Common Areas while
engaged in making additional improvements or repairs or alterations to the
Property; to use or permit the use of the Common Areas by others to whom
Landlord may grant or have granted such rights; and to do and perform such acts
in, to, and with respect to, the Common Areas as in the use of good business
judgment Landlord shall determine to be appropriate for the Project.

            (d) Landlord shall have the unqualified right to increase or reduce
the Common Areas, provided the Project meets the parking requirement under
Paragraph 6.5 below.

            (e) Tenant shall cooperate with Landlord and other tenants in the
Project in recycling waste paper, cardboard, or such other materials identified
under any trash recycling program that may be established in order to reduce
trash collection costs.

       6.4  Environmental Matters.
            ---------------------

            (a) (1)  The term "Hazardous Materials" as used herein means any
petroleum products, asbestos, polychlorinated biphenyls, P.C.B.'s, chemicals,
compounds, materials, mixtures or substances that are now or hereafter defined
or listed in, or otherwise classified as a "hazardous substance", "hazardous
material", "hazardous waste", "extremely hazardous waste", "infectious waste",
"toxic substance", "toxic pollutant" or any other formulation intended to
define, list or classify substances by reason of deleterious properties such

                                       5
<PAGE>

as ignitability, corrosivity, reactivity, carcinogenicity or toxicity pursuant
to any federal, state or local environmental law, regulation, ordinance,
resolution, order or decree relating to industrial hygiene, environmental
protection or the use, analysis, generation, manufacture, storage, release,
disposal or transportation of the same ("Hazardous Materials Laws").

               (2) Except for ordinary office supplies and janitorial cleaning
materials which in common business practice are customarily and lawfully used,
stored and disposed of in small quantities, and except for those Hazardous
Materials listed on Exhibit D attached hereto, Tenant shall not use,
manufacture, store, release, dispose or transport any Hazardous Materials in,
on, under or about the Premises, the Building or the Project without giving
prior written notice to Landlord and obtaining Landlord's prior written consent,
which consent Landlord may withhold in its sole discretion.  Subject to
Landlord's prior written consent, Tenant may request that Hazardous Materials be
added to Exhibit D on an annual review basis; any such amendments to Exhibit D
shall be signed by each party and attached hereto.  Tenant shall at its own
expense procure, maintain in effect, and comply with all conditions of any and
all permits, licenses, and other governmental and regulatory approvals required
in connection with Tenant's generation, use, storage, disposal and
transportation of Hazardous Materials.  Except as discharged into the sanitary
sewer in strict accordance and conformity with all applicable Hazardous
Materials Laws, Tenant shall cause any and all Hazardous Materials removed from
the Premises to be removed and transported solely by duly licensed haulers to
duly licensed facilities for final disposal of such materials and wastes.
Regardless whether permitted under the Hazardous Materials Laws, Tenant shall
not maintain in, on, under, or about the Premises, the Building or the Project
any above or below ground storage tanks, clarifiers, or sumps, nor shall any
wells for the monitoring of ground water, soils, or subsoils be allowed.

               (3) Tenant shall immediately notify Landlord in writing of: (a)
any enforcement, cleanup, removal or other governmental or regulatory action
instituted, completed or threatened pursuant to any Hazardous Materials Law; (b)
any claim made or threatened by any person or entity against Tenant or the
Premises relating to damage, contribution, cost, recovery, compensation, loss or
injury resulting from or claimed to result from any Hazardous Materials; and (c)
any reports, information, inquiries or demands made, ordered, or received by or
on behalf of Tenant which arise out of or in connection with the existence or
potential existence of any Hazardous Materials in, on, under or about the
Premises, the Building, or the Project, including, without limitation, any
complaints, notices, warnings, asserted violations, or mandatory or voluntary
informational filings with any governmental agency in connection therewith, and
immediately supply Landlord with copies thereof.

          (b)  Tenant shall indemnify, defend (by counsel reasonably acceptable
to Landlord), protect, and hold Landlord, and each of Landlord's partners,
officers, directors, partners, employees, affiliates, joint venturers, members,
trustees, owners, shareholders, principals, agents, representatives, attorneys,
successors and assigns, free and harmless from and against any and all claims,
liabilities, damages, fines, penalties, forfeitures, losses, cleanup and
remediation costs or expenses (including attorneys' fees) or death of or injury
to any person or damage to any property whatsoever, arising from or caused in
whole or in part, directly or indirectly, by (i) Tenant's use, analysis,
generation, manufacture, storage, release, disposal, or transportation of
Hazardous Materials by Tenant, Tenant's agents, employees, contractors,
licensees or invitees to, in, on, under, about or from the Premises, the
Building, or the Project, or (ii) Tenant's failure to comply with any Hazardous
Materials Law.  Tenant's obligations hereunder shall include, without
limitation, and whether foreseeable or unforeseeable, all costs of any required
or necessary repair, cleanup, detoxification or decontamination of the Premises,
the Building, or the Project and the preparation and implementation of any
closure, remedial action or other required plans in connection therewith, and
shall survive the expiration or earlier termination of this Lease.

          (c)  Landlord shall have the right to enter the Premises at all times
during regular business hours upon reasonable prior notice for the purposes of
ascertaining compliance by Tenant with all applicable Hazardous Materials Laws,
provided, however, that in the instance of an emergency Landlord's entry onto
the Premises shall not be restricted to regular business hours nor shall notice
be required.

          (d)  Landlord shall have the option to declare a default of this Lease
for the release or discharge of Hazardous Materials by Tenant, Tenant's
employees, agents, contractors, or invitees on the Premises, Building or Project
or in violation of law or in deviation from prescribed procedures in Tenant's
use or storage of Hazardous Materials.  If Tenant fails to comply with any of
the provisions under this Paragraph 6.4, Landlord shall have the right (but not
the obligation) to remove or otherwise clean up any Hazardous Materials from the
Premises, the Building or the Project.  In such case, the costs of any Hazardous
Materials investigation, removal or other cleanup (including, without
limitation, transportation, storage, disposal and attorneys' fees and costs)
will be additional rent due under this Lease, whether or not a court has ordered
the cleanup, and will become due and payable on demand by Landlord.

                                       6
<PAGE>

       6.5  Parking.  Landlord grants to Tenant and Tenant's customers,
            -------
suppliers, employees and invitees a nonexclusive license to use unassigned and
unreserved parking spaces in the Common Areas for the use of motor vehicles
during the Term subject to rights reserved to Landlord as specified in this
Paragraph 6.5.  Landlord reserves the right to grant similar nonexclusive and
unassigned and unreserved use to other tenants; to promulgate rules and
regulations relating to the use of the Common Areas including parking by tenants
and employees of tenants; to make changes in the parking layout from time to
time; and to do and perform any other acts in and to these areas and
improvements as Landlord determines to be advisable.  Tenant agrees not to
overburden the parking facilities and to abide by and conform with the rules and
regulations and to cause its employees and agents to abide by and conform to the
rules and regulations.  Upon request, Tenant shall provide Landlord with license
plate numbers of all vehicles driven by its employees and to cause Tenant's
employees to park only in spaces specifically designated for tenant parking.
Landlord shall have the unqualified right to rearrange or reduce the number of
parking spaces; provided, however, the ratio of the number of parking spaces
available to Tenant will be no less than (2.4) spaces per 1,000 usable square
feet of the Premises.

  7.   Services.
       --------

       (a)  Tenant shall pay for all water, sewer, gas, electricity, heat,
cooling, telephone, refuse collection, and other utility-type services furnished
to Tenant or the Premises, together with all related installation or connection
charges or deposits.  Wherever it is practical to do so such services shall be
separately metered or charged to Tenant by the provider thereof and paid for
directly by Tenant.  To the extent any of the foregoing services are provided by
Landlord, Tenant shall reimburse Landlord for all costs incurred by Landlord in
connection with the provision of such services based on Landlord's reasonable
estimate of the level of Tenant's use or consumption of such services.  Landlord
shall bill Tenant on a monthly or other periodic basis for such services and
payment shall be made by Tenant within ten (10) days after submittal of
Landlord's statement.

       (b)  Landlord shall not be in default hereunder or be liable for any
damages or personal injuries to any person directly or indirectly resulting
from, nor shall there be any Rent abatement by reason of, any interruption or
curtailment whatsoever in utility services.

