<PAGE>   1
                                                                   EXHIBIT 10.53


================================================================================

                                     LEASE

                                    between


                         UNION BANK OF CALIFORNIA, N.A.,
       not in its individual capacity except as expressly stated herein,
                        but solely as Trustee, as Lessor,

                                       and

                       SAFESKIN REAL ESTATE INCORPORATED,
                                    as Lessee

                           ---------------------------
                            Dated as of March 5, 1999
                           ---------------------------


================================================================================

THIS LEASE IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF UNION BANK OF
CALIFORNIA, N.A., AS AGENT (THE "AGENT"), UNDER A CREDIT AGREEMENT, DATED AS OF
MARCH 5, 1999 AMONG UNION BANK OF CALIFORNIA, N.A., NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS TRUSTEE, AS BORROWER, THE LENDERS, AND THE AGENT, AS
AMENDED OR SUPPLEMENTED. THIS LEASE HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS.
TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM
IS DEFINED IN THE UNIFORM COMMERCIAL CODE OF THE STATE OF CALIFORNIA OR NEW
YORK), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART CONTAINING THE
RECEIPT THEREFOR EXECUTED BY THE AGENT ON THE SIGNATURE PAGE HEREOF.

<PAGE>   2
                               TABLE OF CONTENTS

<TABLE>
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<S>         <C>                                                            <C>
SECTION 1.  DEFINITIONS...................................................   1
      1.1      Defined Terms..............................................   1

SECTION 2.  PROPERTY AND TERM.............................................   1
      2.1      Property...................................................   1
      2.2      Lease Term.................................................   2
      2.3      Title......................................................   2
      2.4      Lease Supplements..........................................   2

SECTION 3.  RENT..........................................................   2
      3.1      Rent.......................................................   2
      3.2      Supplemental Rent..........................................   2
      3.3      Performance on a Non-Business Day..........................   3

SECTION 4.  UTILITY CHARGES...............................................   3
      4.1      Utility Charges............................................   3

SECTION 5.  QUIET ENJOYMENT...............................................   3
      5.1      Quiet Enjoyment............................................   3

SECTION 6.  NET LEASE.....................................................   3
      6.1      Net Lease; No Setoff; Etc..................................   4
      6.2      No Termination or Abatement................................   5

SECTION 7.  OWNERSHIP OF PROPERTY.........................................   5
      7.1      Ownership of the Property..................................   5

SECTION 8.  CONDITION OF PROPERTY.........................................   6
      8.1      Condition of the Property..................................   6
      8.2      Possession and Use of the Property.........................   7

SECTION 9.  COMPLIANCE....................................................   7
      9.1      Compliance with Legal Requirements and Insurance 
                 Requirements.............................................   7
      9.2      Environmental Matters......................................   7

SECTION 10................................................................   8
      10.1     Maintenance and Repair; Return.............................   8
      10.2     Right of Inspection........................................   9
      10.3     Environmental Inspection...................................  10

SECTION 11.  MODIFICATIONS................................................  10
</TABLE>


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<TABLE>
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<S>         <C>                                                            <C>
      11.1     Modifications, Substitutions and Replacements..............  10

SECTION 12.  TITLE........................................................  11
      12.1     Warranty of Title..........................................  11
      12.2     Grants and Releases of Easements...........................  12

SECTION 13.  PERMITTED CONTESTS...........................................  12
      13.1     Permitted Contests Other Than in Respect of Impositions....  12

SECTION 14.  INSURANCE....................................................  13
      14.1     Public Liability and Workers' Compensation Insurance.......  13
      14.2     Hazard and Other Insurance.................................  13
      14.3     Coverage...................................................  14

SECTION 15.  CONDEMNATION AND CASUALTY....................................  15
      15.1     Casualty and Condemnation..................................  15

SECTION 16.  LEASE TERMINATION............................................  17
      16.1     Termination upon Certain Events............................  17
      16.2     Procedures.................................................  17

SECTION 17.  DEFAULT......................................................  17
      17.1     Lease Events of Default....................................  17
      17.2     Final Liquidated Damages...................................  19
      17.3     Lease Remedies.............................................  19
      17.4     Waiver of Certain Rights...................................  21
      17.5     Assignment of Rights Under Contracts.......................  21
      17.6     Remedies Cumulative........................................  21

SECTION 18.  LESSOR'S RIGHT TO CURE.......................................  22
      18.1     Lessor's Right to Cure Lessee's Lease Defaults.............  22

SECTION 19.  LEASE TERMINATION............................................  22
      19.1     Provisions Relating to Lessee's Termination of this
                 Lease or Exercise of Purchase Option.....................  22

SECTION 20.  PURCHASE OPTION..............................................  22
      20.1     Purchase Option............................................  22
      20.2     Maturity Date Purchase Option..............................  23
      20.3     Purchase of Less Than All of the Property..................  23

SECTION 21.  SALE OF PROPERTY.............................................  24
      21.1     Sale Procedure.............................................  24
      21.2     Application of Proceeds of Sale............................  25
      21.3     Indemnity for Excessive Wear...............................  25
      21.4     Appraisal Procedure........................................  25
</TABLE>


                                      -ii-
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<TABLE>
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<S>         <C>                                                            <C>
      21.5     Certain Obligations Continue...............................  26

SECTION 22.  HOLDING OVER.................................................  26
      22.1     Holding Over...............................................  26

SECTION 23.  RISK OF LOSS.................................................  26
      23.1     Risk of Loss...............................................  26

SECTION 24.  SUBLETTING AND ASSIGNMENT....................................  27
      24.1     Subletting and Assignment..................................  27
      24.2     Subleases..................................................  27

SECTION 25.  ESTOPPEL CERTIFICATES........................................  27
      25.1     Estoppel Certificates......................................  27

SECTION 26.  NO WAIVER....................................................  27
      26.1     No Waiver..................................................  27

SECTION 27.  ACCEPTANCE OF SURRENDER......................................  28
      27.1     Acceptance of Surrender....................................  28

SECTION 28.  NO MERGER OF TITLE...........................................  28
      28.1     No Merger of Title.........................................  28

SECTION 29.  NOTICES......................................................  28
      29.1     Notices....................................................  28

SECTION 30.  MISCELLANEOUS................................................  29
      30.1     Miscellaneous..............................................  29
      30.2     Amendments and Modifications...............................  30
      30.3     Successors and Assigns.....................................  30
      30.4     Headings and Table of Contents.............................  30
      30.5     Counterparts...............................................  30
      30.6     GOVERNING LAW..............................................  30
      30.7     Limitations on Recourse....................................  30
      30.8     Memorandum of Lease........................................  30
      30.9     Priority...................................................  31
</TABLE>




                                      -iii-
<PAGE>   5
            LEASE (this "Lease"), dated as of March 5, 1999 between UNION BANK
OF CALIFORNIA, N.A., not in its individual capacity except as expressly stated
herein, but solely as Trustee under the Trust Agreement, having its principal
office at Corporate Trust Division, 120 South San Pedro Street, Suite 400, Los
Angeles, California 90012, as lessor (the "Lessor"), and SAFESKIN REAL ESTATE
INCORPORATED, a Delaware corporation, having its principal office at 12671 High
Bluff Drive, San Diego, California 92130, as lessee (the "Lessee").

            In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

                             SECTION 1. DEFINITIONS

            1.1 Defined Terms. Capitalized terms used herein but not otherwise
defined in this Lease shall have the respective meanings specified in Annex A to
the Participation Agreement dated as of the date hereof among Lessee, Lessor,
Agent, the Investor and the Lenders named therein, as such Participation
Agreement may be amended, supplemented or otherwise modified from time to time,
and the rules of usage set forth in Annex A to the Participation Agreement shall
apply to this Lease.

                          SECTION 2. PROPERTY AND TERM

            2.1 Property. Subject to the terms and conditions hereinafter set
forth and contained in the Lease Supplement relating to the Property, Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, the Property.
Subject to the conditions set forth in the Participating Agreement, including
without limitation the satisfaction or waiver of the conditions set forth in
Section 6 thereof, Lessor hereby covenants and agrees to acquire and to accept
pursuant to the terms of the Participation Agreement delivery on the Property
Closing Date of the Land together with any Improvements thereon and
simultaneously to demise and lease to Lessee hereunder for the Term, Lessor's
interest in such Land and in such Improvements together with any Improvements
which thereafter may be constructed on such Land by the Construction Agent
pursuant to the Construction Agency Agreement and any Modifications to the
Property made pursuant to this Lease, and Lessee hereby agrees, expressly for
the direct benefit of Lessor, to lease from Lessor for the Term (subject to
Lessee's right to purchase the Property from Lessor prior to the expiration
thereof), Lessor's interest in such Land and in such Improvements together with
any Improvements and Modifications which thereafter may be constructed on such
Land pursuant to the Construction Agency Agreement and this Lease. Lessee's
delivery of each Requisition requesting the advance of funds by Lessor to
acquire the Land and any Improvements thereon and any Improvements which
thereafter may be constructed thereon pursuant to the Construction Agency
Agreement, respectively, shall, without further act, constitute the acceptance
by Lessee of all of the Land and/or Improvements which is the subject of such
Requisition submitted by Lessee to Lessor for all purposes of this Lease and the
other Operative Agreements on the terms set forth therein and herein, and that
such Land, together with any
<PAGE>   6
                                                                               2

Improvements constructed on such Land pursuant to the Construction Agency
Agreement, shall be deemed to be included in the leasehold estate of this Lease
and shall be subject to the terms and conditions of this Lease as of the Funding
Date relating to such Requisition.

            2.2 Lease Term. The Property is leased for the Term, unless extended
or earlier terminated in accordance with the provisions of this Lease.

            2.3 Title. The Property is leased to Lessee without any
representation or warranty, express or implied, by Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, the Permitted Exceptions) and all applicable Legal Requirements.
Lessee shall in no event have any recourse against Lessor for any defect in
title to the Property, other than resulting from Lessor Liens.

            2.4 Lease Supplements. On the Property Closing Date, Lessee and
Lessor shall each execute and deliver the Lease Supplement for the Property in
substantially the form of Exhibit A hereto and thereafter the Property shall be
subject to the terms of this Lease.

                                 SECTION 3. RENT

            3.1 Rent. (a) On each applicable Payment Date occurring after the
Completion Date, Lessee shall pay the Basic Rent attributable to the Property.

            (b) Basic Rent shall be due and payable in lawful money of the
United States and shall be paid by wire transfer of immediately available funds
on the due date therefor to such account or accounts at such bank or banks or to
such other Person or in such other manner as Lessor shall from time to time
direct. Each payment of Rent payable by Lessee to Lessor under this Lease or any
other Operative Agreement shall be made by Lessee to the Agent as assignee of
Lessor under the Assignment of Lease (or, if all Loans and all other amounts
owing from Lessor to the Lenders under the Credit Agreement and the other
Operative Agreements have been paid in full and all Commitments of the Lenders
have been permanently terminated, to Lessor) prior to 11:00 a.m., Pacific
Standard Time, to the Account established by the Agent in accordance with
Section 8.1 of the Credit Agreement, in immediately available funds consisting
of lawful currency of the United States of America on the date when such payment
shall be due. Payments received after 11:00 a.m., Pacific Standard time, on the
date due shall, for the purpose of Section 17.1 hereof be deemed received on
such day; provided, however, that for the purposes of the second sentence of
Section 3.2 hereof, such payments shall be deemed received on the next
succeeding Business Day and subject to interest at the Overdue Rate as provided
in such Section 3.2.