  8.   Maintenance, Repairs and Alterations.
       ------------------------------------

       (a)  Tenant shall, at Tenant's expense, maintain every part of the
Premises in good order, condition and repair, including without limitation, (i)
all interior surfaces, ceilings, walls, door frames, window frames, floors,
carpets, draperies, window coverings and fixtures, (ii) all windows, doors,
locks and closing devices, entrances, plate glass, and signs, (iii) all plumbing
and sewage pipes, fixtures and fittings, (iv) all phone lines, electrical
wiring, equipment, switches, outlets, and light bulbs, (v) any fire detection,
fire sprinkler or extinguisher equipment, (vi) all of Tenant's personal
property, improvements and alterations, and (vii) all other fixtures and special
items installed by or for the benefit of, or at the expense of Tenant.  Tenant
shall, at its expense, cause to be maintained in good operating condition and
repair, all heating, ventilating, and air conditioning equipment installed in,
or on the roof of the Premises.  Tenant shall keep in force a preventive
maintenance contract with a qualified maintenance company covering all heating,
ventilating and air conditioning equipment and shall annually provide Landlord
with a copy of this contract.  Tenant shall not enter onto the roof area of the
Building, except for the purpose of maintaining the heating, ventilating, and
air conditioning equipment and provided that Tenant shall repair any damage to
the roof area caused by its entry.  Tenant shall be responsible for its own
janitorial service.  Landlord shall incur no expense (nor have any obligation)
of any kind whatsoever in connection with the maintenance of the Premises.

       (b)  Landlord shall keep in good condition and repair the foundation,
roof structure, exterior walls and other structural parts of the Building, and
all other portions of the Building not the obligation of Tenant or any other
tenant in the Building. Tenant expressly waives the benefits of any statute,
including Civil Code Sections 1941 and 1942, which would afford Tenant the right
to make repairs at Landlord's expense or to terminate this Lease due to
Landlord's failure to keep the Building in good order, condition and repair.
Landlord shall have no liability to Tenant for any damage, inconvenience, or
interference with the use of the Premises by Tenant as the result of Landlord
performing any such maintenance and repair work.

       (c) In the event Tenant fails to perform Tenant's obligations under this
Paragraph 8, Landlord may, but shall not be required to, give Tenant notice to
do such acts as are reasonably required to so maintain the Premises.  If Tenant
shall fail to commence such work within 5 days of Landlord's notice and
thereafter diligently prosecute it to completion, then Landlord shall have the
right (but not the obligation) to do such acts and expend such funds at the
expense of Tenant as are reasonably required to perform such work.  Any amounts
so expended by Landlord will be additional rent due under this Lease, and such
amounts will become due and payable on demand by Landlord. Landlord shall have
no liability to Tenant for

                                       7
<PAGE>

any such damages, inconvenience, or interference with the use of the Premises by
Tenant as a result of performing such work.

       (d) Upon the expiration or earlier termination of this Lease, Tenant
shall surrender the Premises in good condition and repair, only ordinary wear
and tear excepted.  Tenant, at its sole cost and expense, agrees to repair any
damages to the Premises caused by or in connection with the removal of any
articles of personal property, business or trade fixtures, signs, machinery,
equipment, cabinetwork, furniture, moveable partitions, or permanent
improvements or additions, including without limitation thereto, repairing the
floor and patching and painting the walls where required by Landlord, to
Landlord's reasonable satisfaction.

       (e) Tenant shall not make any alterations, improvements, or additions in,
on, or about the Premises without Landlord's prior written consent, except that
Tenant may make alterations, improvements, or additions without Landlord's prior
written consent where (i) the reasonably estimated cost does not exceed $2,500,
and (ii) such alterations, improvements, or additions do not affect or involve
the structural integrity, roof membrane, exterior areas, building systems, or
water-tight nature of the Premises, the Building or the Project.  In requesting
Landlord's consent, Tenant shall, at Tenant's sole cost, submit to Landlord
complete drawings and specifications describing such work and the identity of
the proposed contractor at least ten (10) business days prior to the
commencement of any work.

           With respect to any alterations, improvements or additions made to
the Premises by Tenant:

           (1) Before commencing any work relating to alterations, additions, or
improvements affecting the Premises, Tenant shall notify Landlord of the
expected date of commencement thereof and of the anticipated cost thereof.
Landlord shall then have the right at any time and from time to time to post and
maintain on the Premises such notices as Landlord reasonably deems necessary to
protect the Premises and Landlord from mechanics' liens or any other liens.

           (2) Tenant shall pay when due all claims for labor or materials
furnished to Tenant for use in the Premises.  Tenant shall not permit any
mechanics' liens or any other liens to be levied against the Premises for any
labor or materials in connection with work performed on the Premises by or at
the direction of Tenant.  Tenant shall indemnify, hold harmless and defend
Landlord (by counsel reasonably satisfactory to Landlord) from any liens and
encumbrances arising out of any work performed or materials furnished by, or at
the direction of Tenant.  In the event that Tenant shall not, within twenty (20)
days following the imposition of any such lien, cause such lien to be released
of record by payment or posting of a proper bond, Landlord shall have, in
addition to all other remedies provided herein by law, the right, but not the
obligation, to cause the same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien.  All such sums
paid by Landlord and all expenses incurred by it in connection therewith,
including attorneys' fees and costs, shall be payable to Landlord by Tenant on
demand with interest at the rate of twelve percent (12%) per annum.

           (3) All alterations, improvements or additions in or about the
Premises performed by or on behalf of Tenant shall be done in a first-class,
workmanlike manner, shall not unreasonably lessen the value of leasehold
improvements in the Premises, and shall be completed in compliance with all
applicable laws, ordinances, regulations and orders of any governmental
authority having jurisdiction thereover, as well as the requirements of insurers
of the Premises and the Building.

           (4) Upon Landlord's request, Tenant shall remove any contractor,
subcontractor or material supplier from the Premises and the Building if the
work or presence of such person or entity results in labor disputes in or about
the Building or Project or damage to the Premises, Building or Project.

           (5) Landlord, at Landlord's sole discretion, may refuse to grant
Tenant permission for alterations, improvements or additions which require,
because of application of Americans with Disabilities Act or other laws,
substantial improvements or alterations to be made to the Common Areas.

           (6) Landlord may, at any time up to sixty (60) days prior to the
expiration of the Term, require that Tenant, at Tenant's expense, remove any
such alterations, improvements or additions prior to or upon the expiration of
this Lease, and restore the Premises to their condition prior to such
alterations, improvements or additions.

                                       8
<PAGE>

           (7) Unless Landlord requires their removal, as set forth above, all
alterations, improvements, or additions made to the Premises shall become the
property of Landlord and remain upon and be surrendered with the Premises upon
the expiration of this Lease; provided, however, that Tenant's machinery,
equipment, and trade fixtures, other than any which may be affixed to the
Premises so that they cannot be removed without material damage to the Premises,
shall remain the property of Tenant and may be removed by Tenant subject to the
provisions of Paragraph 8(d) above.

  9.   Construction of Tenant Improvements.
       -----------------------------------

       Landlord shall be responsible for constructing the tenant improvements
("Tenant Improvements") in the Premises, as provided in the Work Letter
Agreement, attached hereto as Exhibit B.

  10.  Insurance and Indemnity.
       -----------------------

       10.1 Insurance.
            ---------

            (a) Tenant shall obtain and maintain during the Term commercial
general liability insurance with a combined single limit for personal injury and
property damage in an amount of not less than $2,000,000 (in a form, with a
deductible amount, and with carriers reasonably acceptable to Landlord) and
employer's liability and workers' compensation insurance as required by law.
The insurance carrier shall be authorized to do business in the State of
California, with a policyholders and financial rating of at least A:IX Class
status as rated in the most recent edition of Best's Key-Rating guide.  Tenant's
commercial general liability insurance policy shall be endorsed to provide that
(i) it may not be canceled or altered in such a manner as to adversely affect
the coverage afforded thereby without thirty (30) days' prior written notice to
Landlord, (ii) Landlord, and if requested by Landlord, its lender and property
manager, is designated as an additional insured, (iii) the insurer acknowledges
acceptance of the mutual waiver of claims by Landlord and Tenant pursuant to
Paragraph 10.2(b) below, and (iv) such insurance is primary with respect to
Landlord and that any other insurance maintained by Landlord is excess and
noncontributing with such insurance.  If, in the opinion of Landlord's lender or
in the commercially reasonable opinion of Landlord's insurance adviser, the
specified amounts of coverage are no longer adequate, such coverage shall,
within 30 days written notice to Tenant, be appropriately increased.  Prior to
the commencement of the Term, Tenant shall deliver to Landlord a duplicate of
such policy or a certificate thereof to Landlord for retention by it, with
endorsements.  At least thirty (30) days prior to the expiration of such policy
or any renewal or modification thereof, Tenant shall deliver to Landlord a
replacement or renewal binder, followed by a duplicate policy or certificate
within a reasonable time thereafter.  If Tenant fails to obtain such insurance
or to furnish Landlord any such duplicate policy or certificate as herein
required, Landlord may, at its election, without notice to Tenant and without
any obligation to do so, procure and maintain such coverage and Tenant shall
reimburse Landlord on demand as additional rent for any premium so paid by
Landlord.