            3.2 Supplemental Rent. Lessee shall pay to Lessor or the Person
entitled thereto any and all Supplemental Rent promptly as the same shall become
due and payable, and if Lessee fails to pay any Supplemental Rent, Lessor shall
have all rights, powers and remedies provided for herein or by law or equity or
otherwise in the case of nonpayment of Basic Rent. Lessee shall pay to Lessor as
Supplemental Rent, among other things, on demand, to the extent

<PAGE>   7
                                                                               3

permitted by applicable Legal Requirements, interest at the applicable Overdue
Rate on any installment of Basic Rent not paid when due for the period for which
the same shall be overdue and on any payment of Supplemental Rent not paid when
due or demanded by Lessor for the period from the due date or the date of any
such demand, as the case may be, until the same shall be paid. The expiration or
other termination of Lessee's obligations to pay Basic Rent hereunder shall not
limit or modify the obligations of Lessee with respect to Supplemental Rent.
Unless expressly provided otherwise in this Lease or any other Operative
Agreement, in the event of any failure on the part of Lessee to pay and
discharge any Supplemental Rent as and when due, Lessee shall also promptly pay
and discharge any fine, penalty, interest or cost which may be assessed or added
for nonpayment or late payment of such Supplemental Rent, all of which shall
also constitute Supplemental Rent.

            3.3 Performance on a Non-Business Day. If any payment is required
hereunder on a day that is not a Business Day, then such payment shall be due on
the next succeeding Business Day, unless, in the case of payments based on the
Eurodollar Rate, the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.

                           SECTION 4. UTILITY CHARGES

            4.1 Utility Charges. Lessee shall pay, or cause to be paid, all
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or on the Property during the
Term. Lessee shall be entitled to receive any credit or refund with respect to
any utility charge paid by Lessee and the amount of any credit or refund
received by Lessor on account of any utility charges paid by Lessee, net of the
costs and expenses incurred by Lessor in obtaining such credit or refund, shall
be promptly paid over to Lessee. All charges for utilities imposed with respect
to the Property for a billing period during which this Lease expires or
terminates shall be adjusted and prorated on a daily basis between Lessor and
Lessee, and each party shall pay or reimburse the other for each party's pro
rata share thereof.

                           SECTION 5. QUIET ENJOYMENT

            5.1 Quiet Enjoyment. So long as no Lease Event of Default shall have
occurred and be continuing, Lessee shall peaceably and quietly have, hold and
enjoy the Property for the Term, free of any claim or other action by Lessor or
anyone rightfully claiming by, through or under Lessor.

                              SECTION 6. NET LEASE

            6.1 Net Lease; No Setoff; Etc. This Lease shall constitute a net
lease and, notwithstanding any other provision of this Lease, Lessee shall pay
Basic Rent and Supplemental Rent without counterclaim, setoff, deduction or
defense of any kind and without abatement,
<PAGE>   8
                                                                               4

suspension, deferment, diminution or reduction of any kind, and Lessee's
obligation to pay all such amounts is absolute and unconditional. The
obligations and liabilities of Lessee hereunder shall in no way be released,
discharged or otherwise affected for any reason, including, without limitation,
to the maximum extent permitted by law: (a) the defect in the condition,
merchantability, design, construction, quality or fitness for use of any portion
of the Property, or any failure of the Property to comply with all Legal
Requirements, including any inability to occupy or use the Property by reason of
such non-compliance; (b) any damage to, abandonment, loss, contamination of or
Release from or destruction of or any requisition or taking of the Property or
any part thereof, including eviction; (c) any restriction, prevention or
curtailment of or interference with any use of the Property or any part thereof,
including eviction; (d) any defect in title to or rights to the Property or any
Lien on such title or rights or on the Property; (e) any change, waiver,
extension, indulgence or other action or omission or breach in respect of any
obligation or liability of or by Lessor, Investor, Agent or any Lender; (f) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceedings relating to Lessee, Lessor, Investor,
Agent, any Lender or any other Person, or any action taken with respect to this
Lease by any trustee or receiver of Lessee, Lessor, Investor, Agent, any Lender
or any other Person, or by any court, in any such proceeding; (g) any claim that
Lessee has or might have against any Person, including, without limitation,
Lessor, Investor, Agent or any Lender; (h) any failure on the part of Lessor to
perform or comply with any of the terms of this Lease, any other Operative
Agreement or of any other agreement; (i) any invalidity or unenforceability or
disaffirmance against or by Lessee of this Lease or any provision hereof or any
of the other Operative Agreements or any provision of any thereof; (j) the
impossibility of performance by Lessee, Lessor or both; (k) any action by any
court, administrative agency or other Governmental Authority; (l) any
restriction, prevention or curtailment of or any interference with any use of
the Property or any part thereof; or (m) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing, whether or not Lessee shall have
notice or knowledge of any of the foregoing. Notwithstanding the foregoing
provisions, nothing contained in this Section 6.1 shall provide Lessor with any
right to payment by Lessee under this Lease prior to the Completion Date which
is contrary to Lessor's remedies under the Agency Agreement, including the
limitations set forth in Section 5.4 thereof; it being the express intention of
the parties hereto that Lessee's liability hereunder shall not exceed the
liability of the Construction Agent under the Agency Agreement prior to the
Completion Date. This Lease shall be noncancellable by Lessee for any reason
whatsoever except as expressly provided herein, and Lessee, to the extent
permitted by Legal Requirements, waives all rights now or hereafter conferred by
statute or otherwise to quit, terminate or surrender this Lease, or to any
diminution, abatement or reduction of Rent payable by Lessee hereunder. If for
any reason whatsoever this Lease shall be terminated in whole or in part by
operation of law or otherwise, except as otherwise expressly provided herein,
Lessee shall, unless prohibited by Legal Requirements, nonetheless pay to Lessor
(or, in the case of Supplemental Rent, to whomever shall be entitled thereto) an
amount equal to each Rent payment at the time and in the manner that such
payment would have become due and payable under the terms of this Lease if it
had not been terminated in whole or in part, and in such case, so long as such
payments are made and no Lease Event of Default shall have occurred and be
continuing, Lessor will deem this Lease to have remained in effect. Each payment
of Rent made by Lessee hereunder shall be final and, absent manifest error in
the computation of the amount thereof, Lessee shall not seek or have any right
to recover all or
<PAGE>   9
                                                                               5


any part of such payment from Lessor, Investor, Agent or any party to any
agreements related thereto for any reason whatsoever. Lessee assumes the sole
responsibility for the condition, use, operation, maintenance, and management of
the Property and Lessor shall have no responsibility in respect thereof and
shall have no liability for damage to the property of Lessee or any subtenant of
Lessee on any account or for any reason whatsoever other than the gross
negligence or willful misconduct of Lessor, its agents or employees.

            6.2 No Termination or Abatement. Lessee shall remain obligated under
this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting Lessor, or any action with respect to this Lease which may
be taken by any trustee, receiver or liquidator of Lessor or by any court with
respect to Lessor, except as otherwise expressly provided herein. Lessee hereby
waives all right (i) to terminate or surrender this Lease, except as otherwise
expressly provided herein, or (ii) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be bound
by all of the terms and conditions contained in this Lease.

                        SECTION 7. OWNERSHIP OF PROPERTY

            7.1 Ownership of the Property. (a) Lessor and Lessee intend that (i)
for financial accounting purposes with respect to Lessee (A) this Lease will be
treated as an "operating lease" pursuant to Statement of Financial Accounting
Standards (SFAS) No. 13, as amended, (B) Lessor will be treated as the
beneficial owner and lessor of the Property and (C) Lessee will be treated as
the lessee of the Property, but (ii) for federal, state and local income tax and
all other purposes (A) this Lease will be treated as a financing arrangement,
(B) the Lenders will be treated as senior lenders making loans to Lessee in an
amount equal to the Loans, which Loans will be secured by the Property, (C)
Lessor will be treated as a subordinated lender making a loan to Lessee in an
amount equal to the Investor Contribution, which loan is secured by the
Property, and (D) Lessee will be treated as the beneficial owner of the Property
and will be entitled to all tax benefits ordinarily available to an owner of
property like the Property for such tax purposes.

            (b) Lessor and Lessee further intend and agree that, for the purpose
of securing Lessee's obligations for the repayment of the above-described loans,
(i) this Lease shall also be deemed to be a security agreement and financing
statement within the meaning of Article 9 of the Uniform Commercial Code and a
real property mortgage or deed of trust, as applicable; (ii) the conveyance
provided for in Section 2 shall be deemed a grant of a security interest in and
a mortgage lien on the Lessee's right, title and interest in the Property
(including the right to exercise all remedies as are contained in the applicable
Mortgage and Memorandum of Lease upon the occurrence of a Lease Event of
Default) and all proceeds of the conversion, voluntary or
<PAGE>   10
                                                                               6

involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other
property, for the benefit of the Lessor to secure the Lessee's payment of all
amounts owed by the Lessee under this Lease and the other Operative Agreements
and Lessor holds title to the Property so as to create and grant a first lien
and prior security interest in the Property (A) pursuant to this Lease for the
benefit of the Agent under the Assignment of Lease, to secure to the Agent the
obligations of the Lessee under the Lease and (B) pursuant to the Mortgage to
secure to the Agent the obligations of the Lessor under the Mortgage and the
Notes; (iii) the possession by Lessor or any of its agents of notes and such
other items of property as constitute instruments, money, negotiable documents
or chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of the
Uniform Commercial Code; and (iv) notifications to Persons holding the Property,
and acknowledgements, receipts or confirmations from financial intermediaries,
bankers or agents (as applicable) of Lessee shall be deemed to have been given
for the purpose of perfecting such security interest under applicable law.
Lessor and Lessee shall, to the extent consistent with this Lease, take such
actions as may be necessary to ensure that, if this Lease were deemed to create
a security interest in the Property in accordance with this Section, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the
Basic Term. Nevertheless, Lessee acknowledges and agrees that none of Lessor,
Investor, the Trust Company, Agent, or any Lender has provided or will provide
tax, accounting or legal advice to Lessee regarding this Lease, the Operative
Agreements or the transactions contemplated hereby and thereby, or made any
representations or warranties concerning the tax, accounting or legal
characteristics of the Operative Agreements, and that Lessee has obtained and
relied upon such tax, accounting and legal advice concerning the Operative
Agreements as it deems appropriate.

            (c) Lessor and Lessee further intend and agree that in the event of
any insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting Lessee or
Lessor, the transactions evidenced by this Lease shall be regarded as loans made
by an unrelated third party lender to Lessee.