            (b) Landlord waives all claims against Tenant, and Tenant's
officers, directors, partners, employees, agents and representatives for loss or
damage to the extent that such loss or damage is insured against under any valid
and collected insurance policy insuring Landlord or would have been insured
against but for any deductible amount under any such policy. Tenant waives all
claims against Landlord, and Landlord's officers, directors, partners,
employees, affiliates, joint venturers, members, trustees, owners, shareholders,
principals, agents, representatives, successors and assigns, for loss or damage
to the extent such loss or damage is insured against under any valid and
collected insurance policy maintained by Tenant under this Lease, or would have
been insured against but for any deductible amount under any such policy. The
insuring party shall, upon obtaining the policies of insurance required under
this Lease, give notice to the insurance carrier or carriers that the foregoing
mutual waiver of claims is contained in this Lease. Tenant agrees that in the
event of a sale, assignment or transfer of the Premises by Landlord, this waiver
of claims shall continue in favor of the original Landlord and any subsequent
Landlord.

            (c) Tenant shall at its own cost maintain on all its personal
property, Tenant's improvements, and alterations, in, on, or about the Premises,
a policy of standard fire and extended coverage insurance, with vandalism and
malicious mischief endorsements, to the extent of at least one hundred percent
(100%) of their full replacement value.  The proceeds from any such policy shall
be used by Tenant for the replacement of personal property and the restoration
of Tenant's improvements or alterations.  Notwithstanding any other provisions
of the Lease, Landlord shall have no liability for damage to or destruction of
Tenant's personal property, regardless of whether the damage or destruction
results from the acts or omissions of Landlord unless such acts and omissions
are caused by Landlord's active negligence or willful misconduct.

            (d) During the Term, Landlord shall keep the Building, and
improvements within which the Premises are located, insured against loss or
damage by (i) fire, with extended

                                       9
<PAGE>

coverage and vandalism, malicious mischief and special extended perils (all
risk) endorsements or their equivalents, in amounts not less than ninety percent
(90%) of the replacement cost of the Building and structures insured, and (ii)
flood, in the maximum amount provided for by FEMA under its flood loss insurance
program, with loss payable thereunder to Landlord and to any authorized
encumbrancer of Landlord (with standard mortgagee loss payable clause) in
accordance with their respective interests. Landlord may maintain rent
insurance, for the benefit of Landlord, equal to at least one year's Base Rent
hereunder. If the Lease is terminated as a result of damage by fire, casualty or
earthquake as set forth in this Paragraph 10, all insurance proceeds shall be
paid to and retained by Landlord, subject to the rights of any authorized
encumbrancer of Landlord.

               (e)  Tenant acknowledges that Landlord does not, at the time of
the signing of this Lease, insure the Building for earthquake damage. Landlord
may, when Landlord deems the premiums to be reasonable, insure the Building
fully or partially for earthquake damage. At such time, the premium for
earthquake insurance will be included in the calculation of Operating Expenses.

          10.2 Indemnity.
               ---------

               (a)  Tenant waives all claims against Landlord for damage to any
property or injury to or death of any person in, on, or about the Premises, the
Building, or any other portion of the Project arising at any time and from any
cause, unless to the extent caused by the negligence or willful misconduct of
Landlord, its agents, employees, or contractors. Tenant shall indemnify, defend
(by counsel reasonably satisfactory to Landlord) and hold harmless Landlord, and
Landlord's officers, directors, partners, employees, affiliates, joint
venturers, members, trustees, owners, shareholders, principals, agents,
representatives, successors and assigns, from and against all claims, costs,
damages, actions, indebtedness and liabilities (except such as may arise from
the negligence or willful misconduct of Landlord, and Landlord's officers,
directors, partners, employees, affiliates, joint venturers, members, trustees,
owners, shareholders, principals, agents, representatives, successors and
assigns) arising by reason of any death, bodily injury, personal injury,
property damage or any other injury or damage in connection with (i) any
condition or occurrence in or about or resulting from any condition or
occurrence in or about the Premises during the Term, or (ii) any act or omission
of Tenant, or Tenant's agents, representatives, officers, directors,
shareholders, partners, employees, successors and assigns, wherever it occurs.
The foregoing indemnity obligation of Tenant shall include reasonable attorneys'
fees, and all other reasonable costs and expenses incurred by Landlord from the
first notice that any claim or demand is to be made. The provisions of this
Paragraph 10.2 shall survive the termination or expiration of this Lease with
respect to any damage, injury, or death occurring prior to such expiration or
termination.

          (b)  Neither party shall be liable to the other for any unauthorized
or criminal entry of third parties into the Premises, Building, Project, Common
Areas, or parking facilities, or for any damage to person or property, or loss
of property in and about the Premises, Building, Project, Common Areas, parking
facilities and the approaches, entrances, streets, sidewalks, stairs, elevators,
restrooms, or corridors thereto, by or from any unauthorized or criminal acts of
third parties, regardless of any breakdown, malfunction or insufficiency of any
security measures, practices or equipment provided by Landlord or Tenant. Tenant
shall immediately notify Landlord in writing of any breakdown or malfunction of
any security measures, practices or equipment provided by Landlord as to which
Tenant has knowledge.

          (c)  Any diminution or interference with light, air or view by any
structure which may be erected on land adjacent to the Building or resulting
from any other cause shall in no way alter this Lease or impose any liability on
Landlord.

          (d) Tenant agrees that in no event shall Landlord be liable for
consequential damages, including injury to Tenant's business or any loss of
income therefrom.

          (e)  In the event that Landlord or any successor owner of the Building
sells or conveys the Building, then all liabilities and obligations of Landlord
or the successor owner under this Lease accruing after the sale or conveyance
shall terminate and become binding on the new owner, and Tenant shall release
Landlord from all liability under this Lease (including, without limitation, the
Security Deposit, as defined under Paragraph 16 below), except for acts or
omissions of Landlord occurring prior to such sale or conveyance.

          (f)  Tenant expressly agrees that  (i) the obligations of Landlord
shall not constitute personal obligations of the officers, directors, partners,
employees, affiliates, joint venturers, members, trustees, owners, shareholders,
or other principals, agents or representatives of such business entity ("Member
of Landlord"), and (ii) Tenant shall have recourse only to Landlord's interest
in the Building of which the Premises are a part for the satisfaction of such
obligations and not against other assets of Landlord, or the assets of such
Member of Landlord. In this regard, Tenant agrees that in the event of any
actual or alleged failure, breach or default by

                                       10
<PAGE>

Landlord of its obligations under this Lease, that (i) no Member of Landlord
shall be sued or named as a party in any suit or action (except as may be
necessary to secure jurisdiction of Landlord), (ii) no judgment will be taken
against any Member of Landlord, and any judgment taken against any Member of
Landlord may be vacated and set aside at any time without hearing, (iii) no writ
of execution will ever be levied against the assets of any Member of Landlord,
and (iv) these agreements by Tenant are enforceable both by Landlord and by any
Member of Landlord.

  11.  Damage or Destruction.
       ---------------------

       (a) Subject to the provisions of Paragraphs 11(b) and 11(c) and 22 below,
if, during the Term, the Premises are totally or partially destroyed from any
insured casualty, Landlord shall, within ninety (90) days after the destruction,
commence to restore the Premises to substantially the same condition as they
were in immediately before the destruction and prosecute the same diligently to
completion.  Such destruction shall not terminate this Lease.  Landlord's
obligation shall not include repair or replacement of Tenant's alterations or
Tenant's equipment, furnishings, fixtures and personal property.  If the
existing laws do not permit the Premises to be restored to substantially the
same condition as they were in immediately before destruction, and Landlord is
unable to get a variance to such laws to permit the commencement of restoration
of the Premises within the 90-day period, then either party may terminate this
Lease by giving written notice to the other party within thirty (30) days after
expiration of the 90-day period.

       (b) Despite the provisions of Paragraph 11(a) above, Landlord may elect
within ninety (90) days after such destruction to demolish the Building rather
than rebuild it, in which case this Lease shall terminate as of the date of the
destruction.  Landlord shall give Tenant written notice of its election within
ninety (90) days after the destruction.

       (c) If any destruction occurs to the Premises during the last six (6)
months of the initial Term or during the last six (6) months of any extension
period, regardless of the nature and extent of the destruction, either party can
elect to terminate this Lease within thirty (30) days after the destruction
occurs.  If this Lease does not terminate pursuant to this Paragraph 11(c), the
provisions of Paragraph 11(a) above shall apply.

       (d) If the Premises are damaged from any uninsured casualty to any extent
whatsoever, Landlord may within ninety (90) days following the date of such
damage elect to either:  (i) restore the Premises to substantially the same
condition as they were in immediately before the damage and prosecute the same
diligently to completion, in which event this Lease shall continue in full force
and effect; or (ii)elect not to so restore the Premises, in which event this
Lease shall cease and terminate as of the date of Landlord's election.  In
either such event, Landlord shall give Tenant written notice of its intention
within the 90-day period.

       (e) In the event of destruction or damage to the Premises which
materially interferes with Tenant's use of the Premises, if this Lease is not
terminated as above provided, there shall be an abatement or reduction of Base
Rent between the date of destruction and the date Landlord substantially
completes its reconstruction obligations, based upon the extent to which the
destruction materially interferes with Tenant's use of the Premises.  All other
obligations of Tenant under this Lease shall remain in full force and effect.
Except for abatement of Base Rent, Tenant shall have no claim against Landlord
for any loss suffered by Tenant due to damage or destruction of the Premises or
any work of repair undertaken as herein provided.