                        SECTION 8. CONDITION OF PROPERTY

            8.1 Condition of the Property. LESSEE ACKNOWLEDGES AND AGREES THAT
IT IS RENTING THE PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) BY LESSOR AND SUBJECT TO (A) THE EXISTING STATE OF TITLE
(EXCLUDING LESSOR LIENS), (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF,
(C) ANY STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT
SHOW AND (D) VIOLATIONS OF LEGAL REQUIREMENTS WHICH MAY EXIST ON THE DATE
HEREOF. NONE OF LESSOR, THE INVESTOR, THE AGENT AND ANY LENDER HAS MADE OR SHALL
BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR
IMPLIED, INCLUDING THE CONDITION OF ANY IMPROVEMENTS THEREON, THE SOIL
CONDITION, OR ANY
<PAGE>   11
                                                                               7

ENVIRONMENTAL OR HAZARDOUS MATERIAL CONDITION) OR SHALL BE DEEMED TO HAVE ANY
LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR LESSOR LIENS), VALUE,
HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE
PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR
COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY (OR ANY
PART THEREOF) AND NONE OF LESSOR, THE INVESTOR, THE AGENT AND ANY LENDER SHALL
BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF THE
PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT.

            8.2 Possession and Use of the Property. The Property shall be used
in a manner consistent with the Agency Agreement and, after the Completion Date
as Lessee's primary place of business. Lessee shall pay, or cause to be paid,
all charges and costs required in connection with the use of the Property.
Lessee shall not commit or permit any waste of the Property or any part thereof.

                              SECTION 9. COMPLIANCE

            9.1 Compliance with Legal Requirements and Insurance Requirements.
Subject to the terms of Section 13 relating to permitted contests, Lessee, at
its sole cost and expense, shall (a) comply with all Legal Requirements
(including all applicable Hazardous Materials Laws) and Insurance Requirements
relating to the Property, including the use, construction, operation,
maintenance, repair and restoration thereof, whether or not compliance therewith
shall require structural or extraordinary changes in the Improvements or
interfere with the use and enjoyment of the Property, and (b) procure, maintain
and comply with all licenses, permits, orders, approvals, consents and other
authorizations required for the construction, renovation, use, maintenance and
operation of the Property and for the use, operation, maintenance, repair and
restoration of the Improvements.

            9.2 Environmental Matters. (a) Promptly upon Lessee's actual
knowledge of the presence of Hazardous Materials in any portion of a Property in
concentrations and conditions that constitute an Environmental Violation, Lessee
shall notify Lessor in writing of such condition. In the event of any
Environmental Violation, Lessee shall, not later than thirty (30) days after
Lessee has actual knowledge of such Environmental Violation, either deliver to
Lessor and the Agent an Officer's Certificate and a Termination Notice with
respect to the Property pursuant to Section 16.1, if applicable, or, at Lessee's
sole cost and expense, promptly and diligently undertake any response, clean up,
remedial or other action necessary to remove, cleanup or remediate the
Environmental Violation in accordance with the terms of Section 9.1. If Lessee
does not deliver a Termination Notice with respect to the Property pursuant to
Section 16.1, Lessee shall, upon completion of remedial action by Lessee, cause
to be prepared by an environmental consultant reasonably acceptable to Lessor a
report describing the Environmental Violation and the actions taken by Lessee
(or its agents) in response to such Environmental
<PAGE>   12
                                                                               8

Violation, and a statement by the consultant that such Environmental Violation
has been remedied in full compliance with applicable Hazardous Materials Laws.

            (b) In addition, Lessee shall provide to Lessor, within five (5)
Business Days of receipt, copies of all written communications with any
Governmental Authority relating to any Environmental Violation in connection
with the Property. Lessee shall also promptly provide such detailed reports of
any such environmental claims as reasonably may be requested by Lessor and the
Agent.

                       SECTION 10. MAINTENANCE AND REPAIR

            10.1 Maintenance and Repair; Return. (a) From and after the
Completion Date, Lessee, at its sole cost and expense, shall maintain the
Property in good condition (ordinary wear and tear excepted) and make all
necessary repairs thereto, of every kind and nature whatsoever, whether interior
or exterior, ordinary or extraordinary, structural or nonstructural or foreseen
or unforeseen, in each case as required by all Legal Requirements and Insurance
Requirements and on a basis reasonably consistent with the operation and
maintenance of commercial properties comparable in type and location to the
Property subject, however, to the provisions of Section 15 with respect to
Condemnation and Casualty.

            (b) Lessor shall under no circumstances be required to build any
Improvements on the Property, make any repairs, replacements, alterations or
renewals of any nature or description to the Property, make any expenditure
whatsoever in connection with this Lease or maintain the Property in any way.
Lessor shall not be required to maintain, repair or rebuild all or any part of
the Property, and Lessee waives the right to (i) require Lessor to maintain,
repair, or rebuild all or any part of the Property, or (ii) make repairs at the
expense of Lessor pursuant to any Legal Requirement, Insurance Requirement,
contract, agreement, covenants, condition or restriction at any time in effect.

            (c) Lessee shall, upon the expiration or earlier termination of the
Term with respect to the Property (other than as a result of Lessee's purchase
of the Property from Lessor as provided herein), vacate, surrender and transfer
the Property to Lessor, at Lessee's own expense, free and clear of all Liens
other than Permitted Liens and Lessor Liens, in as good condition as they were
on the Completion, ordinary wear and tear excepted, and in compliance with all
Legal Requirements and the other requirements of this Lease (and in any event
without (x) any asbestos installed or maintained in any part of the Property,
(y) any polychlorinated byphenyls (PCBs) in, on or used, stored or located at
the Property, and (z) any other Hazardous Materials in violation of applicable
Hazardous Materials Laws). Lessee shall provide, or cause to be provided or
accomplished, at the sole cost and expense of Lessee, to or for the benefit of
Lessor or a purchaser, at least thirty Business Days prior to the expiration or
earlier termination of the Term with respect to the Property, each of the
following: (i) an endorsement to the title policy issued for the Property
showing (A) record title of the Lessor in the leasehold or fee estate, as the
case may be, subject to no Liens other than Permitted Liens described in clauses
(i), (v), (viii) and (ix) of the definition of Permitted Liens, Liens described
in clauses (ii) and (iii) of the definition of
<PAGE>   13
                                                                               9

Permitted Exceptions and Lessor Liens and (B) the Mortgage as a valid and
perfected first lien; (ii) an environmental assessment for the Property
satisfying the requirements set forth in Section 10.3 below; (iii) an assignment
(to the extent assignable) of all of the Lessee's right, title and interest in
and to each agreement executed by Lessee in connection with the construction,
renovation, development, use, maintenance or operation of the Property
(including all warranty, performance, service and indemnity provisions); (iv)
copies of all Plans and Specifications relating to the design, construction,
renovation or development of the Property; (v) an assignment (to the extent
assignable) of all permits, licenses, approvals and other authorizations from
all Governmental Authorities in connection with the construction, operation and
use of the Property; (vi) copies of all books and records, and in the event that
Completion shall not have occurred, all Budgets and construction schedules, with
respect to the construction, renovation, maintenance, repair, operation or use
of the Property; and (vii) in the event that Completion shall not have occurred,
(x) evidence satisfactory to Lessor that all building materials purchased or
contracted for purchase which have not been incorporated into the Improvements
at the Property are (A) owned by Lessor free from any Liens, (B) secured,
segregated and identifiable (and if stored off-site, the location of such place
of storage) and (C) insured under policies in amounts and by insurers reasonably
satisfactory to Lessor; (y) evidence satisfactory to Lessor that adequate
provision has been made for the protection of materials stored on-site and for
the protection of the Improvements, to the extent then constructed, against
deterioration and against other loss or damage or theft, and (z) an agreement,
in form and substance reasonably satisfactory to Lessor, from all contractors,
construction managers, architects, engineers and other designee professionals
that each will continue to perform under their respective contracts for the
benefit of Lessor or its assignee. Lessee shall cooperate with any independent
purchaser of the Property in order to facilitate the ownership and operation by
such purchaser of the Property after such expiration or earlier termination of
the Term, including providing all books, reports and records regarding the
maintenance, repair and ownership of the Property and all data and technical
information relating thereto, granting or assigning all licenses necessary for
the operation and maintenance of the Property and cooperating in seeking and
obtaining all necessary licenses, permits and approvals of Governmental
Authorities. Lessee shall have also paid the total cost for the completion (or
removal and restoration of the Improvements following such removal) of all
Modifications commenced prior to such expiration or earlier termination of the
Term. The obligation of Lessee under this Section 10.1(c) shall survive the
expiration or termination of this Lease.

            10.2 Right of Inspection. Lessor may, at reasonable times and with
reasonable prior notice, enter upon, inspect and examine at its own cost and
expense (unless, from and after the Completion Date, a Lease Event of Default
exists, in which case the out-of-pocket costs and expenses of Lessor shall be
paid by Lessee), the Property. Lessee shall furnish to Lessor statements, no
more than once per year and promptly following written request therefor by
Lessor, accurate in all material respects, regarding the condition and state of
repair of the Property. Lessor shall have no duty to make any such inspection or
inquiry and shall not incur any liability or obligation by reason of not making
any such inspection or inquiry.

            10.3 Environmental Inspection. Not less than 6 months prior to the
Maturity Date (unless Lessee has previously irrevocably exercised the Maturity
Date Purchase Option),
<PAGE>   14
                                                                              10

and not more than thirty Business Days prior to surrender of possession of the
Property, Lessor shall, at Lessee's sole cost and expense (unless such surrender
of possession arises from a Construction Risk Event, in which case the
limitations of Section 5.4 of the Agency Agreement shall be applicable to such
cost and expense), obtain a report by an environmental consultant selected by
Lessor certifying that the Property or any portion thereof (i) does not contain
Hazardous Materials under circumstances or in concentrations that could result
in a violation of or liability under any applicable Hazardous Materials Law and
(ii) is in compliance with all applicable Hazardous Materials Laws. If such is
not the case on either such date, then Lessee shall be deemed to have
irrevocably exercised the Maturity Date Purchase Option pursuant to Section
20.2, unless Lessee remediates such Environmental Violation, at Lessee's
expense, by restoring the Property to a condition that is in compliance with all
applicable Hazardous Material Laws on the Maturity Date.