       (f) The provisions of California Civil Code Sections 1932(2) and 1933(4),
and any successor statutes, are inapplicable with respect to any destruction of
the Premises, such sections providing that a lease terminates upon the
destruction of the Premises unless otherwise agreed between the parties to the
contrary.

  12.  Eminent Domain.
       --------------

       (a) If all or any part of the Premises shall be taken as a result of the
exercise of the power of eminent domain, this Lease shall terminate as to the
part so taken as of the date of taking.  In the case of a partial taking of
greater than fifty percent (50%) of the rentable area of the Premises, either
Landlord or Tenant shall have the right to terminate this Lease as to the
balance of the Premises by notice to the other within thirty (30) days after the
date of the taking.  In the event of a partial taking of the Premises which does
not result in a termination of this Lease, the monthly Base Rent thereafter to
be paid shall be equitably reduced on a square footage basis.  If the continued
occupancy of Tenant is materially interfered with for any time during the
partial taking, notwithstanding the partial taking does not terminate this Lease
as to the part not so taken, the Base Rent shall proportionately abate so long
as Tenant is not able to continuously occupy the part remaining and not so
taken.

                                       11
<PAGE>

       (b) All compensation awarded or paid upon a total or partial taking of
the fee title shall belong to Landlord whether such compensation be awarded or
paid as compensation for diminution in value of the leasehold or of the fee
except:  Tenant shall retain and have a claim for the following, to the extent
specifically designated by the condemning authority:  (i) the unamortized value
over the Term of Tenant's leasehold improvements (to the extent Landlord has not
contributed to the cost thereof); (ii) that portion (if any) of the award made
to Landlord as a result of removing fixtures, removable by Tenant herein, under
the terms of this Lease but which are required to be taken by the condemnor or
are so acquired by the condemnor; and (iii) all relocation assistance, moving
and relocation expenses to the extent (if any) provided by the condemning
authority directly to Tenant.

  13.  Assignment and Subletting.
       -------------------------

       (a) Tenant shall not assign, sublet or hypothecate this Lease or any
interest herein or sublet the Premises or any part thereof or permit the use of
the Premises by any party other than Tenant without the prior written consent of
Landlord, which consent shall not be unreasonably withheld.  Any of the
foregoing acts without Landlord's consent shall be void and shall, at the option
of Landlord, terminate this Lease.  In connection with each consent requested by
Tenant, Tenant shall submit to Landlord the terms of the proposed transaction,
the identity of the parties to the transaction, the proposed documentation for
the transaction, current financial statements of any proposed assignee or
sublessee and all other information reasonably requested by Landlord concerning
the proposed transaction and the parties involved therein.

       (b) As used in this Paragraph 13, the term "assign" or "assignment" shall
include, without limitation, any sale, transfer, or other disposition of all or
any portion of Tenant's estate under this Lease, whether voluntary or
involuntary, and whether by operation of law or otherwise, including any of the
following:

           (1) if Tenant is a corporation or a limited liability company:  (A)
any dissolution, merger, consolidation, or other reorganization of Tenant; or
(B) a sale or other transfer of more than fifty percent (50%) of the value of
the assets of Tenant; or (C) if Tenant is a corporation with fewer than 500
shareholders, a sale or other transfer of a controlling percentage of the
capital stock of Tenant; or (D) if Tenant is a limited liability company, a sale
or other transfer of a controlling percentage of the interest in Tenant.  The
phrase "controlling percentage" means the ownership of, and the right to vote,
stocks or interests possessing at least fifty percent (50%) of the total
combined voting power of the limited liability company or, in the case of a
corporation, of all classes of Tenant's stock issues, outstanding and permitted
to vote for the election of directors of the corporation;

           (2) if Tenant is a trust, the transfer of more than fifty percent
(50%) of the beneficial interest of Tenant, or the dissolution of the trust;

           (3) if Tenant is a partnership or joint venture, the withdrawal, or
the transfer of the interest, of any general partner or joint venturer or the
dissolution of the partnership or joint venture; and

           (4) if Tenant is composed of tenants-in-common, the transfer of
interest of any cotenants or the partition or dissolution of the cotenancy.

       (c) No sublessee shall have a right to further sublet, and any assignment
by a sublessee of its sublease shall be subject to Landlord's prior written
consent in the same manner as if Tenant were entering into a new sublease.

       (d) Regardless of Landlord's consent, no subletting or assignment shall
release Tenant of Tenant's obligation, or alter the primary liability of Tenant
to pay the Rent and to perform all other obligations to be performed by Tenant
hereunder.  The acceptance of Rent by Landlord from any other person shall not
be deemed to be a waiver by Landlord of any provisions hereof.  Consent to one
assignment or subletting shall not be deemed consent to any subsequent
assignment or subletting.  In the event of default by any assignee of Tenant or
any successor of Tenant in the performance of any of the terms hereof, Landlord
may proceed directly against Tenant without the necessity of exhausting remedies
against such assignee or successor.

       (e) In the event Tenant shall assign or sublet the Premises or request
the consent of Landlord to any assignment or subletting, then Tenant shall
reimburse Landlord for an administrative fee of $200 and reasonable costs and
attorneys' fees incurred in connection therewith in a total amount not to exceed
$1,000.00.

                                       12
<PAGE>

  14.  Default by Tenant.
       -----------------

       (a) The following events shall constitute Events of Default under this
Lease:

           (1) a failure by Tenant to pay any Rent or to deliver an estoppel
certificate (as provided in Paragraph 17 below) where such failure continues for
five (5) days after written notice by Landlord to Tenant;

           (2) the bankruptcy or insolvency of Tenant, any transfer by Tenant to
defraud creditors, any assignment by Tenant for the benefit of creditors, or the
commencement of any proceedings of any kind by or against Tenant under any
provision of the Federal Bankruptcy Act or under any other insolvency,
bankruptcy or reorganization act unless, in the event any such proceedings are
involuntary, Tenant is discharged from the same within sixty (60) days
thereafter; the appointment of a receiver for a substantial part of the assets
of Tenant; or the levy upon this Lease or any estate of Tenant hereunder by any
attachment or execution;

           (3) the abandonment or vacation of the Premises;

           (4) the discovery by Landlord that any financial statement given to
Landlord by Tenant, any assignee of Tenant, any subtenant of Tenant, any
successor in interest of Tenant or any guarantor of Tenant's obligation
hereunder, and any of them, was materially false; and

           (5) a failure by Tenant to perform any of the terms, covenants,
agreements or conditions of this Lease to be observed or performed by Tenant
(excluding any event of default under Paragraph 14(a)(1) above), where such
failure continues for thirty (30) days after written notice thereof by Landlord
to Tenant; provided, however, that if the nature of the default is such that the
same cannot reasonably be cured within the 30-day period, Tenant shall not be
deemed to be in default if Tenant shall within such period commence such cure
and thereafter diligently prosecute the same to completion.

       (b) In the event of any Event of Default, Landlord may at any time
thereafter, without limiting Landlord in the exercise of any right or remedy at
law or in equity which Landlord may have by reason of such default or breach:

           (1) Pursue the remedy described in California Civil Code Section
1951.4 whereby Landlord may continue this Lease in full force and effect after
Tenant's Default and recover the Rent and any other monetary charges as they
become due, without terminating Tenant's right to sublet or assign this Lease,
subject only to reasonable limitations as herein provided.  During the period
Tenant is in default, Landlord shall have the right to do all acts necessary to
preserve and maintain the Premises as Landlord deems reasonable and necessary,
including removal of all persons and property from the Premises, and Landlord
can enter the Premises and relet them, or any part of them, to third parties for
Tenant's account.  Tenant shall be liable immediately to Landlord for all costs
Landlord incurs in reletting the Premises, including, without limitation,
brokers' commissions, reasonable expenses of remodeling the Premises required by
the reletting, and like costs.  Reletting may be for a period shorter or longer
than the remaining Term in Landlord's discretion.

           (2) Pay or perform such obligation due (but Landlord shall not be
obligated to do so), if Tenant fails to pay or perform any obligations when due
under this Lease within the time permitted for their payment or performance.  In
such case, the costs incurred by Landlord in connection with the performance of
any such obligation will be additional rent due under this Lease and will become
due and payable on demand by Landlord.

           (3) Terminate Tenant's right to possession by any lawful means, in
which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Premises to Landlord.  In such event Landlord shall be
entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including, without limitation, the following:  (A) the worth
at the time of award of any unpaid Rent which had been earned at the time of
such termination; plus (B) 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 Rent loss that is proved could have been
reasonably avoided; plus (C) 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 Rent loss that is proved could be reasonably avoided;
plus (D) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of events would be likely to result
therefrom; plus (E) at Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by applicable
law.  Upon any such termination of Tenant's possessory interest in and to the
Premises, Tenant (and at Landlord's sole election, Tenant's sublessees) shall no
longer have any interest in the Premises, and Landlord shall have the right to
make any reasonable repairs,

                                       13
<PAGE>

alterations or modifications to the Premises which Landlord in its sole
discretion deems reasonable and necessary. The "worth at the time of award" of
the amounts referred to in subparagraphs (A) and (B) above is computed by
allowing interest at the maximum rate of twelve percent (12%). The worth at the
time of award of the amount referred to in subparagraph (C) above is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).