                            SECTION 11. MODIFICATIONS

            11.1 Modifications, Substitutions and Replacements. (a) So long as
no Lease Event of Default has occurred and is continuing, Lessee, at its sole
cost and expense, may at any time and from time to time after Completion make
alterations, renovations, improvements and additions to the Property or any part
thereof (collectively, "Modifications"); provided, that: (i) except for any
Modification required to be made pursuant to a Legal Requirement or an Insurance
Requirement, no Modification, individually, or when aggregated with any (A)
other Modification or (B) grant, dedication, transfer or release pursuant to
Section 12.2, shall impair the value of the Property or the utility or useful
life of the Property from that which existed immediately prior to such
Modification; (ii) the Modification shall be performed expeditiously and in a
good and workmanlike manner; (iii) Lessee shall comply with all Legal
Requirements (including all Hazardous Materials Laws) and Insurance Requirements
applicable to the Modification, including the obtaining of all permits and
certificates of occupancy, and the structural integrity of the Property shall
not be adversely affected; (iv) Lessee shall maintain or cause to be maintained
builders' risk insurance at all times when a Modification is in progress; (v)
subject to the terms of Section 13 relating to permitted contests, Lessee shall
pay all costs and expenses and discharge any Liens arising with respect to the
Modification; (vi) such Modifications shall comply with Sections 8.2 and 10.1
and shall not change the primary character of the Property; and (vii) no
Improvements shall be demolished, except to the extent such demolition does not
impair the value, utility or useful life of the Property. All Modifications
(other than those that may be readily removed without impairing the value,
utility or remaining useful life of the Property) shall remain part of the
realty and shall be subject to this Lease, and title thereto shall immediately
vest in Lessor. So long as no Lease Event of Default has occurred and is
continuing, Lessee may place upon the Property any inventory, trade fixtures,
machinery, equipment or other property belonging to Lessee or third parties and
may remove the same at any time during the term of this Lease; provided that
such inventory, trade fixtures, machinery, equipment or other property, or their
respective operations, do not impair the value, utility or remaining useful life
of the Property (such inventory, trade fixtures, machinery, equipment or other
property, collectively, "Modification Equipment"). Lessor acknowledges Lessee's
right to finance and to secure under the Uniform Commercial Code, any
Modification Equipment located
<PAGE>   15
                                                                              11

at the Property, and Lessor agrees to execute Lessor waiver forms and release of
Lessor Liens in favor of any purchase money seller, lessor or lender who has
financed or may finance in the future such items. Without limiting the
effectiveness of the foregoing, provided that no Lease Event of Default shall
have occurred and be continuing, Lessor shall, upon the request of Lessee, and
at Lessee's sole cost and expense, execute and deliver any instruments necessary
or appropriate to confirm any such grant, release, dedication, transfer,
annexation or amendment to any Person permitted under this Section 11.1
including landlord waivers with respect to any of the foregoing.

            (b) Following the Completion Date with respect to the Property,
Lessee shall notify Lessor of the undertaking of any Modifications to the
Property the cost of which is anticipated to exceed $250,000. Prior to
undertaking any such Modifications, Lessee shall deliver to Lessor (i) a brief
narrative of the work to be done and a copy of the plans and specifications
relating to such work; and (ii) an Officer's Certificate stating that such work
when completed will not impair the value, utility or remaining life of the
Property. Lessor, by itself or its agents, shall have the right, but not the
obligation, from time to time to inspect such Modifications to ensure that the
same is completed consistent with the plans and specifications.

            (c) Following the Completion Date, Lessee shall not without the
consent of Lessor undertake any Modifications to the Property if such
Modifications cannot, in the reasonable judgement of Agent, be completed on or
prior to the date that is eighteen months prior to the Expiration Date.

                                SECTION 12. TITLE

            12.1 Warranty of Title. (a) Lessee agrees that, except as otherwise
provided herein and subject to the terms of Section 13 relating to permitted
contests, Lessee shall not directly or indirectly create or allow to remain, and
shall (subject to the limitations of Section 5.4 of the Agency Agreement which
shall apply to Lessee's liability under this Section 12.1 prior to the
Completion Date) promptly discharge at its sole cost and expense, any Lien,
defect, attachment, levy, title retention agreement or claim upon the Property
or any Modifications or any Lien, attachment, levy or claim with respect to the
Rent or with respect to any amounts held by the Agent pursuant to the Credit
Agreement, other than Lessor Liens or Permitted Liens. Lessee shall promptly
notify Lessor in the event it receives knowledge that a Lien (other than a
Permitted Lien) exists with respect to the Property.

            (b) Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Property
or any part thereof. NOTICE IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE
LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO
LESSEE, OR TO ANYONE HOLDING THE PROPERTY OR ANY PART THEREOF THROUGH OR UNDER
LESSEE, AND THAT NO MECHANIC'S
<PAGE>   16
                                                                              12

OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE INTEREST OF LESSOR IN AND TO THE PROPERTY.

            12.2 Grants and Releases of Easements. Provided that no Lease Event
of Default shall have occurred and be continuing and subject to the provisions
of Sections 8, 9, 10 and 11, Lessor hereby consents to the following actions by
Lessee, in the name and stead of Lessor, but at Lessee's sole cost and expense:
(a) the granting (prior to the Lien of the Mortgage) of easements, licenses,
rights-of-way and other rights and privileges in the nature of easements
reasonably necessary or desirable for the construction, use, repair, renovation
or maintenance of the Property as herein provided; (b) the release (free and
clear of the Lien of the Mortgage) of existing easements or other rights in the
nature of easements which are for the benefit of the Property; (c) the
dedication or transfer (prior to the Lien of the Mortgage) of unimproved
portions of the Property for road, highway or other public purposes; (d) the
execution of petitions to have the Property annexed to any municipal corporation
or utility district; (e) the filing and processing of Site Development Permit
Amendments, Parcel Maps, Legal Lot Line Adjustments, Development Agreements, and
any other permit applications, authorizations, entitlements or agreements with
any Governmental Authority required or beneficial for the construction of the
Improvements or permitted Modifications; and (f) the execution of amendments to
any covenants and restrictions affecting the Property; provided, that in each
case Lessee shall have delivered to Lessor an Officer's Certificate stating
that: (i) such grant, release, dedication, transfer, filing or processing does
not impair the value or remaining useful life of the Property, (ii) such grant,
release, dedication, transfer, filing or processing is necessary in connection
with the construction, use, maintenance, alteration, renovation or improvement
of the Property, (iii) Lessee shall remain obligated under this Lease and under
any instrument executed by Lessee consenting to the assignment of Lessor's
interest in this Lease as security for indebtedness, in each such case in
accordance with their terms, as though such grant, release, dedication,
transfer, filing or processing had not been effected and (iv) Lessee shall pay
and perform any obligations of Lessor under such grant, release, dedication,
transfer, filing or processing. Without limiting the effectiveness of the
foregoing, provided that no Lease Event of Default shall have occurred and be
continuing, Lessor shall, upon the request of Lessee, and at Lessee's sole cost
and expense, execute and deliver any instruments necessary or appropriate to
confirm any such grant, release, dedication or transfer to any Person permitted
under this Section.

                         SECTION 13. PERMITTED CONTESTS

            13.1 Permitted Contests Other Than in Respect of Impositions. Except
to the extent otherwise provided for in Section 12.2 of the Participation
Agreement, Lessee, on its own or on Lessor's behalf but at Lessee's sole cost
and expense, may contest, by appropriate administrative or judicial proceedings
conducted in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any Legal Requirement, or utility charges
payable pursuant to Section 4.1 or any Lien, attachment, levy, encumbrance or
encroachment, and Lessor agrees not to pay, settle or otherwise compromise any
such item, provided that (a) the commencement and continuation of such
proceedings shall suspend the collection thereof from, and suspend the
enforcement thereof against the Property, Lessor, the Agent, the Investor and
the
<PAGE>   17
                                                                              13

Lenders; (b) there shall be no substantial risk of the imposition of a Lien
(other than a Permitted Lien) on the Property and no part of the Property nor
any Rent would be in any danger of being sold, forfeited, lost or deferred; (c)
at no time during the permitted contest shall there be any risk of the
imposition of criminal liability or a substantial risk of civil liability on
Lessor, the Agent or any Lender for failure to comply therewith; and (d) in the
event that, at any time, there shall be a material risk of extending the
application of such item beyond the earlier of the Maturity Date and the
Expiration Date, then Lessee shall deliver to Lessor an Officer's Certificate
certifying as to the matters set forth in clauses (a), (b) and (c) of this
Section 13.1. Lessor, at Lessee's sole cost and expense, shall execute and
deliver to Lessee such authorizations and other documents as may reasonably be
required in connection with any such contest and, if reasonably requested by
Lessee, shall join as a party therein at Lessee's sole cost and expense.

                              SECTION 14. INSURANCE

            14.1 Public Liability and Workers' Compensation Insurance. During
the Term, Lessee shall procure and carry, at Lessee's sole cost and expense,
commercial general liability insurance for claims for injuries or death
sustained by persons or damage to property while on the Property. Such insurance
shall be on terms and in amounts that are no less favorable than insurance
maintained by owners of similar properties, that are in accordance with normal
industry practice. The policy shall be endorsed to name Lessor, the Trust
Company, the Investor, the Agent and the Lenders as additional insureds. The
policy shall also specifically provide that the policy shall be considered
primary insurance which shall apply to any loss or claim before any contribution
by any insurance which Lessor, the Trust Company, the Agent or the Lenders may
have in force. Lessee shall, in the operation of the Property, comply with the
applicable workers' compensation laws and protect Lessor against any liability
under such laws.

            14.2 Hazard and Other Insurance. (a) During the Term, Lessee shall
keep the Property insured against loss or damage by fire and other risks on
terms and in amounts that are no less favorable than insurance maintained by
owners of similar properties, that are in accordance with normal industry
practice, are in amounts equal to the actual replacement cost of the
Improvements. So long as no Lease Event of Default exists, any loss payable
under the insurance policy required by this Section will be paid to and adjusted
solely by Lessee, subject to Section 15.

            (b) If at any time during the Term the area in which the Property is
located is designated a "flood-prone" area pursuant to the Flood Disaster
Protection Act of 1973 or any amendments or supplements thereto, then Lessee
shall comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973, as may be amended. In addition, Lessee will
fully comply with the requirements of the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973, as each may be amended from time
to time, and with any other Legal Requirement, concerning flood insurance to the
extent that it applies to the Property.
<PAGE>   18
                                                                              14

            (c) Lessee shall from time to time obtain such additional insurance
hereunder as Lessor may reasonably require.

            14.3 Coverage. (a) Lessee shall furnish Lessor with certificates
showing the insurance required under Sections 14.1 and 14.2 to be in effect and
naming Agent, the Lenders, the Lessor, the Investor, and the Trust Company as an
additional insured with respect to liability insurance and showing the mortgagee
endorsement required by Section 14.3(c). All such insurance shall be at the cost
and expense of Lessee. Such certificates shall include a provision in which the
insurer agrees to provide thirty (30) days' advance written notice by the
insurer to Lessor and the Agent in the event of cancellation or modification of
such insurance that could be adverse to the interests of Lessor, the Trust
Company or the Agent. If a Lease Event of Default has occurred and is continuing
and Lessor so requests, Lessee shall deliver to Lessor copies of all insurance
policies required by this Lease.

            (b) Lessee agrees that the insurance policy or policies required by
this Lease shall include an appropriate clause pursuant to which such policy
shall provide that it will not be invalidated should Lessee waive, in writing,
prior to a loss, any or all rights of recovery against any party for losses
covered by such policy. Lessee hereby waives any and all such rights against
Lessor, the Trust Company, the Investor, the Agent and the Lenders to the extent
of payments made under such policies.

            (c) All insurance policies required by Section 14.2 shall include a
"New York" or standard form mortgagee endorsement in favor of the Agent.

            (d) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with any
insurance required under this Lease except that Lessor may carry separate
liability insurance so long as (i) Lessee's insurance is designated as primary
and in no event excess or contributory to any insurance Lessor may have in force
which would apply to a loss covered under Lessee's policy and (ii) each such
insurance policy will not cause Lessee's insurance required under this Lease to
be subject to a coinsurance exception of any kind.

            (e) Lessee shall pay as they become due all premiums for the
insurance required by this Lease, shall renew or replace each policy prior to
the expiration date thereof and shall promptly deliver to Lessor and the Agent
certificates for renewal and replacement policies.

            (f) Lessee may maintain insurance required by this Lease by means of
one or more blanket insurance policies maintained by Lessee; provided, however,
that (A) any such policy shall specify, or Lessee shall furnish to Lessor a
written statement from the insurer so specifying, the maximum amount of the
total insurance afforded by such blanket policy that is allocated to the
Property and any sublimits in such blanket policy applicable to the Property,
(B) each such blanket policy shall include an endorsement providing that, in the
event of a loss resulting from an insured peril, insurance proceeds shall be
allocated to the Property in an amount equal to the coverages required to be
maintained by Lessee as provided above and (C)
<PAGE>   19
                                                                              15

the protection afforded under any such blanket policy shall be no less than that
which would have been afforded under a separate policy or policies relating only
to the Property.

                      SECTION 15. CONDEMNATION AND CASUALTY

            15.1 Casualty and Condemnation. (a) Subject to the provisions of
this Section 15 and Section 16 (in the event Lessee delivers, or is obligated to
deliver, a Termination Notice), and prior to the occurrence and continuation of
a Lease Default under Section 17.1(a), (b), (f) or (g) or a Lease Event of
Default, Lessee shall be entitled to receive directly (and Lessor hereby
irrevocably assigns to Lessee all of Lessor's right, title and interest in), or
if received by Lessor or any other additional insured Person under Section 14
hereof, Lessor or such other Person shall pay over to Lessee, any award,
compensation or insurance proceeds to which Lessee or Lessor or any additional
insured Person under Section 14 hereof may become entitled by reason of their
respective interests in the Property (i) if all or a portion of the Property is
damaged or destroyed in whole or in part by a Casualty or (ii) if the use,
access, occupancy, easement rights or title to the Property or any part thereof
or any appurtenances thereto is the subject of a Condemnation; provided,
however, if a Lease Default under Section 17.1(a), (b), (f) or (g) or a Lease
Event of Default shall have occurred and be continuing, such award, compensation
or insurance proceeds shall be paid directly to Lessor or, if received by
Lessee, shall be held in trust for Lessor, and shall be paid over by Lessee to
Lessor, to be either paid over to Lessee if such Lease Default or Lease Event of
Default shall no longer be continuing or applied to Lessee's obligations under
Section 17, and provided further that in the event of any Casualty or
Condemnation, the estimated cost of restoration of which is in excess of
$1,000,000, any such award, compensation or insurance proceeds shall be paid
directly to Lessor, or if received by Lessee, shall be held in trust for Lessor
and shall be paid over by Lessee to Lessor to be held and applied by Lessor
toward payment of the cost of restoration in accordance with Section 15.1(e) or,
if applicable, shall be applied in accordance with Section 16.

            (b) So long as no Lease Event of Default has occurred and is
continuing, Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or insurance
payment on account of any such Casualty or Condemnation and shall pay all
expenses thereof; provided that if the estimated cost of restoration of the
Property or the payment on account of such title defect is in excess of
$1,000,000, then Lessor shall be entitled to participate in any such proceeding
or action. At Lessee's reasonable request, and at Lessee's sole cost and
expense, Lessor and the Agent shall participate in any such proceeding, action,
negotiation, prosecution or adjustment. Lessor and Lessee agree that this Lease
shall control the rights of Lessor and Lessee in and to any such award,
compensation or insurance payment.

            (c) If Lessor or Lessee shall receive notice of a Casualty or a
possible Condemnation of a Property or any interest therein, Lessor or Lessee,
as the case may be, shall give notice thereof to the other and to the Agent
promptly after the receipt of such notice.
<PAGE>   20
                                                                              16

            (d) In the event of a Casualty or receipt of notice by Lessee or
Lessor of a Condemnation, Lessee shall, not later than thirty (30) days after
such occurrence, deliver to Lessor and the Agent an Officer's Certificate
stating that either (i) (x) such Casualty is not a Significant Casualty or (y)
such Condemnation is neither a Total Condemnation nor a Significant Condemnation
and that this Lease shall remain in full force and effect with respect to the
Property and, at Lessee's sole cost and expense, Lessee shall promptly and
diligently restore the Property in accordance with the terms of Section 15.1(e)
or (ii) this Lease shall terminate with respect to the Property in accordance
with Section 16.1.

            (e) If pursuant to this Section 15.1, this Lease shall continue in
full force and effect following a Casualty or Condemnation with respect to the
Property, Lessee shall, at its sole cost and expense, promptly and diligently
repair any damage to the Property caused by such Casualty or Condemnation in
conformity with the requirements of Sections 10.1 and 11.1 using the as-built
plans and specifications for the Property (as modified to give effect to any
subsequent Modifications, any Condemnation affecting the Property and all
applicable Legal Requirements) so as to restore the Property to the same
condition, operation, function and value as existed immediately prior to such
Casualty or Condemnation. In such event, title to the Property shall remain with
Lessor. Lessor shall make disbursements from time to time of any award,
compensation or insurance proceeds held by it to Lessee for application to the
cost of restoration subject to the satisfaction of the following conditions: (i)
Lessor shall have received a fully executed counterpart of a Requisition
requesting funds in an amount not exceeding the cost of work completed or
incurred since the last disbursement, together with reasonably satisfactory
evidence of the stage of completion and of performance of the work in a good and
workman-like manner and in accordance with the as-built plans and
specifications, (ii) at the time of any such disbursement, no Lease Event of
Default shall have occurred and be continuing, and no mechanic's or
materialmen's liens shall have been filed and remain undischarged, except those
discharged by the disbursement of the requested funds or bonded, (iii) Lessor
shall be reasonably satisfied that sufficient funds are available to complete
such restoration and (iv) title to the Project shall conform to the
representation set forth in Section 7.7 (b) of the Participation Agreement.
Provided no Lease Default shall have occurred and be continuing, any award,
compensation or insurance proceeds remaining after restoration of the Project as
herein provided shall be paid to Lessee.

            (f) In no event shall a Casualty or Condemnation with respect to
which this Lease remains in full force and effect under this Section 15.1 affect
Lessee's obligations to pay Rent pursuant to Section 3.1.
<PAGE>   21
                                                                              17

                          SECTION 16. LEASE TERMINATION

            16.1 Termination upon Certain Events. (a) If Lessor or Lessee shall
have received notice of a Total Condemnation or a Seller's Exercise of Purchase
Option, then Lessee shall be obligated, within thirty (30) days after Lessee
receives notice thereof, to deliver a written notice in the form described in
Section 16.2(a) (a "Termination Notice") of the termination of this Lease.

            (b) If either: (i) Lessee or Lessor shall have received notice of a
Condemnation, and Lessee shall have delivered to Lessor an Officer's Certificate
that such Condemnation is a Significant Condemnation; or (ii) a Casualty occurs,
and Lessee shall have delivered to Lessor an Officer's Certificate that such
Casualty is a Significant Casualty; or (iii) an Environmental Violation occurs
or is discovered and Lessee shall have delivered to Lessor an Officer's
Certificate stating that, in the reasonable, good-faith judgment of Lessee, the
cost to remediate the same will exceed $3,000,000; then, Lessee shall,
simultaneously with the delivery of the Officer's Certificate pursuant to the
preceding clause (i), (ii) or (iii), deliver a Termination Notice.

            16.2 Procedures. (a) A Termination Notice shall contain: (i) notice
of termination of this Lease on a date not more than thirty (30) days after
Lessor's receipt of such Termination Notice (the "Termination Date"); (ii) a
binding and irrevocable agreement of Lessee (A) if the termination of this Lease
occurs prior to the Completion Date, to pay, or cause to be paid, the amounts
for which the Construction Agent is liable under Section 5.4 of the Agency
Agreement, or (B) if the termination of this Lease occurs on or after the
Completion Date to pay either (y) the Termination Value and purchase the
Property or (z) the Maximum Residual Guarantee Amount and surrender the Property
to Lessor pursuant to Section 10.1(c) on such Termination Date and (iii) the
Officer's Certificate described in Section 16.1(b), if applicable.

            (b) On the Termination Date, Lessee shall pay to Lessor the amount
due pursuant to the Termination Notice, and in the event such amount is the
Termination Value, Lessor shall convey the Property to Lessee (or Lessee's
designee) in accordance with Section 19.1 and in the case of a Significant
Condemnation or Significant Casualty, shall also convey all of Lessor's right,
title and interest to any Net Proceeds (including Net Proceeds theretofore
received by Lessor and not applied to the payment of Termination Value).

                               SECTION 17. DEFAULT

            17.1 Lease Events of Default. If any one or more of the following
events (each a "Lease Event of Default") shall occur:

            (a) Lessee shall fail to make payment of (i) any Basic Rent or any
      Supplemental Rent representing amounts owed under this Lease or the other
      Operative Agreements within five (5) Business Days after receipt by Lessee
      of notice that the same
<PAGE>   22
                                                                              18

      has become due and payable or (ii) any Maximum Residual Guarantee Amount,
      Purchase Option Price or Termination Value after the same has become due
      and payable; or

            (b) Lessee shall fail to maintain insurance as required by Section
      14; or

            (c) Lessee shall fail to observe or perform any term, covenant or
      condition of Lessee under this Lease, the Participation Agreement or any
      other Operative Agreement to which it is a party (other than those set
      forth in Section 17.1(a) or (b) hereof) and such failure is not cured
      within twenty (20) Business Days after the giving of notice thereof by the
      Agent or, if such failure is not reasonably susceptible of cure within
      such period, within such longer period as is reasonably necessary to
      effect a cure so long as Lessee continues to diligently pursue such cure
      but not in any event in excess of forty (40) Business Days; or

            (d) any representation or warranty by Lessee set forth in this Lease
      or in any other Operative Agreement to which it is a party or in any
      document entered into in connection herewith or therewith or in any
      document, certificate or financial or other statement delivered in
      connection herewith or therewith shall be false or inaccurate in any
      material way; or

            (e) an Agency Agreement Event of Default shall have occurred and be
      continuing; or

            (f) Lessee or any Guarantor shall (i) admit in writing its inability
      to pay its debts generally as they become due, (ii) file a petition under
      the United States bankruptcy laws or any other applicable insolvency law
      or statute of the United States of America or any State or Commonwealth
      thereof, (iii) make a general assignment for the benefit of its creditors,
      (iv) consent to the appointment of a receiver of itself or the whole or
      any substantial part of its property, (v) fail to cause the discharge of
      any custodian, trustee or receiver appointed for Lessee or such Guarantor
      or the whole or a substantial part of its property within ninety (90) days
      after such appointment, or (vi) file a petition or answer seeking or
      consenting to reorganization under the United States bankruptcy laws or
      any other applicable insolvency law or statute of the United States of
      America or any State or Commonwealth thereof; or

            (g) insolvency proceedings or a petition under the United States
      bankruptcy laws or any other applicable insolvency law or statute of the
      United States of America or any State or Commonwealth thereof shall be
      filed against Lessee or any Guarantor and not dismissed within ninety (90)
      days from the date of its filing, or a court of competent jurisdiction
      shall enter an order or decree appointing, without its consent of, a
      receiver of Lessee or any Guarantor or the whole or a substantial part of
      its property, and such order or decree shall not be vacated or set aside
      within ninety (90) days from the date of the entry thereof; or
<PAGE>   23
                                                                              19

            (h) a Credit Agreement Event of Default of the type specified in
      Section 6.1(c), 6.1(e), 6.1(g), 6.1(i), 6.1(k), 6.1(m) or 6.1(n) of the
      Credit Agreement shall have occurred and be continuing; or

            (i) an event of default under the Corporate Credit Agreement or
      under any Replacement Corporate Credit Agreement shall have occurred and
      be continuing or a Triggering Event under (and as defined in) the
      Intercreditor Agreement shall have occurred;

then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Section 17 and in Section 18.1, terminate this
Lease by giving Lessee five (5) days notice of such termination, and this Lease
shall terminate. Lessee shall, to the fullest extent permitted by law, pay as
Supplemental Rent all costs and expenses incurred by or on behalf of Lessor,
including fees and expenses of counsel, as a result of any Lease Event of
Default hereunder.