              (4) Pursue any other legal or equitable remedy available to
Landlord. Unpaid installments of Rent and other unpaid monetary obligations of
Tenant under the terms of this Lease shall bear interest from the date due at
the rate of ten percent (10%) per annum.

          (c) In the event Tenant is evicted or Landlord takes possession of the
Premises by reason of any default by Tenant hereunder, Tenant hereby waives any
right of redemption or relief from forfeiture as provided by law.

          (d) Even though Tenant has breached this Lease and abandoned the
Premises, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession, and Landlord may enforce all its rights
and remedies under this Lease, including the right to recover Rent as it becomes
due under this Lease.  Acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver upon initiative of Landlord to
protect Landlord's interest under this Lease, shall not constitute a termination
of Tenant's right to possession.

          (e) In the event Tenant is in default under any provision of this
Lease then, at Landlord's sole election: (i) Tenant shall not have the right to
exercise any available right, option or election under this Lease ("Tenant's
Exercise Rights") (ii) Tenant shall not have the right to consummate any
transaction or event triggered by the exercise of any of Tenant's Exercise
Rights, and (iii) Landlord shall not be obligated to give Tenant any required
notices or information relating to the exercise of any of Tenant's Exercise
Rights hereunder.

  15.     Default by Landlord, Notice to Mortgagee.
          ----------------------------------------

          Landlord shall not be in default unless Landlord, or the holder of any
mortgage, deed of trust or ground lease covering the Premises, fails to perform
obligations required of Landlord within a reasonable time, but in no event more
than thirty (30) days after written notice by Tenant to Landlord certified mail,
postage prepaid, and to the holder of any first mortgage, deed of trust or
ground lease covering the Premises whose name and address shall have been
furnished to Tenant in writing, specifying wherein Landlord has failed to
perform such obligations; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for performance
then Landlord shall not be in default if Landlord or the holder of any such
mortgage, deed of trust or ground lease commences performance within such 30-day
period and thereafter diligently prosecutes the same to completion.  In no event
shall Tenant be entitled to terminate this Lease or offset against Rent by
reason of Landlord's default, and Tenant's remedies shall be limited to an
action for monetary damages at law.

  16.     Security Deposit.
          ----------------

          On execution of this Lease, Tenant shall deposit with Landlord the sum
specified in the Basic Lease Information (the "Security Deposit").  The Security
Deposit shall be held by Landlord as security for the performance by Tenant of
all of the provisions of this Lease.  If Tenant fails to pay Rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Lease, Landlord may use, apply, or retain all or any portion of the
Security Deposit for the payment of any Rent or other charge in default, or the
payment of any other sum to which Landlord may become obligated by reason of
Tenant's default, or to compensate Landlord for any loss or damage which
Landlord may suffer thereby.  If Landlord so uses or applies all or any portion
of the Security Deposit, then within ten (10) days after demand therefor Tenant
shall deposit cash with Landlord in an amount sufficient to restore the deposit
to the full amount thereof, and Tenant's failure to do so shall be a material
breach of this Lease.  Landlord shall not be required to keep the Security
Deposit separate from its general accounts.  If Tenant performs all of Tenant's
obligations hereunder, the Security Deposit, or so much thereof as has not
theretofore been applied by Landlord, shall be returned, without payment of
interest for its use, to Tenant (or, at Landlord's option to the last assignee,
if any, of Tenant's interest hereunder) at the expiration of the Term, and after
Tenant has vacated the Premises.  No trust relationship is created herein
between Landlord and Tenant with respect to the Security Deposit.

  17.     Estoppel Certificate.
          --------------------

          (a) Tenant shall within ten (10) days of notice from Landlord execute,
acknowledge and deliver to Landlord a statement certifying (i) that this Lease
is unmodified and in full force and effect (or, if modified, stating the nature
of such modification and certifying that this Lease, as so modified, is in full
force and effect), (ii) the amount of the Security Deposit, (iii)

                                       14
<PAGE>

the date to which the Rent has been paid, (iv) acknowledging that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder,
or specifying such defaults, if any are claimed, and (v) such other matters as
may reasonably be requested by Landlord. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Building.

       (b) Tenant's failure to deliver such statement within such time shall be
conclusive upon Tenant, (i) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in Landlord's performance, and (iii) that not more than one
month's Base Rent has been paid in advance.

       (c) If Landlord desires to finance or refinance the Building, Tenant
agrees to deliver to any lender designated by Landlord such financial statements
of Tenant as may be customarily required by such lender.  All such financial
statements shall be received by Landlord in confidence and shall be used for the
purposes herein set forth.

  18.  Subordination.
       -------------

       This Lease, at Landlord's sole option, shall be subordinate to any ground
lease, mortgage, deed of trust, or any other hypothecation for security now or
hereafter placed upon the Building and to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements, refinancings and extensions thereof.  Notwithstanding such
subordination, Tenant's right to quiet possession of the Premises shall not be
disturbed by Landlord or any person claiming by, through or under Landlord if
Tenant is not in default and so long as Tenant shall pay the Rent and observe
and perform all of the provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms.  If any mortgagee, trustee, or ground lessor
shall elect to have this Lease prior to the lien of its mortgage, deed of trust
or ground lease, and shall give notice thereof to Tenant, this Lease shall be
deemed prior to such mortgage, deed of trust, or ground lease, whether this
Lease is dated prior to or subsequent to the date of said mortgage, deed of
trust or ground lease or the date of recording thereof.  If any mortgage or deed
of trust to which this Lease is subordinate is foreclosed or a deed in lieu of
foreclosure is given to the mortgagee or beneficiary, Tenant shall attorn to the
purchaser at the foreclosure sale or to the grantee under the deed in lieu of
foreclosure; if any ground lease to which this Lease is subordinate is
terminated, Tenant shall attorn to the ground lessor.  Tenant agrees to execute
any documents required to effectuate such subordination or to make this Lease
prior to the lien of any mortgage, deed of trust or ground lease, as the case
may be, or to evidence such attornment.  Any such document of attornment shall
also provide that the successor shall not disturb Tenant in its use of the
Premises in accordance with this Lease.

  19.  Attorneys' Fees.
       ---------------

       In the event legal action is initiated by either party, the prevailing
party shall be entitled to recover all costs and expenses incurred in such
action, including, without limitation, reasonable attorneys' fees and costs,
including attorneys' fees incurred at trial and on appeal, if any.

  20.  Notices.
       -------

       All notices, consents, demands, and other communications from one party
to the other given pursuant to the terms of this Lease shall be in writing and
shall be personally delivered, delivered by courier service, sent via facsimile
(confirmation receipt required), or deposited in the United States mail,
certified or registered, postage prepaid, and addressed as follows:  To Tenant
at the address specified in the Basic Lease Information or to such other place
as Tenant may from time to time designate in a notice to Landlord; to Landlord
at the address specified in the Basic Lease Information, or to such other place
and to such other parties as Landlord may from time to time designate in a
notice to Tenant.  All notices shall be effective upon delivery or refusal of
delivery by intended recipient.

  21.  General Provisions.
       ------------------

       (a) This Lease shall be governed by and construed in accordance with the
internal laws of the State of California, notwithstanding any choice of law
statutes, regulations, provisions or requirements to the contrary.

       (b) 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.

       (c) This Lease including attached Exhibits, Addenda, and Basic Lease
Information contains all agreements and understandings of the parties and
supersedes and cancels any and all prior or contemporaneous written or oral
agreements, instruments, understandings, and

                                       15
<PAGE>

communications of the parties with respect to the subject matter herein. This
Lease, including the attached Exhibits, Addenda, and Basic Lease Information,
may be modified only in a writing signed by each of the parties.

       (d) No waiver of any provision hereof by either party shall be deemed by
the other party to be a waiver of any other provision, or of any subsequent
breach of the same provision.  Landlord's or Tenant's consent to, or approval
of, any act shall not be deemed to render unnecessary the obtaining of
Landlord's or Tenant's consent to, or approval of, any subsequent act by the
other party.

       (e) If Tenant remains in possession, with the express written consent of
Landlord, of all or any part of the Premises after the expiration of the Term,
such tenancy shall be from month to month only, and not a renewal hereof or an
extension for any further term, and in such case, Rent shall be payable in the
amount of 110% the last month's Base Rent and all other charges under the Lease
and such month-to-month tenancy shall be subject to every other term, covenant
and agreement contained herein.

       (f) Subject to the provisions of this Lease restricting assignment or
subletting by Tenant, this Lease shall bind the parties, their personal
representatives, successors, and assigns.

       (g) Upon reasonable prior notice to Tenant (which notice shall not be
required in the event of an emergency), Landlord and Landlord's representatives
and agents shall have the right to enter the Premises during regular business
hours for the purpose of inspecting the same, showing the same to prospective
purchasers or lenders, (and during the last six months of the Term, prospective
tenants) and making such alterations, repairs, improvements, or additions to the
Premises, the Building or the Common Areas as Landlord may deem necessary or
desirable.  Landlord may at any time during the last one hundred twenty (120)
days of the Term place on or about the Premises any ordinary "For Lease" sign.
Landlord may at any time place on or about the Premises any ordinary "For Sale"
sign.

       (h) The voluntary or other surrender of this Lease by Tenant, the mutual
cancellation thereof or the termination of this Lease by Landlord as a result of
Tenant's default shall, at the option of Landlord, terminate all or any existing
subtenancies or may, at the option of Landlord, operate as an assignment to
Landlord of any or all of such subtenancies.

       (i) If Tenant is a corporation, limited liability company or partnership,
each individual executing this Lease on behalf of Tenant represents and warrants
that he is duly authorized to execute and deliver this Lease on behalf of the
corporation, company or partnership in accordance with, where applicable, a duly
adopted resolution of the board of directors of the corporation, the vote of the
members of the limited liability company or the vote of the partners within the
partnership, and that this Lease is binding upon the corporation, company or
partnership in accordance with its terms.

       (j) Time is expressly declared to be of the essence of this Lease and of
each and every covenant, term, condition, and provision hereof, except as to the
conditions relating to the delivery of possession of the Premises to Tenant.

       (k) If there is more than one party comprising Tenant, the obligations
imposed on Tenant shall be joint and several.

       (l) The language in all parts of this Lease shall be in all cases
construed as a whole according to its fair meaning and not strictly for nor
against either Landlord or Tenant.

       (m) As used in this Lease and whenever required by the context thereof,
each number, both singular and plural, shall include all numbers and in each
gender shall include all genders.  Landlord and Tenant, as used in this Lease or
in any other instrument referred to in or made a part of this Lease, shall
likewise include both the singular and the plural, a corporation, limited
liability company, partnership, individual or person acting in any fiduciary
capacity as executor, administrator, trustee or in any other representative
capacity.

       (n) The Exhibits and Addendum, if any, specified in the Basic Lease
Information are attached to this Lease and by this reference made a part hereof.

       (o) The receipt and acceptance by Landlord of delinquent Rent shall not
constitute a waiver of any other default.

  22.  Force Majeure.
       -------------

       Any delay in construction, repairs, or rebuilding any building,
improvement or other structure herein shall be excused and the time limit
extended to the extent that the delay is

                                       16
<PAGE>

occasioned by reason of acts of God, labor troubles, laws or regulations of
general applicability, acts of Tenant or Tenant Delays (as the term is defined
in the Work Letter Agreement attached hereto as Exhibit B), or other occurrences
beyond the reasonable control of Landlord. Accordingly, Landlord's obligation to
perform shall be excused for the period of the delay and the period for
performance shall be extended for a period equal to the period of such delay.

  23.  Broker's Fee.
       ------------

       Each party represents that it has not had dealings with any real estate
broker, finder, or other person, with respect to this Lease in any manner,
except the brokerage firm(s) specified in the Basic Lease Information.  Each
party shall hold harmless the other party from all damages resulting from any
claim that may be asserted against the other party by any broker, finder, or
other person with whom the other party has or purportedly has dealt.  Landlord
shall pay any commissions or fees that are payable to the broker or finder
specified in the Basic Lease Information, with respect to this Lease in
accordance with the provisions of a separate commission contract.

  24.  Financial Statement.
       -------------------

       It is acknowledged by all parties hereto that the attached financial
declaration of Tenant is incorporated as a part of this Lease as Exhibit E, that
the information contained therein is true and correct in all material respects,
and that the accuracy of the information is a significant fact upon which
Landlord has relied in the granting of this Lease.

       IN WITNESS WHEREOF, the parties have executed this Lease on the date
first mentioned above.


TENANT:                                  LANDLORD:

Geerlings & Wade, Inc.,                  Cader Lane Associates,
a Massachusetts corporation              a California general partnership


By:  /s/ Jay Essa                        By:  /s/ William C. White
     -----------------------------            --------------------------------
     Jay Essa                                 William C. White

Its: President                           Its: Managing General Partner


By:  /s/ David Pearce
     -----------------------------
     David Pearce

Its: Vice President

                                       17
<PAGE>

                                ADDENDUM NO. 1

1.   Rental Rate:

<TABLE>
<CAPTION>
                          Year                Monthly NNN Rent
                                                per Sq. Ft.
           =============================================================
           <S>                                <C>
                           1                       $0.60
           -------------------------------------------------------------
                         2 - 5                   See below
</TABLE>

     At the start of the second lease year and each year of the term thereafter
     there will be a rental adjustment based on the percentage increase in the
     Consumer Price Index For All Urban Consumers, San Francisco-Oakland-San
     Jose, All Items (1982-1984=100), as published by the U.S. Bureau of Labor
     Statistics ("Index"). The "Beginning Index" shall be the Index published
     most immediately preceding the last Base Rent adjustment. The "Adjustment
     Index" shall be the Index published one month prior to the Adjustment Date.
     The monthly Base Rent until the next Base Rent adjustment shall be
     determined by multiplying the initial monthly Base Rent by a fraction, the
     numerator of which is the Adjustment Index and the denominator of which is
     the Beginning Index. In no event will the monthly Base Rent be increased by
     an amount less than three percent (3%) per year nor will it be increased by
     an amount more than five percent (5%) in years two and three and six
     percent (6%) in years four and five. If the 1982-1984 base of the Index is
     changed, the new base shall be converted to the 1982-1984 base in
     accordance with the U.S. Department of Labor's conversion factor, and the
     base as so converted shall be used. If the U.S. Department of Labor ceases
     to publish the Index, then the successor index designated by the U.S.
     Department of Labor or, if no successor index is so designated, the most
     nearly comparable index shall be used.

2.   Permit Period:

     Tenant shall have until October 21,1999 to obtain a finding of Public
     Convenience and Necessity and Conditional Use Permit from the City of
     Petaluma as well as approval from the California Alcoholic Beverage Control
     for a premises to premises transfer of a type 20 permit (the "Permits")
     required for Tenant to operate within the Premises pursuant to the use
     specified in the Basic Lease Information.  If Tenant is unable to obtain
     the Permits by October 21, 1999, Tenant may request and, upon a showing
     that the Permits have been applied for and diligently pursued, shall be
     granted an extension to November 10, 1999.  If for any reason Tenant is
     unable to obtain the Permits by October 21, 1999 (or November 10, 1999 if
     so extended) then Tenant may terminate this Lease by October 21, 1999 (or
     November 10, 1999 if applicable) upon delivering prior written notice
     thereof to Landlord and reimbursing Landlord for any documented direct
     costs related to this Lease ("Transaction Costs") whereupon neither party
     shall have any further obligation to the other.  Transaction Costs shall
     include, but not be limited to, documented costs of architectural services,
     permits, fees, construction and lost rental value.  The portion of the
     Transaction Costs from lost rental value will be limited to two (2) month's
     Rent.  Landlord shall use commercially reasonable efforts to re-use any
     tenant improvements for a future tenant and Tenant's obligation to
     reimburse the Transaction Costs shall be reduced by such re-used
     improvements.  Notwithstanding any provisions hereof, Tenant's obligation
     to pay rent hereunder shall commence on the Commencement Date.

     Notwithstanding the above, if for any reason Tenant is unable to obtain the
     Permits by October 21, 1999 and does not appear to have a reasonable
     likelihood of receiving the Permits, then, and as an alternative to
     granting an extension, Landlord may terminate this Lease upon delivering
     prior written notice thereof to Tenant.  Upon delivery of such written
     notice, Tenant shall be obligated for the Transaction Costs as described
     above.  Thereafter, neither party shall have any further obligation to the
     other.

<PAGE>

Landlord shall furnish and install the units and quantities of Tenant
Improvements as set forth below:

     1.   Approximately 600 square feet of general office/showroom space which
          will include two handicap accessible bathrooms.  The configuration of
          the office/showroom space shall be mutually agreed upon by Landlord
          and Tenant.

     2    The remaining warehouse space will include metal halide lighting, one
          space heater and an electrical subpanel for Tenant's distribution of
          power and electrical outlets.  The location and quantity of warehouse
          improvements shall be mutually agreed upon by Landlord and Tenant.