            17.2 Final Liquidated Damages. If a Lease Event of Default shall
have occurred and be continuing on or after the Completion Date, Lessor shall
have the right to recover, by demand to Lessee (provided no demand shall be
required in the case of a Lease Event of Default under Section 17.1 (f) or (g))
and at Lessor's election, and Lessee shall pay to Lessor, as and for final
liquidated damages, but exclusive of the indemnities payable under Section 12 of
the Participation Agreement, and in lieu of all damages beyond the date of such
demand the sum of (a) the Termination Value, plus (b) all other amounts owing in
respect of Rent and Supplemental Rent theretofore accruing under this Lease,
provided that if a Lease Event of Default shall have occurred and be continuing
prior to the Completion Date, the Lessor's rights and remedies shall be as set
forth in the Agency Agreement. Upon payment of the Termination Value plus all
other amounts owing in respect of Rent and Supplemental Rent theretofore
accruing under this Lease, Lessee shall be entitled to receive from Lessor, at
Lessee's request and cost, an assignment of Lessor's right, title and interest
in the Property, in recordable form and otherwise in conformity with local
custom and free and clear of the Lien of the Mortgage, and the Property shall be
quitclaimed to Lessee (or Lessee's designee) "AS IS" and in their then present
physical condition. If any statute or rule of law shall limit the amount of such
final liquidated damages to less than the amount agreed upon, Lessor shall be
entitled to the maximum amount allowable under such statute or rule of law;
provided, that Lessee shall not be entitled to receive an assignment of Lessor's
interest in the Property unless Lessee shall have paid in full the Termination
Value.

            17.3 Lease Remedies. Lessor and Lessee intend that for commercial
law and bankruptcy law purposes, this Lease will be treated as a financing
arrangement, as set forth in Section 7. If, as a result of applicable state law,
which cannot be waived, this Lease is deemed to be a lease of the Property,
rather than a financing arrangement, and Lessor is unable to enforce the
remedies set forth in Section 17.2, the following remedies shall be available to
Lessor:

            (a) Surrender of Possession. If a Lease Event of Default shall have
occurred and be continuing, and whether or not this Lease shall have been
terminated pursuant to Section 17.1, Lessee shall, upon thirty (30) days written
notice, surrender to Lessor possession of the
<PAGE>   24
                                                                              20

Property and Lessee shall quit the same. Lessor may enter upon and repossess the
Property by such means as are available at law or in equity, and may remove
Lessee and all other Persons and any and all personal property and Lessee's
equipment and personalty and severable Modifications from the Property. Lessor
shall have no liability by reason of any such entry, repossession or removal
performed in accordance with applicable law.

            (b) Reletting. If a Lease Event of Default shall have occurred and
be continuing, and whether or not this Lease shall have been terminated pursuant
to Section 17.1, Lessor may, but shall be under no obligation to, relet all, or
any portion, of the Property, for the account of Lessee or otherwise, for such
term or terms (which may be greater or less than the period which would
otherwise have constituted the balance of the Term) and on such conditions
(which may include concessions or free rent) and for such purposes as Lessor may
determine, and Lessor may collect, receive and retain the rents resulting from
such reletting. Lessor shall not be liable to Lessee for any failure to relet
the Property or for any failure to collect any rent due upon such reletting.

            (c) Damages. None of (i) the termination of this Lease pursuant to
Section 17.1; (ii) the repossession of the Property; or (iii) except to the
extent required by applicable law, the failure of Lessor to relet all, or any
portion, of the Property, the reletting of all or any portion thereof, nor the
failure of Lessor to collect or receive any rentals due upon any such reletting
shall relieve Lessee of its liability and obligations hereunder, all of which
shall survive any such termination, repossession or reletting. If after the
Completion Date any Lease Event of Default shall have occurred and be continuing
and notwithstanding any termination of this Lease pursuant to Section 17.1,
Lessee shall forthwith pay to Lessor all Basic Rent and other sums due and
payable hereunder to and including the date of such termination. Thereafter, on
the days on which the Basic Rent or Supplemental Rent, as applicable, are
payable under this Lease or would have been payable under this Lease if the same
had not been terminated pursuant to Section 17.1 and until the end of the Term
or what would have been the Term in the absence of such termination, Lessee
shall pay Lessor, as current liquidated damages (it being agreed that it would
be impossible accurately to determine actual damages) an amount equal to the
Basic Rent and Supplemental Rent that are payable under this Lease or would have
been payable by Lessee hereunder if this Lease had not been terminated pursuant
to Section 17.1, less the net proceeds, if any, which are actually received by
Lessor with respect to the period in question of any reletting of the Property
or any portion thereof; provided that Lessee's obligation to make payments of
Basic Rent and Supplemental Rent under this Section 17.3 shall continue only so
long as Lessor shall not have received the amounts specified in Section 17.2. In
calculating the amount of such net proceeds from reletting, there shall be
deducted all of Lessor's, the Agent's and any Lenders' expenses in connection
therewith, including repossession costs, brokerage commissions, fees and
expenses for counsel and any necessary repair or alteration costs and expenses
incurred in preparation for such reletting. To the extent Lessor receives any
damages pursuant to this Section 17.3, such amounts shall be regarded as amounts
paid on account of Rent.

            (d) Acceleration of Rent. If after the Completion Date a Lease Event
of Default shall have occurred and be continuing, and this Lease shall not have
been terminated pursuant to Section 17.1, and whether or not Lessor shall have
collected any current liquidated
<PAGE>   25
                                                                              21

damages pursuant to Section 17.3(c), Lessor may upon written notice to Lessee
accelerate all payments of Basic Rent due hereunder and, upon such acceleration,
Lessee shall immediately pay Lessor, as and for final liquidated damages and in
lieu of all current liquidated damages on account of such Lease Event of Default
beyond the date of such acceleration (it being agreed that it would be
impossible accurately to determine actual damages) an amount equal to the sum of
(a) all Basic Rent (assuming interest at a rate per annum equal to the Overdue
Rate), as applicable, due from the date of such acceleration until the end of
the Term, plus (b) the Maximum Residual Guarantee Amount that would be payable
under Section 21.1(c) assuming the proceeds of the sale pursuant to such Section
21.1(c) are equal to zero, which sum is then discounted to present value at a
rate equal to the rate then being paid on United States treasury securities with
maturities corresponding to the then remaining Term. Following payment of such
amount by Lessee, Lessee will be permitted to stay in possession of the Property
for the remainder of the Term, subject to the terms and conditions of this
Lease, including the obligation to pay Supplemental Rent, provided that no
further Lease Event of Default shall occur and be continuing, following which
Lessor shall have all the rights and remedies set forth in this Section 17 (but
not including those set forth in this Section 17.3). If any statute or rule of
law shall limit the amount of such final liquidated damages to less than the
amount agreed upon, Lessor shall be entitled to the maximum amount allowable
under such statute or rule of law.

            17.4 Waiver of Certain Rights. If this Lease shall be terminated
pursuant to Section 17.1, Lessee waives, to the fullest extent permitted by law,
(a) any notice of re-entry or the institution of legal proceedings to obtain
re-entry or possession; (b) any right of redemption, re-entry or repossession;
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt; and (d) any other rights which might otherwise
limit or modify any of Lessor's rights or remedies under this Section 17.

            17.5 Assignment of Rights Under Contracts. If a Lease Event of
Default shall have occurred and be continuing, and whether or not this Lease
shall have been terminated pursuant to Section 17.1, Lessee shall upon Lessor's
demand immediately assign, transfer and set over to Lessor all of Lessee's
right, title and interest in and to each agreement executed by Lessee in
connection with the construction, renovation, development, use or operation of
the Property (including all right, title and interest of Lessee with respect to
all warranty, performance, service and indemnity provisions), as and to the
extent that the same relate to the construction renovation, and operation of the
Property.

            17.6 Remedies Cumulative. Lessor shall be entitled to enforce
payment of the indebtedness and performance of the obligations secured hereby
and to exercise all rights and powers under this instrument or under any of the
other Operative Agreements or other agreement or any laws now or hereafter in
force, notwithstanding some or all of the obligation secured hereby may now or
hereafter be otherwise secured, whether by mortgage, security agreement, pledge,
lien, assignment or otherwise. Neither the acceptance of this instrument nor its
enforcement, shall prejudice or in any manner affect Lessor's right to realize
upon or enforce any other security now or hereafter held by Lessor, it being
agreed that Lessor shall be entitled to enforce this instrument and any other
security now or hereafter held by Lessor in such order and manner as Lessor may
determine in its absolute discretion. No remedy herein conferred upon or
<PAGE>   26
                                                                              22

reserved to Lessor is intended to be exclusive of any other remedy herein or by
law provided or permitted, but each shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute. Every power or remedy given by any of the Operative
Agreements to Lessor or to which it may otherwise be entitled may be exercised,
concurrently or independently, from time to time and as often as may be deemed
expedient by Lessor. In no event shall Lessor, in the exercise of the remedies
provided in this instrument, be deemed a "mortgagee in possession," and Lessor
shall not in any way be made liable for any act, either of commission or
omission, in connection with the exercise of such remedies.

                       SECTION 18. LESSOR'S RIGHT TO CURE

            18.1 Lessor's Right to Cure Lessee's Lease Defaults. Lessor, without
waiving or releasing any obligation or Lease Event of Default, may (but shall be
under no obligation to) remedy any Lease Event of Default for the account and at
the sole cost and expense of Lessee (subject to the limitation on Lessor's
remedies during the Construction Period as set forth in Section 5.4 of the
Agency Agreement), including the failure by Lessee to maintain any insurance
required by Section 14, and may, to the fullest extent permitted by law, and
notwithstanding any right of quiet enjoyment in favor of Lessee, enter upon the
Property for such purpose and take all such action thereon as may be necessary
or appropriate therefor. No such entry shall be deemed an eviction of Lessee.
All out-of-pocket costs and expenses so incurred (including the fees and
expenses of counsel), together with interest thereon at the Overdue Rate from
the date on which such sums or expenses are paid by Lessor, shall be paid by
Lessee to Lessor on demand as Supplemental Rent.