                                  Exhibit B-1
                                  Space Plan


<PAGE>

<TABLE>
<S>  <C>                                                                                  <C>
     ----------------------------------------------------------------------------------
12.    Landlord's Address for Notices                                                     Paragraph 20
     ----------------------------------------------------------------------------------
       Cader Lane Associates
       c/o G&W Management Co.
       P.O. Box 808030
       Petaluma, CA 94975
       1318 Redwood Way, Suite 140
       Petaluma, CA  94954
     ----------------------------------------------------------------------------------
       With a Copy to:
     ----------------------------------------------------------------------------------




     ----------------------------------------------------------------------------------
13.    Real Estate Brokers                                                                Paragraph 23
     ----------------------------------------------------------------------------------
       Orion Partners
       Meridian Commercial
       Nexus Realty Group

------------------------------------------------------------------------------------------------------------
  EXHIBITS AND ADDENDUM
------------------------------------------------------------------------------------------------------------
       Addendum No. 1
       Exhibit A:    Diagram of Premises
       Exhibit A-1:  Diagram of the Project
       Exhibit B:    Work Letter Agreement
       Exhibit B-1:  Space Plan
       Exhibit C:    Rules and Regulations
       Exhibit D:    Hazardous Materials List
       Exhibit E:    Tenant's Financial Statement
</TABLE>

                                       2
<PAGE>

                                   EXHIBIT B
                                   ---------

                             WORK LETTER AGREEMENT
                           (Turn Key - Single Story)


     THIS WORK LETTER AGREEMENT supplements that certain Net Lease dated
September 27, 1999 ("Lease"), executed by Cader Lane Associates, a California
------------
general partnership, as Landlord, and Geerlings & Wade, Inc., a Massachusetts
corporation, as Tenant. All capitalized terms not otherwise defined herein shall
have the same meaning as those capitalized terms contained in the Lease.

     1.  Landlord shall be responsible for constructing within the Premises the
tenant improvements ("Tenant Improvements") described in the preliminary space
plan attached hereto as Exhibit B-1 ("Preliminary Space Plan").  The Tenant
Improvements for the Premises will be more particularly described in the plans
and construction drawings ("Construction Drawings") as approved below.  Any
additional work ("Tenant Extra Improvements") required under the approved
Construction Drawings shall be at Tenant's expense.

     2.  Landlord and Tenant shall diligently finalize the Preliminary Space
Plan for construction of the Tenant Improvements and Tenant Extra Improvements
so that, within thirty (30) days after execution of the Lease, Landlord can
provide Tenant with the Construction Drawings.  The Construction Drawings shall
indicate the specific requirements of Tenant's lease space, outlining in detail
interior partitions, floor coverings, a reflected ceiling plan, plumbing
fixtures, and electrical plans (setting forth the electrical requirements of
Tenant), all in conformity with the Preliminary Space Plan.  The Construction
Drawings shall include full energy calculations as required by the State of
California and the city agencies.

     3.  Within three (3) days after receipt of the Construction Drawings,
Tenant shall approve the drawings and/or request changes or modifications
thereto.  Any such request for changes or modifications shall be subject to
Landlord's approval and, thereafter, the Construction Drawings shall be
resubmitted for Tenant's approval in accordance with the preceding sentence.
Tenant acknowledges that the Construction Drawings are subject to the approval
of the appropriate government authorities.  It shall be Tenant's responsibility
to ensure that the design and function of the Tenant Improvements and Tenant
Extra Improvements are suitable for Tenant's business and needs.  The
improvements shall be constructed in accordance with current building standards,
laws, regulations, ordinances and codes.  Landlord shall not be required to
install any Tenant Improvements or Tenant Extra Improvements which do not
conform to the Construction Drawings.

     4.  Landlord shall furnish and install the units and quantities of Tenant
Improvements as set forth on Exhibit B-1. The Tenant Improvements to be paid by
Landlord shall not exceed Sixty-four Thousand One Hundred Fifteen Dollars
($64,115) and shall include:

         (a)  The costs of the Preliminary Space Plan (including one revision
thereto) and final Construction Drawings and engineering costs associated with
completion of the State of California energy utilization calculations under
Title 24 legislation, and

         (b)  The costs of obtaining building permits and other necessary
authorizations from the city, county and the State of California.

     Any additional units, quantities or costs of the Tenant Improvements
required in accordance with the approved Construction Drawings shall be deemed
Tenant Extra Improvements and shall be paid for by Tenant at the unit cost set
forth in a summary of unit costs to be provided by Landlord.

     5.  In no event shall the Tenant Improvements payable by Landlord include
(i) the costs of procuring or installing any trade fixtures, equipment,
furniture, furnishings, telephone or computer equipment or wiring or other
personal property ("Personal Property"), or (ii) any Change Orders (as the term
is defined in Paragraph 6 below).  Such items shall be paid by Tenant.

     6.  Following Tenant's approval of the Construction Drawings, Tenant may
request changes or modifications thereto ("Change Order"), however, the cost of
any Change Order(s) shall be borne by Tenant.  If Tenant shall request any
Change Order, then Landlord shall promptly give Tenant a written estimate of (a)
the cost of engineering and design services to prepare the Change Order, (b) the
cost of work to be performed pursuant to the Change Order, and (c) the time
delay expected because of such requested Change Order.  Within three (3) days
after Tenant's receipt of the written estimate, Tenant shall notify Landlord in
writing whether it approves the written estimate.  If Tenant approves the
written estimate, then Tenant shall
<PAGE>

accompany its approval with a check made payable to Landlord in the amount of
the estimated cost of the Change Order. Upon Landlord's completion of the Change
Order and submission of the final cost thereof to Tenant, Tenant shall promptly
pay to Landlord any additional amounts incurred in excess of the written
estimate. If such written authorization and check are not received by Landlord,
then Landlord shall not be obligated to commence work on the Premises and Tenant
shall be chargeable for any delay in the completion of the Premises in
accordance with Paragraph 7 below.

      7. If the Commencement Date of the Lease has not occurred on or before the
Estimated Commencement Date, and if the cause of the delay in the occurrence of
the Commencement Date is attributable to Tenant, then the Lease shall begin on
the date the Commencement Date otherwise would have occurred but for the Tenant
delays.  Delays attributable to Tenant ("Tenant Delays") shall include, without
limitation, those caused by (a) delays by Tenant in approving the Construction
Drawings and costs, (b) Tenant's request for special materials not available
when needed for construction in accordance with the construction schedule, (c)
Change Orders, and (d) interference with Landlord's work caused by Tenant or
Tenant's agents.  All costs and expenses occasioned by a Tenant Delay,
including, without limitation, increases in labor or materials, shall be borne
by Tenant.

      8. Tenant may, with Landlord's written consent, enter the Premises prior
to the Commencement Date solely for the purpose of installing its Personal
Property as long as such entry will not interfere with the orderly construction
and completion of the Premises ("Tenant's Work").  Tenant shall notify Landlord
of its desired time(s) of entry and shall submit for Landlord's written approval
the scope of the Tenant's Work to be performed and the name(s) of the
contractor(s) who will perform such work.  Tenant agrees to indemnify, defend
and hold harmless Landlord, any mortgagee, ground lessor or beneficiary of a
deed of trust encumbering, secured by or affecting the Premises or the Building,
from and against any and all claims, actions, losses, liabilities, damages,
costs or expenses (including, without limitation, reasonable attorneys' fees and
claims for worker's compensation) of any nature whatsoever, arising out of or in
connection with the Tenant's Work (including, without limitation, claims for
breach of warranty, personal injury or property damage).

      9. During the course of construction, at Tenant's expense, Tenant shall
obtain or maintain public liability and worker's compensation insurance, in
amounts acceptable to Landlord, and which name Landlord and Tenant as parties
insured from and against any and all liability for death of or injury to person
or damage to property caused in or about or by reason of the construction of the
Tenant's Work.

     10. Upon substantial completion of the Premises in accordance with the
Construction Drawings, Tenant agrees to accept the Premises in the condition
which it may then be and waives any right or claim against Landlord for any
cause directly or indirectly arising out of the condition of the Premises,
appurtenances thereto, improvements thereon, and equipment therein.  Tenant
shall hold harmless Landlord from and against any liability or damage as
provided under Paragraph 10.2 of the Lease.  Landlord shall not be liable for
any latent or patent defects therein, except that Landlord warrants the Building
against latent defects for a period of one (1) year from the date of substantial
completion.

     11. Tenant releases Landlord from any claim whatsoever for damages against
Landlord for any delay in the date on which the Premises shall be ready for
occupancy by Tenant.

     12. The Premises shall be deemed "substantially completed" as of the date
that all of the following conditions are satisfied:

         (a) The Tenant Improvements have been substantially completed in
accordance with the approved Construction Drawings (except for those punch list
items referenced in Paragraph 13 below), such that Tenant can reasonably conduct
business within the Premises; and

         (b) A certificate of occupancy and/or finalized building permit has
been issued for the Premises.

     13. Tenant shall immediately prior to occupancy inspect the Premises and
compile and furnish Landlord with an initial punch list of any missing or
deficient Tenant Improvements.  Within the first thirty (30) days after delivery
of the Premises, Tenant shall make a final punch list and submit this list to
Landlord.  Landlord shall use its best efforts to complete the corrective work
in a prompt, good and workman-like manner.  Punch list corrections shall not
delay the Commencement Date, nor shall a delay in making corrections be grounds
for a delay or reduction in any rent payments due Landlord.

                                       2
<PAGE>

     14. All floor area calculations are from the center line of the partitions
and the outside line of the exterior and hall walls.  No deduction is allowed
for the columns, sprinkler risers, roof drains, or air conditioning units
serving Tenant and located within the Premises.

     15. Landlord shall select the manufacturer and vendor of all building
materials and equipment with respect to the Tenant Improvements and Tenant Extra
Improvements to be constructed hereunder.


TENANT:                                 LANDLORD:

Geerlings & Wade, Inc.,                 Cader Lane Associates,
a Massachusetts corporation             a California general partnership


By:  /s/ Jay Essa                       By:  /s/ William C. White
     -----------------------------           ------------------------------
     Jay Essa                                William C. White

Its: President                          Its: Managing General Partner


By:  /s/ David Pearce
     -----------------------------
     David Pearce

Its: Vice President

                                       3
<PAGE>

                                   EXHIBIT C

                             RULES AND REGULATIONS


It is further agreed that the following Rules and Regulations shall be and are
hereby made a part of this Lease, and Tenant agrees that Tenant's employees and
agents, or any others permitted by Tenant to occupy or enter the Premises, will
at all times abide by said Rules and Regulations, unless otherwise specified or
provided for in the Lease, to wit:

     1.   The driveways, entrances and exits to the Property, sidewalks,
passages, building entries, lobbies, corridors, stairways, and elevators of the
Building shall not be obstructed by Tenant, or Tenant's agents or employees, or
used for any purpose other than ingress and egress to and from the Premises.
Tenant or Tenant's agents or employees shall not loiter on the lawn areas or
other common areas of the Property.

          (a) Furniture, freight equipment and supplies will be moved in or out
of the Building only through the rear service entrances or other entrances
designated by Landlord and then only during such hours and in such manner as may
be reasonably prescribed by Landlord. Tenant shall cause its movers to use only
the loading facilities, and entrances designated by Landlord. In the event
Tenant's movers damage any part of the Building or Property, Tenant shall
forthwith pay to Landlord the amount required to repair said damage.

          (b) No safe or article, the weight of which may in the opinion of
Landlord constitute a hazard to or damage to the Building or the Building's
equipment, shall be moved into the Premises without Landlord's prior written
approval, but such consent or approval shall not be unreasonably withheld,
conditioned or delayed. Landlord and Tenant shall mutually agree to the location
of such articles in the Premises. All damage done to the Property, Building or
Premises by putting in, taking out or maintaining extra heavy equipment shall be
repaired at the expense of Tenant.

          (c) Landlord reserves the right to close and keep locked any and all
entrances and exits of the Building and Property and gates or doors closing the
parking areas thereof during such hours as Landlord may deem advisable for the
adequate protection of the Property and all tenants therein.

     2.  Except as otherwise provided for in the Lease, no sign, advertisement
or notice shall be inscribed, painted or affixed on any part of the inside or
outside of the Building unless of such color, size and style and in such place
upon or in the Building as shall be first approved in writing by Landlord.  No
furniture or other materials shall be placed in front of the Building or in any
lobby or corridor, without the prior written consent of Landlord.  Landlord
shall have the right to remove all non permitted signs and furniture, without
notice to Tenant.

     3.  Tenant shall not employ any person or persons other than the janitor or
cleaning contractor of Landlord for the purpose of cleaning or taking care of
the Premises without the prior written consent of Landlord, which shall not be
unreasonably withheld, conditioned or delayed.  Except as otherwise provided in
the Lease, Landlord shall in no way be responsible to Tenant for any loss of
property from the Premises, however occurring.  The janitor of the Building may
at all times keep a pass key, and other agents of Landlord shall at all times be
allowed admittance to the Premises in accordance with the provisions set forth
in the Lease.

     4.  Water closets and other water fixtures shall not be used for any
purpose other than that for which the same are intended, and any damage
resulting to the same from misuse on the part of Tenant or Tenant's agents or
employees, shall be paid for by Tenant.  No person shall waste water by tying
back or wedging the faucets or in any other manner.

     5.  No animals except seeing-eye dogs or other animals necessary to the
functioning of handicapped personnel shall be allowed on the lawns or sidewalks
or in the offices, halls, and corridors of the Building.

     6.  No persons shall disturb the occupants of this or adjoining buildings
or premises by the use of any radio, sound equipment or musical instrument or by
the making of loud or improper noises, nor interfere in any way with the other
tenants or those having business with
<PAGE>

them. Should sound mitigation measures be required due to sounds originating in
the Premises, the costs of such measures shall be paid for by Tenant.

      7.  Bicycles or other vehicles, other than wheel chairs, shall not be
permitted in the offices, halls, corridors and lobbies in the Building nor shall
any obstruction of sidewalks or entrances of the Building by such be permitted.

      8.  Tenant shall not allow anything to be placed on the outside of the
Building, nor shall anything be thrown by Tenant or Tenant's agents or
employees, out of the windows or doors, or down the corridors, ventilation ducts
or shafts of the Building.  Tenant, except in case of fire or other emergency,
shall not open any outside window.

      9.  No awnings shall be place over any window or entrance.

     10.  All garbage, including wet garbage, refuse or trash shall be placed by
Tenant in the receptacles designated by Landlord for that purpose.  Tenant shall
not burn any trash or garbage at any time in or about the leased Premises or any
area of the Property.  Tenant and Tenant's officers, agents, and employees shall
not throw cigar or cigarette butts or other substances or litter of any kind in
or about the Property.

     11.  Tenant shall not install or operate any steam or gas engine or boiler,
or other machinery or carry on any mechanical business, other than such
mechanical business which normally is identified with general use in the
Premises.  Explosives or other articles of an extra hazardous nature shall not
be brought into the Building complex.

     12.  Any painting or decorating as may be agreed to be done by and at the
expense of Landlord shall be done during regular weekday working hours.  Should
Tenant desire such work on Saturdays, Sundays, holidays or outside of regular
working hours, Tenant shall pay for the extra cost thereof, if any.

     13.  Tenant and Tenant's agents and employees shall park their vehicles in
areas designated from time-to-time for employee parking.

     14.  Tenant shall not mark, drive nails, screw, bore, or drill into, paint
or in any way deface the common area walls, exterior walls, roof, foundations,
bearing walls, or pillars without the prior written consent of Landlord.  The
expense of repairing any breakage, stoppage or damage resulting from a violation
of this rule shall be borne by Tenant.

     15.  No waiver of any rule or regulation by Landlord shall be effective
unless expressed in writing and signed by Landlord or his authorized agent.

     16.  Tenant shall be responsible for cleaning up any trash blowing around
their facility that may have been left by their customers or employees.

     17.  In the event of any conflict between these rules and regulations or
any further or modified rules and regulations from time to time issued by
Landlord, and the lease provisions, the lease provisions shall govern and
control.

     18.  Landlord reserves the right at any time to change or rescind any one
or more of these rules and regulations, or to make such other and further
reasonable rules and regulations as in Landlord's judgment may from time to time
be necessary for the management, safety, care and cleanliness of the Premises,
and for the preservation of good order therein, as well as for the convenience
of other tenants of the Property.  Landlord shall not be responsible to Tenant
or to any other person for the non-observance or violation of the rules and
regulations by any other tenant or person.  Tenant shall be deemed to have read
these rules and to have agreed to abide by them as a condition to its occupancy
of the space herein leased, and Tenant shall abide by any additional rules and
regulations which are ordered or requested by Landlord or by any governmental
authority.

     19.  Landlord and Tenant acknowledge that Tenant will be using pallet racks
and a forklift in the operation of Tenant's business pursuant to the terms of
the Lease.

                                       2
<PAGE>

                                   EXHIBIT D



          Materials                                      Quantities
          ---------                                      ----------



     Tenant agrees that:

     (a) None of the above materials will be used, held or stored on or about
the Premises in quantities of greater than one (1) gallon each, or twenty (20)
pounds each in the case of non-liquid materials; provided, however, that used or
excess materials may be stored together in a fifty-five (55) gallon drum while
awaiting transport off the Premises for disposal.

     (b) The materials listed on Page 1 to this Exhibit D shall be stored in
fire-proof lockers on the Premises in accordance with applicable laws,
regulations and ordinances.  No storage outside the Premises will be permitted.

     (c) No used or excess materials will be disposed of in, on, under or about
the Premises or Cader Lane Industrial Park.  Instead, such materials shall be
transported off-site, no less often than every one hundred eighty (180) days, by
a duly licensed hazardous materials transporter.  While waiting for transport
off-site for disposal, used or excess materials shall be stored in a safe
location on the Premises in secure containers which are appropriately labeled.

     (d) No materials listed on Page 1 to this Exhibit D, regardless of whether
they are water-soluable, shall be flushed down any sanitary sewer drains on or
about the Premises or Cader Lane Industrial Park.
<PAGE>

                                   Exhibit E

                              Financial Statement

                          (TO BE PROVIDED BY TENANT)