                          SECTION 19. LEASE TERMINATION

            19.1 Provisions Relating to Lessee's Termination of this Lease or
Exercise of Purchase Option. In connection with any termination of this Lease
pursuant to the terms of Section 16.2 for which Lessee receives payment of the
Termination Value, or in connection with Lessee's exercise of its Purchase
Option or Maturity Date Purchase Option, upon the date on which this Lease is to
terminate or upon the Expiration Date, and upon tender by Lessee of the amounts
set forth in Section 16.2(b), 20.1 or 20.2, as applicable:

            (a) Lessor shall execute and deliver to Lessee (or to Lessee's
      designee) at Lessee's cost and expense an assignment of Lessor's entire
      interest in the Property, in each case in recordable form and otherwise in
      conformity with local custom and free and clear of the Lien of the
      Mortgage and any Lessor Liens; and

            (b) The Property shall be conveyed to Lessee "AS IS" and in then
      present physical condition.
<PAGE>   27
                                                                              23

                           SECTION 20. PURCHASE OPTION

            20.1 Purchase Option. Lessee shall have the irrevocable option
(exercisable by giving Lessor irrevocable written notice (the "Purchase Notice")
of Lessee's election, which election shall be irrevocable, to exercise such
option not less than ten (10) days prior to the date of purchase pursuant to
such option) to purchase the Property on the date specified in such Purchase
Notice, which date must occur prior to the date which is six months prior to the
Maturity Date, at a price equal to the Termination Value (the "Purchase Option
Price") (which the parties do not intend to be a "bargain" purchase price). If
Lessee exercises its option to purchase the Property pursuant to this Section
20.1 (the "Purchase Option"), Lessor shall quitclaim to Lessee or Lessee's
designee all of Lessor's right, title and interest in and to the Property as of
the date specified in the Purchase Notice upon receipt of the Purchase Option
Price and all Rent and other amounts then due and payable under this Lease and
any other Operative Agreement, in accordance with Section 19.1. Lessee may
designate, in the Purchase Notice, the transferee or transferees to whom the
conveyance shall be made (if other than to Lessee), in which case such
conveyance shall (subject to the terms and conditions set forth herein) be made
to such designee; provided, however, that such designation of a transferee or
transferees shall not cause Lessee to be released, fully or partially, from any
of its obligations under this Lease, including, without limitation, the
obligation to pay to Lessor the Purchase Option Price on the date specified in
the Purchase Notice.

            20.2 Maturity Date Purchase Option. Not less than six months prior
to the Maturity Date, Lessee shall give Lessor and Agent irrevocable written
notice (the "Maturity Date Election Notice") that Lessee is electing either (a)
to exercise the Maturity Date Purchase Option or (b) to remarket the Property
pursuant to Section 21. If Lessee does not give a Maturity Date Election Notice
on or before the date six months prior to the Maturity Date, then Lessee shall
be deemed to have elected to exercise the Maturity Date Purchase Option. If
Lessee has elected or is deemed to have elected to exercise the Maturity Date
Purchase Option, then on the Maturity Date Lessee shall pay to Lessor an amount
equal to the Termination Value for the Property (which the parties do not intend
to be a "bargain" purchase price) and, upon receipt of such amount plus all Rent
and other amounts then due and payable under this Lease and any other Operative
Agreement, Lessor shall transfer to Lessee or Lessee's designee all of Lessor's
right, title and interest in and to the Property in accordance with Section
19.1.

            20.3 Purchase of Less Than All of the Property. Subject to the
conditions contained herein, Lessee shall have the irrevocable option on any
Business Day on or after the Completion Date to purchase a portion of the
Property; provided that Lessee shall be entitled to purchase less than all of
the Property only if the portion being purchased is released from the Mortgage
and if the portion of the Property not being purchased shall constitute one or
more legal lots after closing of such purchase, shall contain one of the two
Buildings and shall be viable as a separate property in compliance with all
Legal Requirements. The purchase price ("Purchase Price") for the portion of the
Property which Lessee elects to purchase shall be subject to the approval of
Lessor which approval shall not be unreasonably withheld if the fair market
value of the portion of the Property not purchased, as determined by an
Appraisal, shall
<PAGE>   28
                                                                              24

equal the Termination Value for the portion of the Property not purchased.
Lessee's exercise of its option pursuant to this Section 20.3 shall be subject
to the following conditions:

            (i) Lessee shall have delivered a Purchase Notice to the Lessor not
less than thirty (30) days prior to such purchase, specifying the date of such
purchase;

            (ii) no Lease Default or Lease Event of Default shall have occurred
and be continuing on either the date of such Purchase Notice or on the date of
such purchase;

            (iii) such purchase shall not occur during the Marketing Period.

If Lessee exercises its option pursuant to this Section 20.3 then, upon Lessor's
receipt of the Purchase Price and all Rent and other amounts then due and
payable under this Lease and any other Operative Agreement in connection
therewith, Lessor shall quitclaim to Lessee or its designee all of Lessor's
right, title and interest in and to the applicable portion of the Property in
accordance with Section 19, such transfer to be effective as of the date
specified in the Purchase Notice. Lessee may designate, in a notice given to
Lessor not less than ten (10) Business Days prior to the closing of such
purchase (time being of the essence), the transferee or transferees to whom the
conveyance shall be made (if other than to Lessee), in which case such
conveyance shall (subject to the terms and conditions set forth herein) be made
to such designee; provided, however, that such designation of a transferee or
transferees shall not cause Lessee to be released, fully or partially, from any
of its obligations under this Lease, including, without limitation, the
obligation to pay to Lessor the Purchase Price. The option contained in this
Section 20.3 may only be exercised by Lessee once during the Term.

                          SECTION 21. SALE OF PROPERTY

            21.1 Sale Procedure. (a) Unless Lessee shall have elected or shall
be deemed to have elected to purchase the Property and has paid the Purchase
Option Price with respect thereto, or otherwise terminated this Lease with
respect thereto and paid the Termination Value with respect thereto, Lessee
shall (i) pay to Lessor the Maximum Residual Guarantee Amount as provided for in
Section 21.1(c), and (ii) act as Lessor's agent to sell the Property to one or
more third parties for cash in accordance with Section 21.1(b).

            (b) During the Marketing Period, Lessee, as nonexclusive broker for
Lessor, shall use its best efforts to obtain bids for the cash purchase of the
Property for the highest price available in the relevant market, shall notify
Lessor promptly of the name and address of each prospective purchaser and the
cash price which each prospective purchaser shall have offered to pay for the
Property and shall provide Lessor with such additional information about the
bids and the bid solicitation procedure as Lessor may request from time to time.
Lessor may reject any and all bids and may assume sole responsibility for
obtaining bids by giving Lessee written notice to that effect; provided,
however, that notwithstanding the foregoing, Lessor may not reject a bid if such
bid, together with any amounts to be paid pursuant to Section 21.3, is greater
than or equal to the sum of the Limited Deficiency Amount and all costs and
expenses referred to
<PAGE>   29
                                                                              25

in Section 21.2(i) and is a bona fide offer by a third party purchaser who is
not an Affiliate of Lessee. If the price which a prospective purchaser shall
have offered to pay for the Property is less than the sum of the Limited
Deficiency Amount and all costs and expenses referred to in Section 21.2(i),
Lessor may elect to retain the Property by giving Lessee at least two Business
Days' prior written notice of Lessor's election to retain the Property, and upon
receipt of such notice, Lessee shall surrender the Property to Lessor pursuant
to Section 10.1(c). Unless Lessor shall have elected to retain the Property
pursuant to the preceding sentence, Lessor shall sell the Property free of any
Lessor Liens attributable to it, without recourse or warranty, for cash to the
purchaser or purchasers identified by Lessee or Lessor, as the case may be.
Lessee shall surrender the Property so sold to each purchaser in the condition
specified in Section 10.1.

            (c) On the date during the Marketing Period on which the Property is
sold pursuant to Section 21.1(b), or on the Maturity Date if the Property
remains unsold, Lessee shall pay to Lessor the Maximum Residual Guarantee
Amount.

            21.2 Application of Proceeds of Sale. Lessor shall apply the
proceeds of sale of the Property in the following order of priority:

                  (i) FIRST, to pay or to reimburse Lessor for the payment of
      all reasonable costs and expenses incurred by Lessor in connection with
      the sale; and

                  (ii) SECOND, the balance shall be paid to the Agent to be
      applied pursuant to the provisions of the Credit Agreement.

            21.3 Indemnity for Excessive Wear. If the proceeds of the sale
described in Section 21.1(b) with respect to the Property, less all expenses
incurred by Lessor in connection with such sale, shall be less than the Limited
Deficiency Amount for the Property at the time of such sale and if it shall have
been determined (pursuant to the Appraisal Procedure) that the Fair Market Sales
Value of the Property shall have been impaired by greater than normal and
expected wear and tear during the Term, Lessee shall pay to Lessor within ten
(10) days after receipt of Lessor's written statement (i) the amount of such
excess wear and tear determined by the Appraisal Procedure or (ii) the amount of
the Net Sale Proceeds Shortfall, whichever amount is less.

            21.4 Appraisal Procedure. For determining the Fair Market Sales
Value of a Property or any other amount which may, pursuant to any provision of
any Operative Agreement, be determined by an appraisal procedure, Lessor and
Lessee shall use the following procedure (the "Appraisal Procedure"). Lessor and
Lessee shall endeavor to reach a mutual agreement as to such amount for a period
of ten (10) days from commencement of the Appraisal Procedure, and if they
cannot agree within ten (10) days, then two qualified appraisers, one chosen by
Lessee and one chosen by Lessor, shall mutually agree thereupon, but if either
party shall fail to choose an appraiser within twenty (20) days after notice
from the other party of the selection of its appraiser, then the appraisal by
such appointed appraiser shall be binding on Lessee and Lessor. If the two
appraisers cannot agree within twenty (20) days after both shall have been
appointed, then a third appraiser shall be selected by the two appraisers or,
failing agreement as to such third
<PAGE>   30
                                                                              26

appraiser within thirty (30) days after both shall have been appointed, by the
American Arbitration Association. The decisions of the three appraisers shall be
given within twenty (20) days of the appointment of the third appraiser and the
decision of the appraiser most different from the average of the other two shall
be discarded and such average shall be binding on Lessor and Lessee; provided
that if the highest appraisal and the lowest appraisal are equidistant from the
third appraisal, the third appraisal shall be binding on Lessor and Lessee. The
fees and expenses of all of the appraisers shall be paid by the Lessee.

            21.5 Certain Obligations Continue. During the Marketing Period, the
obligation of Lessee to pay Rent with respect to the Property (including the
installment of Basic Rent due on the Maturity Date) shall continue undiminished
until payment in full to Lessor of the sale proceeds, the Maximum Residual
Guarantee Amount, if any, the amount due under Section 21.3, if any, and all
other amounts due to Lessor with respect to the Property. Lessor shall have the
right, but shall be under no duty, to solicit bids, to inquire into the efforts
of Lessee to obtain bids or otherwise to take action in connection with any such
sale, other than as expressly provided in this Section 21.

                            SECTION 22. HOLDING OVER

            22.1 Holding Over. If Lessee shall for any reason remain in
possession of the Property after the expiration or earlier termination of this
Lease (unless the Property is conveyed to Lessee), such possession shall be as a
tenancy at sufferance during which time Lessee shall continue to pay
Supplemental Rent that would be payable by Lessee hereunder were the Lease then
in full force and effect with respect to the Property and Lessee shall continue
to pay Basic Rent at an annual rate equal to the rate payable hereunder
immediately preceding such expiration or earlier termination; provided, however,
that from and after the sixtieth (60th) day Lessee shall remain in possession of
the Property after such expiration or earlier termination, Lessee shall pay
Basic Rent at an annual rate equal to two hundred percent (200%) of the Basic
Rent payable hereunder immediately preceding such expiration or earlier
termination. Such Basic Rent shall be payable from time to time upon demand by
Lessor. During any period of tenancy at sufferance, Lessee shall, subject to the
second preceding sentence, be obligated to perform and observe all of the terms,
covenants and conditions of this Lease, but shall have no rights hereunder other
than the right, to the extent given by law to tenants at sufferance, to continue
its occupancy and use of the Property. Nothing contained in this Section 22
shall constitute the consent, express or implied, of Lessor to the holding over
of Lessee after the expiration or earlier termination of this Lease as to the
Property and nothing contained herein shall be read or construed as preventing
Lessor from maintaining a suit for possession of the Property or exercising any
other remedy available to Lessor at law or in equity.

                            SECTION 23. RISK OF LOSS

            23.1 Risk of Loss The risk of loss of or decrease in the enjoyment
and beneficial use of the Property as a result of the damage or destruction
thereof by fire, the
<PAGE>   31
                                                                              27

elements, casualties, thefts, riots, wars or otherwise is assumed by Lessee, and
Lessor shall in no event be answerable or accountable therefor, except for
Lessor's obligation to advance any insurance proceeds received by Lessor in
respect thereof pursuant to Section 15(e) hereof.

                      SECTION 24. SUBLETTING AND ASSIGNMENT

            24.1 Subletting and Assignment. Lessee may not assign this Lease or
any of its rights or obligations hereunder in whole or in part to any Person
other than an Affiliate of Lessee. Lessee may, without the consent of Lessor,
sublease any portion of the Property to one or more Affiliates of Lessee, and
may sublease up to 25% of the Property to one or more Persons and may modify,
extend or renew any such sublease, provided that: (a) no sublease or other
relinquishment of possession of the Property shall in any way discharge or
diminish any of Lessee's obligations to Lessor hereunder and Lessee shall remain
directly and primarily liable under this Lease as to the Property, or any
portion thereof, so sublet, (b) any sublease of the Property shall be made
subject to and subordinate to this Lease and to the rights of Lessor hereunder,
and (c) any sublease shall expire prior to the expiration of the Term and shall
expressly provide for the surrender of the Property after a Lease Event of
Default hereunder.

            24.2 Subleases. Promptly following the execution and delivery of any
sublease permitted by this Section 24, Lessee shall deliver a copy of such
executed sublease to Lessor and the Agent.

                        SECTION 25. ESTOPPEL CERTIFICATES

            25.1 Estoppel Certificates. At any time and from time to time upon
not less than twenty (20) days' prior request by Lessor or Lessee (the
"Requesting Party"), the party receiving such request (the "Certifying Party")
shall furnish to the Requesting Party a certificate signed by an individual
having the office of vice president or higher in the Certifying Party that this
Lease is in full force and effect (or that this Lease is in full force and
effect as modified and setting forth the modifications); the dates to which the
Basic Rent and Supplemental Rent have been paid; to the best knowledge of the
signer of such certificate, whether or not the Requesting Party is in default
under any of its obligations hereunder (and, if so, the nature of such alleged
default); and such other matters under this Lease as the Requesting Party may
reasonably request. Any such certificate furnished pursuant to this Section 25
may be relied upon by the Requesting Party, and any existing or prospective
mortgagee, purchaser or lender, and any accountant or auditor, of, from or to
the Requesting Party (or any Affiliate thereof).

                              SECTION 26. NO WAIVER

            26.1 No Waiver. No failure by Lessor or Lessee to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
upon a default hereunder, and no acceptance of full or partial payment of Rent
during the continuance of any
<PAGE>   32
                                                                              28

such default, shall constitute a waiver of any such default or of any such term.
To the fullest extent permitted by law, no waiver of any default shall affect or
alter this Lease, and this Lease shall continue in full force and effect with
respect to any other then existing or subsequent default.

                       SECTION 27. ACCEPTANCE OF SURRENDER

            27.1 Acceptance of Surrender. (a) As of the Expiration Date, if any
Default shall have occurred and be continuing under the Lease, then Lessee shall
be deemed to have irrevocably exercised the Maturity Date Purchase Option
pursuant to Section 20.2.

            (b) Except as otherwise expressly provided in this Lease, no
surrender to Lessor of this Lease or of all or any portion of the Property or of
any interest therein shall be valid or effective unless agreed to and accepted
in writing by Lessor and, prior to the payment or performance of all obligations
under the Credit Documents, the Agent, and no act by Lessor or the Agent or any
representative or agent of Lessor or the Agent, other than a written acceptance,
shall constitute an acceptance of any such surrender.

                         SECTION 28. NO MERGER OF TITLE

            28.1 No Merger of Title. There shall be no merger of this Lease or
of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly, in whole or in part,
(a) this Lease or the leasehold estate created hereby or any interest in this
Lease or such leasehold estate, (b) the fee estate in the Property, except as
may expressly be stated in a written instrument duly executed and delivered by
the appropriate Person, or (c) a beneficial interest in Lessor.

                               SECTION 29. NOTICES

            29.1 Notices. Unless otherwise specifically provided herein, all
notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person to be effective shall be in writing (including by Facsimile transmission)
and shall be deemed to have been duly given or made (a) when delivered by hand,
(b) one Business Day after delivery to such nationally recognized courier
service specifying overnight delivery, (c) five (5) Business Days after being
deposited in the mail, certified or registered, postage prepaid or (d) in the
case of Facsimile notice, when received, addressed to such Person as indicated:
<PAGE>   33
                                                                              29

         If to Lessee:  Safeskin Real Estate Incorporated
                        12671 High Bluff Drive
                        San Diego, California  92130
                        Attention:    William R. LaRue,
                                      Vice President-Treasurer
                        Telecopy No.: (619) 350-2380

         If to Lessor:  Union Bank of California, N.A.
                        Corporate Trust Division
                        120 South San Pedro Street, Suite 400
                        Los Angeles, California  90012
                        Attention:    Vivian Savedra
                        Telecopy No.: (213) 972-5694

         with a copy
         to the Agent:  Union Bank of California, N.A.
                        San Diego Commercial Banking Office
                        530 "B" Street - 4th Floor
                        San Diego, California  92101-4407
                        Attention:    Douglas S. Lambell
                        Telecopy No.: (619) 230-3766

or such additional parties and/or other address as such party may hereafter
designate.

                            SECTION 30. MISCELLANEOUS

            30.1 Miscellaneous. Anything contained in this Lease to the contrary
notwithstanding, all claims against and liabilities of Lessee or Lessor arising
from events commencing prior to the expiration or earlier termination of this
Lease shall survive such expiration or earlier termination. If any term or
provision of this Lease or any application thereof shall be declared invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any right or option of
Lessee provided in this Lease, including any right or option described in
Sections 15, 16, 22 or 21, would, in the absence of the limitation imposed by
this sentence, be invalid or unenforceable as being in violation of the rule
against perpetuities or any other rule of law relating to the vesting of an
interest in or the suspension of the power of alienation of property, then such
right or option shall be exercisable only during the period which shall end
twenty-one (21) years after the date of death of the last survivor of the
descendants of Franklin D. Roosevelt, the former President of the United States,
Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the
founder of the Standard Oil Company, known to be alive on the date of the
execution and delivery of this Lease.
<PAGE>   34
                                                                              30

            30.2 Amendments and Modifications. Neither this Lease nor any
provision hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by Lessor and Lessee.

            30.3 Successors and Assigns. All the terms and provisions of this
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

            30.4 Headings and Table of Contents. The headings and table of
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.

            30.5 Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.

            30.6 GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF THE
LEASEHOLD ESTATE HEREUNDER, THE CREATION, PERFECTION AND ENFORCEMENT OF LIENS
AND SECURITY INTERESTS AND THE EXERCISE OF REMEDIES WITH RESPECT THERETO, WHICH
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE IN
WHICH THE PROPERTY IS LOCATED.

            30.7 Limitations on Recourse. Except as expressly set forth in the
Operative Agreements, Lessee agrees to look solely to Lessor's estate and
interest in the Property, the proceeds of sale thereof, any insurance proceeds
or any other award or any third party proceeds received by Lessor in connection
with the Property for the collection of any judgment requiring the payment of
money by Lessor in the event of liability by Lessor, and no other property or
assets of Lessor, the Trust Company member, partner or other owner of an
interest, direct or indirect, in Lessor, or any director, officer, shareholder,
employee, beneficiary, Affiliate of any of the foregoing shall be subject to
levy, execution or other enforcement procedure for the satisfaction of Lessee's
remedies under or with respect to this Lease, the relationship of Lessor and
Lessee hereunder or Lessee's use of the Property or any other liability of
Lessor to Lessee; provided that nothing in this Section shall be construed to
impair or limit the rights of Lessee against the Investor under the Operative
Agreements; and further, provided, that Lessor shall be liable in its individual
capacity for its own gross negligence or willful misconduct. Nothing in this
Section shall be interpreted so as to limit the terms of Section 6.1 or 6.2.

            30.8 Memorandum of Lease. This Lease shall not be recorded, but
Lessor and Lessee shall, upon the execution and delivery of each Lease
Supplement, execute and deliver a memorandum of this Lease (the "Memorandum of
Lease") substantially in the form of Exhibit B and otherwise in form suitable
for recording under the laws of the jurisdiction in which the Property is
located, which memorandum shall be recorded at Lessee's sole cost and expense.
<PAGE>   35
                                                                              31

            30.9 Priority. Unless and until a Lease Event of Default shall
occur, the Mortgage shall be subject and subordinate to this Lease (and Lessee's
purchase options contained herein). From and after the occurrence of a Lease
Event of Default, the Mortgage, at the sole election of the Agent, shall be
senior to this Lease without any further act by any Person.

<PAGE>   36
                                                                              32

            IN WITNESS WHEREOF, the parties have caused this Lease be duly
executed and delivered as of the date first above written.

                                        SAFESKIN REAL ESTATE INCORPORATED

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

UNION BANK OF CALIFORNIA, N.A., not in its individual capacity except as
expressly stated herein, but solely as Trustee

                                        By:
                                            ------------------------------------
                                            Name:  Vivian R. Savedra
                                            Title: Assistant Vice President

            Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on this 5th day of March, 1999.

                                        UNION BANK OF CALIFORNIA, N.A., as the
                                          Agent for the Lenders

                                        By:
                                            ------------------------------------
                                            Name:  Douglas S. Lambell
                                            Title: Vice President